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10 Must-Do Things After You Finally Become Debt Free

Paying off your debts and being debt-free is one of the most satisfying achievements of your life. Imagine not having to worry about making payments or scraping together enough money to pay them off. However, there is one looming question that everyone must address after becoming debt-free: “What am I going to do now?”

What Should You Do Now That You’re Debt-Free?


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Getting out of debt is only the first step toward true financial independence. But now that you’re debt-free, you can set even bigger and more exciting goals like buying your dream home, retiring early, or engaging in your hobbies more frequently.

1. Make a Future Plan

Even before you are debt-free, you must plan what you will do with your money when you can keep a larger portion of it. This plan will keep you from falling back into debt and will help you chart a more meaningful financial future. Your plan may have multiple objectives, such as increasing your cash flow or finally completing that long-delayed dream project. Make plans with clear and attainable goals that adhere to the SMART rule:

Specific – it should be simple enough that you can concentrate your efforts on it.

Measurable – progress toward the goal can be tracked and quantified.

Achievable – it should be realistic and achievable within the time frame you specify.

Relevant – the goal is important to you, your partner, or your family and is worthwhile to pursue at that time in your life.

Time-bound – it should have a target date and a timeline to avoid shifting priorities.

2. Maintain Your Credit Cards

If there’s one thing you can learn from using credit cards, it’s that they can quickly rack up a lot of debt if used frequently. Keep these plastic cards open instead of cutting them off. This decision will help you maintain a good credit score, especially if you have used the cards for a long time. Furthermore, you should keep a reasonable balance on these credit cards to improve your credit score.

3. Increase Your Emergency Fund

When you’re paying off debt, you only have a small emergency fund that will last you a few months if you resign or are laid off from your job. However, now that you can afford a larger cash cushion in your life, it’s critical to keep an emergency fund on hand for unexpected events.


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After all, you don’t want to be caught off guard by an incident that will send you back into debt.

4. Embrace Yourself

The reward that you will give yourself is one of the things that can help you get motivated to pay off your debt. While everyone has different suggestions, never forget to keep the promise you made. The reward does not always have to be extravagant or costly. You might even prefer something you can keep as a token or reminder of your financial success. However, don’t go overboard with your spending and stick to items that are well within your budget.

5. Conduct a Credit Check on Yourself

Knowing where you stand with your credit is something you should do every year as part of your due diligence. Even if you believe you have paid off all of your debts, you should still conduct one to ensure that no payments were missed. If you come across an unpaid debt, make sure to pay it off as soon as possible. If you have money, don’t be afraid to spend it.

6. Begin Creating Wealth

You must start thinking about building your wealth now that you have paid off all of your debts. There are essentially three things you can do to increase your passive income:

Start your own business.

Invest in real estate.

Invest your money in stocks.

Each one is different in terms of risk and skill set required to succeed. If you don’t consider yourself a risk-taker, you should first secure your retirement fund.


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Furthermore, increasing your wealth necessitates a significant amount of learning new things and experimenting with various strategies.

7. Begin Saving for Retirement

You may want to stop working at some point in your life while still having a cash flow that can support your daily needs and occasional leisure. The best part about early retirement is that you still have the energy to do things you enjoy, such as travel to new places. As a result, it would be advantageous to plan your retirement while you are still young and capable of performing at a level you will not be able to do when you are older.

8. Employ a Financial Advisor

Hiring a financial adviser can also assist you in determining where you want to be in terms of financial health. Furthermore, they can explain the various investment options on the market, their risks and rewards, and the various requirements to participate. Your financial advisor can also assist you in monitoring your financial health and providing sound advice on your next major purchase.

9. Plan Your Next Major Purchase

Setting your next big purchase, similar to when you were planning out of debt, can motivate you to do better with your finances. You can plan on moving from an apartment to your big house, or you can travel around the world for a few months. Your next big purchase could be a dream sports car or a boat to take on vacation. Or they may be planning your dream wedding with your fiancee, which you put on hold due to financial difficulties.

10. Follow Your Passion

We understand how difficult it is to prioritize oneself and make room for things that bring you joy when you have a family to support while struggling with debt. After you’re debt-free, devote a portion of your monthly budget to learning new skills, saving for the gear and equipment you’ll need for your pursuits, or even planning for a future when you’ll be able to earn a living doing what you love.

Indeed, achieving debt freedom opens up a world of possibilities that you might not have considered otherwise. It is, however, only one step toward financial security. Getting out of debt is a goal that many of us, particularly young workers, have for the future. We must remain responsible and vigilant to avoid falling back into debt.

Featured Image Source: Credit Counselling Society
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