Paying off a big debt is a long and difficult journey but there’s plenty of advice online to help you manage it. What there isn’t so much of is advice on what you should do after you’ve cleared that debt. If you don’t change any of your spending habits and start being more sensible with your money, you’ll end up back in debt in no time at all. The first thing you should do is breathe a sigh of relief and congratulate yourself, but after that, you need to start taking these steps to make sure you don’t get into more debt in the future.
This is a suggestion that goes against the more cautious advice that will follow, but you should take the opportunity to reward yourself for a job well done. Take the money that you would have spent on next months debt repayment and spend it on something nice that you couldn’t afford before. As well as rewarding yourself for paying down the debt, you give yourself a taste of what life can be like when you’re more sensible with your money and you have more disposable income. That will give you the motivation you need to keep up with your new responsible spending habits.
Work Out Why You Borrowed
If you’re going to avoid borrowing in the future, you need to work out the reason for it. There are a lot of different reasons that people borrow money, it might be because you had to pay for home repairs that you didn’t anticipate. If that’s the case, you need to start building up some savings in an emergency fund to deal with that eventuality in future. It could also be because you were spending more than you were earning, in which case you need to get spending under control. Whatever the reason, you need to work out why you kept borrowing and avoid getting into the same situation again.
When you’ve got that extra money each month, it’s a good idea to start putting some of it away. A savings account is fine but you’re better off investing it instead. Stock trading is the most common way that people invest but you’re better off trading Options instead. It’s a little more complicated but there are some great options trading for dummies guides online. Options trading gives you a more regular income which is the best way to secure your finances in the long term.
Start Saving For Your Next Big Expense
If you know that your car is on the way out or there are some problems that need fixing around the house, you don’t want to borrow money to cover that and end up back at square one. Now is the time to start looking to the future and saving up for those expenses so you can pay for them comfortably without having to rely on borrowing.
Clearing your debt in the first place is a big step, but it’s pointless unless you keep up your good spending habits and avoid more debts in the future.