What Should You Do After You Paid Off Your Debt?
Finally, you made it to the finish line; you’re able to pay the last debt in your list and you’re now debt-free. You can then accelerate to much bigger and fruitful goals. Besides, money management is now easy for you. You’ve become an expert in controlling your spending as you’re able to master this craft while paying down each of your debt. Eventually, you’re able to adapt good money habits in restoring your financial life. Those years, months, and days have finally passed and now you’re ready to take a new chapter of your life.
Things You Should Do After You Paid Off Your Debt
Step #1: Celebrate
Well, of course, pat yourself for a job well done. Paying off your entire debt isn’t an easy journey. Others may have even found it challenging to start, while you can finish it off. Hence, it is truly a rewarding state that you need to celebrate. It is also a significant financial milestone that you need to rejoice and be proud of. Since you’re able to adapt good spending disposition, surely you wouldn’t entertain the thought that you deserve something like an extravagant celebration, which may draw you into a debt trap once again.
Step #2: Adjust your budget
As you’re able to eliminate your debt, your lifestyle will start to change all of a sudden.The large portion of your paycheck that is usually intended for debt payments is now free for you to spend on something. Once more you’re able to attain freedom in spending your hard-earned dollar. So, now that you’re able to free up some money, it’s the best time to start preparing for your retirement years. Of course, you must need to put up that money into something worthwhile. It’s best to advance your emergency fund and invest more in your RRSPs and TFSAs.
Step #3: Set New Goals
It is imperative to imbibe that once you have paid off your debt, you must never allow yourself to be in the same situation once again. This can be attainable by setting new financial goals that will help you avoid getting into debt. Granted that you’re able to gain consciousness in spending, you must set certain motivation that will hinder you in going back to the lapses that you’ve made in the past. Also, you shouldn’t be scared to set several goals for as long as it’s deemed feasible. In fact, it is even more gratifying when you set both short-term and long-term goals.
Step #4: Rebuild Your Credit
Your debt had surely ruined your credit; hence, you must do everything you can to repair your credit. Any late fees, large amounts lying idle, and extensions to limit may take significant time to repair. So, it is better that you start early. This can be done if you pay your bills accordingly and maintaining a credit lesser than 30% of the total limit.
Step #5: Don’t Get Ahead Of Yourself
Paying off your debt allows you to feel a sense of freedom and fulfillment, but this can also be overwhelming. Once you decided to choose your financial fate, you may find it challenging to balance your old and new ways. Bear in mind, that though you’re able to finally paid off your debt, you must continue evaluating your finances. Although you can extricate reigns as soon as you are ready, you must be vigilant to anticipate your potential income and expenses. The key to attaining success is always to live on your budget or live within your means.
CONSUMER PROPOSAL EXAMPLE
Example Unsecured Debts
|2||Credit card 1||$6,812|
Your Monthly Repayments Would Be
a Consumer proposal $748
(total contractual repayments)
a Consumer proposal $295
(total contractual repayments)
* Subject to creditor acceptance
* Payment subject to individual circumstances
* Credit rating may be affected
* Fees apply, subject to individual's circumstances.