Paying Debts ... It Pays!April 26, 2016

Paying Debts ... It Pays!

No one likes to feel trapped by debt. It can be tempting to use some form of credit to pay recurring debts (which is not a good idea). Still, when dealing with creditors, it is important to pay your debts. Obviously it would be nice to be able to borrow all the money you want without ever having to repay it. Unfortunately, financial institutions are not charitable organizations and they do not have money to give away!

Indeed, the real world does not work like that and money has a certain value. Here's why it's important to pay our debts.

To Undertake Long-term Projects

Even if someone completely stopped paying his debts, the latter would not magically disappear. Instead, the person would be subject to severe penalties, in addition to higher interest rates and other additional costs, considerably inflating the total amount to be repaid. It is a fantasy, then, to think that you will get out of debt (without having to pay) by burying your head in the sand. And, if you wait too long, some creditors could even seize your property!

Moreover, failure to pay debts on time can severely penalize you the next time you apply for a loan. You want to buy a house or a car? You would like to return to school or start your own business? All these noble and inspiring projects require liquidity. For that, you must be able to borrow the money needed to achieve them. At the same time, you must not forget that this money is not given to you as a gift. It has been lent to you. It must, therefore, be returned someday. If you never pay it back, you will never be able to borrow money again.

To Demonstrate Our Trustworthiness

We can also summarize by saying that paying debts is a way to show that you are responsible and trustworthy. Obviously, the unexpected may arrive to prevent you from repaying some debts. It happens. And, in such cases, you need to communicate with your creditors to explain the situation. In discussing it, it will be possible to find a solution suitable to both parties.

Many people do not understand the concept of credit, and believe that credit cards and loans are a kind of free money. But credit implies reimbursement! Paying one's debts is a matter of principle.

To Regain Your Freedom

This is the meaning of the famous proverb, “he who pays his debts grows rich.” Paying debts does not make us richer in the financial sense, but rather in the moral sense. By paying your debts, you take a load off your shoulders and liberate yourself, in addition to enjoying an excellent reputation with financial institutions. That is priceless.

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