Having financial targets after debt freedom is the best way to start your new life. Having paid off your consolidated debts is one of the best feelings in the world. It gives you a sense of accomplishment. It makes you feel like you can do anything.
Well, this is true. You can do anything as long as you have the will and motivation to do it. And making new plans while you are still feeling high about your success is the best way to go. It makes you more ambitious as you aim to improve your finances significantly.
When it comes to financial improvements, you are not alone. A survey revealed that 51% of consumers are focused on paying down their debts this year while 53% have every intention to save more. Both of these are direct ways to improve your personal finances. If you can do both simultaneously, the growth of your finances will be quick.
However, not everyone has the finances to accommodate both. This means they are forced to work on one goal at a time. That is okay. You just have to keep on doing what you did while you were paying off your debts. But this time, instead of focusing on your debt payments, you will be prioritizing something else. Continue working hard so you can start reaching new financial targets. These will help strengthen your financial future.
How to reach financial targets after debt consolidation
Right now, you are probably itching to celebrate your new-found debt freedom. But hold off your celebration for now. You will have your reward but you need to consider some things first. You have to consider the financial targets that you should be working on. Only after you have determined this should you allow yourself to think about your just reward.
So what can you do to set your financial targets after you have paid off your debts?
Make a list of all your goals
Start by making a list of all your goals. Ask yourself, now that you have paid off your debts, what do you want to achieve next? Do you want to buy your own house? You need to start saving for a down payment. Do you want to buy a more fuel-efficient car? This will help you save more money as a car owner. Since vehicles depreciate over time, it is best for you to buy this in cash. That can be your next financial goal.
The important thing is to identify what your next target will be. When you write it down, you develop a sense of accountability. It feels more real when compared to simply thinking about it. If you have a lot of financial targets, write them all down. Indicate the timeline by which you want these targets to be accomplished. Then you can create specific plans to reach each one.
Keep living below your means
Once you have the list of your financial goals, you need to keep living below your means. This should be easier because you already cut back on household spending to support your debt relief program. You can pull back a little to ease the strain. But keep living below what you earn each month. Use the extra money to start working on your financial targets. Choose your priority target and focus on that. Once you have done that, you can go on to the next financial goal.
Continue your side gigs
You can also reach your financial targets faster if you increase your income. Did you use a side a gig to help you earn more money for your debt consolidation payments? Why don’t you continue that? The more money you earn, the more you can contribute towards your financial goals. If you were saving for your new house, you can reach your target amount faster. Reaching your goals faster means you can go on to the next target that will take your personal net worth to the next level.
Focus on your progress
Finally, you should focus on your progress rather than the journey that you have to complete. It is just like trying to pay off your debts. Do not focus on the amount that you have to pay. Instead, keep your eyes on what you have already paid off. It will motivate you to keep going. Sometimes, knowing what you are capable of can fuel your drive to meet your financial targets. You can tell yourself that you have already come so far. You can keep going.
Staying out of debt to reach financial targets
Trying to reach financial goals is not an easy feat. It becomes harder if you also have debts to pay off. This is why most people have to wait to achieve debt freedom until they can freely pursue their financial targets.
In one report, almost 6 out of 10 Americans said that their debts can keep them from reaching their financial goals in 2020. So if you are in a position wherein you can pursue your goals because you have paid off your debts, keep it that way! Try to stay out of debt so your dreams will not be compromised.
Here are other reasons why you should make an effort to be cautious of using debt while you are pursuing your financial goals.
Secures your extra money
First of all, it secures the money that is meant for your financial targets. Instead of using your extra money to pay your creditors and lenders, you can use it to improve your financial position. When it comes to spending money, you will feel better knowing that your income is not being used to make your creditors richer. Instead, you are using it to make your own financial future better.
Keeps you from paying the interest rate
What makes debt a hindrance to your financial targets are the interest rates that you have to pay. This is especially true if you have high-interest credit card debts. It can really take up a huge part of your monthly budget. So if it is not needed, keep yourself from using your credit cards – or applying for a new loan. The only exception is if the debt can help you achieve your goals – like a mortgage, etc. But even so, you need to make sure you can keep the interest rate as low as possible.
Makes you creative
When you are forced to keep your use of credit down, you end being more creative. Instead of using your credit card to buy clothes, you can come up with new ways to revamp your old wardrobe. If your family wants to go on a vacation, think of ways you can do that without having to borrow money.
The truth is, it is not required to completely stay out of debt if you want to reach your financial targets. However, it is very important for you to learn how to use debt properly. As mentioned, if it will help you reach your goals, then go ahead. But be prepared with a repayment plan. If you want to use your credit cards, make sure you can pay it in full when the billing statement comes. That way, you can keep yourself from paying the high-interest rate.