We’ve officially received documentation from Navient that our last loan is paid in full – whoop whoop!
So many people have reached out to us, sharing kind words and congratulatory wishes – thank you to each and every one of you! The number one question we’ve been receiving is HOW DOES IT FEEL?!
Similar to marriage when you were already living with your partner before the big day, doesn’t feel much different. Ha!
But really, not much has changed.
We’re still making and following a budget AND we’re still living pretty frugal.
We are now on Baby Step 3: Fully-funded Emergency Fund
Up to this point and over the last 16 months, we’ve only had $1,000 saved in the bank for emergencies. Thankfully we never had to use it (remember, Christmas and snow tires are NOT emergencies), so now we can focus on saving 3-6 months of cash to cover expenses should the worst happen. Because life does happen.
For us, our minimum monthly living expenses including our mortgage is about $2,900. And that’s with $200 worth of personal cash added in, me expecting to spend $300 on oils and $250 in sinking funds. So realistically, rice and beans-wise, we’re at $2,300 a month. That’s all we need to pay the mortgage, keep the lights and heat on, and eat a somewhat healthy vegan diet. That’s basically how we’ve been living the last 16 months and that’s how we paid off our debt so quickly.
I’d prefer to have 6 months worth of savings in the bank, or $13,800. But because I’ve literally never had an emergency fund before in my life, I’d be comfortable with $25,000. Again, this is money just for emergencies. This does not include house renovations or a new wardrobe.
Since we already had $1,000 in an online savings account, we only have $24,000 to go! Once this is saved, we’ll then be able to loosen the reigns even further and start investing for retirement, start saving for vacations and home projects, and paying off our mortgage. And giving! Giving is at the top of our list! The average couple going through this plan has their debt AND mortgage paid off within 5-7 years. I can’t wait to be one of those statistics!
A review of December:
– We paid $3,287.49 toward debt (paying it off in full)
– We deposited $601.66 into savings (!!!) – that felt weird and good at the same time!
Being January 9th as I write this out, we’ve officially doubled our emergency fund since December 13th. As we get paid throughout each month, I’ll continue making transfers to savings just as I did to debt.
Changes to our monthly budget now that we’re consumer debt free:
- Less sinking fund envelopes: I went back and forth on this topic for the first week or so of the month. Ultimately I decided that we don’t need envelopes/savings for smaller reoccurring expenses in our life i.e: haircuts, the quarterly water bill, the bi-annual trash fee, and car inspections. We have more than enough money to cover these expenses out of pocket when they arise and will not feel guilty paying them and saving less that month because, well, they need to get paid. We will continue to use two envelopes as they are higher amounts (and honestly, it feels good to have the money to cover these!): car insurance and Christmas / gift money. We already have one wedding save the date… I know there’s going to be at least one more! I can’t wait to save up and splurge on my friends!
- Personal money: Over the past 16 months neither one of us had a monthly allowance or personal cash to spend freely. That means we didn’t buy any clothes, large unsweetened iced teas from Dunkin’ Donuts or any other misc. items that didn’t fit into our budget. Starting this month, we’ll each have $100 cash to spend on anything our little hearts desire. We won’t need to consult our partner before making a purchase! Freedom! Ha! I joke, but really, this has been the weirdest part of all. Let’s just say on January 1st I placed an online order for two new dresses and when they finally arrive, I’ll only have enough cash to keep one. The suspense is killing me! Then I may get my nails or eyelashes did. Oh, the possibilities are endless!
- A little more wiggle room in the food categories: Our food budget each month has been $400 – a little less when we subscribed to a local CSA this past summer. This has been more than enough for us, however, it didn’t allow us to keep food in the pantry. We added $50 to this category so that we could buy some of our favorite non-perishables to keep on hand for when we want to be spontaneous / not stick to the meal plan without blowing the budget. We also added $50 to our going out budget, which had previously been set at $195 per month. We both love eating out locally, and we love supporting our local brewers. Ha! $50 gives us a little more without being extravagant; we by no means will start eating out on a weekly basis = it’s a money trap! AND it doesn’t make the act of going out special.
Oh, and I dropped a side hustle. My Saturdays are now free to run, wander the Farmer’s Market and hike, as I’ll no longer be working for Annick. I’m super thankful for the opportunity she gave me over the last 7 months. Didn’t always feel like an opportunity when I was committed to something each Saturday of every week, but without that job, we wouldn’t have been able to pay off everything when we did.
I’ve decided to keep sharing our month in review to not only keep ourselves motivated toward saving / staying the course, but also help motivate all of you! Just this morning I received a PM via IG with a debt snowball update from a friend and golly, it really set the tone for my day! I LOVE seeing y’all win with money too!