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Once you've paid off your debt and taken control of your financial life, it's time to take a deep breath, look at what you have, and take the necessary steps to protect it.

When we are trying to get out of debt using debt consolidation as a tool, it is forgivable to ignore the “should do's” until we can get our heads above water. It doesn't make much sense to save for a new car when you haven't paid off the one you have.

But once you are back on solid footing, it's time to cover your rear and make sure you don't fall back into old habits or get caught reacting instead of acting.


Your Family

If you purchased your own home, I'm sure you have household insurance to protect your dwelling and its contents, so you might start to think about protecting your family in case of a natural disaster or emergency. If the power is out for two weeks, your insurance agent isn't going to stop by to feed you.

Take a hundred bucks or two and go to the grocery store and buy two weeks of food and water for your family. Estimating how much food you may need is easy, but for water it can be trickier. A handy rule of thumb is to have one gallon per person, per day, to cover drinking, cooking and sanitary needs.


Your Emergency Fund

I recently talked about having an emergency fund once you are debt free, and how to build the perfect emergency fund.

The one I designed is all-cash and in multiple locations, each a bit harder to reach than the last. My emergency fund also has a good amount of cash in a safety deposit box in a different town. That way if the power goes out in your city, chances are you'll be able to access your safe deposit box should you deplete the cash you already have in your home.

An emergency fund may not be very helpful in getting you out of debt, but it is useful in keeping you out of debt. Essentially you are borrowing money from yourself instead of a bank.


Your Replacement Car Fund

If you are debt free, that means you don't have a car payment. What it also means is that you need to take steps to protect your car and set some money aside each month to buy a new car. Again, you are creating the Bank of You.

Once you've paid off your debts, a new car is basically the most expensive recurring expense you will have for the rest of your life (unless you choose to further your education).