Between student loan payments, car payments, credit cards, medical expenses and other bills, you may be spending hundreds — or even thousands — of dollars every month paying debt. One day, hopefully, you’ll be debt-free. Have you ever stopped to think about what you’ll do with all of that extra money each month once that day comes?
Paying off debt is a very smart and rewarding task, but it requires a lot of hard work, and can drag on for several years. It’s easy to lose motivation during that process of work, discipline and self-control. So today we want to give you a quick shot of motivation by reminding you about some of the things that you’re working toward as you go through the journey of paying off your debt.
Some of the things that you gain are big and important, while others are fun and indulgent. The truth is that it can take both of these to motivate us. So whichever it is that lights a fire under you, we’re not going to judge.
The Important Stuff
One of the biggest problems with a lifestyle of debt is that it really holds us back from accomplishing many important financial goals. Once you’re finally out of debt, you’ll be able to give each of these things the attention that it deserves:
1) Emergency savings — Having a good emergency fund protects us from the ups-and-downs of life, and keeps us from having to borrow money to pay for unforeseen disasters. Once you’re out of debt, you can use a big chunk of your extra money to build your rainy day savings.
2) Giving — We should all be generous givers at all phases of life. But once you’re out of debt, your ability to give generously becomes super-sized. You can use your extra money to make a big difference in the world around you.
3) Investing — The best way to secure a prosperous future for retirement or your family’s education is to begin saving and investing for it now. Your ability to invest is limited when you’re making debt payments; once you’re out of debt, though, you’ll have the free cash to invest toward becoming a millionaire.
4) Big Purchases — Unless you’re at the end stage of your life, you’ll probably have to make a big purchase — a car or maybe even a house — in the near future. When you’re out of debt, you can use your extra income to save up enough money to buy your next car with cash, or build up a huge down payment for your next house.
The Fun Stuff
In addition to all of those big, important financial goals, getting out of debt can give you some wiggle room in your budget to do fun things as well. While these items shouldn’t become a big part of your spending, they can create big memories for your family.
1) Eating Out — Though restaurant spending can wreck a budget if it’s not carefully controlled, in the proper context it can be a great way to have fun with your spouse, family or friends. A debt-free budget usually has room for a moderate amount of eating out.
2) Travel and Vacation — Some of life’s greatest memories come from traveling with people we love. You probably can’t afford nice vacations while you’re paying off debt; once you’re debt free, reward yourself by saving up some cash to pay for a fun trip.
3) Movies and entertainment — There are myriad ways to get media and entertainment these days, and some of them are more expensive than others. If you live frugally while you’re paying debt, you may be able to afford something like a Netflix subscription or a night out at the theater once you become debt-free.
4) Small Luxuries — We all have some basic needs — like household items, furniture and clothes — that you may be overlooking while you’re paying off debt. Once you’re debt free, you can use some of your extra cash to upgrade to some more luxurious items in these categories.
We hope we’ve given you some inspiration to hang in there and fight your way to debt freedom. So, what will you do with your extra cash once your debts are paid off?
Photo by Jesus Solana. Used under Creative Commons license.