You’ve Paid Off Your Debts, What Do You Do With All that Available Cash?


When you begin the process of paying off your debts, it can seem like a long one. Whether it takes you 12 months or 12 years, the process of spending every last available dime you have to pay off debts you incurred in the past is a big deal. It goes by so much faster than you might imagine, and you might find yourself pleasantly surprised to realize that you’ve just paid off your debts and now have a significant increase in your disposable income. Putting aside every penny to your debts is a habit you get used to, and it might come as a bit of a shock when you no longer have to write those debt payoff checks each month.

So, what do you do with all that money you were paying off your debts with? The answer is simple; you find somewhere else to allocate those finds. First and foremost, however, let me give you the permission you might be looking for to go out and have some fun. Treat yourself to a spa day or a date night or something else that you can really enjoy and reward yourself with. You really do deserve it, you know. It’s not easy to pay off all your debt and change your life like that.

Now that you have paid it all off and you have additional funds each month with which to use in some other way, what do you do with it? Before you get back into making poor decisions, let us provide you with a few suggestions as to what you might do with those funds. We think some of them might be particularly interesting.

Add to savings

Do you have a savings account? It doesn’t actually matter if you do or not; you need one and you need to add to the one you already have. Take half that money and put it into that account. You will thank yourself for this, and you won’t miss the money since it was going toward credit cards and other debts for so long, anyway. Save it – half of it.

Create an emergency fund

You should already have one of these with at least $1,000 in it. However, if you don’t, now is a good time to go ahead and create this account. Once you have this much in it, don’t stop. We like to say $1,000 is the minimum you should have in this account, but we prefer you have 6 months to one year worth of savings in this account; and not just any savings. This should be an account with a full year worth of living expenses so that you are covered in case anything happens to you or your job at any point.

Max out your retirement

Do you have a 401(k) at work your employer contributes to? If you do, max that baby out. The more you contribute, the more your employer contributes. Let’s say your employer will contribute up to 50% of your retirement contributions; that’s free money. For every $100 you contribute to this account, your employer contributes another $50. That’s big time, and it’s big money. Max it out and get as much as you can from your employer. When it’s time to retire, you’re be a little more appreciative of this decision.

Pay off other things

I love the idea of not stopping at just your credit debts when paying off your debts. I like the idea of also paying off other debts. Do you have a car payment? Put as much money as you have left over each month from your other debts toward that and pay it off as quickly as possible. It’s a nice feeling to drive around in something that belongs to you that you don’t have to pay anyone else for; having that title in your name and in your hands is a great feeling.

You can do the same for your mortgage. Let’s say you were allocating $2,000 per month to your debts. Now you have an additional $2,000 per month you can apply to your mortgage. If your mortgage is only $1,000, you’re paying it off three times as quickly. That means you can pay off a 30-year mortgage three times as quickly. How nice would it be to be mortgage-free in a decade?

Save for a trip

If you spent time working on paying off debts, we know you weren’t traveling. How about taking some time and saving some money for that trip you’ve always dreamt of taking? There is nothing holding you back now, so go ahead and put some money away each month until you meet your goal. Now go on vacation, spend money, live it up and reward yourself for doing something so amazing for so long with all your hard-earned money.

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