Over a year ago, I became debt free by paying off my massive $77,000 student loan debt.
If you are unfamiliar with my money moron journey, I took out four years of student loans without saving money, missed payments resulting in my student loans defaulting during my 20’s, and got my act together in my 30’s. I accelerated my debt payoff the last 8 months from July 2018 to February 2019 averaging $4,225 a month for a total of approximately $33,800.
I wanted to share what has happened and how my financial situation has changed since paying off my massive student loan debt and becoming debt free.
7 Actions I Took After Becoming Debt Free
- I celebrated. When you have a long term goal you are trying to achieve, it is so easy to get demotivated. That is why during this debt free journey, I realized I had to celebrate the little wins along the way to achieving my goal. Once I achieved my goal of paying off my student loan debt and becoming debt free, I shared on social media and then took my parents out for dinner.
- I restarted my budgeting that was previously automated. My less than 1 minute monthly budgeting process was so automated that I knew exactly where my money was going. During the debt payoff journey, I had to know I was not wasting any money on anything other than paying off my massive debt. However, the problem I realized a couple months after becoming debt free is that the excess money was not being accounted for in my investments.
- I saved even more to build up extra funds. I was always a minimalist, but I did have my guilty pleasures especially around designer clothing and shoes. During this debt payoff journey, I knew I had to sacrifice my guilty pleasures and focus on saving to pay off my debt. I got so used to this lifestyle that it continued even after becoming debt free. As a result, I have increased my savings by 50% to my high yield savings accounts to store up for either an opportunity fund such as when the stock market crashes or to build up my real estate fund. My emergency fund was knocked out, which was the highest priority.
- I invested even more into my retirement account. I always invested in my 401k; however, as soon as I became debt free, I immediately increased my investment percentage to my 401k. Now I am on track to max out my 401k limit well before the end of the year. One thing I am keeping a very careful eye on is to make sure my contribution occurs throughout the year so that my company 401k match does not stop when I hit my 401k limit. I heard on various podcasts that if, as an extreme example, you were to front load the entire $19,500 as an individual in January, there is a possibility that your company match will stop in January. I have not confirmed this, but I would rather play it safe and contribute evenly throughout the year so that I get my company match.
- I invested even more into my taxable accounts. Outside of my retirement accounts, I created a taxable account fund that allows me to put excess money into either individual stocks, which I enjoy doing, or keeping it simple and into the total stock market fund. Typically my priority will be to save for the opportunity or real estate fund before investing into my taxable accounts.
- I became more generous. I should preface this by saying that me being generous is supporting my parents. My parents will take priority over any charitable organization because of how hard they have worked to support me. I recently paid off one of their vehicles and I continue to give them a monthly amount in hopes that they live more comfortably.
- I became less stressed, worked out more, and was noticeably happier. Although I am not one to be stressed easily, I definitely felt a lighter load on my shoulders every month knowing I had no debt to pay off every month. I started working out more, getting back into my tennis playing rhythm, and was just genuinely happier. Being debt free has allowed me to explore new opportunities without feeling pressured or stressed about investing money into a project that could ultimately fail. Being debt free has given me more freedom than I could have ever imagined.