Financial PlanningLending Education

So You’re Debt Free – What Next?

a man jumping for joy
With hard work, perseverance, ingenuity, and help from the right groups of support and advice, we can eliminate the pressure of debt in our day to day lives. For many individuals, the road to eliminating long-term debts and all of their negative effects on personal financial health consumes so much energy that getting to the goal may leave them with a sense of confusion. We hear plenty of stories about the process of debt elimination and debt management, especially in the cases of those who go to exceptional lengths to rebuild their personal finances, but there’s a type of story that gets told less often. It starts like this:

What now? What next?

The intense focus required to rebuild financial health from a highly indebted position may cause our attention to lapse from other important goals with longer-term outcomes, such as saving for retirement. We may find ourselves with “extra” money in our pockets. It can be tempting to spend the money that previously went to debt — but this will quickly lead to major lifestyle inflation and possibly down the road back to debt if we are not careful.

Turning the lessons you learned when combating debt into a diligent, smartly executed set of strategies for managing your new financial plan will be the biggest factor in your continued stability and success. Mental preparation for new financial opportunities is key. It’s also important not to lose sight of the granular goal-setting processes you have built: new goals, like contributing to emergency funds, TFSA or RRSP accounts, will help give your financial plans meaning and specificity.

Of course, it’s not all business. It’s OK to celebrate the milestone achievement of turning your financial life to a new chapter! Look to a major life goal and start thinking about how you’re going to get there responsibly and in the time frame you want. Enjoy the emotional and mental relief of stressors that may have plagued you – while budgeting effectively for the things you want and need. Some people find that normal expenses become paralytic or create anxiety – every dollar needing to be allocated somehow to some greater purpose. However, it’s important to have some balance in life and to take advantage of the wealth building potential that a debt free life offers you. After all, once all your debt is paid off, you have a phenomenal opportunity to build significant wealth.