Friday, September 10, 2010

We're Debt Free!!!!!!!

That was for all you Dave Ramsey fans :) If you listen to Dave you know that Fridays are debt free Fridays, when people call into the show to scream that they are debt free. And on this Friday, we count as people who could call in and do just that.

I won't call in though for 2 reasons.

1. Dave always asks how much debt you paid off, how long it took and how much money you were making while paying off the debt. And if I answered those questions honestly he would probably ask me why it took so long. People that call in usually sacrifice a lot to pay off their debt. We didn't sacrifice a whole lot. We stuck to a budget but if we hadn't bought a new car and had really cut back we probably could have done this much sooner.

2. I have already called into the show once and talked to Dave and so I don't really feel the need to do it again.

Mostly its just reason number 1 why I don't want to.

But I have this here blog where I can announce it to the world that yours truly no longer has any debt. With the exception of our house, but Dave lets people celebrate after paying off everything but the house, so we're celebrating.  We paid off 2 cars and just this week sent in a check to get rid of the student loans.

Now comes the very difficult question of what to do next. Making the decision to pay off debt was easy. But now comes a much grayer shade of money management. How much money do you save? How much goes into an emergency fund? How much do you put into your 401k? How aggressively do you try to pay off your house? How much should you give over and above tithing?

Dave Ramsey has it all laid out in his book The Total Money Makeover. (If you haven't read it you really should, it is a great motivator to get your finances in order.)

Dave would say we should now start saving up until we have 3-6 months of expenses in an emergency fund. Next we should put away 15% of our income towards retirement. After that we should pay off the house (this is skipping the step of saving for college for kids since we don't have any) and finally we can give like crazy. And I like this approach. Except I don't really like the idea of having 3-6 months of expenses in an emergency fund. There are people starving to death today. Is that not an emergency? And do I really need to retire at 65 and have a multi million dollar nest egg so I can live out the rest of my life comfortably? What about giving sacrificially instead of out of our excess?

On the flip side, if we do follow this plan and get our house paid off and save for retirement, then down the road we will have way more money to give away than if we just gave it all away now. If we paid off our house and invested our money, we could have millions to give in the future. 

I'm not sure there is a right answer. But now that the debt is paid off it is something we are forced to wrestle with and figure out. But I would love to hear your thoughts on the subject. Which camp do you fall into or are you somewhere in the middle?


LaDonna Rae said...

If you were to get very seriously ill, or lost a huge part of you income you would appreciate the cushion

Jennifer Wheeler said...

Congratulations! What a great accomplishment, I think you should go out for a really nice expensive celebratory meal, and then you should lock back down into saving mode. There's a fine line between being a wise steward who's saving money and being the fool who stores up treasure that you can't take with you. If you find the balance, fill me in!

Holly said...

YAY! congrats anne!

Chloƫ said...

That is AWESOME!!! Congratulations! :]

But I totally get the whole emergency fund-people dying TODAY kind of thing. This is something that drives my dad especially nuts. I mean Jesus said "Give us this day our DAILY bread"...not "Give us this day three months worth of bread". I know it's smart to plan for disasters, but if you're not saving due to giving to God, don't you think He'll take care of you?

These are just my thoughts though. You should pray on what to do.

Anonymous said...

Congratulations!!!! That's so awesome! Josh and I have been doing the Dave Ramsey plan - but we still have a loooong way to go - too many student loans! So happy for you guys! I don't have any great advice, though! I'm sure you'll figure out what's best for you guys!

Callie Nicole said...

Good for you! We were debt-free once, and then shortly thereafter our car broke down for good, and we were forced to go into debt to buy a new one. We hadn't had enough time to save up enough money to buy one outright. It's kind of depressing. But once we get that car paid off again, we'll be back in the debt-free (except the house) and I can't wait! It just feels good not to owe anything.

Anonymous said...

Wow, what an amazing accomplishment. Really impressing! I am debt free, but that's mainly due to my family supporting me and that I haven't had to make any investments that I could not pay for myself.

Thank you so much for commenting on my climate change question. I was really curious what other people think about it. Thank you for stopping by and taking the time to comment.


Anonymous said...

I'm not a giant Dave Ramsey fan, only because I'm a pretty anti-formula person, and I hate money. BUT, I LOVE the idea of living debt-free! It might be a pipe dream, but I'd love to never borrow for anything except a house. Having the cushion (6 months or more), in my humble opinion, is hugely important because it allows you to be free from that necessary evil which is dependence upon anyone or anything for cash (another necessary evil). It is wise to have that wiggle room in case you feel called to support another person, up and move, or perhaps give like crazy for a particular cause. God provides, and being a good steward of what he provides may mean holding off on spending it as you get it -- not for some boring/cushy retirement, but perhaps for something you don't even know about yet!

Congratulations, friend!

Anonymous said...

That's awesome news!!! I can just picture you and Derek screaming "we're debt free"!

Molly said...

CONGRATS! That is awesome.

I don't know how I feel. I always tell the hubs I want to enjoy life and help others enjoy life NOW and not only when I'm retired. I think you just have to find a happy medium.

Kristin said...

Woohoo! You go girl! That is so exciting! We're still paying on one car, and then we'll be able to scream too :-D! I would really like to pay it off early, but I'm not being very sacrificial... Your post has inspired me to put on Dave Ramsey's book again though (we have the CD version) - it's been awhile since I've read it, and need the fresh inspiration. Hope you're having a great week so far! But then, how could a debt free week not be a good week?!

Amanda said...

Congratulation!! My husband and I are like you all; no kids and paying on the house. I tend to think that if you tithe like you should, God will bless you so that you will have the means to give even more to others and you will also be taken care of. My human mind likes a backup. I don't think there is anything wrong with saving for unexpected problems. The only time it would become an issue is if you start loving the money, hoarding it, and not enjoying the fruits of your labor. I've been reading the book of Ecclesiastes and it talks a lot about this. I will tell you one experience I've had of how God looked out for us. A few years ago, my husband was laid off from his job for a few months. The money was very tight, I actually wrote out the bills one of those months and was short $29 and some change. I just prayed that some of the checks would not clear the bank until I got paid again. We didn't tell anyone about our financial situation. We were the only ones who knew. A couple days after that, we were at church and my husbands aunt handed him some cash folded up and said, "I just felt like I should give this to you." He didn't want to take it but she insisted. He stuck it in his pocket until we got home. Wouldn't you know when he finally pulled it out and counted it, there was $30. Just what we needed. So God does look out for his people. I just think you have to use what He gives you wisely. Again, congratulations!