Life After Debt: When You Stop Paying Down Balances and Start Building Wealth

November 2, 2016
Eric Roberge

start building wealth once you pay off debt

When you can gain control over your cash flow and start aggressively paying down loans, you know it’s only a matter of time before you’ll reach debt freedom.

It’s thrilling to know that once your debt is gone, you can put all that money toward building wealth rather than just repaying what you owe. You’re more empowered with your money and in control of what you can accomplish in your life.

But once you succeed at knocking out that debt and it’s time to actually do what’s next, some of that excitement can fade. It’s not because paying off debt is a bad thing, but because it forces you to start asking new questions.

That can be intimidating and overwhelming. Figuring out where to go from here isn’t easy.

What’s Next in Life After Debt?

Your debt can start to feel like it’s a part of you. Deal with it long enough and it feels like part of your identity.

You may hate it, you may wish it was gone, you may blame it for all your money stress and anxiety.. but it’s part of your life and it’s familiar.

Debt can hang around for so long that you forget about a time when you didn’t have it. But if you stay dedicated to your goal, eventually it will be gone.

The next question that comes up once you hit a major milestone like debt freedom is simple but extremely important: “Now what?” How do you choose what to do with your extra money?

Choosing What’s Next After a Big Financial Milestone

Once you achieve a goal like paying off debt, it’s time to decide what’s next. You have a few options when deciding what you’ll do now:

  1. You can allow lifestyle creep to set in and eat up that extra money that’s no longer going toward debt repayment.
  2. You can immediately take the money that was going toward debt and begin to invest it for the future.
  3. You can relax a bit and do some financial spring cleaning.

Hopefully, option 1 doesn’t tempt you at all. Lifestyle creep is the biggest thing that will stop you from building wealth.

Option 2 may sound like the smartest thing to do, especially if you want to build wealth now that you’re finally out of debt. And while this is a good long-term goal, it may not be your immediate next step.

Instead, think about choosing option 3 first.

Take a Break to Review Your Financial Life

After paying off debt, take a moment to recognize that you just accomplished a huge goal. Celebrate a bit!

A perfect way to do this is to take a month’s worth of your prior debt repayment amount and put it toward a fun night out or a nice weekend away.

This is not irresponsible. It’s thanking yourself for a job well-done. I always encourage and help my clients to celebrate wins in a financially savvy way so they can truly enjoy the progress they’ve made.

Next, take time to refresh your priorities. You can cross out the debt repayment goal and take a look at what’s next on your financial goals list.

The funny thing is that you may not feel compelled to achieve the next few things you wrote down when you first made that list, before you reached debt freedom.

Have Your Priorities Changed?

Paying off debt has an amazing way of allowing you to see your priorities more clearly. You may feel like it’s time to start a family, or finally take a leap and quit your job to freelance instead.

Or you might find that it’s finally time to bump your retirement savings up to 12-15% per year. (Side note: If you start in your 20s, your goal should be somewhere between 12-15% per year. If you start in your 30s, you may want to shoot for 20%.)

Maybe you already bought the home you wanted while you were paying down your debt, and that new car doesn’t sound all that important anymore.

As life changes and time goes on, so do our goals for building wealth. And that’s okay. We just need to recognize that when it happens.

So what do you do with your money? Claim your free 30-minute strategy session and see if working together to create a customized financial plan can help you live the life you really want.

Now Is the Time to Start Building Wealth

Once you revaluate your priorities and take a break from driving toward a financial goal 24/7 (and celebrate that initial win!) it’s time to think about getting back into action.What if you set up a “grow wealth” account? This term is far from technical, but it does get to the point.

What if you set up a “grow wealth” account? This term is far from technical, but it does get to the point.

You don’t always have to have a specific goal for your money. It may be that you simply want to continue to save so that you have the flexibility to choose a new goal down the road.

You’re already in the habit of tracking and keeping extra spending in check. Now, all you have to do is divert some cash from your checking to an online savings account (some options are Capital One 360, Alley Bank or Simple Bank), or stash it directly into an investment account to grow it for the future.

And truly, that’s enough to get you started. That’s all you need, so don’t let anything else hold you back or stop you from getting into action.

You don’t always need a specific goal tied to your money saving activities. It feels great to turn that corner and begin to build true wealth.

Remember, the more money you have, the more financial freedom you can build for yourself. Growing your money can provide flexibility for a time in the future that has yet to be envisioned.

More money, more choices!

Create a Process for Your Money.

Do more with your money! Get a free copy of my eBook to learn how you can create and implement a financial strategy to enjoy today and still plan responsibly for tomorrow.