when i am out of debt

April 27th, 2009

When I Am Out Of Debt…

Changing focus so far this year to primarily save and secondarily pay down our remaining non-mortgage debt was an idea that made total sense to me intellectually and on paper, but in practice didn’t work as well as I had hoped.  Which is why we chose to return our primary focus to debt elimination for the remainder of our final non-mortgage debt, my student loan.

As a sort of incentive to finally rid ourselves of this final debt, I’ve started thinking about what life will be like after debt.  Will things change significantly?  No, of course not.  Our focus will again shift to saving, but this time without a split focus with debt involved too.  We may decide to shift back to debt elimination in some form through addressing our mortgage, but we’ll be mindful to strive to keep ourselves out of future debt by trying to anticipate places that debt could be incurred (costly home repairs, automobiles, medical emergencies, job loss) and begin to prepare for those eventualities or uncertainties.

But what immediately happens upon eliminating debt?

I think we get a new refrigerator.

I know that probably sounds silly.  It is somewhat silly.  But at the same time, it is a relatively small thing (in the entire scheme of things) that will make a direct, positive difference in our lives on a number of levels.  Our current refrigerator is an energy hog.  I’ve calculated its energy usage and in the fall, winter and fall months (when we’re using gas heat  or nothing at all as opposed to electric a/c)  the refrigerator alone accounts for close to half our total electricity usage.  It is close to 30 years old, in an era where energy efficiency was still in its babyhood.  The coils were maybe never cleaned by previous owners, and although I make valiant attempts, it is set up in such a way that I can only clean so much underneath without literally skewering myself on the coils.  And since it is set back in a nook with the plug in the back, to unplug it to clean it (recommended every three months) it needs to be literally pulled out 7 feet to reach the plug.  And it isn’t meant to be moved, so that’s a fun chore.

We don’t want top of the line, crazy fancy in our next refrigerator.  Energy efficient, easier to clean, and functional.  I haven’t priced things at all yet, but I am anticipating something under or around $1000.  We wouldn’t pull out of emergency or current savings funds, we would save ~2 months of the former debt elimination fund to purchase it.  And it is really only a matter of time – a refrigerator’s life span is only so long in the first place, and 30 is a granddaddy number.   It won’t be that many years before the decision is made for us.

I still have to calculate exactly how much money an energy efficient model will save us per year over our current model, but rough estimates with the energy star website calculates that it would take only 5 years (if not less) to recoup the cost of a new refrigerator in the difference in energy usage.  So when we eliminate our non-mortgage debt, a new refrigerator finds its way to us.  Unless the refrigerator makes that decision first, like our furnace did last year.  I must admit, it is fun to dream.  Debt elimination makes it feel possible to dream and actually think a dream might eventually happen.  A cool thing in and of itself, regardless of the eventual outcome.

What’s your post debt elimination fun, reward type goal (if you have one)?

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20 Responses to “When I Am Out Of Debt…”

  1. Ooh, we’re just getting started hot and heavy into our non-mortgage debt elimination. I don’t know if I dare think about the aftermath yet, but I have wanted a new bed for years. And yes, I do think that would make a positive impact on our lives! In so many ways…;)

  2. Once we’re free of credit card debt, our reward will be putting the next $3000 extra dollars into savings. That doesn’t sound very exciting, but I think it will make us feel great.

  3. There are often times tax rebates for buying EnergyStar appliances. Make sure whichever model you choose qualifies.

  4. i’m almost freaked out about the day i’m out of debt… because those numbers represented very real goals. must pay $xxx to reach this goal. and somehow, saving and all just seems much more nebulous, even if i set up separate accounts and determine to save, say, $10,000 in a liquid emergency fund. $5,000 for a Roth IRA. etc., etc. i just really feel like i get squishy when it comes to thinking about money after debt. i sure hope i’m not the only one that feels that way!

  5. As of just today, I am free of credit card debt, and officially saving for the honeymoon we put off because we couldn’t afford to take it. We’ll be married 2 years in August, but we wanted to be wise and frugal before we celebrated. We’re no less in love, and the vacation someplace sunny will be all the better for the peace of mind.

    Of course, when we get back, we’ll concentrate on working on our student loans. When we get those paid off, maybe we’ll go on a *second* honeymoon.

  6. In about 5 years my final payment for a specialized school student loan will be paid. And I will rejoice! It is the only debt I carry…no mortgage as I rent. I have been repaying this school loan since 2004, and my investment has paid off in ways no words can describe. Some people borrow $50,000 to buy a luxury vehicle. I borrowed to invest in the life of a child and it has made all the difference.

  7. Jinger: *AMEN*!!

  8. FrugalChick Says:

    April 28th, 2009 at 7:34 am

    Don’t forget to check out scratch and dent’s! There are a few big-box stores around here that have huge scratch and dent sections. A friend of mine needed a new fridge and found a great Energy Star one at HHGreg for hundreds less than the retail price, all because of a small nick on the side. Then you would recoup the cost of the fridge even faster!

  9. I think you’ve got the same refrigerator as I do. The cutting edge of 1970s technology. Mine is also the biggest energy hog in my home. Other than the A/C unit which I suspect also dates back to the 1970s.

    Look on the bright side. At least you have the option to get rid of it once your debt is paid off. I live in an apartment, so I’ve got to keep mine and eat the cost.

    Another good point to consider about having an ancient refrigerator: all those great stories about defrosting the freezer. You’ve got to have at least one.

  10. we’re looking at paying off our house this year if things continue as they currently are – we are so so so excited about it! We haven’t 100% decided what our treat will be yet, but we both have a list of “toys” we’ve been postponing even thinking about until the house is knocked out…I’d like a nice sewing machine & a DSLR…DH wants a tractor. I’m sure we’ll have several splurges after paying off the house…but every one of them will be totally worth it! And better yet…paid 100% with cash :)

  11. That’s funny, because a new refrigerator is what I’ll be getting when my debt is paid off next year too! Mine is 16 years old, and, like you, I want to replace it on my timeline, not as an emergency. I’ve been causally pricing them, and I’m pretty sure I can get a good basic, energy-efficient model for $600 or less. Then I have a whole list of things that will need replaced – tires, the rest of our appliances (all bought the same day as the refrigerator), mattresses, etc. After the ‘frig, my intent is to save up the cost of whatever I’ll be buying plus $1000 for the emergency fund, make my purchase, then save up the cost of the next item plus $1000, etc. I know it will take several years to get through the list, but I think it will work out just fine.

  12. Wife and I plan to save a few months worth of debt elimination snowball payments to take a cruise – grandparents have been warned that they’ll be expected to watch their granddaughters for a couple of weeks. ;-)

  13. “You’ve just paid off all your debt and are debt free, what are you going to do now? We’re going to Disneyland!” We are planning Disney with our two kids and Grandma and Grandpa.

  14. You’re gonna love it!
    You’re gonna sleep better at night!
    The state of the economy is not going to bother you!
    You’ll know you can face any situation!
    Debt free is a totally wonderful place to be!
    It’s worth the struggle to get there!

    That in itself is treat enough for me!

    I just like the fact that if I want something, I know I can buy it. Now. That doesn’t mean I do, but it’s a nice feeling to know I could if I wanted to :)

  15. Wow. Our ultimate goal will be to downsize and own outright; to ditch that last big debt, the mortgage. Timeline for that is maybe 5 years. I suspect our portion of the kids’ SL will be around until then, too. That leaves getting rid of CC debt, which should happen most likely be within the next year.
    So, with that in mind:
    When the CC’s are killed, it’ll be on to absolutely assigning a purpose for each $1 that comes our way. Right now, we do that (as I’ve said) for monthly bills, but there are all those others: property taxes, gifting, etc., that we scrounge around for. I’d like to have a constantly replenished fund for “misc” that could handle even a major purchase (car, appliance, whatever), that and a big fat EF.
    We don’t “need” anything right now and if we’re lucky all those major things will last until we downsize. If not, I plan on paying in cash, or do without. We have toyed with hiring someone to paint our interior, now that’ll wait until ready to sell, we had talked about installing a solar water heater, but not worth the investment at this point. So, a pretty simple goal: be able to cover all expenses without worrying. Oh, and maybe a trip–or two :-) . And SAVE, SAVE, SAVE.

  16. Unfortunately the last time I got out of debt I “overrewarded” myself and slid back in, so this time my only reward will be the satisfaction of turning my monthly debt payments into monthly payments to my savings account – oh, and the right to perform a crazy, goofy, I’m-out-of-debt-yay-me happy dance spontaneously and intermittently for a week.

  17. It’s never been as important as it is today to settle your debt. More than ever, credit score is crucial. How long will the whole credit score system will last is a bit of a mystery but its worth the sacrifice of starting the settlement process.

  18. Once we’re out of debt…and that’s a few years off from now…I think we’ll rip all the carpet and tile up from the main level of the house and replace it with different tile and hardwood floors. And with what we’re paying every month in debt, we’d really only have to save a couple or few months to do that. It will be a great reward. Until then…we don’t need anything and I’ll continue to try to convince my kids that their wants are not needs!LOL

  19. This is a great topic… I think once we’re in a debt elimination mode and we’re enjoying the good feelings or shedding the debt it’s good to begin to set our eyes on the price – being debt free and how’ll handle that situation.

    As we creep ever closer to debt freedom I’ve basked in the idea of being able to allocate MY money for MY purposes or intentions and not those of Visa or Sallie Mae.

    In this way, I’ve created a sort of “spending” snowball for lack of a better term. Since I’ve wrangled my budget to yeild a monthly pool of money I’ve been using to service debt, I want to maintain some control.

    As I project the debt free budgets there may be some changes – increased food and blow money allowances and increased retirement savings once the Emer Fund is in place… but I wanted to control that remaining balance so rather than a list of debts we’re paying we’ll have a list of “purchases” we’ll beging to knock out – a newer used car, a nagging home repair, a new suit for work, etc… but we’ll save and pay for these with the exact same disciple and approach we used for killing the debt.

    And I fully respect a fridge being near the top of the list!

    Thanks for sharing and faciliating such great discussion.

    Dave

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