Monday, February 27, 2017
I've Paid Off My Debt. What's Next?
Well done – you finally did it! After months, or even years, of funneling your income towards that lingering cloud of debt, you’ve made your last payment and will never have to worry about that particular payment again. Now that you’ve shrugged off this burden, it can be hard to know what you should do next with your money. Here are some good next steps to consider…
Okay, a tendency to spend on some of life’s luxuries could have been what got you into debt in the first place. However, if you’ve been shackled to this debt for a long time, and it’s been dictating every little purchase you’ve wanted to make, use this relief to reward yourself for all your self-discipline. A special meal out, a luxury purchase you’ve been putting off, or even a little getaway could all be in order depending on the kind of debt you’ve managed to rub out. Just exercise a little moderation, and don’t start the process of racking up debt all over again!
Re-prioritize your Goals
After you’ve had this celebratory spending spree and come back feeling refreshed, your next important step is to prioritize your remaining financial goals. It’s pretty common for people to pay off a debt that’s been hanging over their heads for some time, and then relax the financial part of their brains, figuring that they don’t have much else they need to be worrying about. However, when you’ve managed to free up some of your personal cash flow, you’re presented with a great opportunity to start planning for your next big goal. Whether you want to use up spare cash investing at a binary options broker or simply move onto dealing with the next big debt, don’t lose your sense of structure!
Bolster Your Emergency Fund
If paying off your debt has caused you to dip into your emergency savings, then re-building this should take priority over any of your other financial goals. After all, the next time a big, unexpected expense gets dropped on your head, you don’t want to be left with no resources to tackle it! If you’ve totally depleted your emergency fund, then start it up again with a nice big contribution; around half of what it was before you used it to pay off your debt. Then, aim to contribute around a half of this every month until your emergency cash cushion is looking healthy again.
Start a Savings Plan
If you’ve spent a fair length of time paying off this debt, there’s probably going to be at least one big purchase that you’ve been putting off thanks to the financial burden. Now that you’ve been able to free up some of your money, you should set out a savings plan for the next big purchase you’ve been putting off. Whether it’s a new car, a trip of a lifetime or a big home renovation, set yourself a rough budget and then give yourself a marker for making monthly contributions towards it. This is one more thing that will give your personal finances a firm sense of structure.