Today I accomplished a major financial milestone... The mortgage is history!
Three or four years ago, we attended Dave Ramsey's Financial Peace University series at a local church. While we weren't financial basket cases, we knew we could be doing so much better with what we had. Bills were paid, food was on the table, cars were paid off, but I can't say we felt financially "secure"...
Within a short period of time, my wife and I got on a budget that we've kept up consistently. That in itself was a major stress reliever, as Susan knew what money she had to spend, and I wasn't worried about "cash flow". We put together the start of our emergency fund (the $1000 goal for those who know the DR method), and we reviewed what we had in the way of debt. No car payments helped (one of the few good things financially that came from Enron), and the credit cards were pretty minor. Within six months, we were working on our 3 to 6 month emergency fund.
Fast forward to now... Ian's tuition at Portland State is part of our monthly budget, so no loans there. We use cash for the categories that Susan manages (groceries, household, etc.) and one credit card for bill payments (the stuff I take care of, like utilities, tuition, etc.), but we record it in the checkbook as a debit expenditure. The bill then gets paid off with no interest charge, and we get our air miles. The 401K is at the max for company match. I could be doing MUCH better there, but I got a late start. I *can* retire some day... when I'm 87. :)
The only real debt that we still had was the mortgage. We refinanced back in the late 90's for a 15 year loan, so it was always the plan to have it paid off around 2011 or so. But still... to be *sooo* close to having it over with. Some of my side gigs with writing have paid off well, and I've been making some chunk payments to bring the remaining balance down even more. With a writing check I got at the end of 2008, I decided to use most of that to give myself a late Christmas present... no debt and a paid-off mortgage.
Where do we go from here? Now we start to build up the emergency fund to a true six month level. Of course, not having a mortgage as part of your budget makes that a lot easier (more money to put towards it, and less monthly expenditures to save for). We really need to be putting more away for retirement, too. But getting the buffer fund fully built up will be a nice feeling, especially in this economy.
We've been truly blessed to be in this position. I would strongly recommend Dave Ramsey's program to anyone who is struggling to get on top of their financial life. It's not smoke-and-mirrors, and it requires some hard decisions if you've overused credit in the past. But even taking the first step towards financial freedom is a great feeling, and the momentum builds quickly...