On September 1, 2010, my new husband and I declared ourselves to be non-mortgage, debt-free [1] from our $25,000 of consumer and student loan debt [2] mostly leftover from debt [3] accumulation during our single years. It was momentous, it was awe-inspiring, and then it was just life as usual. Except that we didn’t quite know what debt-free, life-as-usual was going to look like. For nearly a year we had a great goal of becoming debt-free before going down the aisle (only missed that milestone by four months), and this gave us razor-sharp purpose. After reaching this goal, we were both surprised with a sort of void we felt that needed to be filled.
In my first article on The Aftermath of Debt Payoff [4], I discussed the immediate changes that becoming non-mortgage, debt-free had brought to our lives and circumstances. These included things like shifting our priorities to a few purchases and some travel we had been postponing over the course of several years, fully funding an emergency account [5], upping our grocery budget by $50 per month, and vowing to save up money for each future purchase we would make. And I also discussed what had immediately remained the same for us, such as our desire to continue to maintain a frugal and (mostly) non-wasteful lifestyle and to accumulate wealth. The article ended with sort of an open-ended question to myself and to the world as to what we would focus on next now that our non-mortgage debt was behind us. I was relieved to learn that many other My Dollar Plan readers were in our same boat [6], and just didn’t quite know how to proceed on such unchartered territory.
So what did we choose to do, and how have things changed since then?
Things that Remained the Same
Our vow to not purchase anything without first saving up cash to pay for it (although we do charge everything to a credit card that we pay off before the grace period is up in order to take advantage of credit card reward points [7]. This includes when we were faced with a potential $7,800 central A/C unit replacement, and when my car broke down and we purchased a used one for $2500 out of pocket [8].
We have always been savers at heart, but since freed from the chains of debt [9], our ability to save each month has increased big time. In 2012 we banked 40% of our take-home pay in retirement, investments, and long-term savings (accounts that we have not touched and will not touch for short-term savings goals). The year before that, it was 38%.
And of course, frugality is still king in our household. Yes, we’ve loosened up a little bit and focused on some other priorities such as travel [10], but no one would call us extravagant. My husband still packs his lunches most days of the week, our “fun money†spending category has remained the same, and we still find creative ways to keep us out of the store.
What Has Changed: We are Designing Our Lives
My husband and I knew that we had done something great and life-changing by getting out of consumer and student loan debt [11] at an early age, we just didn’t know how to “cash in†on the opportunity. After fully funding our emergency fund and saving lots of money over the last two and a half years, we finally came up with a great way to reap the financial rewards: self-employment. I had never dreamed of becoming self-employed [12], though I had always wanted to be a writer (i.e. dream job from second grade when I created a story about giants and doodled large nostrils onto their faces throughout my first illustrated creation). My blog, Frugal Confessions, was started four and a half years ago in a bout of unemployment, and I have worked at it as a second job all of this time in the hopes that one day it might be able to partially provide for my family. Because of our frugality (which means low bills), and increased cash flow after paying off the debt, my husband and I came to the huge decision of me quitting my daytime job and pursuing my passion full-time.
Our New Financials
We did not come to this decision quickly or without regard to financial ramifications. Instead, we had many discussions, took out an excel sheet and calculator, and ensured that all of our bills plus maxing out two Roth IRAs [13] could be achieved through my husband’s paycheck alone (well, and with my frugal finesse). After we figured that out, then we knew that we had to take this opportunity.
Since February 1st of this year, I have been self-employed [14]. We have not touched our savings account other than to add to it, and we have consistently met our monthly retirement savings goal in order to max out the current Roth IRA limits for 2013 [13]. Even though I have not achieved my pre-self-employment income to date, I can honestly say that taking this leap has been quite a success, and quite a life-changer. I have released my first ebook, and am working on my second. I’ve guest posted and started to staff write for a few other blogs, and I am currently working on a business plan in order to fully maximize this opportunity.
My husband and I could not be happier with how we chose to “cash in†on our increase in monthly cash flow after paying off our debts [15]. Choosing to take advantage of it now instead of continuing to save gobs of money for some unknown future purpose (other than for retirement) has meant a much higher quality of life for both of us. We could not be happier.
Have you figured out what to do in the aftermath of debt payoff? Are you still in debt payoff mode, or perhaps just getting started like my husband and I were back in the fall of 2009?