What To Do After Becoming Debt-Free
While my husband and I aren’t completely debt-free (we’re still working on paying off our mortgage) I can speak to what it’s like to be free of the other typical debts that people often take on. We have no car payments, no student loans, no money owed on credit cards, no home equity loans, etc.
A funny thing happened when we paid those things off. In addition to being thrilled, we…didn’t know what to do with the extra money we now had each month. You wouldn’t think that would be a problem, but it was a strange feeling. (A good strange, but still strange.)
So we thought about it a little while, and realized that a beefy emergency fund was next on the list. Once we were done with that though, we found ourselves back in the “what next?” situation.
Eventually we sat down and hammered out some priorities. We decided on:
- Beefing up retirement contributions
- Learning about investing (and starting with small investments)
- Paying for a home improvement project (which turned into two bathroom remodels instead of just one)
- Setting up a vacation fund and a couple of other funds
- Paying off our house
And that’s what I’d recommend doing after becoming debt-free or nearly debt-free: clearly spelling out your priorities, in order. (Doing that while you are getting out of debt works too, if it will provide additional incentive or a greater sense of purpose).
It’s always good to have a plan, especially one that will prevent you from accidentally accumulating a spending habit or failing to reach important long-term goals.
There is life after debt, and it’s fun!