If you are close to paying your debts off completely or just recently have, you may be wondering what to do next. It is true that you can start to live a little more comfortably. However, it would not be wise to fritter away all of that extra money in your budget. Here are five suggestions on what to do with the extra money.
1) Begin saving for a great vacation. You have earned it. You worked hard to pay off your debt and made many sacrifices. It is time to reward yourself. It is important that you reward yourself on a cash-only basis. Do not go overboard and land yourself back in debt.
2) Reward yourself by saving for retirement aggressively. This is a very important step. By choosing to save now, you are choosing a comfortable future. Small sacrifices to fully fund your retirement are well worth it. In addition to your 401K at work you may want to look at other investments.
3) If you have children, you should begin saving for their college education. As higher education becomes more expensive, it is important to realize that every penny you save will make a difference. You will also be helping your children gain the necessary skills to compete in the business world.
4) It is important to set up sinking funds and to save three to six months of expenses now. You are free from debt and monthly payments, by planning ahead with these types of savings you can guard yourself from being in debt in the future. You can have a sinking fund for a new car, house repairs, vacation expenses and medical bills. Planning now will save you in the future.
5) Once you have decided how much to put where, relax and enjoy yourself. You have eliminated a great deal of stress in your life, and you deserve to enjoy it. Just don’t go overboard.