I am just going to go ahead and assume this includes my mortgage. I don’t talk a lot about my mortgage debt when talking about eliminating my debts, because it is not the biggest priority to me right now. But it is still debt, still there, and if I was truly debt free, it wouldn’t exist either. So, combined with my other debts and the amount I usually manage to throw at debt payments, I’ve freed up about $1800 a month to do things with.
Whoa. Just…. whoa.
Well, now… what to do? I would have my spouse’s 401K deduction set to 10%. I would also start contributing the maximum to my Roth IRA. Those two things together would take up about $700 of that $1800 a month I’d freed up. I would contribute the rest to our emergency fund until I’d saved 6 months worth of expenses. Without debt, that would happen quickly. And then I would start contributing $300 per month to each of my children’s college funds, and increase our fun budget from zero to $200 a month and general savings to $200 a month for house-related renovations. I might even bump the 401K contribution up to 15%. Crazy! Heh.
Basically, I would save a whole lot more, and spend a little more. There are a few renovations to the house I would love to do, and I could save for those little by little, as well as save for a new(er) car. Which ends up being spending eventually of course but better than new debt!
This was fun to think about, but I’m not sure it will ever happen. The house probably won’t be paid off for a loooooong time. But, at the same time, my spouse hopefully will continue to increase his earnings as time goes on, so maybe it will happen sooner than I think. I do know that even eliminating the non-mortgage debt will put us in a much better place than I could have imagined a year ago. Here’s to dreaming….