To get out of debt, there’s a clearly-defined path to follow. Afterward, it gets a bit more complicated.
Every new beginning comes from some other beginning’s end – Seneca
As I write this, Sarah and I are completely debt free.
We have no mortgage. We have no car loans. We have no student loans. We have no credit card balances. We have no consumer loans of any other type. We have a healthy emergency fund that will keep us from falling back into debt very easily. We have a healthy amount of savings for our next car and for our next appliance replacement or two. We’re saving for retirement, for our children’s college education, and for our dream home. We both have steady incomes for the time being, incomes that exceed our monthly expenses.
Our monthly bills right now, taken as a whole, are lower than they’ve been at any point in our married lives.
So, what’s next?
It’s a question that Sarah and I have been struggling with for the last few weeks. What is our next step?
Up to this point, there’s been a clearly-defined path to follow. Build up an emergency fund. Get rid of your high interest debt. Build up a bigger emergency fund. Start saving for retirement and for your children’s education. Pay off your lower interest debt. In most cases, own – meaning without any debt – your living quarters, whether it’s a home or a condo or something else.
It’s a long and difficult journey. It took us almost a decade to follow that path, and that’s with us living rather frugally and me working a lot of hours, both at my full-time job, on The Simple Dollar, and on countless freelancing gigs over the last several years (Sarah made this route possible with her spectacular efforts with household concerns.)
In a lot of ways, it required us to change who we are. I don’t have the motivation any more to spend money in the way I did a decade ago. It’s not something I even want to return to, and Sarah feels almost exactly the same way.
Now, though, there’s no clear path for us to follow. We’ve reached the point in our financial journey where the advice begins to diverge heavily.
Some people say that when you have a good foundation, you should “live a little” and do things like travel or own a nice car. Others suggest investing aggressively so you can move towards a life where you no longer have to work for a living. Some point toward entrepreneurship. Others simply say to keep things nice and steady until opportunity knocks.
As different as those paths seem, there are a few fundamental things they all agree on.
First, you need a goal. Without a goal, you’re going to simply spin in place and, as the saying goes, the devil finds work for idle hands to do. The multitude of ideas above are all goals, they’re just different ones that require a different path to get there.
Second, you need communication. Sarah and I have no interest in going down different roads at this point. We’ve travelled this far together and we want to keep going together, wherever that path may lead. However, left to our own devices, we would have somewhat different visions for that path. Without communication and discussion – a great deal of it, actually – we could easily find ourselves going in different directions at this point.
The fundamental question is whether I want to be setting my goals or our goals. I’d far rather set our goals, even if that doesn’t mean having things perfectly my way. We agree on a lot of things, and the value of resolving the other parts together is much greater than what we would get out of addressing them separately and drifting apart.
So, what do we want? What’s next for us?
We’re establishing a list of things for the future that we both agree on. This is in addition to our dream home. We both want to travel a significant amount with our children when they’re older and can appreciate it and grow from it. We both want to increase our giving to charity. We both want to retire as early as we can so we can focus our energy on charitable work.
These are the things we want from our lives. They’re simple things. They are what makes us happy.
We’re not going to move until we can build our dream home out of pocket. We are not going to return to indebtedness again. If that means slow progress toward the house we want to someday build, so be it. Debt introduced an incredible amount of stress to our lives, and there’s no material thing that’s worth bringing that back into our lives.
The same holds true for any of our other plans. We’re not going to do anything that leads us anywhere close to debt ever again for any non-essential reason.
We have a home.
We have what we need.
We have no debts.
Most importantly, we have each other.
Everything else will follow.