Now What: Rebuilding Your Finances After You’re Done with Debt

5 New Habits to Start Over After You're Done with DebtPaying off old debts and rebuilding your financial health is a huge accomplishment. Feeling unburdened by past due bills is a great feeling. But, this feeling of relief can often be followed by the thought “Now what?”. You’re out of debt, but you’re still experiencing the aftermath while trying to avoid falling back into the cycle. This can be a delicate time. Rather than falling back into your old habits, take this time to reassess and find new and more effective ways to manage your money.

Start a budget

Your first step when rebuilding your finances is to create a budget. Make this a quick habit you do at least a few times a year (if not monthly). Establishing a plan for how and when you spend your money will keep you from spending beyond your means. A budget will help you visualize your income compared to your expenses. This way, you’ll know how much you can spend without failing to pay any bills or overdrawing any accounts.

Use credit only when necessary

Even if your cards are paid off be careful and very selective when using credit. Use your credit card only for purchases you know you can afford to pay back. Avoid falling back into the habit of using your card even when you don’t have the money to pay it off. You’ll end up back where you started.

Be a little bit frugal

You’ve worked hard and should take the time to enjoy yourself. However, don’t derail your successes. Use this time to adopt some new spending habits to ensure you’re able to pay all your bills and continue rebuilding your financial health. Some easy areas to target include the grocery store, your utilities (like cable) and transportation expenses. Once you make the initial cuts, you new habits will become second nature (and your bank account will thank you!).

Make your payments on time and in full

Now is not the time to miss any payments for any reason. Payment history is the biggest influencer of your credit score. As you work to recover from your experience with debt, focus your efforts on ensuring you make every payment every time. For additional peace of mind (and benefit to your credit score) try to make your payments in full. This will keep your utilization ratio low and keep any debt from accumulating and setting you back where you started.

Increase the amount of money you’re saving

The best way to avoid future problems is to start putting money aside to cover an unexpected expense, emergency or life event. This will allow you to refrain from putting a strain on your credit cards, taking out loans you can’t afford or falling behind on bills again. Though having money left to save may feel impossible, finding any bit of money to put in savings can be a lifesaver. It also allows you to avoid derailing your hard work.

Here are few easy and painless ways to start your emergency fund:

  1. Set aside a few dollars every day. It won’t seem like much but if you stick to this habit, you’ll be amazed at what you’ve accumulated!
  2. Sell your old or unused clothes, furniture, appliances, etc. Put your profits in a savings account. Set aside time to do this a few times a year.
  3. Every time you’re about to make a purchase, ask yourself if you truly need this item. If the answer is no, put the money you planned to use into your savings account.


You may also like...

4 Responses

  1. I love what you guys are up too. Such clever work and reporting!
    Keep up the excellent works guys I’ve added you guys
    to my own blogroll.

  2. Dadu Koprok says:

    Wow, superb weblog structure! How lengthy have you been running a blog for?
    you make running a blog look easy. The whole look of your web site
    is fantastic, let alone the content material!

  3. I wanted to thank you for this very good read!! I
    absolutely loved every little bit of it. I have you saved as a favorite to check out new
    things you post…

  4. Great аrtiⅽle! We ɑre linking to this particularly great article on our website.
    Keep up the good writing.