You’re Debt Free, Now What? Money Moves That Make Sense

By Aaron Sarentino Reviewed by Minh Tong Updated Dec 26, 2022
You’re Debt Free, Now What? Money Moves That Make Sense

First of all, congratulations on becoming debt free! 

It was probably a long and tedious journey, but you’ve made it! Paying off debt is a marathon, and completing the race definitely calls for a celebration!

The end of a chapter means the beginning of a new one, which begs the question, now what?

Many people prioritize becoming debt-free, but when it finally happens, they feel a bit lost.

Being debt-free does not mean that you are finished with your financial journey. People do many things after going debt-free, but not everyone thinks about them beforehand.

This article will discuss ways to put the resources you once dedicated to debt repayment to good use.

  • Treat Yourself 

One of the first things you can and should do after you’ve become debt-free is to treat yourself. 

Getting to this stage took a lot of sacrifices, dedication, and discipline, so treating yourself in reasonable moderation is an excellent way to start!

Use the funds previously allocated towards debt repayment to buy yourself something special before you make the next financial move. Ideally, this should be a “big ticket” item you’ve always desired, like a new laptop or washing machine.

However, ensure that a little splurging does not send you off into a downward spiral.

  • Refresh Your Financial Plan

When you go debt-free, you will have more money on hand.

It’s our nature as humans to transition to a more comfortable lifestyle when cash flow increases.

Doing so without a plan can, however, develop poor spending habits or lead to potentially reckless financial decisions.

That said, now is the best time to do a complete financial review and reorganize your financial plan. Think about your long-term financial goals and which are a priority.

If you have kids, you should make it a priority to set up a college fund. If you’re not yet a homeowner, you may consider putting down a down payment for a new house. Always wanted to get your Master’s degree? Now’s the time! 

Create a monthly savings plan to help you reach your next financial goal, whatever that is.

  • Build Your Emergency Fund

Starting an emergency fund or bolstering your existing one is another thing you should prioritize after you’ve become debt-free.

Also called a rainy-day fund, this buffer is dedicated explicitly to stopping you from falling into debt when an emergency expense comes knocking. This can be a large medical bill or sudden job loss. 

An emergency fund should ideally be enough to sustain your family’s basic living expenses for 3-6 months. Since there’s no way to determine the cost of a future emergency, the more significant your savings are, the more financially equipped you will be.

  • Increase Your Contributions to Retirement Savings

Another financial move that we highly suggest you should prioritize is building retirement savings.

Many Americans do not plan for retirement until they are already in their retirement years. No matter what age you’re at, retirement will ultimately come, and you should be prepared for it. Now is the perfect time to start saving for retirement.

If you don’t already have a retirement savings plan, this is a great time to create one. Whatever money you were spending on debt payments can now go towards retirement (for instance, maximizing contributions to any retirements accounts you might be eligible for, e.g., a 401(k) retirement plan)

It’s okay to slow down your retirement contributions while working on becoming debt-free. But now that you’ve paid off your debt, you can work on increasing those contributions. Aim to save at least 15 percent of your pre-tax income yearly for retirement.

After ensuring that you’re fully covered for any future eventuality (both bad and good), then you can proceed to create multiple income streams.

  • Create Additional Income Streams

It can be quite daunting to contemplate starting a side business when you’re in debt.

A good way to create a new revenue stream when you are finally debt free is to start that business you’ve always dreamt of.

If you have never thought of opening a business or are unsure about what type of business to open, try to think about things you love and how to turn that passion into some extra cash!

  • Invest Wisely

Now that you are debt-free with a well-funded emergency fund and retirement savings, you can finally start growing your money.

The absolute best way to grow your money is to invest it. Every time you make a new investment, you are allowing your money to earn you more money. 

There are many ways to invest, including stocks, bonds, real estate, mutual funds, and precious metals. Make sure to diversify to reduce your risk.

If you don’t know the first thing about investing, that’s okay. Start small and work your way up. 

If you’re a seasoned investor, consider investment products and options with a higher risk level and earning potential.

  • Protect Your Income 

Reassess your insurance to protect your income.

When it comes to insurance, there’s a whole boatload of choices out there. Life, long-term disability, and homeowner’s insurance policies are a great place to start.

Consider if your coverage needs to expand. Maybe your debt payments affected the coverage you were able to get. 

Not anymore! You will probably want to upgrade your insurance policy now that you can afford it.

  • Make a Will

Without all those extra debt payments, you will have a lot more funds to play with each month. 

Whether you decide to use this money to buy a property or put it into life insurance, we strongly advise you to write a will to protect your assets. 

A will ensures that your property and/or money are kept within your beneficiaries if something happens to you.


Becoming debt-free means that you’ve opened up more avenues for financial growth.

Making the above financial moves after you’ve finally become debt-free can prevent you from careless spending, illogical lifestyle adjustment, or worse, having a false sense of financial security.

Attaining financial security does not happen overnight, but you can get there with some effort. Make sure to start now and your future self will be grateful.


Aaron Sarentino

Aaron oversees executive, administrative and management functions for the firm. Aaron has a Bachelors in Business Administration from Pepperdine University. He is responsible for helping customers at every stage of the debt settlement process and focused on building loyalty to ensure long-term client retention by addressing customer issues. Aaron plays a pivotal role in the upliftment of the Americor team to ensure the best possible customer experience for clients.