What Do I Do Once I'm Out of Debt and Saving for Retirement?
Once you get out of debt, you may be wondering what comes up next. So many people work on getting out of debt that when it finally happens, they feel a bit lost. It is important to have a solid plan in place as you continue to take control of your finances so that you do not end up back in debt.If you do not have clear plans Here are six areas to continue to focus on.
Out of Debt? Keep Budgeting
You have worked hard and it is tempting to stop worrying about money constantly.
It can be appealing to stop budgeting completely because you finally reached your goal. You may not want to keep worrying about money, but if you stop paying attention to how you are spending your money then you may end up back in debt. It is important to keep budgeting, you may relax how strict you are and increase spending in some categories, but you should not stop budgeting completely.
Out of Debt? Then Start Building Your Emergency Fund
You have reached a point where you are regularly putting money aside for retirement, and you have your emergency fund of about six months of income in place you will need to decide what your next step is. That answer is entirely subjective. It depends on your future goals and plans. If you see yourself married in the future, you may want to save up for that either for the wedding, a ring or the honeymoon. If that goal is too far away, think about trying to pay your home off, so you can move up in home or begin investing more of your money.
Out of Debt? Then Increase Your Retirement Contributions
Many people will slow down their retirement contributions while working on getting out of debt. Now you can work on building those contributions up to about fifteen percent of your income. This should be fairly easy to do, you can do it each time you get a raise.
In addition to investing in your 401(k) you should open up a Roth IRA which will allow you to take your withdrawals tax free once you retire.
Out of Debt? Then Plan for Your Future
Plan for your future. Look at the next step in your life. If you have not purchased a home yet, save up for a down payment. If you have children, do you need to set aside money for their education. If you see yourself enjoying your current job until you retire, you may not need additional training, but if you would like to move up to higher level in your company or try out a new field in a few years, now is the time to get the additional training you need. You do not need to go to school full time to make that happen. Take one or two classes a semester, and pay for the tuition as you go. You can receive the extra certification you need and keep yourself competitive in a changing job market.
Out of Debt? Start Investing
You may want to explore other means of investing. Learn more about mutual funds and the stock market and begin saving outside of your retirement accounts. Real estate is another good option, which provides a steady source of income. The key to be successful with this type of investment is to do it with cash.
That way you will not get in over your head. It may be time for you to focus on building wealth. You can do this through careful planning and steady investing. You should commit to staying out of debt.
Out of Debt? Enjoy Yourself
When you are in your twenties it is a time to enjoy your life. If you have started out by getting out of debt, and contributing to your retirement, it may mean it’s time for you to enjoy where you are right now. Plan out your dream vacation and save up for it and then go. This may mean traveling to Europe or taking a trip or two a year to the Caribbean or being able to take a month off of work to go hiking. You are in a position now to do the things you enjoy the most. Take advantage of it. You worked hard to get here.