Debt Free and Happy, but Where to Go from Here?

I normally like to think of myself as above average in financial intelligence. For the last several years I’ve read dozens of books on personal finance. I’m an avid reader of financial blogs and subscribe to the Wall Street Journal and several finance magazines.

But it has occurred to me lately that I know much less about the larger world of personal finance than I thought I did. At times I feel like a complete novice. I used to think the only thing holding me back was debt. “If I ever reached debt freedom I would become a millionaire in ten years,” I thought.

If only I were debt free. I’d throw caution to the wind; start my own business; invest in hot stocks that I missed out on while paying down debt. The truth is that paying off debt changed very little.

The anxiety I used to feel from the debt cloud hanging over me has been replaced by the anxiety I feel trying to preserve, and grow, what little bit of savings I have managed to pile up since then.

I worry about losing money. I worry about not earning enough money. I worry about losing my job, or getting sick, or being able to provide for my family in an emergency. Sure, those worries are not as intense thanks to debt freedom and an emergency fund, but they are still there.

It’s actually a little depressing. It reminds me of the feeling you had on Christmas morning, when after ripping open the large, red box in the corner, you realize that Santa Claus brought you that toy you have been wanting all year long. It’s euphoric…for a few hours.

By that afternoon you were tired of that new toy, and sad because it would be 364 days until Christmas came around again.

I don’t mean to discourage anyone from paying off debt. I think short of building a basic emergency fund, paying down debt is one of the smartest moves anyone could make right now, given continued economic and job market instability.

However, I also wanted to paint for you a very real picture of what life after debt freedom looks like. It’s not an absence of money worries. The worries just change. In fact, I would argue that certain worries intensify, because you no longer have debt as an excuse to get busy on your goals. I used to say things like,

  • “We’ll start saving for retirement after we get out of debt.”
  • “It would be nice to contribute to the kids’ 529 college savings plans, but we can’t while we are paying off credit cards.”
  • “We will pay cash for our next car, but for now we’ll have to borrow because I can’t save up that much cash AND pay down debt.”

It is almost as if debt became an excuse to acquire more debt, or not save and invest. Once the debt is cleared, you have to purge that thinking from your mindset. And that is hard.

It’s also hard to continue living on a slimmed-down “debt” budget when you no longer have payments. The increase in disposable income forces you to make decisions and engage willpower that wasn’t really required when sending most of your paycheck to banks and credit cards companies (assuming you were faithfully doing this for some time to get out of debt).

I know what you’re thinking. Increased disposable income, yeah, nice problem to have. And it is. But it also tests your willpower in ways it hasn’t been tested in some time. Actually, if you were like me, and in credit card debt as soon as you were old enough to sign up for one, your financial willpower may never have been tested at all.

Maybe this is why some people who pay it off go right back into debt. Or why lottery winners are bankrupt in only a few short years. Or why dieters who lose 100 pounds gain back 110 pounds. It’s because our behaviors never changed. Once the euphoria of reaching our milestone wears off, life begins to happen again. You are tested.

Preparing for Life After Debt

If I had known this ahead of time, I probably would have left some of the same tools in place that I used to keep myself in check while in debt. Instead, we took off all the restraints, and in a couple months found ourselves spending way too much on our credit card (we paid it off every month, but thanks to overspending it caused us to stretch and even dip into savings on one or two occasions). I wasn’t happy, and immediately worried we had returned to our old ways.

Fortunately, we were aware of what was happening and managed to keep the train on the track. These days, we are again focusing our attention on what we spend and trying to reduce that amount each month. We aren’t quite as strict about things as we were when we were in debt, but we make the effort to spend more intentionally.

My anxiety over investments and college savings and emergency planning, etc, etc. has subsided some as well. We’re saving for retirement, adding some to the kids’ college plans, and fortunately, have time to let all the dips and dives in the market work themselves out over the long haul.

We invest conservatively for our age, but it helps me sleep at night – a sacrifice I’ll gladly give up for a couple percentage points in returns.

If you are currently in debt, I hope you are working to pay it off and enjoy a debt-free life. As you move closer to your goal, begin to think about how your life will look once you are back to even.

Create a debt free “dream” budget to imagine how your expenses would look without any payments. Start researching various investment opportunities that might interest you when you have the money to invest in them.

Think back to all the things you wanted to do while still in debt and make plans for those things, too (take vacations, look for a more fulfilling job, donate to a charity that you feel passionate about, or maybe help a friend or family member).

Above all, remember it’s OK to loosen the reigns a bit, just be sure not to completely let them go.


  1. Now that you are debt free, take the money from those payments and invest it.

  2. Love the transparency about slipping back into old spending habits for a bit… I think that there are alot of us that this happens to, but the great thing is that we can catch ourselves and get back on track. 🙂

  3. Maybe the longer it takes one to get out of debt the more apt one is to keep the restraints in place. Living on a dime became so ingrained that I never even have to think about “not spending” now that I’m out of debt.
    “Not spending” is my default setting and I think it always will be.

    Sure, once in a while you splurge on something bigger like a CD, a new phone, and upgrade computer, or a rocking chair or a fancier gift for someone than you would have previously…. but it becomes a rare exception, and not the norm… and it’s because you can afford to.

    I no longer worry about losing my job, about a big medical bill, about running out of money… Whatever happens, I think I’ll be ok, even if there are minor setbacks along the way. It’s total peace of mind knowing that I have “enough”, and having “enough” when you are debt free means having way more than enough 🙂

    I think the main difference between your way of thought and mine is that you are still worrying about what you ARE spending on, and I am not worried because I focus on what I am NOT spending on 🙂 I hate spending money…!

    Total peace of mind here 🙂

    • I think I sort of kidded myself into thinking I liked to spend money again, when in fact I still hated it. We lived so incredibly cheap for so long that a part of me wanted to go back to the way things were, before we began our debt free journey. Fortunately, that didn’t last too long before I realized the accumulation of stuff wasn’t really making me happy.

      • Allow yourself that occasional splurge – if you do it once or twice, you’ll find that the “thrill of it” is not there, and you will be cured of splurging again 🙂 lol! My theory anyway!

        You’ll be on autopilot 🙂

        I still use the “wishlist” taped inside the kitchen cabinet… if something stays on that list over 6 months-year, and I still want it, then I’ll seriously consider buying it – even now, when I now I could buy it at any time 🙂

        It’s like the NookColor. I WANT one 🙂 but don’t want to pay the $249… It has NOT gone on sale since I started looking at them last November…. and I’m just soooo determined NOT to buy one until it goes on sale…. I may wait a long long time…. haha! (My local library says the Kindle won’t take most of the books available thru my library – but the Nook will….that’s why… and I would prefer my three magazines in color )

    • Ditto! I lived “smartly” (cheaply is such a harsh word! I do use double-ply!) since I was a kid. My parents had no debt except mortgage growing up. They paid off their first home in 5 years! I, myself, just have the mortgage, also and on track to have that done in 13 years. I never had CC debt or bounced a check. I finished college with no debt and savings (not much, but some). What OTHER things will I do when I pay off the mortgage? I know I’ll still live like scrooge, still yell at my husband for not turning out the lights when he leaves the room, still go camping for our vacations. Maybe I’ll buy a NEW car… but I know I won’t! I am beginning to realize living cheaply, I mean “smartly” makes me happy even if I die tomorrow.

  4. Congratulations on becoming debt-free. You’re right where I was when I got married. I had no debt, a new job, and seemingly more money than I knew what to do with. It took not too long before I also came to the same realization as you did: I’m not getting ahead! I think you’re right to focus on your worries and fears — they are what are holding you back now. A couple of weeks ago I wrote about how my wife and I got from nothing to where we are today in All-In: How I Made $800,000 in a Lifetime and $15,000 Last Week, I suspect that you will be even further along in ten years! (I thought twice about posting the above link again, since I already brought it to your attention on the last post, but it is even more relevant to this post!). I also have a financial post from yesterday, but not as relevant.

  5. Last month I became debt free (again) but this time I was ready for it and like Marci said – I made “Not spending” my default setting. My monthy budget is not listing credit cards and loans now but e-saver accounts, (high interest) regular saving accounts and ISA’s. My debt payments have become credit payments and instead of watching my debt balance go down, I am watching my credit balance go up.
    Having an Emergency Fund takes the pressure off any short term worries and I am now saving up in a Freedom Fund (6 months expenses). Life is good!
    (By the way I love your blog!!)

  6. It can be hard to shift focus when you have finally achivved that goal you worked so hard for. There can be that “now what?” feeling. And the habits you formed may need to adjust to your new situation.

    It does sound like you are on the right track. You know what to do, and hwat to watch out for.

    But, if you find yourself getting too down and depressed, or falling back into bad habits. Just let us know. We’ll all show up at your house, slap you in the face and say “snap out of it!”.

  7. I love the “snap out of it” thing!

    We took the “payments” and put them in a bank we do not ever access. No debit card or credit card there. I have savings accounts for: the next car, house repairs, dream vacations (different than regular “retirement trips”), down payments for “children’s homes”, grandchild 529. We just rolled the payments that we used to make into what we want into the future.
    Granted- we are 53 and 60 so we don’t have quite as many family needs as we used to have. It sure is nice to have a lump sum sitting, waiting for our wants!

  8. This post could have easily been written by me… I’ve definitely been in your shoes… We went through a period in which we started eating out more and not watching our budget very closely… and ended up with a bleeding savings account (which we’re still working to rebuild).

    Some fish grow to the size of their tank… it’s easy for your expenses to grow with your income, too. I’m finding that if I budget for little indulgences, then I feel better, and am able to enjoy life more.

    I used to make a list of our debts and the order I wanted to pay them off. Now that we’re debt-free except the mortgage, I make a wish list of things we’d like to buy/accomplish with your money and work on that.

    I just really like the idea of working towards something!

  9. I completely agree with this post, and it’s really nice to know that someone else out there feels the same. My husband and I are in the process of paying down some cc debt from our wedding…. a year ago. It’s been a long process and it’s really hard when we aren’t making the money we used to. But on top of that, we’ve found very frugal ways of living and saving money. Sometimes I have such remorse for being FORCED to live so cheaply, that I just want to go out and spend and live the way we used to. Unfortunately, this is just isn’t an option. Not with this economy and our current job situation. And of course once out of debt, it’s really hard to not want to spend the extra disposable income…. it feels nearly impossible. I know, I’ve been there before. We always say things will be paid off right away, or that we don’t need to save “right now”.

    Anyways, thanks for such an awesome post! I really enjoyed reading it and definitely plan on passing this around to friends I know in similar situations.

  10. Very interesting post. I find one of the worries after getting out of debt is about what you should do with your surplus money. I mean you want a decent return on investment to continue working towards your goals but like you said you also have a fear of losing your principal in the investment and wanting to preserve what you already have. It is a better situation to have then just worrying about a mountain of debt… but it is interesting how having more money than you require can also be considered a “problem”. (I have a fear of not working fast enough towards my financial freedom goal that money just sitting in the bank is losing money for me to inflation)

    I currently have a lot more cash on hand than I probably should since I’m still trying to figure out what I should best do with it. I want to keep the cash on hand so that I can jump on opportunities in real estate if I find one… but in the meantime my mind is also telling me that if I just put the cash into my mortgages that is a guaranteed ROI of at least the mortgage interest… and with after-tax dollars savings it’s a magnified return. The con to this is that it is locked back into the mortgage and I’d have to have a HELOC to get it out… and actually pay interest to access my capital…

    I’ve thought of placing all my cash into my margin account and just buying index funds… but if an opportunity arises suddenly in real estate, I’m not guaranteed to be in a good position to sell and might’ve actually lost money at that point. The stock market is not ideal for money you expect to need in the short to medium term though the returns can sometimes be great so can the losses.

    Locked in GIC’s are a similar situation in that if you take out the money before the end of the term you lose the interest accumulated. At the moment I just keep the money in cash in a “high interest” savings account because I’m racked with indecision. What do you guys think?

    • How many months of living expenses do you figure you have in cash? My sense these days is that investments are risky and you’re better off keeping the cash right where it is until you can both buy a new property AND keep 6 months to a year of expenses in the bank.

      • Currently in pure cash(just in my bank accounts) I have about 26 months of expenses (using a very aggressive burn rate of more than I actually use, can obviously be decreased if I don’t have a job). My Stocks, TFSA, RRSP accounts if totally drawn out would be about 29 months (at current value). I’m also currently saving about a paycheque and a bit a month (get paid every two weeks). So I have a cushion of safety I’m comfortable with (hence my seeking a new property).

        Problem is the Canadian Real Estate Market in general and the Regina, SK market I’m looking at in particular is getting a bit overheated and difficult to find cashflowing properties. Obviously there’s nothing wrong with just sitting on cash… but I hate it when surplus cash is not actually working actively for me. Still there is something to be said for having cash on hand so that if an opportunity does arise I can jump on it.

        • How much would you consider putting down on a cash-flow property? Enough to make it cash flow with a comfortable margin for repairs, etc, or something like 50% down? Ideally, I’d like to put 100% down, but I hate to dump that much cash into a single property.

          • My rule has always been to use the bank’s money on rentals… Borrow and let the rent income cover the payments and repairs. For cash flow, I figured it would be rented 10 out of 12 months – anything over that was the gravy. To your mortgage payment, add the insurance, taxes, utilities if you pay, and that one month’s rent per year will go for repairs and cleanups between tenants. To that figure, add 10% for contingencies…

            That is about as goobledegook a way to figure it as anyone has ever come up with, but that’s my rental investment house strategy. For the down payment, 5% or less if I could do it.

            Remember, in addition to the positive cash flow, you will get tax deductions and a lot of write offs if you do things right.

            Very unconventional, but I like to use the bank’s money, and keep mine safe 🙂 And don’t bite off more than you can chew – if you borrow $50,000, then have that much tucked away somewhere else in case you have to bail yourself out 🙂

          • I think this might become a long post… I have a lot to say about this and am not sure I can summarize my whole real estate investment philosophy in a short amount of space…

            My original income property I put down 10%… but after that the government of Canada changed the rules and made it so that for investment real estate one has to put down 20% (and really it makes sense anyways otherwise you have to pay CMHC which is the mortgage insurance). My last property I put down 20%. Like Marci357 I’m more interested in using the banks money than all of my own. It is about leverage… if a property is 200,000 and I have to put down 100%… that’s 200,000 and one property… while it should cashflow at that point (again even at 100% there’s no guarantee… think if you bought a place in Detroit and have no renters or something)… you’ve sunk all your money into one property… versus… $40,000… or buying 5 properties with an $800,000 loan.

            I understand leverage can work out badly… and hence why you buy positive cashflow properties in cities and neighbourhoods you’ve researched well (in-migration, growing incomes, decreasing vacancies and a well diversified economy)… and so I’m not actually buying for appreciation (that is just the gravy)… but for properties that can support themselves easily. I’ve heard investing in the states is a bit of a different ballgame so I can’t comment on what you should be doing there… I understand with the housing bust… what I use for a downpayment here could technically buy a house 100% in areas like Phoenix or Orlando. (Though financing I’ve heard is also fairly difficult to come by so buying 100% might be all one can do)

            What I mean by positive cashflow is the rent can cover mortgage payments at 6% mortgage (currently can find variable rate mortgages at prime minus 0.9 so actual rates would be 2.1% giving me a nice margin of error) along with taxes, property insurance, property management, 5% vacancy allowance, 5% repairs and maintenance. Generally I put all this into my spreadsheet and see if it cashflows… if it does… then the property is worth a look. (There’s a wack of due diligence after this but this is a good screen)

            I’ve read about others using an even simpler rule of thumb which is the 1% rule… if you have a property that makes 1% per month in rent… so a $200,000 property generates $2000 a month in rent… it’s pretty close to a sure thing it will cashflow… most properties will cashflow at 0.8% or even 0.7%… but you can get a quick and dirty from the 1% and see if it is within the ballpark. I’ve found 1% can be difficult to find in the area where I’m currently searching.

            Real estate is all about location and it is hyper local game not national… different suburbs in the same city can have different potential (for example if an area is easily accessible by public transportation, generally higher values). I’ve chosen Regina, SK because Saskatchewan in general has the resources the world is in constant need of… food, fuel and fertilizer (potash)… and being the capital city it also has a nice government sector base to its economy… also the vacancy rate in Regina was 0.8% last time I checked. (Meaning there is virtually no vacancy)

            Anyways that’s what I look for in my investment properties and what I put down as a downpayment. I’m happy to answer any other questions. Many others are more conservative and put down 25 to 35%(in cases of commercial property you sometimes have to)… but if you have to put any more than that to cashflow the property… means you can probably find a better deal elsewhere. (Another motto I have… there’s always another deal)

  11. I guess it’s like dieting. You have to diet for life. So I have to be that strong with my money.

    We recently became debt free early this year and it’s amazing. But now we have about $1,300 extra and it’s hard to say no to the iPad 2 and home theater systems and going out to eat 🙂

  12. I wrote about something similar today. The fact is that debt reduction requires very little thinking, planning or strategy besides making and sticking to a budget. It’s very black and white. Every month you either get a little closer to $0 in debt or you don’t.

    Saving is infinitely more complex and it’s also not that apparent what that magic number is for retirement.

    I look forward to more topics on this subject as I’m grappling with the same thing right now.

  13. Congrats!! What a great predicament to be in.
    I agree with First Gen though. Saving is complicated. Long term, short term, high interest, low risk etc. It can be quite the mental game trying to figure everything out.

  14. I would start either building more assets or start to invest in getting more assets now that you are debt free

  15. I really enjoyed this post. While I am not completely debt free yet I am very, very close and I have definitely experienced my spending increase along with the influx of extra cash on hand. My husband and I have started eating out more (adding up to a LOT of extra money every month) and buying more expensive things at the grocery store (pre-packaged foods, expensive cuts of meat, etc.). I have noticed this and we actually just talked about it last week, getting our spending back under control that is, but your post was a good kick in the butt to get serious again. I also really appreciate your honesty on the topic and your willingness to share with us both your successes and setbacks. Thanks!

  16. I love this post Jason. I’m in the process of becoming debt free hopefully by February 2012 if not sooner. Great reminder that there’s still important decisions and of course worries with life after debt.

    The funny thing is I was thinking to myself once I’m all debt free I’m going to do this and that and buy this and that. But realized, Hello! You have to be mindful of you saving and spending habits or you’ll just get back in trouble.

    I’m actually a bit scared to be debt free. If diet and debt are any indication then I’m worried for myself. I’ve been a yo-yo dieter my whole adulthood although never been overweight. I’ll go months dieting and working out almost daily to a point where I’m underweight.

    Then I’ll gain it back fairly quickly and come back to my original weight if not more. So I’ve gotten down to 111lbs. and upwards of 128lbs. within a 6-month period then repeat it all over again.

    I’m afraid I’ll be a yo-yo debtor. Anyways end of rant.

    I’ve decided once I’m debt free my next goal will be saving for a down payment on a home then spreading my paycheck to my emergency fund, retirement and of course some fun.

  17. I became debt-free in early March this year, and immediately started plowing my money into an emergency fund. I did have a bit of a splurge with a $1000 check my parents gave me as an unexpected birthday gift in April, but other than that I’ve kept things in check. It could easily get away from me though, so I am trying to be very vigilant. It’s hard to see those savings balances grow and not touch them, when you’ve been a lifelong spender.

  18. This one hits home. Years ago we were in six figures of student loan and credit card debt. We paid off the credit cards and a good bit of the student loans and we went and refi’d with cash out to put a large addition on our home which ate some of what had been debt repayment. We finally kicked the rest of the student loans to the curb and then we were debt free.

    We gorged ourselves on free spending for YEARS. We had some savings, weren’t creating any new debt, and were saving for retirement, but we weren’t consciously not spending anymore. Oh, if I could have those days back! My guess is we’d have another 100k AT LEAST in savings. We seemed to wake up in stages to the errors of our ways.

    Now we’re aggessively funding savings. We’ve begun using targeted savings accounts. We have a car replacement fund. A vacation fund. A tuition fund. A regular old emergency fund, etc. Breaking the one large savings account into smaller funds has helped us feel a good bit poorer, which was a feeling we badly needed to feel.

    I think we’ll relax again when the car replacement and tuition funds are fully funded. Until then, we’ll only eat once in a while, and we’ll keep planning our menu from the weekly circular, etc.

    • Make an effort to pay off the mortgage, if you still have one. It is a psychological trick to keep you more realistic.

      For example, suppose I have a $100,000 mortgage and $250,000 in a taxable stock brokerage account. My net worth is $150,000 (i.e. $250,000 – $100,000 = $150,000).

      If I use $100,000 from the taxable brokerage account to pay off the mortgage. my net worth stays $150,000.

      But psychologically, when I look at my brokerage statement, I feel “poorer” because I only have $150,000 in it instead of $250,000.

      This psychological trick help keep me “on the straight and narrow” of saving.

  19. I guess the thrill and addiction of paying down the debt goes away with the debt itself. I would say that you almost need to start automating your savings, like automated payroll deductions if possible. Or automatic debits from your savings account to an online brokerage account. I employ both of these techniques.

  20. Nice post!

    You know, there is a similar transition to what you describe when you finally make it to a large investment goal (like getting to be a millionaire).

    You don’t realize it when you are in debt, or plugging away saving and investing, but reaching a major goal like being a millionaire has it’s own issues (yeh, yeh, I know, we all wish we could take a whack at those kind of problems). But, that is one reason I started my blog and site – to try to help those future ‘millionaire next door’ types get a feel for some of the things they need to start thinking through and preparing for.

  21. My husband and I paid off all of our consumer debt and are now working on getting our mortgage out from underwater. As soon as we started paying down the mortgage, I started worrying about the next step. I know my husband must have thought I was a little nutty, but I couldn’t get over how many choices we had. I kept on stressing the word “options,” and just when I thought I had settled on one, a whole new option that I hadn’t even thought of popped up.

    We’re about 20% of the way to getting our mortgage out from underwater and refinancing. And we finally settled on what our financial life will look like with a mortgage payment that is $1000 per month smaller. We’ve got the next ten years mapped out financially… Again, I know it sounds crazy, but I’m a person who likes instruction manuals, recipes, direction at all times. Even if we get thrown off course, at least I know what things are supposed to look like.

  22. It’s hard to keep momentum when you have reached such a huge goal. I find myself slipping from time to time, but I’ve made a plan for my money after I achieve each goal. For instance, once we became debt free (except the house) and built a reasonable emergency fund, I gave myself a little more breathing room and a little more money to do something fun with.

    This allowed me to celebrate my hard work, yet push forward towards getting money saved for a car and adding to our retirement savings.

    It looks to me like you need a new goal to reach for and a plan to get there. Of course I’m a very goal oriented person so that is what works for me. Whatever you want to reach for, just make a plan and go for it!

  23. This post comes at a really good time for our family. We just finished paying our second mortgage this past Tuesday (treating it as a part of our debt snowball), and are left with only our house payment as debt.

    I had already been fearing that the old ways might creep back in so we have been replanning our budget so we don’t misuse the freed up funds. It is great to hear from you on this subject and at this time–thank you for this encouragement to continue to press forward. Truly, this is a behavioral issue and requires discipline, and for many, possibly a first-time defining of what makes them “happy”, a hole that “stuff” cannot fill.

  24. im targeting my finance/debt fist time in my life—single 50–you start thinking about these things more

    1.paid off 10k loan/credit debt today in 19 months

    2. building emergency fund –one years wages-20k
    my emergency fund has been low–£700 due to hammering away my debt.

    3.clear mortgage

  25. Oh how this post resonates with me! I have never been buried in consumer debt, but live in a high COLA. After a cancer experience in my very early twenties, I was determined to own my own home, by myself. I saved like mad for it and ignored retirement saving completely. I achieved the home goal several times over and am now playing “catch-up” with my retirement savings. Your point that one just shifts what they worry about is blazingly insightful. Just as upper division courses build on what was learned in the lower division courses, one’s worry and concern do not go away as debts are paid off, they just shift to more advanced subjects. Now one is charged with looking forward and wisely building something, not just paying for past mistakes. Building wealth involves a completely different set of skills. It includes a much broader range of options and many more choices. It can be more difficult than slaying the debt dragon, in my opinion. Please continue sharing your thoughts as you grow in this direction. There is much to be learned and written about creating wealth in a way that fits with a frugal, yet creative mindset.

  26. I think if you took the time to train your mind NOT to feel fear (it’s difficult but possible with lots of work), you’d find peace in the moment which is all we really have anyway.

    Most people go through life thinking that they cannot help the way they feel (think),but you can. It just takes work.

  27. Love this article! Actually this is a very valid concern… life after debt. You have nailed the topic. Definitely going to take your advice and start planning for life after debt!

  28. Great post. It’s always nice to take a big picture look at things and make sure all your decisions are still leading toward what you want.

  29. Congratulations on becoming Debt free. I am sure that I will have my willpower tested as soon as I reach my goal of being debt free. I am one of the ones that got my first credit card my first year in college and was less than responsible. I am trying to teach my kids the lessons they need before they leave home that I didn’t get in hopes they don’t fall into the same pitholes.

  30. I was just looking today at our long-term goals for what we want to accomplish once we get debt free. At first I thought “Put all that extra money towards the mortgage and get it paid down!” Then I realized that shoring up the emergency fund, saving for the next car, and getting our retirement funding to a better level were more immediate goals, and would likely take a couple of years to accomplish (and only if we continue to live on a fairly strict budget).

    So yeah, I feel you. It’s easy to get carried away…by desires to make lots of purchases, by desires to pay off the mortgage, by desires to travel or any of a number of other desires…

  31. Thanks for a really interesting read, learn quite a few tips here, trying hard to improve my credit , i did a consumer proposal 7 years ago and just now i am starting to rebuild my credit slowly but surely and trying to avoid that credit card trap.

  32. I’m sort of sitting here, stunned. This is exactly what i’ve been wondering about for awhile now…what do we do when we’ve paid off everything.

    I don’t feel like I still have a great answer to this but I will tell you that I don’t like the feeling I often have of holding on to money by tooth and nail. We’re fortunate to make very good incomes and it bothers me that I sometimes feel like being debt free has made me a money hoarder. I wonder if we’ll ever have achived our “goals” or if we’ll just keep coming up with more goals on which to spend.

  33. I’m also struggling with how to balance all my goals. I have a car loan that I’m paying down now and a low interest student loan which I’m less concerned about. I’m also working really hard to convince myself to fully fund my Roth IRA this year. That’s really hard when I want to be paying off my car faster and saving for a house sooner. It’s also hard to balance those goals with more immediate wants like going out to visit family or on a vacation or signing up for some classes. I know there has to be a good balance somewhere, but it’s really hard to find it!

  34. slinky –with you on balancing goals/ i did a budget–all monthly/annual payments so i could work out disposible income each month

    depending on month–ranges from £12 to £700—6/7k a year

    ive been getting better results when i focus on 1 target. loan-PAID
    2.5k–emergency fund–another 8 months
    3.clear mortgage–dec 2015–jan 2016

    reduced my emergency fund down to 5k

    • “ive been getting better results when i focus on 1 target.”

      So do I, but how do you pick JUST one? I have a fantastic budget which lets me play around with the numbers, which I love. That doesn’t tell me if getting into a house is more important to me than paying off my student loans or going to visit my MIL across the country. It doesn’t justify putting off my retirement savings just because I really want my car loan gone. How do you balance the best (logically speaking) path against the one that fits what you WANT the most? How do you balance the need to save for retirement (long term) with the need to pay off your car (mid term) with the need to fix your dishwasher and buy a new mattress(short term)? What gets priority and what gets pushed back? Budgets don’t tell you that. Only you can figure that out yourself, but I’ve been going in circles on all this for a while now. So. How do you figure it out?

      • Studies have shown (from the study of New Year’s Resolutions) that a person is more likely to accomplish many goals if he/she tackles them all at once instead one at a time.

        Note this is for goals, not tasks. Studies have show a person is more likely to accomplish many tasks if he/she tackles them one at a time instead all at once.

        Probably the reason for this is a person can get “stuck” trying to accomplish one particular goal and make no headway. For example, if I decide my most important goal is marrying Britney Spears to the exclusion of everything else, I am not going to accomplish anything.

        The answer I have found for paying off debt is the same answer I have found for investing: diversification. In other words, allocate a portion of your cash flow in trying to accomplish all your goals.

        For example, I might decide to devote 1/3rd of my savings to paying off credit card debt, 1/3rd of my savings to contribute to a 401(kl) plan, and the final 1/3rd of my savings to creating an emergency fund.

        That being said, once you decide what percentage of your cash flow to devote to paying off credit card debt, you would then use either the “minimize cash flow” method or the “minimize total cost” method of paying off your credit card bills.

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  36. Could I get a little advice from these readers here, please? My husband and I are both very close to 60. Next month, we will be completely debt free. We paid cash for your home 10 years ago. I retired 8 years ago, my husband is still working another 2 years. Is 1.6 million enough to retire on? Our expenses usually run around $5K a month. Also, is it more important to be debt free or save the money to add to our savings to make it more than $1.6?

    Thank you.