This is the final article in a ten part series on how to get out of debt. If you haven’t already, you should check out the previous articles:
- Step 1 – Declare War on Your Debt
- Step 2 – Stop Increasing Your Debt
- Step 3 – Create a Budget & Stick to It
- Step 4 – Find Ways to Cut Back & Earn More
- Step 5 – Build a Starter Emergency Fund
- Step 6 – Make a Plan to Pay Off Your Debt
- Step 7 – Focus on Paying Off Your Debt
- Step 8 – Celebrate Milestones
- Step 9 – Top Off Your Emergency Fund
Step 10 – Don’t Get Trapped Again!
You’ve finally paid off the debts that have been dragging you down. You’ve topped off your emergency fund so you don’t have to rely on credit cards when things go wrong. You feel like you can rest easy. But your journey isn’t quite over.
It’s taken a lot of work to get here. The last thing you want to do is go back to the patterns that got you into debt in the first place! I’ll be the first to congratulate you for reaching your goal, but the true measure of your success will be your ability to continue using the skills you’ve learned in this process. If you get back into overspending and not preparing for emergencies, you’ll have to do this all over again. I don’t think you want to go there.
So to make sure you don’t get trapped by debt again, let’s take a few moments to consider what you’ll need to do to retain this success. My hope is that the process of paying off your debt has changed your habits so that you’ll maintain them for the rest of your life. But you’ll have to keep your eyes open so you never fall into the pits of debt again.
- Limit Your Use of Debt – Debt can be useful for some situations, but using a credit card because you don’t have the money isn’t one of them. Limit your use of debt so that you only consider it as an option when it is wise. Buying a home, getting an education, or starting/expanding a business can be good reasons for using debt (but not always). There may be times when debt appears to be your only option, but make sure it’s your choice of last resort and that you absolutely need whatever it is you’re paying for.
- Continue to Track and Optimize Your Spending – The single best way to make sure you prevent overspending is to keep an eye on what you’re spending and review it regularly. The simple action of tracking your spending will naturally lead you to spend less because you’re consciously thinking about every dollar that leaves your hands. You can also use the information you collect to find the areas where you can cut back on things that aren’t important to you.
- Look for Ways to Earn More – If you’ve been in debt for a while, it’s likely you’re a bit behind on saving for retirement and other financial goals. To catch up you not only need to decrease your spending but you also need to increase your earnings. Combining those strategies will leave you with the money you need to save and reach your goals. Advance your career, earn some money on the side, or start your own business – there are many ways to increase your income.
- Keep Your Emergency Fund Stocked Up – If you have to use your emergency fund, be sure to replenish those savings as soon as possible so you’ll be ready for the next Murphy’s Law event. Also, don’t look at that money as your “spend on anything” fund. It’s there for a purpose. Only use it for that purpose!
- Have a Plan and Save for the Future – You got into debt because you didn’t have a plan. Fail to make a plan now and you’ll probably end up in debt again. Make a plan, choose your goals, and figure out how you’ll get there. Save for those goals so you won’t be tempted to use debt on a whim.
- Learn to Find Contentment – Finally, seek contentment in all things. Comparing ourselves to others, wanting what “they” have, and not being happy with our situation all lead us to living beyond our means. And living beyond our means leads to debt. Discover what’s truly important in your life, eliminate what isn’t, and set your own standards for success and happiness rather than letting others do it for you.
That’s it for this series! As I mentioned in the last part of this series, my plan is to combine these ten steps with some valuable resources to help make getting out of debt achievable and easier. Make sure you’ve signed up for free updates to Provident Planning so you don’t miss out when I release this invaluable package! If you’ve signed up for free updates, you’ll be sure to see it as soon as it’s available.
Have you gotten out of debt and stayed out of debt? How did you do it? What has been key to your success? Let me know in the comments below!