financial successEvery month, you dutifully send off  payments to each of your long-term obligations. These might include a car payment, your mortgage, a couple of credit card balances, or the last of your student loans.

And then it happens. One month, finally, you finish paying something off. That’s one less payment to schedule every month, and one milestone well worth celebrating. Woo hoo! Time for a little happy dance. Suddenly you think of all the things you can do with that extra money every month. But before you know it, you’ve spent the entire amount and then some.

Woah. Slow down. It might seem like you’ve just struck gold, but if you really want to get ahead financially, don’t let that extra money be absorbed into your daily spending routine simply because your obligation has been completed. With just a little effort, you can repurpose that money into a building block to your financial success.

Give Your Goals a Boost

Let’s say you’ve just paid off your car, toward which you had been paying $500 a month. If you don’t simply absorb that money, you now have an extra $6,000 a year. That’s a lot of money.

You could earmark it for a new car fund, so when your now paid-off car dies a few years from now, you’ll have cash to buy a new one. How sweet is that? Or, you could set it aside as an emergency fund or a down payment fund for your dream house.

Bonus Tip: To reduce the temptation to spend your newfound riches, have the money automatically withdrawn from your paycheck and put into a separate account–whether that be a savings account or an investment account–that you designate for the goal of your choice.

Pay It Forward

This strategy doesn’t just work with car payments. There are lots of expenses that you have over the years that disappear and leave you with extra money. If you’re a mom, that expense might be formula or diapers. When your child starts wearing underwear, you easily have an extra $50 a month that once went for diapers.

What about daycare? From the time your child is a newborn until he enters school, you’ll likely shell out $600 to $1,200 a month for his care. Why not use that money to create a college fund for him when he starts kindergarten? You’re already used to paying that money, as painful as it may be, so it will be the easiest time for you to pencil in new “obligations” for your finances.

Bonus Tip: When your child has outgrown some of his expenses (like diapers or daycare), take half the amount and put it in your retirement account, and put the other half in your child’s college fund. Down the road, both of you will be glad you had the foresight to pay it forward to your future selves.


After you finish a large monthly obligation, wanting to spend the money and absorb it back in your budget is normal. However, if you maintain your financial discipline and make that money work for you in new ways, you’ll get ahead faster than you could ever have imagined.