Life After Debt

Posted by Mike Smith :: October 25, 2007 @ 7:06 am

Getting out of debt can be such a long process that it often seems like the final destination. Unfortunately, once your debt is gone, some financial decisions may become more difficult. While you were working your way out of debt, the question of where to put any extra money that you could come up with was probably a no-brainer: pay down your debt. Without the obvious way to apply your money, you may be left wondering what to do once you’re debt-free.

Here are a few options to consider:

Fund Your Retirement
Contribute as much as you can afford to your retirement accounts. Depending on the type of plan that you have, there may be additional benefits, such as employer matching or tax-free earnings growth. Many people are becoming solely responsible for their financial well-being in retirement, so don’t short change yourself.

Invest
Let your money work for you by investing it. Investing takes on many forms, from stocks and bonds to real estate to Lending Club P2P loan portfolios. Consult with a financial advisor or trusted source before proceeding, particularly if you’re new to investing.

Build a Buffer to Prevent Future Debt
Savings accounts have their place in a solid financial plan. By routinely saving, you’ll be creating a funding source for purchases and unexpected expenses that previously would have been prime candidates for using your credit card.

Allow Yourself a Little Fun
After working hard to get out of debt, you deserve to have a little fun. So consider allowing yourself a small indulgence from time to time. Be mindful not to overdo it!

Keep Up Your Good Habits
The habits that get you out of debt can keep you out of debt, so keep up the good work. Falling back to your old ways will ensure that your debt-free life is short-lived.

Having more money then you know what to do with sounds like a problem we’d all like to have. The newly debt-free often find themselves with so many options that they have a hard time making good decisions. Now is the time to educate yourself about your options to ensure that you maximize the benefits of being debt-free.