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Bottom Line Up Front

  • Once you’ve paid off personal loans or credit card balances, make sound financial decisions with your extra cash flow – like beefing up your emergency fund or investing in retirement.
  • Ready for another big purchase? Consider setting up recurring transfers to a certificate to reach your new goal.

Time to Read

3 minutes

June 3, 2022

When you’re working toward paying off types of debt like a car or student loan, you can become hyper-focused on your goal. Once you see those 3 little words—“paid in full”—it may feel like a giant weight has been lifted. “Now what?” you might ask. Here are some next steps you can take that could help you on a path toward continued financial health.

Start Retirement Savings

The sooner you start saving for retirement, the better off you’ll be. If your job has an employer-sponsored retirement plan, enroll and set up automatic deductions from your paycheck. If you’ve been making modest contributions while paying your loan, increase the percentage now. Aim to contribute enough to take full advantage of any employer match. If you don’t have access to an employer-sponsored retirement plan, consider an Individual Retirement Account (IRA). Traditional and Roth IRAs have different tax benefits, but both are appropriate for retirement savings. Other investment options include mutual funds, stocks and bonds. You can use a savings account to build a small nest egg. Then, when you saved up enough, use those funds to invest.

Tackle Another Debt

Paying off a debt like a car loan or credit cards will free up a portion of your monthly budget. The first thing you should consider is putting the same payment amount you’ve already been making toward paying off other loans and credit card debt. Start with paying off the debt with the highest interest rate first. Paying off more than the minimum payment each month allows you to pay a greater percentage of the principal and save on interest over the long term.

Create a Safety Net

Focus next on a short-term goal that’s essential to financial security: an emergency fund. Calculate the total of 3 to 6 months of your net income and save until you’ve met that goal. You can set up a Basic Savings account for your emergency savings—the focus is on access, not interest. If an adverse life event occurs—loss of job, accident or car repair—you won’t go back into debt to survive it.

Save for a Major Purchase

Now that you’ve successfully achieved a financial goal, roll that confidence into a new personal finance goal. Two common savings goals are a new car and a down payment on a house. Set up an automatic transfer from your checking account to a certificate or your savings account so monthly “payments” into savings is a no-brainer. Setting up a portion of your direct deposit to go right into savings is another good strategy. You won’t even see the money leave your checking account.

Use What You’ve Learned

Consider your journey to pay off debt an invaluable lesson. Apply that mindset as you move forward. Often, when people are repaying a loan, they feel deprived. Once the debt is repaid, it’s a natural reaction to want to spend freely. However, the last thing you want is to wind up back in debt. Continue to use the self-control you’ve mastered and stay debt-free for the long haul. Focus instead on paying yourself first to increase savings while treating yourself when appropriate.

Next Steps Next Steps

  1. Have other debt you need to tackle? Check out these different debt repayment strategies to help you get started.
  2. Kick your savings into gear by setting up automatic transfers to your savings account. 
  3. If your debts are paid off, and you have an emergency fund, consider investing that money in stocks with the Navy Federal Investment Services Digital Investor tool or increasing your retirement savings contributions.1


1Navy Federal Financial Group, LLC (NFFG) is a licensed insurance agency. Non-deposit investments, brokerage, and advisory products are only sold through Navy Federal Investment Services LLC (NFIS), a member of FINRA/SIPC and an SEC-registered investment advisory firm. NFIS is a wholly owned subsidiary of NFFG. Insurance products are offered through NFFG and NFIS. These products are not NCUA/NCUSIF or otherwise federally insured, are not guaranteed or obligations of Navy Federal Credit Union (NFCU), are not offered, recommended, sanctioned, or encouraged by the federal government, and may involve investment risk, including possible loss of principal. Deposit products and related services are provided by NFCU. Financial Advisors are employees of NFFG, and they are employees and registered representatives of NFIS. NFIS and NFFG are affiliated companies under the common control of NFCU. Call 1-877-221-8108 for further information.

This content is intended to provide general information and shouldn't be considered legal, tax or financial advice. It's always a good idea to consult a tax or financial advisor for specific information on how certain laws apply to your situation and about your individual financial situation.