September 15, 2021

Money Moves to Make When You Become Debt-Free

You've become debt-free, congrats! Now, how do we protect ourselves from ever taking on toxic debt? Here are some tips to get you started.

9 min read

Qoins Staff

@qoinsapp

Guest post by Brian Meiggs of My Millennial Guide

Have you thought about the feeling you will have once you wake up and you’re finally debt-free? It can easily provoke a sense of freedom and is a new chapter in your life. You now have extra spending money and can forget about tracking your money, right?

Wrong. Although you should celebrate becoming debt-free (a huge accomplishment), it is also a good time to double down on the money moves you make to ensure you won’t fall into debt again and can grow your net worth.

In this article, we will go over five ways for you to stay debt-free:

Keep Budgeting

As soon as you become debt-free, it can be easy to stop worrying about your spending and budgeting.

Some people may consider completely stopping budgeting altogether. You may want to reconsider if that’s the case— using budgeting tools to manage your money is an important step to take to prevent yourself from getting back in debt.

Budgeting tools also allow you to stay on track for major financial goals such as buying a home, track your net worth, manage your finances, saving for your next vacation and saving for your retirement.

Build Your Emergency Fund

Once you are debt-free, creating an emergency fund is a top priority. Building an emergency fund ensures against life’s unexpected expenses.

Financial advisors swear by an emergency fund of three to six months of living expenses and stand by it for financial stability. If you are having trouble streamlining the process of building up an emergency fund then remember to start small, trim down your expenses, use a different savings account, or consider a gig job.

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Review Your Insurance Coverage

Becoming debt-free means you’ll have some additional spending money. When you are in debt you may have been scraping by with the minimums on your insurance coverage, but now that you have some money freed up from debt obligations, you can look to protect yourself and your family by adding coverage.

For example, if you were looking to get life insurance in the past, now is the time to do so especially to add security in the senior years of your life. It’s no secret that dental, medical, and health insurance coverage is important too.

Identify Damaging Habits

Lastly, spend some time figuring your spending and saving habits to see what led to you becoming in debt in the first place.

If it was due to an unforeseen emergency, take some time to build your savings. If it was the result of overspending, adjust your budget and ways to find new ways to save money.

Conclusion

As always, staying on top of your finances can help you stay debt-free and allow you to focus on the future. Now that you aren’t chained to debt, you can completely lift your head and focus on what is best for you and your family. Just remember to keep budgeting, build an emergency fund, increase your retirement contributions, and review your insurance coverage.

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