The strength of mind to not return to debt
When you pay off a big debt, you strengthen your resolve to stay financially solvent.
That comes with one important caveat: Your ability to stay out of debt likely depends on how you paid off your debt, says Kinney.
If you worked hard to steadily pay off your debt, you likely have practiced discipline to keep your finances in check going forward. "The clients that really push through over a number of years and a lot of sacrifice kept their debt paid down," Kinney says. Even though she's now debt-free, Hildebrandt's family has remained strict with their spending. "We just worked too hard to go back into debt," she says.
But this resolve may not stick with you if you paid that hefty tab with a windfall, such as a bonus or inheritance. "Down the road, (these) people are likely to go back into debt because they didn't earn the money and they didn't have any 'sweat equity' in paying off the debt," says Kinney.
Of course, if pennies from heaven fall into your life, Dlugozima says it makes sense to put it toward your debt. "But if it's just done in a vacuum in a way where you're not looking at your spending or budget, you're doomed to repeat the sins of the past," he says. "The two need to be tied together to make it stick."