It’s a brave new world out there folks!
For the last 25 months we have focused solely on paying off our debts and saving up an emergency fund. It’s become our way of life, our routine, our mission.
But what happens after you pay off all your debt and save up your emergency fund?
What are you supposed to do now you’re debt free?
The Dave Ramsey Baby Steppers out there shout: “Steps 4, 5 and 6! … or BS3b if you don’t own a house yet” (For the non-DR fans that is BS4: Save 15% of your gross income for retirement, BS5: save for your kids college and BS6: pay off your home asasp. BS3b is 20% deposit for a home loan if you’re renting) BUT … that’s not all!
In a recent podcast Dave spilled the beans on Life After Debt:
Baby Step 4 is when you can take your foot off the gas a little. If you’ve been working a tonne of overtime or you picked up a second job to get out of debt, once you have your Emergency Fund in place it’s OK to cut back.
Step 4 is a great time to stop and consider some short term saving goals, as well as looking a long term savings like investing and saving kids college.
Are you considering upgrading your car soon? It might be time to start saving for that.
Been a while since you’ve had a vacation? Want to update your bedroom? Replace your laptop? Now is the time to sit down and consider what your big short term savings goals are.
Remember, just because you’re out of debt, doesn’t mean you don’t need to budget anymore. If anything, now is the time to be extra vigilant you don’t blindly swipe the debit card and end up wondering where your money went.
Completely paraphrased, but you guys get the drift!
So, what are our goals for 2017 post BS3?
Although our Big Lap is constantly at the front of the goal list, it’s weird now we’ve popped the question ~
“So, we’re debt free! What do you wanna do now, honey?!”
Let’s just say ^^this^^ is becoming a standard facial expression in our home at the moment!
We’ve been suddenly paralyzed by the fear of spending our money ‘wrong’.
We want to do everything and nothing all at the same time.
Welcome to Life After Debt!
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I am lead to believe that this face is a TOTALLY NORMAL RESPONSE after almost 20 years of debt dependence.
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Taking a step back for a minute, it was time to revisit our 2017 Coffee Date Goals:
a) upgrade our current vehicle to a 4wd
and b) modify said 4wd for camping to have it “Big Lap” ready.
c) purchase an off-road camper trailer or caravan
d) save some $$$ for our first 3 months on the road.
e) Take an overseas holiday (perhaps Fiji?)
Lastly, we need to throw Moving Interstate into the mix, as will be leaving our current (rented) residence and bunking in with my parents before we take off on our Big Lap.
Heading into Life after debt, our main objective to to continue savings as much as possible.
We have re-adjusted the names of our Savings Maximiser Accounts with ING Direct to reflect our current goals and now have the following back accounts
- Everyday Transaction Account with ATM card (Monthly Budgeted Allowance goes in, Bills come out)
- “Fuel Card” Transaction Account with ATM card (Monthly Fuel Money only)
- Pre-paid / Pre-loaded MasterCard (for Credit Card functions and for direct debit bills such as our phones. NB: there is no borrowing function with this type of card)
- “Monthly Stockpile” Savings Account (all our pays get stockpiled here, for distribution to other accounts on the 1st of every month – this is how we do our monthly budget)
- “Buffer” Savings Account (we keep $1000 here in case of small emergencies)
- “Car Maintenance Sinking Fund” Savings Account (the only sinking fund we have!)
- “Fully Funded Emergency Fund” Savings Account (3-6 months of expenses for dire emergencies only)
- “Savings” Savings Account (1st goal is enough to purchase a 4wd, then a caravan / camper trailer)
We have Cash Envelopes for grocery shopping and our Splash Cash (personal spending money)
So there you have it! Life after debt, not much different to before! We have chosen not to add too much back into our Monthly Budget, because honestly we don’t miss most of the crap we were wasting our money on before, but rather continue to save and focus on our next goal; which is the 4wd.