Find a New Payment Plan for Your Debts After They Are Paid Off
What will you do when you finally pay off your credit cards, student loan, or other debt? Where does the money you spend on these payments go to? If you don’t have an answer to this question, get it before you pay.
As business and finance site DailyWorth points out, once your debt is paid off, you will have a larger gap in your monthly budget than before. This is great news! This money is also easy to spend if you don’t have a plan for what to do with it. Or worse, you may end up spending too much money and immediately get back to your current situation. At the very least, you should save some money for a rainy day:
“If you don’t already have one, setting up an emergency fund should be your first financial goal,” says Liz Davidson, founder and CEO of Financial Finesse. In her 17 years of experience with clients, people who have saved up enough money to cover expenses for three to six months are less likely to find themselves in debt again. “The biggest things that keep us going into debt again are unforeseen expenses,” she says. “The Emergency Fund is automatic fail-safe.”
Once you’ve paid off your credit cards, you can set aside some money in an emergency fund, start depositing more into tax deferred retirement accounts like 401 (k), or just spend a month or two when you’re not living. on the fields. By having a plan to pay off your debt before you pay it off, you will be better equipped to deal with the influx of new money after you pay it off.
So you’ve paid off your credit card debt – now what? | DailyWorth