Our One Year Debt-iversary!

What’s a debt-iversary celebration without a good back story? So let’s take a look, it’s in a book, and read how we got into and out of debt at Our Debt Story. Sorry about the quasi-Reading Rainbow reference.

One year has come and gone since Johnny and I said farewell to debt. ‘Twas not the night before Christmas, but ‘twas a cold winter’s night in December when Johnny and I submitted that final payment toward our debt snowball.

And here we sit, another year older and a little bit wiser. So what have we done with the money that was paying off our debt? How have our lives changed since becoming debt free?

Well, without debt, we’ve found some other ways to utilize that extra money:

• We’ve saved up three months’ worth of expenses in an emergency fund. What was a minimal fund the year before, we’ve grown into a larger cushion.
• We’re now putting a larger percentage of our incomes into savings.
• When we found out we were expecting a baby, we actually felt ready for her — financially, at least. Still working on feeling mentally ready…
• We paid cash for a two-year-old car. When it became a necessity to buy a car this August, we were able to pay for it without adding any extra financial strain to our lives. Not that it was easy-peasy saying goodbye to tens of thousands of dollars, but it wasn’t a burden on use either.

There’s also a lot we haven’t  done with that extra debt money:

• We haven’t paid more for housing. In fact, with the baby on the way, we’ve lowered our rent by $200 this year in the hopes of offsetting some baby costs.
• We haven’t gone on a celebratory vacation. And it’s not that we haven’t wanted to, believe you me. We’re hoping to save up for this in 2013.
• We haven’t raised our budgeted expenses. The only reason we’re able to save more now that our debt is paid off is by keeping our lifestyle the same. That’s not to say extra expenses haven’t come up. But our spending is still just as calculated now as it was when we had monthly debt payments to answer to. And that means on the limited occasions that Johnny doesn’t bring a sack lunch to work, he’s eating whatever the monthly $5 Subway footlong happens to be.
• We haven’t gone into more debt. But temptation has come a’knockin’ on multiple occasions. When it came time to buy a car, our savings account was looking mighty fat and happy. And suddenly erasing a big chunk of it to pay cash for a car seemed tough. A small down payment instead would have kept our savings nice and plump. But it also would have meant becoming reacquainted with the Debt Monster… so we resisted. And continue to resist.

And there are a few things we hope to do in our second year of debt-free living:

• Saving up for a mortgage
• Putting more toward retirement
• Having a more extensive emergency fund

I know, BORE. We’ll do fun stuff, too. Maybe get our very own financial advisor! Still bore? Well, maybe we’ll take a real splurge on a very long vacation. But for the most part, life and our freaking budget will continue as usual. But whatever we do, it’s up to us, not the Debt Monster. And that’s what makes it worth it.

What about you? What financial freedom have you found from paying off debt? Or how will your life change once your debt is paid in full?