We’re Debt Free and Employed, Now What?


I returned to work full-time on Sept. 19 and my husband will start his new job on Oct. 22. We are out of debt due to cashing out two retirement accounts because I wasn’t planning on returning to work.

We are painfully aware that we are sorely underfunded for retirement, but we also have a 1997 Acura that is on its last leg. We would also like to own a home (a modest one this time).

We are struggling to prioritize these purchases while still saving and investing. We also know we have to do what’s right for us. So far this is what we have:

  1. Emergency fund, savings for income taxes and 401k contributions.
  2. Tuition – My husband is going back to school in January.
  3. Buy a car – We’ll need to replace the Acura before we have cash to pay for one outright, but we intend to pay it off early.
  4. Buy a home – We will probably take advantage of a VA loan and hope to have a mortgage payment that less than our current rent.
  5. Vacation – We don’t know where or when since my husband is starting a new job.  There is a possibility my sister will still have a destination wedding this winter.
  6. Additional retirement investing beyond 401k and house value.

Are you out of debt? How did you make decisions regarding your future?



We’re Debt Free and Employed, Now What?4 Comments

  1. As you've illustrated here, it's difficult to decide where to start once you're out of debt! There are so many directions you can go with your new income. I felt a bit overwhelmed when I made that final debt payment, but it looks like you have solid options here. That's great! Now the hard part – prioritizing!

    Another of my challenges is feeling like I'm not making enough progress when I focus on multiple goals. So, just like with my debt, I'm tackling one money goal at a time with lots of zeal. Right now it's the emergency fund. It'll probably be the emergency fund for a while. 🙂 Good luck! One thing to consider – could you husband take out stafford (no interest) loans for school? If so, it could give you time to focus on some of the more pressing goals (like the car replacement). I know it's debt, but it's zero interest. And you can always pay it off while he's still in school if you feel good about your other goals by that time.

  2. In response to your last question, my wife and I just paid off our mortgage and we are now debt free.

    I found the article title a little misleading. I thought you were going to post about what your options were now that you were debt free. Not that you were considering going into more debt. As far as what options you have for future purchases. I would save and pay for the things you want when you have the money to pay for it. Going into more debt so soon after paying off your previous debt sounds very counter-intuitive to me.