I have been debt free since the start of this year. I consider it as one of my greatest accomplishments. A couple of years ago, I was indebted to the tune of at least $70K and did not think that I would be able to get out of this financial dilemma. Fortunately, I did. It took me 2 and a half years to pay off my debt. Did I say that I was the only one working in our family while I was paying this debt?
It’s easy to assume that once you are debt free, you will always be debt free. The reality is some people go back to where or how they were before. I know a couple of people who became debt free just to find themselves in debt-ridden situations years later.
For me, becoming debt free is different from maintaining a debt free life. I was really happy when I made my final debt payment because I knew my life would never be the same. I promised myself that I would never ever again go back to my old situation. While I have been debt free for just eight months, I can say that I am fulfilling my promise.
A lot of people have come to me and ask me what I have been doing to make sure that I keep myself free from debt. While there’s no standard way to keep oneself free from debt, here are some of the ways I put into action to ensure I keep my promise.
Continue making payments as if you still had debts
Once you’re done with paying off your debt, what do you do next with your money? Do you stash your money in the bank, invest it in the stock market, or something else? Remember that once you make your last payment, you will have more money freed up that you can use for something else.
You may or should continue making payments as if you still owe something to your creditors. What I mean by this is pay yourself by putting the money, which would have gone to your debt, towards your investments, savings, or something else.
You should consider saving for your future and your family by funding your 401(K), Individual Retirement Accounts (IRAs), and college funds. If you missed funding your emergency funds because you focused on paying off your debts, then, this is the best time to do it.
Plan ahead for a better future
There is no better time to secure your dreams than when you are free from debt.
Aside from investing and saving, you need to identify what you want to do in life, what your goals are, and how you want to get there. It is all about strategy and proper planning. If you want to buy a house, then, you need to save for a down payment, improve your credit score, among others. If you need to get a new car, you need to determine how much you are willing to spend, what type of car you need to buy, etc.
One of the things that causes people to go back to their unfortunate financial situation is impulsive buying. Plan ahead and buy wisely to help you avoid from going back to your previous situation. Do not go in a whim and buy things instantaneously.
Revisit and reevaluate your budget
Just because you are debt free does it mean you don’t need a budget anymore. Whether you have a lot of money or have a little of it, a budget is key to a debt free lifestyle.
Coming from a personal experience, it is really tempting to spend the money you previously designated for debt. If you succumb to this temptation, you’ll find yourself changing your lifestyle and may see yourself back in your old situation again.
This budget should note where your excess money should go. Hopefully, it’s not in one of the ‘want’ categories.
Share your blessings
Becoming debt free is a blessing.
When I was a young boy, my father would always tell me that blessings should be shared and not to be kept to oneself. My father was a tricycle driver who earned $1 or less a day to feed a family of 11.
Though he didn’t make much, I saw him sharing food, helping others, etc. I knew from a young age that sharing blessings is important.
Now that I am debt free, I contribute more to church. I buy food, clothing, and other necessities and give those to charities. I believe that sharing is good karma and it’s the least thing I can do to reciprocate the blessings I receive.
As my wife consistently says, sharing even the smallest things you have can mean a lot to other people.
So, what else can you do when you are debt free? What do you think are the biggest challenges you will face when you become debt free?
Some products that can help you:
Personal Capital: Personal Capital has a ton of great Free features, you can track your spending, net worth and even analyze your portfolio. It has top notch security and I am able to connect all of my accounts. Saves a ton of time!