For 22%* of people who use a debt consolidation company to pay off their consumer debt they have amassed, they end up free and clear of debt with an improved credit score. The percentage seems pretty low, but for almost a quarter of people who successfully complete a debt consolidation program by making on-time payments, they are back on the right financial track. Having eluded bankruptcy, they are now ready to begin building a stronger financial future.

So what’s next for a person who is debt free? A logical step would be to begin using the money they had been paying towards their debt repayment plan to build wealth. This might look different for each person, but I’ve outlined a few options below.

Emergency Fund

One reason people find themselves deep in debt are emergency expenses seem to catch them by surprise. Not having any kind of savings account in place means using credit to fix a flat tire, pay a vet bill, or replace an appliance. Instead of depending on credit, it’s time to build an emergency savings fund to pay for these irregular expenses. A person who has just completed a debt consolidation program now has that monthly allocated amount available to them to apply towards this fund. One way to guarantee that amount will be applied towards an emergency fund, instead of spent on other items, is to set up an auto-debit that deposits the money directly into your savings account. Selecting a slightly higher interest rate savings account, such as an online account through ING or Capital One Money Market account, means earning a little more over the long run.

Some proponents of emergency funds suggest savings 3-6 months (or more) of living expenses. I don’t necessarily agree. It really depends on your job security, if you’re self-employed, if you have multiple streams of income or only one. Obviously, if you have only one source of income, setting aside 3-6 months of living expenses might be a good rule to follow. However, if you have multiple streams of income, you might be able to get away with 1-2 months of expenses saved up. Once you’ve settled on a set amount for an emergency fund and have successfully reached that goal, it’s time to build wealth.

Wealth Building

Investing in a retirement plan can be done simultaneously while continuing to pay off debt or build your emergency fund. But if you’ve been focusing on paying off debt up until now, it’s time to get serious about your future. If you have access to a 401(k) or 403(b) plan through your employer, depositing the maximum amount or a percentage of your income is a great way to build wealth and reduce your taxable income. These plans are also an excellent option if your employer matches any part of your contribution. Since the amount you deposit is deducted from your paycheck before taxes are taken out, it’s not as noticeable a difference in your take home pay.

Another wealth building option that is a favorite of many personal financial planners are IRA’s, traditional or ROTH. The maximum amount you can invest each year is $5,000 unless you are 50 years or older. At 50 you can begin depositing up to $6,000 annually. offers some retirement calculators that will estimate how much you can potentially save over X amount of years.

An alternative option that is a good supplement to standard retirement accounts are mutual funds. Index funds are the more popular of mutual funds, but mutual funds range from aggressive to conservative. Researching these funds thoroughly through, and/or is a good way to gauge cost and yield. These are not tax-free accounts; you deposit money into these funds after taxes and the investments are taxable. is a good way to gauge your expenses on mutual funds.

IRA’s and mutual funds are also available to the self-employed. The SEP IRA is an excellent choice for self-employed workers looking for a way to build a retirement account.

A combination of these wealth building practices can guarantee a future of financial security; something everyone can attain with a plan and some discipline.

*22% is based on Dave Ramsey’s research.

Have you successfully completed a debt consolidation plan? Have you recently finished paying off a debt and are now using that money to build wealth? What wealth building strategies are you using?


  1. krantcents Reply

    It can lead to a happy ending if you get help to resolve whatever got you into the problem. I think the definition of insanity is doing the same things over and over again expecting a different result. you must change your habits to avoid getting the same results.

  2. @krantcents
    I definitely agree. Hopefully, those that successfully complete one of these programs have learned their lesson. A good follow up to this program, or a consecutive solution, would be offering basic finance and budgeting workshops.

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