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Debt Free! -- now what?
Posted on 6/10/16 at 8:33 am
Posted on 6/10/16 at 8:33 am
TL;DR - Learned to budget with YNAB 16 months ago. Since then I've finished paying off my student loans (4 years early) and just this morning sent in an early pay off (2 years) on my car. For the first time in my adult life I'm actually debt free!
I guess I need to learn where to go at this point. I've got a $1500 emergency fund. I rent, have no 401k match at work (never bothered to open one up because of it)
Feel like I should build my emergency fund up some more and start saving up for something...maybe a house in the future or something, hell I don't know I want to do now. The only goal I had originally was get out of debt
I guess I need to learn where to go at this point. I've got a $1500 emergency fund. I rent, have no 401k match at work (never bothered to open one up because of it)
Feel like I should build my emergency fund up some more and start saving up for something...maybe a house in the future or something, hell I don't know I want to do now. The only goal I had originally was get out of debt
10
Posted on 6/10/16 at 8:40 am to Doldil
1. I'd aim for 15-20% into 401k or retirement.
2. Get an emergency fund up to at least $5000, but preferably 6 months of expenses
3. Save for a house downpayment of 20%
4. Invest extra
2. Get an emergency fund up to at least $5000, but preferably 6 months of expenses
3. Save for a house downpayment of 20%
4. Invest extra
Posted on 6/10/16 at 8:41 am to Doldil
quote:
Feel like I should build my emergency fund up some more and start saving up for something...maybe a house in the future or something, hell I don't know I want to do now. The only goal I had originally was get out of debt
Well - if you're not following Dave Ramsey's plan, he would still be proud of you. I would suggest a fund of 3 to 6 months expenses (Baby Step 3 - you've already completed 1 and 2) - then get to 15% savings rate for retirement (exclusive of any company match). You should be preparing to purchase a home, but if you're single and flexible about future work plans (are willing to relocate within the next 5 years if the right opportunity comes along), then you can hold off on buying a house.
In lieu of that, I would stack cash and get some reasonable return on it - because even if you qualify for a no/low money down loan, there are closing costs and you want to avoid PMI if at all possible.
But, enjoy the debt free moment for a little while - you've achieved something many Americans simply cannot imagine.
Posted on 6/10/16 at 8:42 am to Doldil
Congratulations. I'd say save money to buy a house would be first on my list.
Posted on 6/10/16 at 9:05 am to Doldil
Did you do your Debt Free Scream? That's first on the list.
Posted on 6/10/16 at 9:06 am to bwallcubfan
I intend to take a celebratory shot tonight when I get to the beach, does that count?
Posted on 6/10/16 at 9:17 am to Doldil
That'll work
after that:
Build your emergency fund to 3-6 months of expenses. If you have a stable job, I'd lean more to 3 months.
Start putting at least 15% into retirement (401k and IRAs). Automate it.
Anything after that, just stash away as much cash as you can for a house (at least a 20% down payment).
My last advice is don't change your ways much now that you're debt free. Obviously, you don't have to be as frugal as you were, but just continue to live below your means and stay away from the new fancy gadgets and going back into debt.
after that:
Build your emergency fund to 3-6 months of expenses. If you have a stable job, I'd lean more to 3 months.
Start putting at least 15% into retirement (401k and IRAs). Automate it.
Anything after that, just stash away as much cash as you can for a house (at least a 20% down payment).
My last advice is don't change your ways much now that you're debt free. Obviously, you don't have to be as frugal as you were, but just continue to live below your means and stay away from the new fancy gadgets and going back into debt.
This post was edited on 6/10/16 at 9:36 am
Posted on 6/10/16 at 10:52 am to Doldil
Another word of advice... keep putting away that car payment for when you eventually need repairs or a new vehicle. The hardest thing to do after not having a car payment for a few years is to start paying one again.
Posted on 6/10/16 at 11:23 am to Doldil
First, start maxing a ROTH for you and your spouse, then continue to add to your emergency fund. I put this in that order because you can withdraw your roth contributions penalty free, so it can act as a temporary emergency fund if necessary.
Once you've maxed your roth and strengthened your emergency fund, start piling up as much as you can afford in your 401k.
Congrats.
Once you've maxed your roth and strengthened your emergency fund, start piling up as much as you can afford in your 401k.
Congrats.
Posted on 6/10/16 at 11:45 am to Doldil
quote:
I've finished paying off my student loans (4 years early) and just this morning sent in an early pay off (2 years) on my car. For the first time in my adult life I'm actually debt free!
First, congrats. Tough row to hoe.
Now, it's time to be an American -- F-250. Solid gold truck nuts. 7 year note.
You know you need it.
Posted on 6/10/16 at 1:03 pm to Doldil
Take that $1500 you have and put it toward a downpayment on a boat.
Posted on 6/10/16 at 1:35 pm to Doldil
Start saving for a house so you never be debt-free again
Posted on 6/10/16 at 5:18 pm to Doldil
How about traveling, learning something new/fun, and gaining some life experiences along the way? Houses are overrated. Save for retirement, stack some cash for your emergency fund, but also start a travel fund. Go somewhere you've never been that will challenge your mind, not just an all inclusive beach resort. Before you're tied down to a mortgage, go see the world.
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