What Should You Do After You’ve Finally Cleared Your Debt?3 min read
Getting out of debt is like scaling a steep mountain; aside from leaving you physically and mentally drained, you also need to reinvent yourself to become efficient in both dealing with your debt and fulfilling your obligations. Once you’ve been able to crawl out of the cycle of debt, you may feel like getting a sense of financial independence. With that in mind, what are you supposed to do with your newfound freedom to avoid sliding back to the quagmire of debt again?
Reorganize your financial goals
Now that debt is out of the picture, you may now eliminate it from your list of priorities and sort them out the way you want them to be. However, the best way to reorganize your finances after debt is by focusing on things you neglected when you were paying up your debts. For instance, now is the good time to bump up your savings or start investing your money into something that will multiply your money. Think of something worthwhile you can do with your money, a pursuit that will yield more money.
Create an emergency fund
Some people go through debt because they encounter unforeseen circumstances without a safety net in the form of emergency fund. Because they don’t have the financial fallback for these events, they tend to borrow money, which will create a rippling effect in their finances. To avoid another case of debt, you may want to stockpile your contingency funds; be it for hospitalization, car accident, or home repairs in the future, having a disposable fund in the future will help you avoid slamming into a financial dead end again, where there is no way out but debt.
Get a certificate of full payment
When you get into a rut called debt with the banks, it can almost be inescapably hard to escape it. If your loan or credit card bills became a problem, then you may want to get a certificate of full payment from your bank once you’ve paid off every single money you owe them. While having debt can have negative impact on your credit score and hurt your reputation with other banks, having a bank certificate will at least give them an assurance that you can pay your debts. Think of this certificate as your diploma after finishing your school of debt.
Cut your other cards
Having multiple credit cards can be good, especially if you know how to take advantage of each and every type of credit card. However, it is easy to become prey to debts racking up from several credit cards, especially if you have the knack for mismanaging your due dates. If you know that having multiple credit cards can lead your return to debt, cut your other cards as soon as possible. When choosing which credit card to keep, think which one can give you the most bang for your buck. Remember, having a credit card is enough, even more when you have a tendency to abuse them.
Pursue new horizons
You may think that once your debts have been settled, you can go back to your life as it was. Unfortunately, your debt is not a case you can isolate from other aspects of your life; it can cause and affect other events in your life. Once you’re done with your debts, you may want to restructure your life for the better. Maybe you can pursue another higher paying career or take up hobbies to compensate for the stress caused by debt. Financial scars aren’t the only ones left by debt, they can also cause some psychological damage too. Try to make up for the lost time because of debt and you can suture your life.
It’s hard to deal with debt while it is there, but the freedom that comes after can also be a tricky situation to be, especially once you’ve tasted your newfound freedom. But if you are determined to work on your life to make improvements when it comes to handling money, you can bounce back and become even better in no time.