Congrats on becoming debt free! After paying off debt you might find yourself celebrating (there can be a huge emotional burden with debt!) and also wondering: what money moves are next?
It might feel a little overwhelming; do you invest? Do you save more cash? Is it time to buy a house? You just worked for hard to get out of debt and now you have to make MORE money decisions??
We’re full time money nerds over here, and we have your back. Take a breath, picture your happy place, and release that stress baby.
Here are the next four things you should do after paying off debt.
Revisit Your Budget
You probably used budgeting, or a spending plan to help pay off your debt. Now that you don’t have to allocate that money to debt each month we have to revisit the plan and figure out where it’s going to go!
Firstly, take a look at the remainder of the year. What major expenses or experiences are coming up? If you become debt free in September, the next major costs in your life might be holiday travel and spending. If you become debt free in March, summer camp for the kids might be the next major expense on your radar.
Start incorporating savings for those short term goals now. You can open what we call a slush account; a savings account where you stash money MEANT to be spent in the short term.
Secondly, consider what other money goals you have. Debt can hinder a lot of our other financial ambitions.
Now that you’ve freed up some money by paying off your debt, you can turn that towards other longer term financial goals.
Create a Plan to Build Wealth
Probably the best part of paying off debt is realizing that ALL of your income is now YOURS. You don’t owe anyone shit- literally!!!
And so next up it’s time to put that money to work creating more money.
Investing, side hustles, or starting a business are all ways to build wealth. I would recommend starting with investing because it’s the easiest and the simplest.
If you’re totally new to investing, start with our article on breaking down common investing language. You shouldn’t start investing until you know what you’re doing, because it’s very easy to be taken advantage of or to lose money by making a mistake.
From there, look to your retirement accounts. These accounts, like a 401k or IRA, come with tax benefits and help insure that old you still has enough money to party rock. You will never regret saving money for later in life; especially if you’re a woman who lives longer and earns less than men!
Learning about how to invest is one of the best investments you can ever make (see what I did there?!?!) because you will be investing for the rest of your life.
We’ve got a super helpful and short course on investing 101 right here to jumpstart your journey by breaking down retirement accounts, investing terms, how the stock market works, and what makes a good investment!
Diversify Your Income
If you’ve already got a good investment plan in place, then I suggest you start diversifying your income after paying off debt!
I have always have multiple streams of income and I love it. I would marry multiple streams of income if it was possible. They are the stuff financial independence is made of!
Ideas for diversifying income can include:
Protect Your Money
Now that your focus is going to be on growing your financial stability and wealth it’s so important to protect and organize your money.
You need to do things like create an estate plan, and understand how your taxes are impacted by your new investing strategy.
You need to create a road map for more financial flexibility, or ultimately financial freedom.
Get a team of experts, like a CPA and an estate lawyer in one place at our Untouchable Challenge! This is a six week live course where I assemble experts to come in a lay the groundwork for different areas of your money.
Going out and finding all of these people on your own is time consuming and probably going to overwhelm you. Instead, I did all that leg work for you and you can sit back, soak it up and get ready to craft a plan that will carry your money forward for YEARS.
And finally, celebrate yourself!
After paying off all my debt I went out to a bar with all my friends, got totally drunk, woke up the next day and went to see the Rolling Stones. It was incredible and I wouldn’t change a thing about that weekend! (Except maybe the hangovers.)
Paying off debt is a huge accomplishment! Life is short and when you do something awesome you should celebrate it!
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