in a blog post recently at living almost large, the author questioned what happens in life after debt?

“I noticed a lot of people are very focused on getting out of debt.  They are “gazelle” intense and snowball or snowflake their debt out of their lives.  But what happens “after debt”?

When people become debt free does their lives change?  Are they able to revert back to their free spending ways or has their habits changed?  If their habits have changed and they have been used to budgeting, is it easy to flip into the mindset of saving?”

this intrigued me, and made me question my own plans.  i realized i didn’t yet have a concrete plan. i decided i didn’t need to wait until i finished paying off my debt in order to think about what i would do afterwards with the money i was using towards debt.  in fact, it may behoove me to consider this as soon as possible.

after some thought, i came up with various questions i believe we might be able to ask ourselves in order to plan for our lives after debt.

when will it be ‘post-debt’ ?

i hope to be out of debt by at the latest, end of 2010: april 2009 for my now $7700 personal and consumer loans, and the remaining college loans leisurely throughout 2009-10. by this point, i will more officially be able to help the SO with the mortgage payments. aside from the mortgage, i will consider myself debt-free when i am done paying off the personal and consumer loans.

what will be the status of my savings by ‘post-debt’?

• hopefully, my emergency funds will be somewhere between $2100 (if it gets dipped into, monthly deposits get smaller, etc.), to $5000+.
• my retirement accounts will hopefully still exist, despite the latest economic downturns.. if things look up over the next year and a half, then i may have at least $25,000-35,000.
• there is also the 529 college savings account.  i anticipate somewhere between 1500-2500 within the next year or two depending on the economy, and how much i continue contributing monthly.
• the SO and i may continue chipping in casually, slowly but surely, into our ‘japan fund’. by then hopefully we will already have gone to japan, but we may start over to save for another trip to say, scotland. it is difficult to say what we may save a fun fund for, aside from travel or recreation. the fund is to be used for something that will entertain both of us.

what do i believe i’d like to do when ‘post-debt’ begins?

after snowballing my way out of all my debts, i would like to do the following in order:

1. finish building up my emergency fund for 3-6 months’ worth
2. maximize contributions on my IRAs
3. increase amount i contribute to mortgage, utilities, and food payments from 1000 (now) to 2500
4. go over plans with SO on how we might pay house off sooner than later (30 year to 15 year mortgage?)
5. adopt 2 puppies

what do i need to do now to make those goals happen?

1. confirm my cash flow is assigned the best jobs in order to fulfill my plans as soon as possible
   1. bring down my current ira contributions to either 0 or 3% (employer match) only
   2. bring down contribution of 529 to minimum allowed
   3. ensure i am only paying minimum towards college loans
   4. ensure i am paying what i need to pay monthly in order to be consumer debt-free by april 2009
   5. include little brother payments in snowball plan
2. continue finding ways to cut back
3. continue snowballing and snowflaking
4. continue minimizing expenses
5. focus intensely on my financial goals lest i falter
6. keep up with the news in order that i may be aware of economic conditions
7. research and learn more about my various IRA options (roth versus traditional)
8. research and learn more about mortgages and how they work
9. research and learn more about investing in general

what immediate action steps should i jot down to refer to for quick reference the day of/after i am ‘post-debt’?

1. send the money i was using towards snowballing towards emergency fund
   increase amount towards IRA to minimum i need to max it out
2. re-evaluate academic plans, and increase amount towards 529 appropriately
3. send the difference of money i was using in #1 and now #2 towards mortgage and other house expenses
4. fund general brokerage accounts
5. fund fun funds
6. set aside money for donating to charity/tithing (international campaign for tibet, other)

in you’re broke because you want to be, larry winget wrote a great quote about plans:

“Broke happens when you don’t have a plan.”

i certainly do not want or plan to return to being ‘broke’.

with a plan, i feel as though i have more purpose.  there are goals beyond merely paying off my debt.  after debt reduction, i have wealth building to look forward to.  when in doubt, i can refer back to my plan here to remind myself where i am headed.

what about you?

do you have a plan?

have you considered these questions as well?

any questions i’ve forgotten?