Depending on the amount of debt you have, paying it off can feel like a huge accomplishment. If you use your credit card regularly, paying on the bill each month may not be an activity you think too much about. If your credit card debt is on the larger side, finally paying it off can feel like a big weight off your shoulders. Besides being an accomplishment, it’s also time to be proactive so going into debt doesn’t happen again. Here are some steps you should take after paying off a large debt.
Step back and take a look. Paying down on your debt each month is something to be proud of. It probably wasn’t easy, but you did it. In order to make this happen, you probably had a budget in place that maximized your debt payments in order to pay it off. Now that you no longer need to make payments on this bill, it’s time to look over your budget again and figure out what needs to be changed moving forward. Maybe you had to cut back in other areas while you were working on paying down that debt. Or maybe there’s a big ticket item you’ve been waiting to save up for. Now you can adjust your budget and you’ll probably find that you have a bit more wiggle room.
Save money. When sacrifices are made to become debt-free, your savings can often take a hit. If things weren’t too tight while you were working on paying down your debt, it might be a good idea to take that same amount of money – but now put it into your emergency savings account. If you have direct deposit, you can even take that monthly amount and set it to go right into your savings account so it’s automatic.
Set a goal. Whether you’re thinking about planning a future vacation or making a big home improvement that you’ve been putting off, using the money you’ve already budgeted for your previous debt payments is an easy way to save quickly. Consider opening up a separate savings account just for this goal, and keep transferring the money in until you have enough saved.
Stop going into debt. Don’t pay off one large debt and then start racking up more. Every time you log into your mobile banking app or check your account balance online, let it remind you to stay out of debt and how good it feels to pay it off. Stick to your budget and be disciplined!
Article Source: John Pettit for CUInsight.com