We’ve reached the home stretch! We understand that you likely stumbled across this guide because you were struggling with existing debt, but we also want to leave you with a plan that will prevent you from sliding back into debt in the future. So before we let you go, let’s recap:
- Create and Follow a Budget: This is honestly the most important step out of this entire guide. Without a budget you’re just relying on blind luck when allocating your money to purchases, investments, and luxuries. We understand that budgeting seems overwhelming at first, but with the tools we’ve outlined in this guide it will very quickly become second nature.
- Build an Emergency Fund: Even the most stringent budget can’t save you from an unexpected emergency. Follow our section on Building an Emergency Fund to prepare yourself for the worst. (Hint: include regular contributions to your emergency fund in your monthly budget. Ta-da! Two birds with one stone.)
- Don’t Be Afraid of Borrowing Money: We know that borrowing is the last thing you want to do after paying off a large debt balance, but sometimes life happens. Once your credit score has recovered from any financial missteps in your past, we recommend applying for a low interest credit card for emergency situations. This should not replace an established cash emergency fund, but should simply supplement it.
- Save, Save, Save: Once you find yourself in a more stable financial situation, you can start planning for the future. Begin contributing to a 401k or IRA as soon as possible, and be sure to investigate what kind of matching your employer might offer.
- Most Importantly: Don’t let money continue to be a black cloud over your life. Yes, you might have made some financial mistakes in the past, but you are clearly working to correct these and move forward with your life. As long as your are following your budget and saving for the future, don’t restrict yourself from the basic luxuries of life like enjoying a weekend away or a new outfit. Money is to be managed responsibly, but that doesn’t mean it can’t still be enjoyed.