If you’ve set a goal to become debt free, this is a must-read post on how to manage money once you hit your goal!
Guest post by Lydia of Frugal, Debt Free Life
For many years, I felt like being debt free was the impossible dream. And then it happened. In February 2014, my husband and I were able to declare ourselves a debt-free family.
We had trampled down a mound of credit card bills and gotten out from under an avalanche of student loans.
In the year since we became debt free I have learned so much. Here are three lessons:
1. Budgeting doesn’t stop just because the debt is gone.
For so long, it felt like we were walking around with a backpack full of bricks. Once the debt was gone, we were able to take off that backpack and breathe for the first time in years.
But it didn’t take long to realize that savings and frugal living don’t stop once you pay off that debt. If you’re not careful and you don’t live with intention, you will fall back into the older patterns that got you in debt in the first place.
2. You still need to set goals.
For months and months, our number one goal was to get out of debt. Once we achieved that, we needed a new goal.
Without a purpose to work toward, you will stagnate. Without a purpose, it is difficult to stay motivated or even want to budget to begin with.
Our new goal became to purchase a home. When that goal was achieved, our new goal became to pay off that house early.
3. You are allowed to splurge responsibly.
Because we had been in debt-paying mode for so long, it became difficult to switch that mode off and allow ourselves to have some fun.
When the opportunity arose to take our children to see a life-sized Thomas the Train in a town a few hours from us, we balked. After years of holding onto every dollar so tight, it felt like too much money to spend. But we looked at our budget, saw we had the extra money to go, and decided to treat our family to a rare outing.
It’s okay to have fun and spend money responsibly and that’s not something to feel guilty about.
There are few feelings greater than being debt free. That feeling is an excellent motivator, why not let it carry you into other parts of your financial life?
Lydia Senn is a wife and blogger. She lives on a growing homestead with her bearded husband and two energetic boys. She loves Jesus and coffee.
Whitney says
This post is so true. We became debt free in January of this year, and it has been awesome. However, you don’t magically have a limitless amount of cash, just because you no longer have debt. Like Lydia, we still adhere to the same strict budget, and the money that was once going toward debt is now going to a new goal: home ownership! In many ways, our monthly budget hasn’t changed at all! Money is just being assigned a different job, but we are still living on the same budget.
Jordan says
Yay and congratulations on such a huge accomplishment! Thanks for sharing how you’ve continued your financial goals with us. -Jordan, MSM Team
Amie says
Congratulations on being debt free. I am still working on that goal. While I do have a plan in place, it will take me longer because it’s more important to me that my kids have certain experiences. When my son was 3, we took him to ride on Thomas’ Day Out. He’s almost 7 and just the other day he mentioned to me that he remembered riding on the real Thomas and how special it was. I think those experiences are really worth it.
Kristina-Cents and Order says
These lessons are spot on! We just paid off $16,000 in credit card debt and had the same realization about goals. The money that was going to debt was spent randomly because we no longer had a goal we were working towards. It’s easy to fall out of your frugal habits and dig back into debt if you aren’t careful. Congrats on being debt free!
Kelly Cox says
Yes, to all of this! I so agree. We are debt free, praise the Lord, too and it takes work, discipline, budgeting and working hard as a family in this area!
lydia @ frugaldebtfree says
You said it!
Jennifer Tasker says
Great article, thanks for sharing! You’ve put to words what I’ve been thinking about lately (I’m so not a writer). My husband and I spent the first decade of our marriage being very, very frugal, making tough decisions, setting ourselves up for the future, etc. Thankfully we did not come into marriage with any debts (credit cards or student loans) and we did take on some mortgage debt to buy land (paid that off first) then more to build a house – but things are very different down in Australia vs. the US when it comes to housing prices! Anyway, we have been debt free for almost 5 years now, and have started to let the purse strings open a bit more for a lot of things – more giving, and more “splurging”.
We were just balancing our budget this weekend and I commented that we’d been spending a lot more “unallocated” the last 6 months. Upon analysis, and yes, we itemised everything then analysed our overspending, we realised that whilst we were spending more than we earn (our number one rule), we also weren’t growing our investments anymore – which is one of the ways we earn money. We also realised we didn’t have a specific goal right now – so we’ve set new goals, re-jigged some budget items and are refocused once again.
lydia @ frugaldebtfree says
Goals are crucial. Good luck in your house hunting efforts!
Rosie says
I completely agree with everything you said. We also found it hard to get back to being comfortable spending money on things, even though we had the money to do so.
lydia @ frugaldebtfree says
It’s learned behavior and you have to retrain your brain. It can be so tough.
Laura Vanderkam says
There are a lot of parallels between this and losing weight. You can’t go back to living the way you were before because that way leads right back to weight gain. But figuring out when it’s OK to splurge is complicated!
lydia @ frugaldebtfree says
That’s a great way to look at. (What I know about weight loss could fit in a thimble!) But I bet if I applied this attitude to my weight loss efforts it would pay off.
Delorise says
Loved this!! Being debt free is such a feeling of absolute freedom-we love it. Totally agree with the 3 lessons. I have a friend who is debt free but didn’t comprehend the necessity of a budget. She and I worked out a budget for her to follow. Our first step was to build up her household fund. Fortunately she has been able to work 15 hrs biweekly overtime. This is a rarity so it was almost as if God was giving his blessings on her budget. She is so excited that now when her annual expenses ( car insurance, home insurance, taxes) are due that she won’t have to charge them to her credit card and figure out how to pay them off in the next few months. Every weekend (she lives 100 miles away) we have a phone budget meeting and review her finances. This past weekend she told me she was going outside and wash her own car because she did not want to pay $6.00 to a car wash. She would rather that go into her household fund. She has a goal that she is building to and wants to throw every dollar she can at it. Once she reaches her goal she has a plan to relax a bit on her frugalness but has already told me that she plans on our having weekend budget meetings forever so she can be accountable in sticking to her budget and the amount she wants to save.. She has repeatedly told me that she never realized that this budget stuff could be so freeing and fun. I am so glad that I am able to assist her in this—can’t say how proud I am of her. Congrats on being debt free and your plan to pay off your home early. You should call into the Dave Ramsey show when you achieve this and do your ” We’re debt free ” scream.
Kristen @ Joyfully Thriving says
Congratulations to you and your family on being debt free! You have some excellent points, especially on keeping a goal. We are debt free (except our mortgage) and continually adding and adjusting financial goals, from paying extra on our principal, to adjusting retirement amounts and always, saving for various projects and repairs. Thanks for the reminder that living debt free is worth the hard work!
lydia @ frugaldebtfreelife says
Thanks, Kristen. It sounds like you guys are working so hard and doing so well with your goals!