NDSU Extension Service - Ramsey County

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Debt Free! Now What?

Debt Free!  Now What?

 

            Congratulations to you!  You paid off your credit card debt, your school loan debt, an auto loan, etc.!  A large debt that had been looming in the background is now history.  Congratulations, you did it!  Once you complete your happy dance, what is next? What should you do with the dollars that were going to pay that debt? Consider the following:

            Increase Your Credit Score – Using your once maxed out credit card but now paying it off in full each month will keep your credit score healthy. This will make it easier for you to obtain credit at favorable terms in the future.           

            Set Up an Emergency Fund - If you don’t have an emergency fund yet, start saving now. Most experts suggest saving between three and 12 months of expenses, depending on various life circumstances. For instance, couples with two stable incomes and no pre-existing health conditions can probably save closer to three months of expenses, while a single parent running a business may want to save 12 months.

             Save for Retirement- Start saving for retirement with a match in your employer sponsored plan or your own IRA.

            Save up for a Large Purchase – New car, new home, vacation of a lifetime –whatever your choice, have a purpose for the money you once committed to paying down debt. It is very easy for money to disappear once it is no longer connected to a particular debt.

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