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As I mentioned a few weeks ago, I have been debt free for two years. After two years of enjoying life - debt free -I can state, without hesitation, that deciding to get out debt was the smartest decision I have ever made. I cannot explain how different my life is now. Instead of worrying about interest rates or late payments, I can enjoy the process of saving money and planning for the future.

Clearly, getting out of debt was a big deal. But, my goal is to live without borrowing money. To that end, I have been working my way through the following list of -

10 Things To Do After You Get Out Of Debt

I created this list almost three years ago, while I was still getting out of debt, and I have modified it, several times, since then, adding new goals as my financial situation changed. These are the steps that I am taking (or plan to take) to ensure my family’s financial well-being. I will list the step and underneath each step, I’ll indicate my own progress.

  1. Fully-fund an emergency fund with enough money to cover 6 months worth of necessary expenses.
    • Shortly after getting out of debt, I accomplished this step. Since that time, I dipped into my emergency fund to purchase an automobile. I am currently rebuilding a portion of my emergency fund. I have also begun to refer to this portion of my savings as non-retirement savings.
  2. Learn more about available retirement options. Consider pre-tax and after-tax retirement options. Understand the account benefits / restrictions.
    • I have chosen to fully-fund a 403b account, a Roth IRA, and partially fund a SEP-IRA account. My wife fully-funds her pension plan and a Roth IRA. The amount that you can contribute to a retirement account will be limited by the amount of money you make and the amount of monthly necessary expenses you have. For me, funding retirement accounts is a ‘must’.
  3. Learn more about investing - mutual funds, exchange traded funds, stocks bonds, etc.
    • While I only have a rudimentary understanding of the stock market and how it works, I have decided to stick with low-cost, index-based mutual funds and ETFs. I read several books and websites about investing. Right now, I am working to build up the funds in my retirement accounts and I am ‘keeping things simple’. Perhaps, one day, I will broaden my basket of investments, but for now, I am satisfied with the mutual funds and ETFs that I own.
  4. Learn more about college savings options.
    • My wife and I have two children (with a third on the way) and I am working very hard to fully-fund three Education Savings Accounts. I am also learning more about 529 plans and other options for college funding.
  5. Create a will and other end of life documents to ensure the safety and security of my wife and kids, should something happen to me.
    • I have a will and my wife does, too. I still need to work on some other end-of-life documents and learn more about this particular subject.
  6. Increase term life insurance coverage to an amount that will adequately support my wife and kids, should something happen to me. Do the same for my wife, should something happen to her.
    • My wife and I both have term life coverage - but we need to increase our coverage amount. At present, we both have about 6 times our annual income in term life coverage, but we would like to have about 12 times. I will revisit this issue next October, when our policies are due to be updated.
  7. Organize my financial documents. Create a system that I will actually use.
    • I have created my own, very simple, system for organizing and storing my documents. I still need to invest in a safe / safe-deposit box. For now, I keep copies of important documents in two locations.
  8. Create and maintain and easy-to-use financial inventory for my spouse.
  9. Learn more about taxes and how to minimize my tax liability.
    • I have yet to understand our arcane tax system, but I have learned that I can reduce my tax burden by increasing my pre-tax retirement contributions. Also, I have done my very best to understand effective tax rates.
  10. Find creative ways to earn extra income and become financial independent.
    • I have figured out how to monetize my various websites, I enjoy selling items for profit, and I am working hard to make myself an irreplaceable worker. Every day, I move towards financial independence, and every day, I am reminded of both how far I have come and how far I have to go!

Clearly, this isn’t an exhaustive list, but its the list that I’m working through at this time. I want to encourage you to create a list of your own. If you can’t think of your own list - that’s cool - use mine!

If you have steps / goals that I haven’t listed, feel free to leave a comment and share. Combining our knowledge and dreams, we all move forward.