Horrible, horrible freedom!

by Abigail · 11 comments




I experienced panic the other day. Real, serious, heart-beating-fast panic. All because we’re going to be out of debt soon.

I know. That’s weird. It’s not that I enjoy being in debt, by any stretch of the imagination. Yet there is a certain boundless possibility to life without debt that, while exhilarating, is also deeply terrifying.



I know, their fear is laughable. But, in a way, I understand it. I’ll soon be in the financial black and I’m realizing that, despite all the stress and angst it brings, debt does make life simpler sometimes.

The thing is, debt is the evil you know. It’s the bad guy, which means you’re automatically the hero valiantly fighting it. You can say no to that dinner out and put that money against your credit card balance. You can say, “I can’t afford it.” Heck, you can even realize you just prefer the money go against debt.

Not only do you feel virtuous but it’s also just so obviously… right. When you’re in debt, it’s always pretty easy to know what you should do.

After you pay it all off, though, it’s the end of the Cold War all over again. We spent so much time defining ourselves in opposition to something, be it debt or Communism, that it’s hard to know where to go after the threat is neutralized.

There are still obvious goals, of course. You’ll want to bulk up your emergency fund, save up for a down payment on a house. It’s all very smart, and the goals are certain good ones. Still, it’s not nearly as motivating as having a villain — an evil — to rally against.

Budgets aren’t surveyed to find every extra cent. Quite the opposite. Now, we get to loosen the purse strings and enjoy having money to play around with.

Except now the hard and fast rules are gone. When you wanted to eradicate debt, you put your nose the grindstone and threw anything you felt you could spare at that credit card balance. But you don’t want to live like that just to build up savings.

So where’s the line? How much do you concentrate on savings, and how much do you let yourself spend? When are we not being serious enough about creating a safety net, and when are we being too hard on ourselves and missing out on a lot of fun?

Everyone will have a slightly different answer. Nothing new there, technically. After all, even debt reduction methods vary greatly from person to person. But the central tenet is always to get rid of debt. Once you’re out of the red, priorities jostle for attention.

There are just so many obligations that we put off until we’re out of debt. My most immediate goals will be a three-month emergency fund, IRA contributions, starting a car repair/replace fund, building a savings account, and working toward a down payment for a house.

And that’s barely skimming the surface. There are still issues like wills (mine is horribly outdated), learning about insurance options, finding investments we’re comfortable in and plenty of other goodies. Frankly, just thinking about it all makes me a little light-headed. And, as I mentioned, a little panicky.

Suddenly, I don’t feel free anymore. Instead, I just feel overwhelmed. And a little more sympathetic toward those ants.

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Rewards programs: Stretch the budget or indulge in some luxury?
May 4, 2010 at 3:02 am

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1 shtinkykat May 3, 2010 at 1:29 pm

I recently had the same discussion with my friend. My current financial priority is easy – - dig myself out of debt. But the moment I'm free of the debt, what should my priorities be? Do I get myself right back into debt by investing in real estate? Do I max out my IRA or should I be maxing out my savings bond purchases? Should I start investing in REITs? Commodities? The possibilities are indeed overwhelming.

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2 Meg May 3, 2010 at 4:04 pm

First off, an early congrats for getting this far. I know you guys have had it rough.

I'm starting to see the light at the end of the tunnel, too, though it's still a way's off. I've thought a lot about what what I want to do when we're debt-free but the house and how I'll feel. I don't know that it will feel all that different until we get the house paid off, too, but that's part of the plan and we'll get there eventually.

We're already feeling pretty good, to be honest. We don't feel very deprived despite our cost-cutting, in part because we're lucky to have enough left over for things that are really important to us. We do have a decent emergency fund at this point, even though we hope to increase it some when the non-house debt is paid off.

The important thing for us is not getting back into debt, not for investing, not for emergencies (if we can anyway help it), not for a car, not for business… for no reason whatsoever. And so, while the debt will be gone out of our household, I think that the idea of debt will still be out there and we'll just be building big walls between us and it.

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3 MFO May 3, 2010 at 4:54 pm

Congrats on almost paying off your debt! That must be one of the best feelings ever!! I often imagine what it would be like to not have debt, just to motivate me to keep paying it down…. I too have been in debt so long, fighting that evil, that when I am finally out of debt, I wonder if I will know what to do with myself. I imagine I will start seriously investing in the stock market, maybe finally pursue owning some home for renting purposes, perhaps start a side business, and of course, save a TON.

I think the best way to approach your many upcoming tasks is to really REALLY focus on one at a time. Take your will for example. Research it, talk to people, email, do everything you have to do to finish that up, and don't start your next thing on your list until you are done with that. A concentrated effort to accomplish one task at a time may be better than trying to do many things at once – something may just end up getting left by the wayside.

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4 Red May 3, 2010 at 11:31 am

I "get" this post so much.
I like having a bad guy to fight against.
I know in my head that i won't feel the same way about savings at all.
And that sucks.

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5 Jersey Mom May 3, 2010 at 5:15 pm

Congratulations on being nearly done with your debt!!!

How to save, how much to save, and where to invest is different for every person; it also depends on how comfortable they are with risk. With that said, I want to let you know what my husband and I do. With approx 33% of gross income going to taxes and such, we used to allocate 20% of gross income to savings/investments (now it's 33%); and the rest are for expenses. Most people allocate expenditures first then save the rest. We save first then use the rest of the money for expenses.

Once you figure out how much you want to save, build your emergency fund first. Once you’ve got that covered, split your savings between retirement fund and savings for other things i.e. down payment on house.

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6 Greg May 4, 2010 at 2:53 am

Think of saving as another sort of debt to pay off

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7 Stella May 3, 2010 at 9:36 pm

Congratulations! Since you're already used to living frugally while you were paying down your debt, take that money you allocated for debt repayment and start socking it away into savings, 401k, etc.

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8 Abigail May 4, 2010 at 3:13 am

Thank you all for your suggestions. I think there are a lot of good ideas here for how to take that plunge into the murky depths of being "in the black." I mainly just needed to vent, but I think I'll end up using something of a hybrid of the approaches mentioned here.

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frugal zeitgest Reply:

My situation was a bit different, but after paying off my mortgage I felt a little bit adrift for a while because I didn't have a great, big tangible goal to go after. What got me going again was figuring out what I needed for retirement and putting together a one-year action plan. I'm closer to retirement than you are so it may not be as motivating to use that as a goal, but there are other goals you can swap in, i.e. large emergency fund, investment fund, and so on. Good luck and relish the last of this challenge – it's so much fun knowing you're almost there!

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frugal zeitgest Reply:

My situation was a bit different, but after paying off my mortgage I felt a little bit adrift for a while because I didn't have a great, big tangible goal to go after. What got me going again was figuring out what I needed for retirement and putting together a one-year action plan. I'm closer to retirement than you are so it may not be as motivating to use that as a goal, but there are other goals you can swap in, i.e. large emergency fund, investment fund, and so on. Good luck and relish the last of this challenge – it's so much fun knowing you're almost there!

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