As counter-intuitive as it sounds to all of us instant-gratification folks, there is actually a big reward for being responsible with your money. Having funds to decide what to do with will make you less desperate, and you will be able to make better decisions. I never understood that and just wanted to buy, spend, do, move quickly. It’s been a very different tone since I’ve paid off my debt. There are a lot more “honest moments” I have with myself. I have to ask myself, “Can I afford buying this at the moment and still pay off my credit card balance in full this month?” Of course, the answer is still usually no, but the difference is that I listen and will resist the temptation to spend. I’ve set up a few paths to make this previously unheard of responsibility possible.

Give Everything Plenty of Time

This is the best lesson I have learned so far. Time is magic. It’s changed the way I look at my day. I prepare for my work day the night before by packing my lunch and my workout bag. That saves me money instead of buying lunch and pushes me to get up and go to the gym before work. Plus, now that I work out in the mornings, it frees up my evenings for reading, hanging out, and whatever else. I give myself time to plan my day and this makes the next day so much better.

You also need to give yourself time to become better off financially. You just paid off debt or bought your first place or some other big financial milestone. That’s awesome! With the debt, you need to give yourself time to start growing your savings. With the house, you need to give yourself time to figure out how much you will now be spending each month, and how to deal with repairs you need, or renovations you want. You can’t do everything at once. Everything is step by step, and as simple as that sounds, if you apply it in your finances, you’ll be surprised at how it can make things more comfortable and achievable.

Be Committed to Staying Out of Debt

Everyone worries about lapsing into old habits. Debt was a habit and I fed that habit for almost 10 years. This month was tough because I had to pay a big credit card bill in order to stay out of debt. But I incurred it, and I am responsible for paying it off. I don’t want to pay any interest on consumer debt ever again. That’s going to be hard because I feel like we have a very spendy lifestyle and our income just doesn’t match it. Oh for now it does, but it’s definitely a squeeze. We need to figure out how to spend less. On gas, eating out, rent, everything. It sucks to say that I still feel squeezed even though I am not paying off debt. But I am saving a lot, so it feels like I am living on less.

Decide on a Certain Percentage of Savings and Keep Growing That Number

Right now I am at just over 31% of my income being automatically saved in investment accounts. My goal is to get that to 40% by the end of the year. I’d love to do it right now, but I may jeopardize my cash flow for everything too much, so I am going to work hard to make it happen by the end of the year.

Do you have any rules that help keep you in line?

You’ve pinched every penny and finally clawed your way out of debt.  It was a struggle but the relief of being debt free makes it worth it.  No more stress, no more worry – you have accomplished much. But now what?  Use your momentum to carry you forward and accomplish the things I have listed below to ensure your financial security for you and your family for generations to come.

Save for Emergencies

Now that your debt is paid off use the money that was going towards the debt and start an emergency fund.  Try to get about 4-6 months of expenses in something very liquid and accessible like a bank account.  I keep my emergency funds in a Money Market Account at Capital One 360, which currently yields 0.75%.  Not bad compared to 0.01% at your local brick-and-mortar bank.  Remember this savings should be in addition to your every day transactional account.  I highly recommend keeping these separate so you don’t accidently overspend and dip into your emergency funds. Having these funds in place will help you avoid getting back into debt when something comes up like a job layoff, a big auto repair or other “emergency.”  It will happen eventually, and if it doesn’t, well, more money for you.

Don’t throw out the Credit Cards Yet

Credit Card debt is one of the worst types of debt with high interest rates and hidden fees.  This debt can be so distressing that many people end up hating the credit card companies. So, when they finally pay off the debt they cut up the offending credit card so that it can never get them into the mess again.

Well, I’m going to tell you something that you may not like (or maybe you have already figured out for yourself).  It wasn’t the credit card companies fault. They didn’t get you into debt it, YOU DID!  So, even if you hate credit cards now, with time I hope you will come to love them, like I do.  You just need to think of the Credit Card as a tool.  And a great tool at that!  One little plastic card can replace all other forms of payment such as cash or checks.  If you lose your cash, it’s gone.  If you lose your credit card you can get a replacement mailed to you within a couple days with the credit card company footing the bill for any fraudulent charges.  But convenience isn’t the only reason to use your card; the best reason is the rewards.  Use your credit card for every purchase as long as you plan to pay it off, on-time, every time.  If you don’t have the money already in your bank account then don’t make the purchase.  Simple as that.

As for the rewards, just go with the cash back.  No need to mess around with gift cards or travel miles – these things only encourage more spending.   Typical cash back card will give you 1% but I have seen cards that provide 2% and even up to 5% on specific purchases.  While 1% doesn’t seem like a lot I can tell you that it can add up to tens of thousands of dollars over a lifetime, depending on your level of spending.  Every time you are going to write a check, pay with cash, or use a debit card ask yourself, “Can I pay this with a credit card?”  And “Do I have the money in the bank to pay this off right away?”

Here comes the fun part – Investing!

You have been a slave to your money for a long time now it’s time to turn the tables and make your money work for you, through investing! But do it smartly – start by contributing to your 401k plan at work. Make sure you contribute at least up to your employer match but the maximum contribution limit for 2014 is $17,500 or $23,000 if you are age 50 or older.  If you don’t have a 401k or max out your contributions consider opening a Traditional, Roth, or Educational IRA and save another $5,500 or ($6,500 if age 50 or older). This is subject to IRS restrictions, so you may need to do a little extra research based on your own situation. Finally assuming you have utilized all of your tax deferred options open an after-tax brokerage account.

401k, 403b, IRA, and Brokerage accounts are all just types of accounts; they are not the actual investments.  This is just where your money is held waiting to be invested.   You need to purchase stocks, mutual funds, exchange traded funds, or bonds in the accounts.  You should consider using low cost, highly diversified ETFs and Mutual Funds from a reputable company like Vanguard.  The type of stocks and bonds and the allocation between them all depends on your personal financial situation so I can’t provide specific recommendations in this article.

Create a Financial Plan

Ok, you have your emergency funds and you’ve started investing.  Now might be the time to consider creating comprehensive financial plan.  You can do it yourself – here is a Do-it-yourself Investment Guide to help – or you can hire someone to help.

If you decide to do it yourself here are some steps to help:

1. Create a Net Worth Statement – This will help you understand what you own and what you owe.  Once you complete this you will update this regularly (annually) and watch it grow.
2. Create or Update your Budget – You may have created and used a budget to get out of debt.  Now that your cash isn’t going to pay off your debt it can be allocated elsewhere.
3. Determine your Goals – Create a list of your financial goals. Examples are education, retirement, a house, etc.  Assign a dollar amount to each goal so you know exactly what it takes to achieve it.
4. Analyze your cash flows – This involves looki
5. ng at all your cash inflows and cash outflows and determining how much you need to save and invest to achieve your goals.Invest – If you have already started investing you are ahead of the game here.  Now instead of just investing to grow your money you can invest with the purpose of achieving each of your goals.  This might mean changing up your allocation to stocks and bonds.
6. Monitor your Plan and you Portfolio – Major life events and changing markets will affect your financial plan.  Revisit it often when these things happen to make sure you are still on track and make changes if necessary.

If you decide to hire a professional, make sure they have a certification such as a Certified Financial Planner (CFP) or a Chartered Financial Analyst (CFA) and make sure they are Fee-Only.  This ensures that they are competent and that their compensation structure is transparent and free from conflicts of interest.

Basic Estate Planning

Now that you are starting to grow your assets you should consider creating an estate plan in order to efficiently pass on those assets if something were to happen to you.  Even if you don’t have assets (yet!) you should consider an estate plan as it will plan and prepare for incapacity.  This is when you are no longer able to make financial or medical decisions due to an illness or disability.  This also involves choosing legal guardians for your children. 

Don’t forget the kids!

You have learned a lot on your journey out of debt.  Don’t forget to pass on this knowledge to your progeny.  The schools won’t do it! Your struggle with debt is something you wouldn’t wish on your worst of enemies, so ensure your children never have to go through it by preparing them early.  Here are some creative ways to start the education:

1. Open a checking account and deposit their allowance directly into the account – show them how to use it.
2. Buy them books – You can find financial books for almost any age.
3. Make them pay for non-essential purchases. Show them how to work and save. They may realize they don’t really need it after they have to work so hard to get it.
4. Once they get the hang of a transactional account, encourage them to open an investment account.  Teach them about stocks and bonds and let them pick a mutual fund or two.

I applaud you for getting out of debt but that is only the beginning of getting your entire financial house in order. I hope these six tips will help you continue to grow your wealth and continue on the path to prosperity.  Please share your other tips after you were able to get out of debt in the comment section below.

The outstanding balances of a person whether, on credit card loans or payday loans online, can have negative consequences not only for the persons owing the debt, but for their heirs and family as well. For instance, when your parent dies, you, as the child will be left to go through the financial rubble. The question now is whether debt is really inheritable or not. And if so, what are the things that you can do in order to deal with this effectively and avoid getting harassed by collectors.

In this article, you will learn everything about debt inheritance and the best measures to prepare such phenomenon.

Inheriting Debt – Is It Possible?

Fortunately, most of the debt cannot be inherited. This means that the debt itself passes away along with the person. But then, existing debts can wipe out possible inheritances, though there can be a few exceptions. After the death of a person, the executor may sell the deceased’ assets to settle all or most parts of the debts. With this, the payments are made through:

• Secured and unsecured debts
• Inheritances outlined in the will

In case of secured debts, the physical collateral serves as the assurance for the outstanding balance. Such debts are similar to car loans and mortgages. On the other hand, unsecured debts are not involved with physical collateral like credit card debts. It is only when all debts were deducted from estate will you get your inheritance. In the circumstance that the assets are inadequate to settle the debts, no one is legally responsible to pay for these debts.

Exceptions to the Rule

Although you are generally safe from inheriting your parents’, spouses or other people’s debt, there are some instances where you can be legally bound to pay the owed money and these are the following:

• In case you cosign, you will assume total responsibility of the debt when the other person dies such as in credit card debts and shared loans, so be cautious when cosigning.
• Holders of joint accounts whose credit history or income were utilized to take the loan will be held liable for settling the joint debts. When your partner in the joint account dies, it is you who will shoulder the debt.
• Widowers and widows who are residing in community state properties are legally bound for the debts of deceased spouses.

How to Handle the Debt?

There are many types of debts and here are the major kinds and some tips on how to handle each after a loved one passes away.

• Mortgages – There are various options when your parents leave you with mortgage loans. In case the estate has the money to pay the loan, they can do so and you can take the home to your possession. If you wish to, you can take charge of the property and the mortgage and proceed with the payments. Also, you can sell the house or refinance to settle the debt.
• Credit card debts, personal loans – Such debts like payday loans online, which are a great way to get money fast without taking on too much debt, should be repaid with the money acquired from the existing estate. If the assets are not enough, the money collected will be distributed among collectors and what remains shall be written off.
• Student loans – In case an individual such as a student passes away, students loans of federally insured students are actually forgiven. However, private loans should be repaid in the same manner like personal loans.
• Car loans – Your alternatives are almost similar with mortgages. You have the option to settle the loan from the estate funds, sell the car, refinance or transfer it to your name.

Upon knowing all these things about what happens to debts when someone passes away, the next step should be done. Well, it can be difficult to have your parents talk to you about debt and death or speak with your children about it. But then, it should be done.

In order to make sure that a strong estate plan will be set, it is always advisable to ask the help of a professional. With this, all legal matters regarding debt after death will be arranged the right way.

This is a guest post by Jon Fritz from Simplified Life Insurance. If you’re interested in submitting a personal finance guest post visit this page.

According to globalpost.com, Bachelor’s degree graduates earn over $20,000 more per year than people who have only earned a high school diploma. While these future earnings do make college very appealing, those future dollars do nothing to help students who need help paying for college now. If you are working towards earning your college degree, but you are unsure how you will afford it, here are ten ways you can save money as a college student.

Although I wanted to own real estate by the time I was 30 (and 30 is not finished yet), I am excited to have no debt as I start my 30s. I’ve been really focused on building a strong financial future for myself and my fiancé, but it is not easy by any means. It feels like a marathon in which they keep adding 1 mile to the race as you get closer: 26.2! No, 27.2! How about 28.2?!

One of the best things you can do for your finances is analyze the crap out of them. Here are a few things I’ve already implemented:

1. Writing down everything I spend money on in a daily notebook, then putting it in a spreadsheet at the end of the month,
2. Tracking my net worth each month,
3. Have a spreadsheet of all of our monthly expenses and make monthly attempts to reduce it, calling the cable company to lower the Internet bill, calling the insurance company every 6 months before the premium is due, etc.
4. Finally bought a few ETFs in my Roth IRA and Rollover IRA, on a commission-free basis

One thing I have wanted to do for a while is analyze the asset categories of my net worth. I don’t include my car, computer or personal property in my net worth because I use them and really wouldn’t sell them to get cash out of them. So the categories and percentage of my net worth are:

• Savings account (currently uninvested, earning miniscule interest): 16% of net worth
• Checking account (money flows in and out too quickly to invest, this is for daily living): 0% of net worth
• Roth IRA (Invested in one ETF): 1% of net worth
• Rollover IRA (From all former employers, hold four mutual funds, one ETF, three individual stocks and a little cash): 64% of net worth
• Employer Stock Purchase Plan: 6% of net worth
• Employer 401(k): 12% of net worth
• Individual Brokerage Account (no money in it, yet J): 0% of net worth

My Analysis

As you can see, the majority of my net worth sits in my Rollover IRA. This doesn’t worry me, because I like the holdings that I have in there, but I would like to see the Roth, 401(k), ESPP and brokerage account really start to grow and be the big categories. I also don’t love that I have 16% of my net worth just sitting in cash. I have already decided that after a few more weeks of saving, that money will start going into the brokerage account so it can be invested. Eventually, I’d like my other assets to grow so that my savings is only 5% of my net worth. But I won’t transfer any money out.

Your Turn

I know you guys are super smart and can help me improve my net worth. Where would you focus? What would you change? Would you move any of the cash savings somewhere else? I am PUMPED for some new ideas!