So… you have, or are about to, pay off your credit card.

What happens now?


Pay off other debts.

If you owe on your car, student loans, mortgage, or whatever… keep the momentum going! The best part is that you’ve just freed up some cash to pay them off.

Prioritize your loans according from highest interest rate to lowest, and knock them out for good.

Do NOT close out this card!

Your credit score is based on many factors, but one of the most major is your “credit utilization”. Lenders, and credit bureaus, like to see that you CAN handle high credit limits, but don’t NEED to use them.

In other words, having a $1,000 line of credit with a $0 balance is better than having a closed line of credit.

If you leave it open, it shows the world that you have access to this money, are capable of paying it back, but you are also responsible enough to not even have to use it. If you close this line of credit, the easy “good credit gravy train” stops right there. End of the road.

However… if you think you will be tempted, cut up this credit card and forget about it.

Need to know more about what affects your credit score?

Check out THIS ARTICLE from last month.

Continue to use the credit card…responsibility.

If you know, for sure, that you’ve got a handle on responsible credit card usage, feel free to keep using this card. If you make a few purchases and pay them off in full by the end of the month, your credit score will stay strong.

Keeping strong credit is crucial if you want more favorable terms for other loans in the future, as well as being able to score low rates on car insurance, secure utilities without deposits, and many other “life” events.

If you are looking for a trick to paying off your debts in the fastest way possible, while saving the most money, check out THIS debt avalanche calculator, and read all about the debt avalanche method HERE. This is what I am doing to pay off my house in a little over 6 years.

Save for emergencies.

If you don’t have an emergency fund saved up, start saving. You need to aim for at least $1,000…but I suggest eventually save for 3-6 months of expenses (bills/spending). This will protect yourself, and your family, from getting right back into debt the second something unexpected happens.

In the last 90 days, I had to buy a new refrigerator, a new car battery, and pay for my husband’s wisdom teeth to be removed. Seriously. Life happens, and the emergency fund saved mine.

Save for a big purchase.

Want to buy a house? Need a new car? Most people have something that they want to buy in the future. The only thing better than low-interest loans…is paying CASH. So, save it and write a check instead.

Save for retirement.

Either you die young, or you live long enough to reach retirement age. If you’re like me (mid-twenties), it may feel a little silly to save for something that is literally decades away, but we’re in the absolute BEST time to do it. We can contribute a small amount for many decades and take advantage of thousands of dollars in compound interest gains over this time.

Need to know where to start with your retirement? Here's some tips.

Match your employer’s 401k. Most companies offer a 401k match of some form. For example, if your employer matches 50% up to 6%, you need to be contributing 6% of your paycheck. Why? Your employer will add 3% to your 6%–which is an instant 50% return on investment. It’s taxfree, and an easy way to give yourself a few thousand dollar raise per year.

IRA’s. Individual Retirement Accounts are opened at a broker or your financial institution, and not by an employer. As of 2017, you are allowed to contribute up to $5,500 per year, or $6,500 if you’re above 50 years of age. IRA’s come with great tax advantages, so be sure to consult with an expert if you’re interested.

Max out the 401k. You’re allowed to contribute $17,500 per year (23k if you’re 50+) tax free, so if you have money left over…put it to work! I’ll say again, this is tax free money…so not only will you earn thousands of dollars, you will also owe less in taxes.