It’s been said the quality of your life is determined by the quality of your relationships. Some recent data suggests that your relationship with debt might also help define your quality of life. In fact, just having a plan to pay off debt could improve your overall satisfaction with life by nearly 30%. A recent survey by Comet explored this relationship between debt and well-being, surveying 1,000 Americans to find out how their debt, or lack of it, affected their quality of life. It turns out the type of debt you have can impact things like happiness, ambition and even sleep.
Here’s the three types of debt people said most improved their quality of life:
- Home mortgage
- Auto loan
- Personal loan
And the two types of debt people said had the most negative impact on quality of life:
- Unpaid bills
- Medical debt
Having a Plan vs Not Having a Plan
The survey asked respondents about a variety of different measures of life satisfaction, including quality of family life, sleep, happiness, optimism and ambition. According to the survey, your approach to debt can have a meaningful impact on all these things. The key difference, according to the survey results, is whether or not you have a plan to pay off debt.
- 72% have a plan to overcome their debt
The survey asked respondents to rate their satisfaction on different quality of life factors and people with a debt payoff plan scored, on average, 18.1% higher on the following:
- Ability to overcome diversity
- Level of happiness
- Quality of family life and friendships
Ultimately paying off debt can also improve happiness, the survey found.
- 83.8% said overcoming debt made them more happy
Paying off their debt was especially beneficial for Americans who owed more than $25,000, with 87.5% saying it made them stronger.
Why Different Kinds of Debt Impact Your Life in Different Ways
One possible explanation is that the more favorable types of debt – mortgages, auto loans and personal loans – are often used for funding major life milestones, and therefore facilitate accomplishments, like buying a home or purchasing a car or financing a wedding. These are often celebratory moments enabled through borrowing. The survey asked respondents what debt has allowed them to do, and people said they used debt in the following ways:
- 9% attended college or higher education program
- 3% purchased something that was necessary for basic living
- 2% completed a purchase for personal enjoyment
- 8% covered medical expenses
- 4% provided for their family
- 21% went on vacation
- 5% funded a business venture
At the same time, people said debt has prevented them from doing things such as attending social events, getting help with medical issues and even dating.
Debt That Lowers Your Quality of Life
While some debt can help you achieve your aspirations in life, debt that arises as a result of borrowing for overdue bills and medical expenses often arises from unwelcome circumstances, which could generate stress and anxiety. Unlike mortgage, auto and personal loans, medical debts and other bills don’t necessarily come with in-built pay-off plans, such as a set term and manageable payment structure for getting balances down to zero.
Build Your Life Around Debt Repayment, Not the Other Way Around
The data also showed that overcoming debt, regardless of the amount, generates feelings of happiness:
- 84% of respondents said they were happier living debt-free, so having a clear plan of action for getting there can contribute to improvements in overall happiness.
Once you’ve confronted the numbers on how much you owe and settled on a debt repayment strategy, it’s all about following through on your plan. To do that, it may help to start thinking of your debt repayment as a priority, something you build your life around as opposed to something you fit into your life if you can find the space, time, energy and money. Building your debt repayment into your budget may require some adjustments to your usual spending habits. It might require a few sacrifices or working a few extra hours to generate additional income. And it might not always be fun. But the changes are temporary, and the payoff could be freedom from unwanted debt. Wouldn’t that feel good?