What Happens After you Get out of Debt?

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What happens after you get out of debt? You might be thinking that you can’t even begin to think about that right now. You are doing just well enough to work your budget every month, pay the bills on time, and apply any and all extra money to that debt snowball.

Or perhaps that’s exactly where you are. You have sacrificed and paid the price, you have budgeted each month, you built that initial emergency fund, you cut back on expenses, and you worked extra hours.

And now, that last debt on your list is finally gone. So this coming month will be the first time that your “debt” line item in the budget will have a $0 associated with it.

Congratulations!!! So what happens now? Where do you apply all that energy and focused intensity you used to get out of debt?

Well now you can relax a little but without losing your purpose. There is more work to be done :-).

I like to think about financial wellness, as a journey in three stages that are analogous to the building of a home: laying down a firm foundation, building up your financial household, and letting the trees grow.

Let’s talk about each phase.

1. Laying down a Firm Foundation

Every home needs a great foundation. In terms of our finances, this is the stage where we move from standing in quick sand to higher, firmer ground. This where we get on a budget so we can gain control of our money and where we eliminate our consumer debt.

When this stage is completed, you know where your money is going and you have some savings for emergencies. Peace of mind with your money is now part of your life. You know what else comes with debt freedom? Options! You are in control and you get to decide what happens next, not the creditors.

2. Building up your Financial Household

After the foundation is laid, the frame of the house is added and the different rooms are laid out.

In this stage of your financial wellness journey, you now can focus on adding to the firm foundation, by directing your attention to other elements of the plan. Here the focus is on strengthening your financial position and minimizing risk.

3. Letting the Trees Grow

When a new home is constructed, usually the builder plants a couple of trees in the front yard. Initially they are of course small and fragile, but with time and proper care, the roots grow deep and wide and the trees flourish.

In older neighborhoods you can see strong, tall trees that provide beauty, shade, and a place for kids to climb or for friends to gather.

In terms of your money, you want to go beyond the initial foundation that benefits you and your family today. You want to share the blessings with others around you and with future generations. You want to give extravagantly and you start thinking in terms of the legacy you will leave behind.

Before we go any further, I want to emphasize a point about giving. Even though I see stage 3 as the place where you can give extravagantly, I don’t want you to think that giving should be ignored in the first two stages.

Generosity does not have to be limited by the size of our bank accounts. You can be generous with your time, talents, and your treasure at every point in your journey. The more generous you are, the more blessed you will be. In the words of Anne Frank: “No one has ever become poor by giving”.

Over the next two weeks I will have a mini-blog series, focusing on stages 2 and 3 of our journey towards financial wellness.

Next week, we will focus on stage 2: building up of your financial household. The following week we will shift our attention to stage 3: letting the trees grow.

Hope you will come back next week!

What do you think of the three stages of financial wellness? What stage are you in right now?

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