The Benefits of Paying Off Your Debts Faster

Cents App

Debt repayment is a serious and complicated matter, especially if you have just graduated from college and owe a lot in student loans. Debt comes in different forms for different people, like credit cards, mortgages and car payments. For students, it comes in the form of student loans. Irrespective of whether you have done the calculations and seen the key figures, you really do not feel like paying your debt. However, you have to pay it off, whether you like it or not.

How about paying off your debts faster? Ever considered this? Here is a look at the benefits of paying your debts off faster. So, are you ready to make a huge dent in your debt? Keep in mind that a debt payment plan is useful in this situation. When you apply your extra cash to one particular debt at a given time, you appreciably expedite the debt repayment process.

The benefits of paying off your debt faster are as follows:   

Reduce Your Debt Period

When you pay your debt faster, or in other words, earlier than it is due, you save yourself a huge burden and responsibility. This will give you peace of mind. Many people find being in debt distressing and upsetting. In case you have more than one debt at the same time, paying off one allows you to focus on the remaining one. Moreover, if you have a single debt, paying it off faster will make it easier for you to avail a new line of credit, just in case you need it.

Save on Interest

We all know that the longer we take to pay off a debt obligation, the more we have to pay in the form of interest. So, paying off a loan faster means significant savings in interest, which can be a relief. Repayment calculators are valuable in this regard. They allow you to calculate the interest amount you will have to pay over the years, which depends on the loan repayment schedule. Interest savings are a great motivation for paying debts off faster. When you pay your debt faster, you are allocating more dollars to principal repayment as compared to interest.

Save More and Gain Flexibility

People in general and students in particular base their budgets on their monthly income. Incoming paychecks fund lifestyle, entertainment and living expenses. When you have a lot of money wrapped up in repaying student loans, saving for the future becomes difficult. When you pay your debts faster and are released from your obligation, a big burden is lifted off your shoulders.

The cash that was previously being used in debt repayment can now be stashed up for the future. In addition, if you are not big on saving dollars you can spend the money on purchasing other useful items that you always wanted. With more cash to spend, you enjoy greater flexibility when planning your monthly budget.    

You can make the process of debt repayment easier and pay your debts off faster by using a debt management app such as the Cents App.

The True Cost of Debt

The True Cost of Debt

We tend to measure debt in dollars and while that’s part of it, it’s not the whole picture. There are other factors that make up the true cost of debt.

Time

When it comes to growing your money, there is no substitute for time. Here is an example;

Person A invested $1,000 per month from ages 25-35. He didn’t invest another penny but didn’t touch that money until he retired at 65. He was getting an average return of 7%.

Person B gets a late start. She invests $1,000 a year from ages 45-55. The same scenario as above, no more invested, the money untouched until age 65, a 7% return.

At age 65, Person A will have $1,444,969. Person B will have just $373,407.

When you have debt to pay and cannot invest, you are losing time for your money to grow.

Dollars

Well, obviously! Part of the cost of debt is how many dollars it costs us. We usually think of that in terms of interest we pay. If you have credit card debt, that amount can be staggering. The average interest rate for a credit card is just over 15%.

But debt costs us dollars in the form of missed opportunity as well. If you are paying off debt, you’re not investing and saving for retirement. We discussed above how much debt can cost when investing is delayed in terms of giving your money time to grow.

If you were offered a great job that involved a big location change you might not have the money to pay for a move. Maybe a friend or family member comes to you with a terrific business opportunity. But you don’t have the money to get involved.

Continue reading “The True Cost of Debt”

Welcome to Common Cents!

Welcome to Common Cents - Cents App

Welcome to Common Cents! The official blog of the Cents mobile app. We couldn’t be more excited that you’re here and ready to join the debt-free revolution!

A little about us…

We’re a company created by people with debt, for people with debt. That’s right—we’re just like you! Getting into debt is as easy as 1, 2, 3… but getting out is much, much harder. Surveys show that more than half of Americans are living paycheck to paycheck, unable to reach their financial goals thanks to hefty monthly payments and demanding interest rates.

Paying off debt is a marathon, not a sprint, but what if you could boost your pace without breaking a sweat?

Enter Cents: a mobile app that actively eliminates your personal financial debt.

Cents rounds up your everyday purchases to the nearest dollar and uses your spare change to pay down your debt accounts, whether it’s a mortgage, car loan, student loans, or that pesky credit card bill from that caribbean cruise you charged when you were 19 (yep, we’ve been there).

Whether you’re buying groceries or paying rent, every transaction gets you one step closer to ditching your debt and living your dreams.

So what do you dream about? Is it success? More time with friends or loved ones? Maybe it’s travel, or finally owning that home. We believe that debt shouldn’t hold you back from the things you enjoy most.

Cents mobile app is coming spring 2017! Enter your email below to receive exciting news and updates. In the meantime, keep visiting the Common Cents blog for tips and tricks to help you make smart financial decisions.