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HomeBlog Debt ReliefYou’ve Paid off All That Debt … So Now What?
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You’ve Paid off All That Debt … So Now What?

September 21, 2015 by National Debt Relief

Woman working on couponsThere are few things in life that feel better than paying off that last debt. It took time and patience and there were probably days when you felt it was a hopeless task. But you persevered. Maybe you even had to take on a second job but hallelujah! You’re finally totally debt free.

We say congratulations! You fought the good fight and you won. There’ll be no more phone calls from creditors. And no more lying in bed nights wondering how you’ll ever get your debts paid off. Just imagine. Every cent you earn is now all yours. Want to take a weekend trip to the mountains or beach? No problem. Feel like meeting your friends for drinks and dinner? Hey, why not? You can afford it … finally.

But what comes next now that you’ve paid off your debt and freed yourself from that awful burden? Here are some things to do to make sure you’re never ever in debt again.

Understand what got you into debt

If you’re not careful you could fall back into those habits that got you in trouble. This is why it’s important that before you decide to take off for that fun weekend or make other changes in your behavior that you take the time to think and understand why you got into debt to begin with. The answer might be simple like because of student loans. Or it may not be that easy. Stop and think about how you approach your personal finances and how your friends and experiences shape your attitude towards money.

What were the behaviors or choices that lead you into so much debt? If you can identify them it’s likely you’ll see some patterns. Maybe you never got around to paying off your credit cards on time so that you fell victim to the power of compounding interest. Or maybe you bought clothes you knew you really couldn’t afford because you wanted to look good to your friends. According to a study published on AICPA.org, Millennials tend to rely on the financial habits of their peers to define their own. The important thing is to develop a good understanding of how you think about money as this can help keep you from falling back into debt.

Budgeting is now more important than ever

We assume you had a monthly budget that helped you get out of debt. It’s now critical to develop a new one. You’re going to now have more discretionary income than ever before and you need to have a plan for how you’ll spend and save it. Having a budget will prevent you from falling back into those old habits especially now that you have discretionary income that could tempt you into spending on unnecessary stuff. You’re used to paying your creditors and now you should pay yourself. Consider saving at least 20% percent of your disposable income. Make saving money nonnegotiable and as important as it was to get out of debt.

Make new goals

Now that you no longer need to worry about paying off your debt and have committed to saving money you need to next determine what you are saving money for. One good way to do this is by thinking in terms of short, medium and long-term goals.

For example, a good short-term goal would be to build an emergency fund. According to an article published on Forbes.com, 6 out of 10 Americans do not even have $500 to cover an emergency. If they run into a financial emergency such as a serious illness or unemployment their only alternative is to rack up debt. If you have an emergency fund you will be protected from sudden unemployment, if your car were to break down or some other big, unexpected expense. You should try to save the equivalent of six months of your net income, which would then give you enough money to get through a bad stretch without having to take out loans. If the idea of saving six months of your net income seems unattainable try to save at least three months worth. But also be sure to pay off your credit card bills at the end of each month so that you don’t begin running up unnecessary interest that could get you back into trouble. Plus, this is money that should be going into your emergency fund.

woman on a hammockThink about a medium-term goal

Have you always wanted to take a tour of Costa Rica, visit Paris or buy a home? Whatever it is you’ve always wanted to do could be your medium-term goal. Once you have an emergency fund. begin saving money to fulfill that goal. Maybe you won’t achieve it next year or even the year after but when you have a goal like this you’ll be able to see every month that you’re coming closer and closer to realizing it.

 What’s your long-term goal?

If you want to retire at a decent age it’s important to get your retirement fund going, which might be your long-term goal. If your company has a 401(k)plan that’s a great place to start – especially if it provides matching funds. You should try to contribute the maximum amount and when your employer matches your contributions that are basically free money. You should be able to have your deductions automatically taken out of your paycheck, which makes things simple and the money you then don’t see is money you won’t miss.

If you’re self-employed or if your employer does not offer a 401(k) plan you should start an IRA. If you choose a standard IRA your contributions are called pre-tax income because they won’t be taxed. However, you will have to pay taxes on the money when you begin withdrawing it but that will be many years in the future.

An alternative to this would be to open a Roth IRA. This is the reverse of a standard IRA in that the money you contribute to it will be taxed but then tax-free when you withdraw it. There are pros and cons to both these plans and it’s important to understand what they are. Discount brokerages such as Charles Schwab are good places to start an IRA and you should be able to get some good advice as to which type would be best for you. Whichever plan you choose try to set up a monthly draft payment system. This would be similar to a 401(k) as your contributions would be automatically taken out of your paycheck and deposited in your brokerage account.

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National Debt Relief is one of the largest and best-rated debt settlement companies in the country. In addition to providing excellent, 5-star services to our clients, we also focus on educating consumers across America on how to best manage their money. Our posts cover topics around personal finance, saving tips, and much more. We’ve served thousands of clients, settled over $1 billion in consumer debt, and our services have been featured on sites like NerdWallet, Mashable, HuffPost, and Glamour.

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Easy National Debt Relief Caller: April Transcribed WE 1/17/2021 April: Our call may get recorded. What financial concerns had led you to seek out National Debt Relief's services? RILEY: I guess just not being able to pay my debt. April: What had you choose National Debt Relief over other companies that provide the same service? RILEY: Really just researching online. Everything that I had read about them seemed pretty positive. April: What service or program did National Debt Relief help you to get through? Like a payment or consolidation program, anything like that? RILEY: I just do bi-monthly payment to them, and then they reach out to my debt account, I guess, that negotiated everything for me. So, it’s pretty easy. April: Can you walk me through the process of what you went through to enroll for the services? RILEY: God, it's been like two years, so I kinda don't really remember. I just had to fill out some stuff online and then talk to them on the phone. I had to give them all my account information and everything. And then they worked out a payment plan for me. And they communicate with me like once a month with my statement. And whenever they have communication with my accounts, they have called me and had me verify before they've done anything and whatnot. April: That sounds like a really good service there. RILEY: Yeah. April: At this point, are you still in the program or have you completed it at this point? RILEY: I'm almost done. It was, I think, a two-year plan. So, yeah, I think I just have one other account that I'm paying on. April: How about any interactions with the negotiators? You said they will call you at any time that there was maybe an account activity that they want to confirm with you first. RILEY: Uh-huh [yes]. April: So, how is the interaction with them when they reach out to you and you're able to discuss with them? How is that interaction? RILEY: It's been super easy and positive for me and relieves a lot of stress and anxiety. So, yeah, it’s been very easy. April: And then how has National Debt Relief been able to work with you in terms of your payment plan? RILEY: I basically just told them what I could afford, and they figured it out. And they have offered COVID relief if I need to stop payment for the time being or whatever. Fortunately, I haven't had to do that. So, I don't really know how that would have worked, but that was an option. But they're always like, “Call us if you can't make payment, and we'll figure something out for you.” April: What are your thoughts about the cost in relation to the quality of the service you received? RILEY: I'm really happy with the program. [unclear 0:04:22] as far as I know. I don't have any complaints. April: Has working with National Debt Relief impacted your life? RILEY: Yeah. April: How would you say that it's impacted your life at this point? RILEY: It just has relieved a ton of pressure and stress, financial stress, anxiety. I'm not living paycheck to paycheck now to pay my interest, so that’s been nice. April: Have you had other experiences to National Debt Relief that perhaps you want to share with us in regards to your experience with them? RILEY: No. I think that’s it. April: On a scale of 1 to 5, where would you rate National Debt Relief, if 5 stars is that you recommend to your friends and 1 star is you're very dissatisfied? RILEY: I would say 5. April: In a few words, how would you summarize overall the National Debt Relief in your experience with them? RILEY: Just easy and stress-free. April: Would it be okay for us to also utilize your commentary as a review that we can publish for National Debt Relief? And that would go to public webpage here, but that's to help other consumers make good choices if they're also in the same market. RILEY: I guess. Would it have my first and last name? I don’t— April: Only the first name. And if that's an issue, we do the first letter. RILEY: [unclear 0:06:03] you want my full name. April: Not at all. So, we only do the first name as an option. We can also do the first letter. So, it's really up to you on which option you prefer. But just the first name. We don't do last name. We don't post anything personal like your phone number. RILEY: Yeah. I think you can use my first name. April: I do offer a link that we can also send you with a direct link to your review. So, once it's published, you also get to see directly. Is that something you would like to have sent to your email? RILEY: No.

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Riley Barker
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