We’ve got tips galore on Tip Hero that can help you out with paying off debt, but what do you do once your debt is eliminated? After you celebrate (within reason and within your budget of course) here are some steps to consider taking next:
- Reevaluate Your Budget: as soon as you send off the last debt payment, you should already have a plan in place for other ways that you can use the money that usually goes to paying down debt monthly.
The excess money can be used for a wide variety of purposes, but one thing it should not be used for is to encourage lifestyle creep. If you don’t make plans for the excess money in your budget it will be all too easy to let your expenses begin to balloon and you want to avoid that.
- Max Out Retirement Savings: if you can, use extra money to max out your retirement savings – specifically you’ll want to max out your 401(k) and fully fund your IRA.
- Choose Other Investment Vehicles: if you still have money leftover monthly after maxing out your retirement accounts, consider other investments that will increase your current cash flow and diversify as well.
Real estate is one popular way many use to increase cash flow and a solid portfolio of real estate not only provides current cash, but should also increase as an asset by itself, giving you increased net worth. Another solid investment to increase cash flow is dividend bearing stocks. Not only do these provide you with cash on a regular basis, they also help keep your taxes lower since dividend income is taxed at a low 15% currently. Other possibilities include precious metals, bonds and P2P lending.
Check out 5 more helpful tips over at Money Infant’s 8 Things You Must Do After Paying Off Your Debt.