By Lila Quintiliani, AFC®, Military Saves Senior Program Manager

When you have debt – whether it’s credit card debt, student loans, or a high-interest personal loan – it’s difficult to see the light at the proverbial end of the tunnel. It’s easy to get discouraged, and you may feel like you will never be able to make progress in any of your financial goals.

But there is a different, more positive way to frame things: when you are paying down debt, you ARE saving, even if it may not seem like it at the time.

Why Debt Is So Hard to Pay Off

The average American household owes $7,149 in revolving credit card debt, $28,035 in auto loans, and $57,520 in student loans. And this isn’t even counting mortgages, which add an additional $195,405 to the mix.

So, if you have debt, you’re not alone, and it’s not just your imagination that it’s difficult to make progress on tackling your debts: Because of the way interest is calculated on most debts, the amount you owe grows over time.

Most credit cards, for instance, charge compound interest. If you don’t pay off your balance in full at the end of the billing cycle, the interest will be calculated continually (often on a daily basis). You’ll then pay interest not only on the amount you owe, but on the interest you owe. It’s easy to see how it can quickly add up.

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How Paying Off Debt Can Improve Your Credit Score

One of the first benefits you see as you pay down debt is a boost to your credit score. This is because of how your score is calculated: Roughly a third of your score depends on the amounts you owe on your credit cards, specifically comparing it to your total line of credit. As you pay down your debt, as long as you don’t accrue more debt, your score should start going up.

Continuing to pay your debt on time also will boost your credit score. Payment history is the single most important component of your score, according to FICO, the company that invented the credit risk scoring system that lenders use.

The higher your credit score, the more favorable the interest rate you will be able to get on future loans. You may even be able to call your creditors and get better rates on existing loans and credit cards.

Free Up Money for Other Goals

There are many ways to pay down debt, and there’s no single right way to do it. You might pay off the smallest debt first, or the one with the highest interest rate. Whichever method you choose, as you pay down debt, you may notice that you suddenly have more cash in your bank account – money you can put toward other goals such as beefing up your emergency fund, adding to your Thrift Savings Plan or 401(k), or saving for a Hawaiian vacation.

Build a Solid Saving Habit

Saving is a habit, and just like any other habit, it can take a while to learn and internalize. But by making regular debt payments, you are also practicing the same behavior that you use to save for a goal of any type.

That means once you have paid down your debt, you’ll be in a perfect position to pivot to saving for your next goal.

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Get Peace of Mind

One of the most indefinable yet undeniable benefits of paying down debt is that it can bring peace of mind. A recent study showed people who reported significant financial stress were 13 times more likely to have a heart attack than those with minimal or no stress. Ironically, financial stress can make it even more difficult to manage money.

Debt can sometimes seem like a crushing burden, and debt payments can make you feel like you will never make progress toward your financial goals. It’s important to remember that saving is a journey, and even small, incremental steps forward can empower you to make it the rest of the way.

For more information on paying down debt, active duty and retired military families can seek assistance from an installation Family Readiness Center. If you don’t have access to an installation, you can get free financial counseling through the nonprofit Yellow Ribbon Network.

MOAA is teaming with Military Saves, a campaign coordinated by the nonprofit Consumer Federation of America, as part of Military Saves Month. Need help getting into the savings habit? If you would like more motivation on your saving journey, take the Military Saves Pledge and follow Military Saves on social media.