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I'm Debt Free! - ...Now what?

So you've taken the plunge to eliminate debt in an educated way. You've dedicated hours to reviewing finances and cutting expenses. You stopped going out and drinking designer coffees every morning wondering "when will it end?". It's always nice getting that final email notifying you of your $0 account balance, but now what? 

You've probably noticed it's a little easier to come up with extra money each month, because you're not slowly being eaten away by credit card fees, payments and monthly interest charges. 

You can finally take a deep breath! Below I'll outline a couple great ways to spent that extra money that continues adding to that retirement fund, and also let me know which topic I should dive into further in the comments!

If you're struggling getting to this debt free point, then now is NOT the time to stress and start impulse buying. You're doing great!

Emergency Fund

I know this isn't the most exciting part of becoming debt free, but if you haven't already done so through Dave Ramsey's baby steps setting up an emergency fund account will be the number one thing you need to get going. Why you ask? Everybody has always talked about them, but it just puts my money in an empty pit that doesn't do anything. The point of this account is to STAY debt free. 

Surprise purchases are always right around the corner no matter how careful you are, especially as a new homeowner! Don't get stuck on saving every penny, because it can cost more than thirty thousand dollars to replace the major features of a home and I never recommend having that much standing money. 

I actually recommend the average person stay in the $2,000 to $5,000 range, but do what makes you comfortable within reason. Put those funds in a high yield money market account and leave alone for a rainy day. Once you dip into it dedicate a monthly amount until it's back to your emergency number.

401k and HSA

This is a big step, and a controversial one for myself. I'm listing this first, because most people start as employees in this modern age and most retirement goals start and end at a 401k. HSA accounts are highly versatile pretax funds used to fund medical bills which can be rolled over into a 401k! That is important to keep in mind and makes it easier to dump a larger sum of money into your health savings.

My personal opinion of a 401k is that they should be used sparsely. For me, contribute just enough to hit your employer match and call it quits. For most, this is their discipline and the most likely chance of retiring on-time. Everything I do is about getting to financial independence just a little bit earlier.

If loading up your 401k so you don't see that extra income sitting in your account works for you, do that. Do what works. Contribute that 20-30% and retire comfortably! If you think you can push it further than that, hit your contribution minimum and continue reading. 

This money in your 401k can be used to establish yourself as a "lender" and loan yourself money for your future investments. We won't get into that here, but that is an amazing tool we'll cover in the future so let me know if that's a topic I should cover!

Start a Small Business

You should always be doing something in your free time to work on you and make you happy. Your life is about you and your family, not about someone else. Take that extra money you have each month and use it to buy inventory or get a lease for your dream office space. 

Use this little bit of extra freedom to invest in yourself and your business, or mind your business as Rich Dad would say. Always mind your business. Make sure you keep a little slice of the pie just for your professional development. 

Develop an Online Presence

This can tie into getting your business setup, but doesn't always need to. If there's one thing you do on this list, you need to get online. This is an online world and every single person should have between 1-5 websites that receive traffic each month. 

The reason for this is that it's basically free ad space for your own products. When you finally get to the point of getting your business online you'll have multiple built in avenues for getting your products or services out to people who trust you, and in the mean time you can sell that space to other businesses for a profit. Who doesn't want another stream of income these days? 

If you like taking pictures, start an instagram. If you like reading books, review them online. Maybe you like telling stories, put them on paper and sell them to Amazon. Do something to get your name out there to prepare you for success!

Invest in what you believe

For me that's houses. I love looking at houses, touring houses, buying houses, painting houses and everything in between. I take the proceeds from running a small business and pour that into purchasing investment real estate. 

Everybody will tell you real estate is slow and to stay away, but that's simply not the case. It's the easiest way to leverage other peoples money and change your financial standing in life. In a lot of cases, especially with how the last 10 years have gone people have been able to double the money they invested in the first couple years and that's without doing a single flip. Do the research and find the properties worth having.

Another great option is Index Funds. It's safer more consistent option that can almost guarantee you'll hit your mark. Investing in the market has always been a long time favorite. 

On a separate, but similar note you can invest for Dividends. Careful with this option though as it's taxed as yearly income through the IRS meaning you owe for taxes every year. Investing in regular long term stocks you only need to worry about capital gains tax which can be subverted through your investments.

Long story long, whatever you do be smart about it! There are endless amounts of opportunities to make use of some extra cash in this day and age. My wife is a couponer and uses her extra cash to stock pile inventory. Just do what you love and learn to make money off it, because nobody else is looking out for your new debt free future besides you. Happy Spending! 


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