You Are Excited And Debt Free!! Now What?

You have worked so hard.  You have paid off every debt but your house.  You have sacrificed family vacations and dinners out with friends to dig yourself out of this hole.  And you have done it!!  You have paid off those student loans (GOOD RIDDANCE!) and the credit cards (What did you even buy?) and kicked those car payments to the curb (Still love that car!!). You are officially debt free!  Now what?

The world is at your fingertips now that you are debt free.  Here are some great suggestions on how to spend your money since you have no debt hanging over your head.  It is time to make some more dreams come true because you are finally debt free: now what?

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Commit To Staying Out Of Debt

Make the commitment to yourself and your family that you will never go back into consumer debt again.  Plan for the new car and don’t get distracted by shiny new (and expensive) things.  You must remember your mindset when you were working so hard to get out from under that burden.

Keep up the best practices you already have in place.  Do not stop budgeting and utilizing those sinking funds.  Those habits will continue to benefit you after you have paid off all that debt.


Continue to spend wisely.

Continue those habits of bargain hunting and avoiding retail therapy.  You have more money now, so if you chose to buy a good pair of quality shoes that will last for years to come, do so.  But be wise about them and purchase timeless and not whatever is in style today.


Keep Using Your Cash Envelopes

Cash got you out of this mess and will continue to serve you when you are faced with new goals and dreams.  Continue your cash only mindset, so you don’t slip back into old credit card habits.  Consider updating to a cash envelope wallet system for a nice change.

Create A Solid Emergency Fund

Make sure you beef up that emergency fund to cover a full three months worth of living expenses.  It shouldn’t take you too long and honestly; the amount shouldn’t be as much as you might think now that you OWE NO ONE!!!

Sit down and figure out which expenses are your top priority if you or your loved one loses a job or falls ill.  Just the things that you NEED to keep you alive and healthy.   Consider three to six months of those expenses to give you security.  Those might be:

  • Housing
  • Heat
  • Food
  • Electric
  • Insurance
  • Gas
  • Phone
  • Internet
  • Pet
  • Medicines
  • Taxes


Pay Off Your Morgage

You know that intensity you have had all these months?  That drive, passion, and desire you have felt watching those numbers decrease?  Keep it up.  Put all that money into your mortgage and knock that sucker out!

There are some contradictions on whether you should pay off your mortgage or continue to receive the tax write-offs.  I believe that the security and peace I feel knowing that the house I live in is mine and I own it means so much more than the small tax write off I might get.  You would have to do a little research into this and see if it makes sense to you and your family.


Contribute To A College Savings Plan

If you have children, consider putting some money aside for their college years.  We decided to skip this part as we knew that the local community college was the best option for our son.

Because we have money available each month, we can help with any other expenses that he may need while attending.  He has a job and will be attending in the fall with a full-tuition scholarship.

A 529 Educational plan is a great starting point.


Get Aggressive About Retirement

This is the time to max out all your retirement contributions.  If you have a while before you reach retirement age, compound interest will make you a millionaire!

Think of your 401K, mutual funds, IRA’s and any other investment you can conjure up and safely invest your money.


Invest In Rental Properties

Owning a few rental properties can allow you as much if not more than your current income down the road.  This is a wise choice if you have gotten a late start saving for retirement.

If you enjoy fixer upper type projects, you can find some less expensive homes and add a little love to rent it out for maximum monthly income.  Check out realtor sites like Zillow for deals in your area.

The top one percent of the population has multiple income sources.  Investing in properties is a FANTASTIC option!


Look At Insurance Coverage

Do you have enough car and homeowners insurance?  Many times when you are getting out of debt, you chose to decrease insurance costs to the minimum.  This is an excellent time to check on those and raise them now that you are debt free.

Also, if you are over the age of 60, consider long term care insurance. We plan on looking into this soon.  Long Term Care Insurance will cover any type of nursing home care either in the home or out of the home.  This protects the family from having to pay out of pocket and deplete all the savings.


Have Some Fun!

You have done an amazing job getting to the other side of this mountain.  You have all the important stuff covered and your debt free; now what?  Have some dang FUN!!!


Follow Your Passion!

Have you always been a hobby writer and dreamed of writing a book?  Now is the time!!!  How about taking your art to craft shows? Are you rebuilding a 1969 Chevy Nova always been in your “someday” file?  Let’s do it!!!  What are those passions that you have always had yet never gotten to because you didn’t have the time or money?  Now is the time to dust them off.


Start A New Hobby!

You have always wanted to buy a good camera and learn how to use it, but like those passions above, there was a priority for your money – like keeping the lights on, buying food, and getting out of debt!

Think back to the time when you had those hobbies you never had the time or money for and dig those art brushes out!  Buy some new guitar strings or order those “Learn Italian” programs from Amazon!



This is high on my list! There are so many places I want to see.  I can’t wait to explore all that this country has to offer.  We are almost ready to hit the trail running.

Make a list of all the places you can’t wait to see.  Create a Travel Bucket List!

Have you ever thought of traveling across the country?  My grandparents did it twice, and I look forward to the day I get to experience an adventure like this!

How about Europe?  It isn’t cheap to spend time in Europe, but now that you are debt free, you can start saving your money for that trip.  Maybe even become a part-time travel agent to get some great deals!


Congratulations on this, by the way!  Its a huge deal and you should take a moment and bask in the glory now that you are debt free. It is quite an accomplishment, and I am super proud of you!!




2 thoughts on “You Are Excited And Debt Free!! Now What?”

  1. Thank you for these tips! I need to say something about the 529 College Plan.

    Please do not do this, ever! Our neighbor did. She paid enough into the state plan to pay for 12 years of pharmacy school.

    Then, somehow, the state lost all of the 529 money!!! Over a billion dollars gone!

    I know of others that paid into the system and lost every dime.

    My thoughts….NEVER EVER give the government one more dime than you absolutely have to do!

  2. frozenpennies

    Oh my goodness, Carol!! That is TERRIBLE!!! It makes you wonder how in the world that could ever happen!! Also, if your child decides they don’t want to go to college, they get no money. If you invest in something else, they will be able to use it for their first house or their own retirement! Thanks for commenting!

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