5 Things to do When You Pay off a Debt
First off, congratulations; it is a huge accomplishment to pay off a debt. You feel the weight off of your shoulders and get rid of the feeling that you are continuing to sink deeper into debt. Now that you have tackled this obstacle it is time to stay disciplined and continue on the path of financial freedom away from debt. Once your debt is gone there are a few next steps to stay ahead of the game.
Check Your Credit Report & Score
Getting out of debt is a glorious feeling, it’s easy to get caught up in the moment and start spending that discretionary income again. To quash that urge you should first check your credit score to see how much it improved since paying off that debt. If you are unfamiliar with score, you can see what a good score is here http://aaacreditguide.com/credit-scores/what-is-a-good-credit-score/.
Figure Next Financial Steps
The next move is to figure out what your next financial move is. Is there more you need to pay off, do you need to start setting up a savings account for the extra money, or maybe you need to create a budget to curb spending going forward in order to not repeat previous mistakes. Whatever you do, make sure saving is high on the list.
Move onto the Next One
If one debt is down, it is time to move onto the next until they are all paid off. Try the next smallest balance to feel even more accomplishment, or try and tackle the debt with the largest interest rate so you can apply more towards principle and get rid of it.
Stash More Away for Rainy Day
Experts say that you should have between three and six months of living expenses put away in case of a job loss or a large unexpected repair such as your car or home appliance, so if you have not started to save, now is the time.
Save for Next Purchase
The trick to staying out of debt is to not continue to make unnecessary purchases, and to only spend what you can afford, so if there is an upcoming purchase that you want to make, now is the time to start saving, whether it is for a new car, home down payment, or even planning the next family vacation.
Filed under: Saving Money
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