How Paying Off Debt Gives You Freedom with Kumiko Love (2024)

FAQs

What are the benefits of clearing debts? ›

By paying off your debt, you may find that you have less stress and more disposable income in your life. By spending or using credit cards, overdrafts or loans - otherwise known as credit, you could receive monthly interest fees.

Kumiko Love wasn't always good with money. But as the 33-year-old mother embarked on a career as a financial counselor, she learned valuable information that she has shared with millions of followers on her blog, "The Budget Mom."

Less debt usually leads to a better credit score, especially if you have a history of timely payments. Credit bureaus take note of how much of your available credit you're using, and lower utilization generally leads to a higher score. The journey to become debt-free isn't easy, but it can be incredibly rewarding.

Once debt is paid off, your self-confidence can make a fast turnaround. Some individuals even share their debt stories out of a renewed sense of confidence, according to Dlugozima. “You become more open about it because you've gotten through the other side,” said Dlugozima. “It's empowering.”

Wiping out high-interest debt on a timely basis will reduce the amount of total interest you'll end up paying, and it'll free up money in your budget for other purposes. On the other hand, not having enough emergency savings can lead to even more credit card debt when you're hit with an unplanned expense.

After Aunt Yukie passes away, Kumiko inherits her home, settles back in Okinawa, and becomes a dance teacher for children. While she had many marriage proposals, she never married or had children.

As Daniel wanted her to follow her dreams and be happy more than he wanted her to be with him, he reluctantly convinced Kumiko to stay in Japan and pursue her dancing career.

Now, she's made a successful career of helping others do the same. Love is known as “The Budget Mom” to her millions of social media followers. She's a Spokane local who operates a warehouse in Spokane Valley. There, she packs and ships budgeting tools like the Budget by Paycheck Workbook, Live Rich Planner, and more.

“Shark Tank” investor Kevin O'Leary has said the ideal age to be debt-free is 45, especially if you want to retire by age 60. Being debt-free — including paying off your mortgage — by your mid-40s puts you on the early path toward success, O'Leary argued.

Wealthy individuals create passive income through arbitrage by finding assets that generate income (such as businesses, real estate, or bonds) and then borrowing money against those assets to get leverage to purchase even more assets.

How aggressively should I pay off debt? ›

Pay the largest or highest interest rate debt as fast as possible. Pay minimums on all other debt. Then pay that extra toward the next smallest debt. Paying off a big debt can boost a feeling of control and gets rid of big interest, too.

The study found that six in 10 people could not cover three-plus months of expenses. Thirty-one percent said they had no emergency fund. It's no wonder just 23% of Americans say they live debt free, according to the Federal Reserve.

They avoid debt

This probably won't come as a big surprise, but the bulk of millionaires are very reluctant to take on debt. In fact, 73% of millionaires surveyed in the US have never carried a credit card balance,¹ while 56% of active credit card accounts in the United States currently have a balance.

Debt relief can take a number of forms, including reducing the debt, lowering the interest rate on it, or extending the period for repayment, among others. Creditors are often willing to consider debt-relief measures when the alternative is total default by the borrower.

Paying off your debt can give you a better credit score which has many benefits. A higher credit score can get you a better interest rate on any future loans as well as lower insurance premiums. It can also make you more desirable to employers or landlords who use credit scores as a measure of reliability.

Making on-time payments is one of the most crucial factors in determining your credit score. Clearing your credit card debt in full usually improves your CIBIL score. It shows responsible credit behaviour that is seen positively by the lenders. Besides, it helps borrowers avoid interest charges.