It has been nearly a month since we paid over $34,000 in debt. So far we are not complaining. The feeling is awesome, I love it when Dave Ramsey says, if you don’t like being debt free, you can always go back into it. No plans on doing that!
However, we have learned a few things in the last couple of days. Most of them are positive changes. We have also experienced a few more changes to our budget, our behavior, and overall our happiness. so here are a few of those lessons that I hope inspire you to find your own journey and to not make the same mistakes as us.
Well this one is pretty obvious. Since we have absolutely no debt (car payments, student loans, credit cards, etc.) we have a larger wallet as a result. We still have to pay bills, but whereas before our expenses amounted to a little more than $3000, now all things combined (food, rent, fun money, bills, etc.) are less than $2,500 give or take depending on the month.
That means that more of our money is being saved or spent on small things to treat ourselves. While working ourselves out of debt, we often felt like what most people refer to as “living paycheck to paycheck.” We always kept our emergency fund at at least $1,000. It didn’t mean that every time money went to the dealership or the student loan lender didn’t hurt.
Since being debt free, we have made more room in the budget for things we enjoy. Things like going out for a nice dinner, traveling, or purchasing gifts for family. In addition, our giving has increased tremendously (it’s amazing how selfish debt can make you). That brings me to my next point.
Relaxed Budget, Relaxed Discipline
With an increase in cash flow comes an increase in the ability to say yes to things. And although that is a great opportunity to take advantage of things you otherwise wouldn’t while in debt, it also means slack in discipline. I’m not saying that you shouldn’t treat yourself, it has to be done for your sanity. All in moderation however. The awesome thing about working your debt is that it provides a goal which brings forth intensity. When it’s gone, something else has to take its place.
This can go either way, that goal-destroying intensity can either be replaced by your eagerness to succumb to all your shopping desires, or it can transform you into an investing and saving money maniac. Either way it has to be replaced.
So What Do I Do With My Money?
In order to keep up the same intensity we have figured out that we need to keep making goals. After paying off all our debt we have decided to focus on having an emergency fund of $6930. That’s the equivalent of 3 months of expenses. We plan on increasing that to 6 months in the future, but we figured out that’s a pretty nice safety net.
In addition to the emergency fund, we also decided to maximize Taylor’s 401k contribution to take advantage of the full six percent match. Once our emergency fund in finished we plan on opening a Roth IRA and put about seven percent of our income in there as well.
Related: 3 Things Investing is and Isn’t
We have also made a little room for some trips to visit friends, and I am proud to announce that on August 2nd we will be in Nashville visiting Dave Ramsey to do our debt free scream! Aside from finally getting a chance to meet the man whose wisdom changed our life, we are also excited to take a fun road trip. I plan on posting the debt free scream video on the site, so stay tuned for that when the time comes.
So are we glad we are debt free? You better believe it. Now there is time and money to focus on what really matters, family, friends, and making sure that our future is bright and secure! We don’t have money problems, and the little ones we do have are nothing to lose sleep over. Even though we are constantly working on mastering and sticking to the budget, the daily money routine is not a life or death situation.
This is the type of life I always envisioned for me and my family and it feels great to have a new and hopeful outlook on life and our future. If that is a place you want to get to take a look at how we managed to control our spending and savings by clicking here.