Now That We Are Debt Free!!!
What are we doing now that we are debt free? I have been very bad at writing blog posts lately, so I thought it was time for an update. One reason I haven’t been writing is because I have been out there enjoying being debt free! B and I celebrated becoming debt free with an awesome vacation to Oahu, Hawaii in May. It was a fantastic celebration. We have been debt free now for 6 months! I cannot tell you how amazing it feels. B and I have been working on a lot of things now that we are debt free. Life after student loans is fantastic. Let me share with you what we are doing now that we are debt free!
First Things First – Baby Step 3
One of the first things we did, once we became debt free in December, was to begin saving money again! Because we threw all our money and savings at our debt, we were only left with our $1000 emergency fund. This was acceptable when we were crunching numbers and dollars to pay off debt. However, now that we hit our goal, we needed to increase our savings. Read my blog post here to learn all about how we paid off our student loans early!
As the guide to the next step, we referred to Dave Ramsey’s Plan again. Dave Ramsey’s Financial Peace University is not just an awesome resource to get out of debt. It is also a resource on how to build wealth and change your financial life! So, we checked off Baby Step 1 – get an emergency fund of $1000. Then, we checked off Baby Step 2 – Pay off all debt except for your house. CHECK! So our next step was Baby Step 3 – Save 3 to 6 months of living expenses for a new emergency fund. This was one of the things we have been working on for the past 6 months. We didn’t go out and just start buying tons of stuff and blowing our money. A new emergency fund was the next check off on our list. As of last month, we have officially checked off Baby Step 3! We have 3-6 months of living expense saved in a money market account for easy access in case something happened and one of us lost our job.
Baby Step 4
One thing we needed to do immediately when we became debt free, was start on Baby Step 4, which is increasing your retirement contribution. Now that we are able to keep our whole entire paycheck, we needed to decide what to put towards retirement. Our employer already takes out a specific percentage of our paycheck to put toward retirement. So while paying off our student loans, it was mandatory for us to contribute. However, we did not put any extra towards retirement. This was actually extremely difficult for us because we felt that we were losing out on precious time. But, it was necessary to sacrifice in the moment so we could do one thing well. Now we are able to do the next thing well.
We met with a financial planner to determine what our options were for our future and retirement. We settled on our monthly dollar amount and started putting extra toward retirement. I cannot tell you how exciting it is to know that we can put money toward our future and not be worrying about our monthly student loan payments. Can I repeat how great it feels to be debt free?! So we were doing Baby Step 3 and 4 at the same time for the last 6 months. Once we figured out our monthly retirement dollar amount, it enabled us to decide how much money we were able to save every month towards our emergency fund. But saving for the future isn’t the only thing we have been up to.
Now that we are debt free, of course we are celebrating! We just recently got back from our celebration vacation in Hawaii! It was so much fun to be able to relax and reward ourselves for all our hard work. One important note, we did not go back into debt to take this vacation! We cash-flowed the whole thing. (Have I told you yet how amazing Costco Travel is?!) But seriously, we did reward ourselves for sticking with it and sacrificing for the past 3-4 years. We lived like no one else so tomorrow we can live like no one else. We are taking full advantage of our vacation days and our vacation budget!
One other celebration was to buy a new-to-us car! We were so blessed to buy a nice car from a family member with CASH! B and I saved up $4500 to buy a car that we really needed! We drove our old cars to the ground while paying off debt. So now, we have one very old car and a nicer one. Having a newer car allows us peace of mind, and the ability to take road trips and go camping! Lots of camping coming this summer.
Generous With Our Old Car
One thing about being debt free is the ability to do crazy things. Not only were we able to buy a very nice, inexpensive car, but we were able to give one of our old cars away! My old Honda still ran pretty well and really only had cosmetic things that were falling apart. So, B and I decided that we would give it away to someone who needs a car but doesn’t have money to buy one. I could not believe that God would allow us to bless someone in such a way. It was incredible. It was definitely a celebration!
Baby Step 3b
So what’s the next step? Right now, the next step in our journey is to work on Baby Step 3b (what Dave Ramsey calls it.) This is basically saving money to buy a house since we don’t already own one. Baby Step 3 is done, and Baby Step 4 is something that will continue until we retire. Therefore, we will start Baby Step 3 and save to buy a house. Technically, the next step is Baby Step 5, which is to save for your children’s college fund. Well, B and I definitely don’t have kids yet, and we are not planning for babies right now. So we decided to skip the college planning until it’s time.
Baby Step 6 is to pay off your house early. Well, since we don’t own a house yet, we will be saving money for one instead. If the housing market decides to take a dump again, we will be ready with cash in hand! However, since I don’t see that coming, we are in the process of deciding our future and where we would like to live our lives. California is extremely overpriced and expensive. However, we have to live somewhere. So we will be saving money until we come up with 20% down of whatever we are willing to spend and will live where God leads us. I can tell you, one thing we are not going to do is overspend on a home. The lessons we have learned while becoming debt free will stick with us forever! Living within our means is the secret to success and we will stick with it.
Principles We Are Sticking To
Now that we are debt free, we are not just throwing everything we learned out the window. Please, if you are planning on becoming debt free, find out what the rest of the Baby Steps are and retake Financial Peace University classes! We took the 9 week course at our church again two months after becoming debt free. It was a great reminder of why we started this journey in the first place. It was also a great tool to start the next couple of baby steps! The momentum of becoming debt free is now pushed towards the next steps in our lives.
Recap – Now That We Are Debt Free
- Still have a budget! And we will for the rest of our lives! Haha
- Still stick to the budget! All the time!
- Celebrated a little and added fun categories to our budget like saving for another car and vacations
- Started the next Baby Step
- Retook Financial Peace University
- Continue on with all the Baby Steps until we are living AND giving like no one else!
- Enjoying being debt free
- Bought a car with cash
- Saving for retirement
- Saving for a house
- Living our best life!
If you are in the process of becoming debt free, stick with it! It is completely worth it I swear! The process is difficult and time-consuming. However, live today like no one else so tomorrow you can live like no one else – Dave Ramsey.
Do any of you have fun things you are doing since you’ve become debt free?! Tell me in the comments!