How to Stay Debt Free After You Have Paid Off Your Credit Cards or Other Debt

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How To Stay Debt Free After You’ve Paid Off Your Credit Cards or Other Debt

How to stay debt free after you've paid off debt
How to stay debt free after you’ve paid off debt

Have you recently paid off your credit cards and want to know the next step to take, to keep them paid off?


Many people pay off their credit cards, to only fall back into credit card debt because they haven’t taken the next necessary step to keeping them paid off.

Create an Emergency Fund

The next step is to start building up an emergency fund. Then when those rainy days do happen, you have a nice cushion that can take care of it, instead of needing to throw it on your credit card, throwing you back into credit card debt.

Things That Can Happen and Why it is so Important to Have an Emergency Fund:

  • Loss of income or loss of job
  • A decrease in income or salary
  • Health problem/disability/insufficient insurance coverage
  • Large vehicle repairs
  • Home repairs ex: your furnace going in the middle of winter or other large appliances quitting
  • Computer crashing
  • Unexpected large bill in the mail
  • Tax re-assessment and now owing government immediately
  • Family member needing to move in and the associated costs, energy and time

When people don’t have emergency funds, that is when they are easily thrown into debt or into further debt because they didn’t have that immediate “cushion.”

When you are first building up your emergency fund you should set a goal of having $1000 in it. Once you have achieved that, what is recommended is to have it cover 3-6 months of living expenses so then if you were to lose your job, have a health problem, etc. then you would have a little bit of time to try and sort things out and be able to make your payments and have money to live off of.

Aim to have $1000 in your emergency fund and then continue to increase it from there, even if you can only put $25 a month into it, that is a start and a great habit to build upon. It is important that you keep putting money into your emergency fund once you’ve hit that $1000 mark and don’t get caught up in finally having your credit cards paid off, that you decide to purchase other things that you want, because many things can happen very quickly that the $1000 won’t fully cover. Focus on growing your emergency fund to 3-6 months worth of monthly expenses, you will not regret it!


Click here to download my Realistic Budget template! 

How to Keep Up the Momentum With Growing Your Emergency Fund

Know your “why” and know it well. The more you remember why you are doing what you are doing, the easier it is to do it. Just focusing on your finances and reducing your expenses to reduce them, isn’t very empowering and won’t encourage you to stay the course when you see things that you want. What will keep you focused on building your emergency fund to a sizeable amount that really supports you and helps you to remain debt free, is seeing the bigger picture of why you are doing it. Whether that be to keep your stress levels reduced, your anxiety around money to be less and almost non existent, to not have to pay someone else high interest rates because you had to put a large expense on your credit card because you didn’t have a big enough emergency fund, to be able to go on vacation and actually enjoy it because you know it didn’t cost you hundreds more in interest, etc.

Knowing the real underlying reasons of why you are going to keep focused on building that emergency fund, is what is going to get you through on those days when you don’t want to stay the course. It makes it so it is easier to align your actions and daily habits with what you truly value most in the long run and not what you want right now or what you want impulsively.

How Your Anxiety is Affected by Your Money

How to Have More Money to Put Into Your Emergency Fund

  • Sell items you aren’t using in your home that are just taking up space.
  • Switch to a no-fee bank and use the money that you were paying in banking fees, to put towards your emergency fund automatically.
  • Plan out what you are going to eat for the week so you can save money on groceries and have more to put towards your emergency fund. Check out my post, 11 Ways to Save Money on Groceries.
  • Eat out 1x less eat week and put that into your fund.
  • Have 1-3% come off of your cheque from your employer automatically that goes directly into an account that is only to be used for emergencies.


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Be Firm on What Constitutes an “Emergency”

To make sure you aren’t taking money out of your emergency fund, make sure you are firm on what that money can be taken out for. Emergencies do not include a vacation that you feel you’ve wanted to go on forever, it doesn’t count to rebuild your wardrobe you’ve hated forever, it doesn’t count for gifts for someone or for yourself. The money in your emergency fund is for unexpected vehicle repairs, loss of income/job, reduction in income, unexpected home repairs/appliances, unexpected bills in the mail, etc.

Make sure if you have a significant other, they are on the same page with you for understanding the significance and importance of building your emergency fund. Also make sure that you both are in agreeance with what defines an emergency and when that money is allowed to be used. Your finances are like a marriage or relationship, the better the communication, the more it is going to thrive. So the more you communicate with your spouse/significant other about your money and managing it, the more successful you are going to be with your finances.

Are you ready to have all of your debt paid off and feel the freedom of not owing anyone else any money? Click here for my free 4 Steps to Pay Off Your Credit Card Debt E-book.

Click here to download my Realistic Budget template! 

Frequently Asked Questions about Financial Coaching

Want to find out where you really stand financially? Click “Cash Flow Confidence” Program.


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