What to do once you’re Debt Free

If you’ve managed to successfully make all your IVA repayments and have been discharged, this article offers advice on what to do next and how to avoid getting into debt again in the future.

Stick to your monthly budget

If you’ve been living with an IVA for 5 years you will be used to budgeting well and this is something you should continue even after your IVA is finished. Many people’s debt problems stem from the fact that they have no idea how much they’re spending every month and are shocked when they find out. Sticking to a monthly budget will help you plan your finances better in the future and make you less likely to turn to loans and credit cards again.

Prepare for any eventuality

None of us have a crystal ball and the last thing you’ll want to do having completed your IVA is to get back into debt through illness or redundancy. It’s a good idea to arrange insurances to cover yourself in the event of an accident/illness or losing your job so that if the worst was to happen you have enough money coming in to cover all your outgoings.

Resist the urge to splash out

Sticking to your IVA agreement for a period of 5 years can be very difficult and when it’s finally over and you’re debt free there can be the temptation to splash out on things that you’ve had to do without, like a family holiday. While this is an understandable reaction it could very easily lead you down the path of borrowing again and before you know it you could be back to square one.

Keep a reminder of how things were before

You may want to forget all about the days when you were worried sick about paying the bills or having to fend off calls from angry creditors, but a reminder can stop you repeating the same mistakes. Many people fall into the debt trap time and time again because they simply forget over time how bad things actually were and think that they can handle it better the second or third time around. Keeping an old credit card statement or letter from your debt company showing how much you owed can act as an incentive to not repeat the same financial mistakes.

Look at the bigger picture

If money is still very tight even after your IVA has finished it’s a good idea to take stock of your situation to see if you can improve it. For example you may be in a job where your salary has barely gone up in the last 5 years and want to look at free training courses to help you progress and earn more money. If you have a family you should also think about the impact being in debt will have on them and their futures. Looking at the bigger picture in terms of your personal finances can also involve things like expensive holidays. For example is 2 weeks abroad really worth it if you have to pay it back with interest over the next 2 or 3 years?

Summary

Being debt free is a fantastic feeling, especially when you’ve put up with all the worry and stress of being in debt for many years. Having a clear plan in place for when your IVA finishes will help you to avoid getting into debt again in the future.