Welcome to Between two debts! In this segment, I’ll ask a question every week and answers I receive will find their way here.
What was the first thing you did/are going to do when you became/become debt free?
Phase One: Figure out how bad it is and prepare. This phase means you have to look deep. You might need a calculator too.
Here were the steps we did in phase one:
1) Cash out: Look at all bills and figure out how much money goes out every month. (For bills that varied, we looked at last year’s numbers and add 5 %.)
2) Cash in: Look at income.
3) Figure debt: Figure everything, house, cars, loans, credit cards…
4) Start on an emergency fund
Phase Two: Reduce Cash Out and Increase Cash In. Look even deeper and keep the calculator out. At this stage, we did the following steps
1) Sell, sell, sell!I was listening to Dave Ramsey one night and he said, “Start selling stuff, make the kids think they might be next.” We did just, here are just some of the stuff we sold: One of our cars, Our old iPhone, Old car cover, Old car lights…
On the day I am debt free, I’m going to….I have no idea! I think that’s because part of me doesn’t believe it will happen. I still have a nasty tendency to make costly mistakes. The other part of me hasn’t invested too much time dreaming about being debt-free because I tend to skip over that moment into the living debt-free. But now that you’ve planted the seed in my head, I’ll be working on it. There may be a martini and a blog post involved.
I became debt free nearly 12 months ago and I sometimes wonder if it was the right decision! We got our mortgage in April 2011, hammered it for 5.5 years before I was made
We got our mortgage in April 2011, hammered it for 5.5 years before I was made redundant and had enough cash to pay it off. But 2.5 years ago, I had an epiphany as regards investing. I realized that it would *probably* be a better financial decision to invest aggressively than to repay the mortgage aggressively. On the other hand, debt freedom gives you incredible freedom.
So what did I do when I became debt free? Well after I’d had the phone call to tell me the redemption figure whilst I was in Sainsbury’s and confirming I wanted to pay the balance, I text my husband to ask if he felt any lighter, as though a weight had been lifted. Then, I went round to my Gran’s and we had tea and cake. We always talked about how we’d celebrate, but by the time we made our final payment, celebrating didn’t seem necessary.
We did clink glasses to mark the occasion when we were on holidaying in Spain a couple of weeks later but the general feeling of elation when you become debt free is celebration enough. 🙂
We’re going to start investing more when we get debt-free! (Hopefully, my wife and I will both consistently max out IRAs)
I don’t have any real plans. I’m sure I’ll drink a beer because I’m always looking for an excuse to have one. Might do one of my solo man dates, where I take myself out to dinner and go see/red box a movie or something. I will be taking that “extra income” and investing it. That much I do know.
That’s all for this week. Next week, there will be a new question and (hopefully) some fresh answers. Thanks for reading!