Our Debt Story Part IV: We're Debt Free...now what?!?!

WE’RE DEBT FREE!!!!!!!!!!!!!!!!




Before you celebrate with us, make sure you've read Elizabeth's Story, Eric's Story, and How We Climbed Out of Debt.


Two and a half years of gazelle-ish-like intensity + the few months prior as emotional primer and slowed spending, we made it!  We paid off over $50,000.  We have two car titles. Closed credit card accounts. Statements from one student loan (and one on the way!) with a $0.00 balance.  All our debt with Eric’s parents is paid off.  It’s. All. Gone.



We also paid for my 3 semesters of grad school in cash.  Paid a second car accident in cash (it was minor compared to the first one).  Went to Nicaraga on a Mission Trip in cash.  Went on a 5 day Puerto Rican vacation in cash.  We’re up to date on medical expenses for the baby in cash.  All while squeezing in travel for weddings, babies, family reunions, half-marathons, mini-vacations and to see out of town friends...in cash!



We have about 4 months of living expenses saved up.  And by December we will have all six months of our emergency fund saved, as well as our 10% income invested for retirement.  We will also be able to pay for our hospital bills (assuming all goes well) with the baby in cash.  In addition, we are a third of the way saved up for a vacation to Ireland exactly one year from now.



And now...



It’s time to save for a house!!!!!



We aren’t exactly sure how to go about this.  In fact, most of Dave Ramsey’s basic teachings don’t information for couples planning to buy a house (probably because this is such a Pandora's box of additional information), just pay the current one off.  We are excited to start researching savings plans on how to do this.  In the mean time, we have a lot of praying to do about what size house we’d like and where to buy.  Thank goodness we’ll have plenty of time to do so!




Eric wants to add.....



We may be debt free, but we there is still a lot to plan.  How much do we increase our previously minimal amount of charitable donations?  What is the priority between a house, the baby and saving for retirement, especially before 30?



To be honest, we don’t know, but it just goes to show that being debt free is only half of a successful financial plan. For the past two years I’ve been following two financial blogs, mostly to keep me motivated.  From www.thesimpledollar.com and www.getrichslowly.com, I’ve not only gotten motivation, I’ve learned a little bit about how to manage finances after being debt free.



E and I have just a vague plan from here on out.  We definitely want to start giving 10% as donations, whether it be to our church or other charities.  We have always been wiling to give, but have been hesitant to give so much, so this will be a big change for us.  


Also, now that we are debt free, we need to start considering retirement. All financial experts say that the younger you contribute the better off you are because of compound interest.  Numbers from 10% to 30% of total income are common, so where do we fall?  Right now, our plan is to start with maximizing contributions to a Roth RA for both of us, which means I have to start contributing a lot more and Elizabeth has to start one.  At the present time our companies do not match 401k/403b contributions so we aren’t setting that as a priority. Though my job does contribute regardless if I do or not.  Bonus!  We do, however, need to combine old 401ks into our current so we don’t have too many account to keep track of.  We believe, that the simpler it is to keep track, the more likely you are to actually keep track.



So with 10% going to charitable giving and at least 10% going to retirement, what do we have left besides a new family member to care for.  We want to buy a house, but I have had one condition since before we got married.



I refuse to pay PMI (primary mortgage insurance) even though “the housing market is great right now”.  I don’t care how great the market is if I can’t put the required 20% down, thus avoiding PMI.  Maybe I’m weird like that, but I just can’t fathom throwing extra interest at an already astounding mortgage payment.  So we will be saving every extra penny we have for our house goal, after all of our other goals.



Our other goals include saving cash for the rest of that trip to Ireland, and whatever else comes along that we decide is important enough to delay owning a house for some amount of time.  It may be another “trip of a life time”, baby item we “need”, or charity we can’t turn down, but that will be decided when the time comes, as a family.



We are hoping to be in a house by March 2012 (an additional 1 year lease at our current apartment), but it may be sooner and it may be later.  Our priorities may shift.  Our goals may change. Our income may vary.  A car might break down. Or something unexpected might happen.  We don’t know for sure, but after the almost 3 years we have been attacking our debt, we know how to communicate and feel ready to deal with any issues as they come.



We feel blessed to be in such a great position and we hope that you can join us soon, if you haven’t already.  Look for posts on how we (actually) tackled our debt to come later this weekend and ask us for any advice on how to reach your goals.  We’d love to help!  In addition to Dave Ramsey, we recommend www.thesimpledollar.com, www.clarkhoward.com and www.getrichslowly.com no matter what your financial situation is.  There are articles for every situation.


Thank you again to both sets of parents, our siblings, and close friends for making this day happen. We couldn't have done it without your support, encouragement, and enthusiasm! We love you :)

Give away**

To jump start our “Give Like No One Else” We’re giving away a copy of Dave’s Total Money Makeover (the book version of the CD’s that changed our life) and Total Money Makeover Workbook.  Enter to win the set for you, or to share with a family or friend in need.

{First Entry}

Follow us via Google Connect (see side bar) and tell us that you’re following us in the comments. This goes for old and new followers.

{Second Entry}

Ask a question about our story: practical, emotional, spiritual, how-to, etc

 (We’ll answer them in a future post!)

{Third Entry}

Share some money-saving tips or a bit of your debt (free) story.

Each entry must be it’s own comment. Max 3 entries per person. Contest closes at 11:59 pm Sunday EST.  Winner will be announced on Monday, Sept 12, 2011 on our blog, and must contact us within a week to claim their prize.

**This is not a sponsored giveaway, just something we wanted to offer our fabulous readers as a way to give back the blessings we’ve received.