Saturday, January 31, 2015

Financial Freedom: What Now?

If you're just tuning in, you can check out the other posts about our journey to debt freedom.  Check out these posts about our financial history how we acquired $34,000 worth of debt, the first step we took to get out of debt, what started to happen when we began Financial Peace University, how we manage our budget, and some things we do to save money.  

We've been MIA for a while. Sorry about that!  Neal and I both sincerely hope that us sharing our journey with you all is an encouragement to you and your family in reaching financial freedom! It may take you 6 months or it may take you 16 years.  Regardless of the timeline, we'd really encourage you all to use some of these tools to leave a legacy of financial freedom for you and your family.  I know that's our ultimate goal for our family!

So..we've paid off all of our debt.  If I were you, I'd be wondering....what's next?!

The next goal should always be Baby Step 3: Put 3-6 months of expenses in savings.  Build up that full emergency fund! Neal and I were able to do this immediately as we had more money than we thought sitting in a savings account (wish we would have paid more attention because we could have paid off our debt even earlier!).  That was a huge blessing!  We were pretty dang excited about that!

For Neal and I, our next goal is to purchase a home.  We set a goal to put at least 10% down on whatever home we decide to purchase (or build).  We have a timeline in mind, but if we're not ready to purchase by then, then we plan to just continue to save until we have 20% to put down.  With Neal's job, this is a definite possibility for us.  It's possible that we may move around a bit more..and in that case it makes no sense for us to purchase a home just because we have our 10% saved.  Speaking of purchasing a home, we plan to stick with Dave Ramsey's "rules" for purchasing a home.  We plan to purchase a home with a 15 year fixed rate mortgage (yes, we realize that with a 30 year mortgage our payments will go down.  And, no, we still don't want one), a monthly payment that is only 25% of our monthly income, and then, as I just said, we plan to put 10% or more down.  We also plan to budget that 25% based on Neal's income because our long-term plan is for me to stay at home with our children (when that day comes) so we don't want to set ourselves up to financially fail by relying on my income now and then not having it later. 

I know that all of this can sound so serious and some of you are probably wondering, "What about the fun stuff?"  We do build "fun stuff" into our monthly budget.  Trust me.  But we also believe that it doesn't make sense to take a $5000 vacation when you owe someone thousands of dollars.  (I mean think about it, if someone owed you $20,000 but was going on an expensive vacation to the Caribbean, that wouldn't make much sense to you, would it?) SO...now that we're debt free AND have our emergency fund squared away, we're planning a big vacation somewhere within the next year.  Woop woop!  We never went on a honeymoon, and well, who doesn't want to go on a vacation?  BUT, we'll still be paying CASH for ALL of our expenses.

After we purchase a home and finally go on a "honeymoon" we plan to move onto Baby Step 4 (saving for a down payment is Baby Step 3b).  We each already contribute to a 401k through our employers,  but we're certainly not putting 15% of our total income away at this point.  Neal's company matches up to a certain percentage so we already put that amount (I think it's 5%) into his 401k.  But after Baby Step 3b is completed, we will begin putting 15% away each month. 

Then, we'll just keep trucking along, knocking out Baby Steps 5 and 6 and then, the REALLY awesome part, living Baby Step 7 for the rest of our lives
Our progress chart for working through the Baby Steps.
Does all of this take time?  Absolutely!  But is it totally do-able? Without a doubt, YES!

If you would have asked me, say, three years ago where I thought I'd be financially in 2015, I for sure would not have described the situation we're currently in.  Thankfully, some people stepped in, shared their journey with us, and it's changed the trajectory of our lives, and our family's lives, forever.  We pray that we will be able to raise a family who is financially free.  But that doesn't happen on accident!  And, y'all, just because your family didn't teach you about what to do with your money (or maybe they did and you just didn't care) please know that it's not too late.  You can change your family's legacy! 

P.S. Stay tuned! Neal's working on a post to talk about some things from his perspective.  It's definitely worth reading :)

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