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    What to do once you’re out of debt

    Howdy dudes.

    Happy to report that my wife and I have finally paid off student loans, about 2.5 years after we got serious with it, we paid down about $250k or so…..but so now our next question is: what next?

    We've been living off her paycheck and the tiniest bit of savings, putting 100% of my paycheck into our student loans, and forgoing most things.

    Additionally, we've been contributing to max match of our 401ks, but not a penny more.

    Now, we still have vehicles and a mortgage – our gameplan going out the door is every other of my paychecks goes direct to the vehicles, while the other does ~something~

    So the question is: what is that something?

    Obviously, we want to rebuild savings some. We want to invest some. We probably want to put more into retirement. We want to pay extra on the house. And we'd like to have a little bit of fun – we're living in SD for a few more years and want to continue to explore the west before we need to move back to PA in a few.

    There's alot to balance, now, and now that we're not on an "all or nothing approach", this seems way more complicated lol

    What to do once you're out of debt
    byu/elevenpointf1veguy inpersonalfinance



    Posted by elevenpointf1veguy

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    13 Comments

    1. Intelligent-Sale2564 on

      Congrats on crushing that debt monster! 250k is no joke

      I’d probably go emergency fund first (3-6 months expenses), then bump up retirement contributions before attacking the cars. Vehicle debt usually has lower rates than what you can get investing, plus you guys deserve to breathe a little after that grind

      Maybe do like 70% responsible stuff and 30% fun money for exploring SD – you earned it and life’s short

    5. espiritusanto23 on

      Congrats, I bet that feels incredible! You’ve learned to live on less….balance enjoyment but don’t let life style creep happen.

      First thing I’d recommend is a ~6 month worth of expenses emergency fund.

    6. NecessaryEmployer488 on

      Yes emergency fund 6 months worth of expenses. A car fund is next thing as well. You want to be able to pay cash for your next vehicle.

    7. mpitt6250 on

      Depends on your goals, but I’d put almost as much in retirement savings, and retire early.

    10. mihran146 on

      Increase your emergency fund, max both of your Ira’s, save up for a vacation/ something nice( you deserve it), pay off your car’s, but probably the most important is not to fall victim to lifestyle inflation

    12. rumapricot on

      I suggest putting the equivalent of 20% of your salary’s into your 401k’s. So, if your employer gives a 5% match, put in 15% of your salary.

      Next, save up a minimum of a 6 month emergency fund, and work towards 12
      months (it sounds like you’re both high earners, and it may take longer to find a new job equivalent to your previous salary, should you get laid off.)

      Then work towards paying off your mortgage. Go over options that work best for you; making extra payments, refinancing to a lower rate and/or 15 year term, or simply saving into a separate account (easily accessible funds should you need the cash for emergencies) until you have enough to pay off the principle balance in full.

      If any is leftover, take a nice vacation, pay off cars, etc

      Remember, the more you can save into retirement accounts when you’re younger the more compound interest will favor you when you’re older

    13. shellbackpacific on

      When we got out of debt we immediately started dreaming of financial independence. Our net worth has exploded since becoming debt free. Also bought a really nice guitar and just generally bask in the calm of accumulating wealth, more travel, and living a nice life. I’ve spent time learning more about investing and am enjoying that a lot. Have some dreams and go after them

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