Once we're debt free, then what?!!

[Purseval]

We're totally debt free. We use our extra money to take advantage of all the people who got in over their heads and now have to sell at firesale prices. You can't believe the deals you can find out there, so many that you can make insultingly low offers and they still get accepted. The ones that don't? Who cares, another deal is right around the corner. Doesn't matter if you're looking for a vacuum cleaner or a vacation home.

 

[DawnM]

We became debt free (other than house) over a year ago.

We now have 6 months of savings. We want to get that to 12.

We also have a sinking fund for several items.

We have been able to have CASH to pay for several home repairs! We paid cash for a new roof last year. We paid cash for a new heat pump this year. It is so wonderful to pay CASH!

We have always paid full payments into retirement, so that hasn't been an issue.

I would save up for a full year of savings first. Do you have a house? Save up for a house and any replacements/sinking funds you will need.

Dave Ramsey's plan says you are just getting towards finishing Baby Step #2! There are 4 more steps to go!

Dawn

 

[crisi]

First we paid off credit card debt.

Then we paid off our mortgage.

Then we built our emergency funds up to the point where we were comfortable. You need to determine what that level is - its different if you have two people working in "steady" fields than if you have one income coming from a job that is uncertain.

(The last two were done sort of similtanously).

Our 401ks were already maxed.

Then we started to

1) Seriously save towards the kid's college educations.
2) Start spending some money - my husband does drive a very nice car, we have taken some very nice vacations.
3) Do some hobby investing.
4) Do a lot more giving than we had.

 

[Ember]

Sorry about your mom

But, I gotta say it sounds like you do not have any kids, am I right?

If so, then don't worry - when kids come, they will take care of your "surplus" and then some!!

No, no children for us. Not now and perhaps not ever, though of course nothing is set in stone. I adore children (one of the reasons I love teaching) but seem to be lacking a biological clock. But it is nice to think that if we did choose to have a child in our lives we could afford to do so.

 

[Swimalie]

First of all, congratulations!!

Now, after you are debt free you should have you retirement fund maxed out per year and at least 6 months of salary in savings. After that, then you can have investments and extra savings.

 

[indimom]

since you do not have a mortgage or children, I would just invest, invest, invest your surplus (don't forget to enjoy some of it too ). Put some in longer-term investments and some in an account (where you can access the money if needed, without penalty), but with a better rate of return than a savings account.

You will be one of the EXTREMELY lucky ones who just might be able to purchase your first home debt free! Oh, how I wish, DH and I had been as smart as you, as young as you...

 

[RachaelA]

I'm only 29, I think I have a few years left.

I don't think its ever too early to start saving for retirement. I'm 24 and that's part of my plan for the new year is to max it out. DH has been almost doing it since he was 20 (hes 29). We plan to retire early because of our active saving now.

I would work on at least 6 months of expenses. Unless your monthly expenses are less than $1k a month, $5k won't get you far if you lose your jobs.

DH and I only have his car loan and our mortgage. E-fund (6 months worth (we have a little over 2 right now) is our next goal and then the car.

Congrats! Splurge a little.

 

[BuzznBelle'smom]

Investing now for retirement is a good idea--it has so much time to grow! So, definitely consider that. Since you're so young, I would also plan for the possibility of home ownership and children down the line. You may do neither--certainly, it doesn't sound like your short-term plans include either, but both would take a lot of $$. So, investing for retirement right now makes sense, as does having more in savings. Once you've settled down (after your South Africa adventure), home ownership might look more appealing to you. Children might, too--emphasis on MIGHT.

Sorry about your mom. The only thing I would suggest there is, you know your mom, and you know what she'd like for you to use that money for. Emergency savings, living it up a little, education for potential future grandchildren, whatever. And in your mind, maybe earmark it for future expenditures that would make your mom happy. When my mom died, I got a small inheritance (~20k), and spent a lot of time thinking about how she would want the money directed. For me, it was family time. For you, it might be something completely different.

 

[Purseval]

since you do not have a mortgage or children, I would just invest, invest, invest your surplus (don't forget to enjoy some of it too ).

I can testify to the dangers of oversaving. A company I used to work for paid bonuses in stock. Not only did we save it all we even bought extra until we had about a million dollars worth. Today it's worthless. I thought my coworkers who bought cars, boats, took vacations, etc. were foolish. At least they got to have some fun before the bottom fell out

 

[minnie1928]

I can testify to the dangers of oversaving. A company I used to work for paid bonuses in stock. Not only did we save it all we even bought extra until we had about a million dollars worth. Today it's worthless. I thought my coworkers who bought cars, boats, took vacations, etc. were foolish. At least they got to have some fun before the bottom fell out

I am so sorry that happened to you, but that is not a danger of over saving. That is the danger with not having a diversified portfolio. Employer stock can be wonderful but it's also a duel edged sword. In one hand, you have this potentially size-able investment and on the other hand you have the company that provides you with your salary. If the stock goes under...so has your job (most likely) and you've lost both your investment and you salary. You shouldn't hold employer stock any more than you would any other stock (amount wise).

 

[FINFAN]

So sorry about your mom, prayers for you all,
As far as what to do with any extra $, retirement...care costs are insane and only getting more $$$$. If you do not have children, then all help you may need will have to be paid for . It is wonderful you are there for your mom, but what if you weren't? I know Canada health care system is different than U.S., not sure about assisted care etc. I agree that renting sounds better for you both, especially if you are not going to be at home for 2 years. Congrats on the financial stability , you should be quite proud!

 

[tnmt]

I don't understand when people say they are debt free except for their mortgage. In my opinion, you are not debt free until you don't owe for anything and that includes the mortgage.

 

[indimom]

Because that's what they are...debt free EXCEPT for their mortgage.

Trust me, those of us who have a mortgage are well aware we are still in debt. But, we are also aware that those around us who owe on numerous credit cards, school loans, personal loans, and vehicles, most with high interest rates are in a completely different situation.
Assuming the homeowner didn't buy during the bubble and have a house that lost all it's equity, most could get out of their mortgage (by selling) and have money in the bank. You can't do that with any of the other debts.

No offense intended here, just wanted to explain why most of us see our mortgage differently than other debt.

 

[Ember]

I agree that renting sounds better for you both, especially if you are not going to be at home for 2 years. Congrats on the financial stability , you should be quite proud!

This is random, but thank you. As we've been talking to friends and family about not buying as per the initial plan, we've gotten a lot of slack. I realize that we're "throwing away" our money, but it just doesn't make sense for us to buy and then sell in under two years when there's a real chance we'll lose money in the bargain. In general, Canada didn't get hit in the same way the US did regarding housing, but we were hit none the less. And where we are located (Alberta), our provincial government is facing huge losses in natural gas revenue due to the ability to get the gas out of the shale in places like Texas. Couple that with the numerous issues we're having with oil and I'm convinced my province is in for more problems in the future. I honestly do not feel it's the time to buy if you can't ride out the storm.