But now what?

[lillyb]

So we tackled the debt and got rid of everything but the house payment. We used Dave Ramsey's way to get here, but it's like... now what??

There's so many different ways I want to go my head's spinning. Do we save up a bigger emergency fund first? Do we start sinking funds for things we were paying out of pocket first? Do we max retirement first? In all honesty we'd like to hit the house 'first' but that'd take a few more years and the above can't wait that long.

I'd like to quit obsessing like I have for the past long year and half, get it all set up automatically and go get a life again. And then there's all of those things we put off or did without that is desperately needing attention, where do they fit into all of this, you know?

As of right now I'm kinda hitting everything at once. I feel like I'm not getting anywhere cause it's all spread out... some for the emergency fund, upped retirement some (but not fully), started sinking funds for the must-haves, and paying our 30 year like a 15 years on the house. Most of these are set up on auto, which relieves my mind, yet I'd like some opinions, is this the best way??

Anyone out there climbed over a mountain of debt then felt yourself floundering? Do I just need a break or what? Advice can you give? Thanks for any input or support.

[corns]

Start thinking about retirement fund.

[puck36]

Well it sounds like you got Steps 1 & 2 done, so move on down the list. Do you have step 3 done, if so move to step 4 and so on.

1. $1,000 to start an emergency fund
2. Pay off all debt using the Debt Snowball
3. Three to six months of expenses in savings
4. Invest 15% of household income into Roth IRAs and pre-tax retirement
5. College funding for children
6. Pay off home early
7. Build wealth and give! - Invest in mutual funds and real estate

Sounds like you are doing great. Just take a break for a week and then continue on.

I also got debt free using Dave Ramsey's Plan. I got my emergency fund done. I'm doing a Roth IRA and a Roth 401k at work (not 15% its more like 6% total). I have no children so I don't have to do step 5. Now i'm on step 5.5, which is saving for a down payment on a house.

Once again good luck.

[greedy4chips]

After we made it out besides the house payment, we started stockpiling cash...what a great feeling! We contribute to retirement even though many people think we have plenty more than we will ever need based our our current retirement savings and projected returns.

What a great problem to have, deciding what to spend your money on versus your bills deciding what to do with your money!

As far as all those things you neglected go, do the same thing you did to get out of debt. Make a priortized list of all the things you need to get done. With your extra cash you should be able to attack 1 of these items every week, two weeks, or month. Once you get rid of all the NEEDS you can move onto the WANTS and then onto the DREAMS.

Retirement gets 15% of your income, and if you follow Dave Ramsey you should have a pretty good idea on how to make sure you never get into debt again by paying cash for all the NEEDS first. Then have fun with the rest improving areas that are not necessities. Or pay of the house and then imagine what you could do with all that money. You could do whatever job you wanted regardless of pay, you could upgrade your lifestyle (neverending chore), or just help others get financially free.

Congrats on getting out of debt!

[b4freedom]

It's time to get a new book. The book you have doesn't fit you anymore. It's like you used to be a really really fat person (with debt), now your skinny. You don't need a Diet 101 book anymore, you need an Advanced Cardio/Excersise book.

My personal favorite is "Making the most of your money." It's big and covers everything, I refer to it every now and then to see "what I should do next." But, you may want to look at other books and see what works for you. There are many paths to success.

Also, it seems that once you get a really good handle on your finances, the mystery is gone. The mystery being gone kind of kills the romance. It's kind of boring being "automatically" successful by building up a safety net, retirement accounts, etc. slowly over time. Having debt and wondering where you're going to get your next mortgage payment from provides lots of emotional and personal drama. Maybe you need more drama, but a good kind. Maybe you can find an investment club or set aside small amounts of "play" money to invest in the market.

[zetta]

Congratulations on knocking off your debt! It's fantastic that you are ready to move on to the "next level"! I agree that you have outgrown your current books and need to move on to a new set. Since most of them are focused on just getting out of debt and to financial solvency, it's hard to find ones that apply.

One time I asked my dad how much I should save and he said, "everything you can." Well, when have I saved enough that I can slow down and enjoy a little of it today? A book called All Your Worth helped me to set a balance between enjoying life today and saving for tomorrow. It is summarized in my blog: Booknotes: All Your Worth: Zetta's Striving to Get Rich Slow

If by "sinking funds" you mean saving a little each month for big periodic bills like car insurance, then setting up your budget to accomplish that is definitely your next step.

I disagree with Dave Ramsey about paying off the house before focusing on building wealth (especially if you are likely to move before you retire), but I would agree that you should next work on the items mentioned:

3. Three to six months of expenses in savings
4. Invest 15% of household income into Roth IRAs and pre-tax retirement
5. College funding for children

#3 can also be viewed as "How many months expenses would I want to have on hand if I got laid off tomorrow?"

While #4 is a good rule of thumb, I think the actual percentage that should go toward retirement depends on your age and savings to date. If you started early (in your early 20's), 15% may be overkill, while if you started late (in your 40's) you may need to save even more. The best thing to do is some analysis to figure out your retirement savings goal and work backwards to the contribution.

Again, with #5, make a plan for what kind of school your children are likely to go to, and how much of their education you want to fund.

I think it's reasonable to set up your budget so that you are working on these goals in parallel.

For computing that retirement goal, and for setting wealth-building goals, one book that I particularly like is The Complete Idiot's Guide to Getting Rich. I wrote a blog entry about it here: Booknotes: The Complete Idiot's Guide to Getting Rich: Zetta's Striving to Get Rich Slow .The biggest idea I got from this book was how to numerically set my goals. It also lays out 5 levels of wealth. Dave Ramsey gets you to level 1.

[scfr]

Believe it or not, money concerns never go away, they just change. Even after the house is paid off and you have plenty of retireent savings, there will be concerns!

I agree with those who say it's time for some new books.

I've never read a Dave Ramsey book; even tho' it sounds like he offers really good advice that works for many people, his focus does seem to be people who are in debt (and I've never had credit card debt). You have moved on from there.

In addition to the good books already mentioned, you could check out:
- The Net Worth Workout (Susan Feitelberg)
- Smart and Simple Financial Strategies for Busy People (Jane Bryant Quinn)
- One of the Finish Rich books by David Bach
- Women & Money (Suze Orman)

The one thing I would suggest you do right away is that if you have an employer match on your retirement plan, you increase the amount you are contributing to get the maximum match.

Good luck! You are doing great!

[Ima saver]

You are doing great. SCFR is right, you will always have concerns about money.

[Aleta]

I agree with Zetta about ALL YOUR WORTH. I had become complacent about our finances and this book turned me around. There is so much practical sense about it. I have read a lot of books, but I definitely recccomend this one. It is an easy read.
Something that I have started this year is reading one financial book a month. I pick them up at the library. I currently have Dave Ramsey's new 2007 edition on hold and was told that there are 200 people behind me waiting for it. I have found that you can pick little nuggets out of each book that you read. One thing for sure is that one size doesn't fit all and that's why its' wise to read as muchas you can and to educate yourself.
You're doing fine. Your situation is like one of someone who has just inherited a lot of money or won a lottery. You just don't know what to do with it because it's overwhelming. Just know that you have time on your hands and it would be good right now to just max out your retirement plans, set down some goals, anticipate your future needs, fund your emergency fund and make some small goals for yourself. You're doing great!

[lillyb]

Many thanks!! Great suggestions, and thanks for the book recommendations!!

[Elgin526]

I beleive Dave has an unoficial mini-step of taking a vacation, especially if you haven't taken one while getting out of debt. All work and no play, and all of that. If you been putting off a trip or another frivioless want for the last however many years while digging out, now might be a good time to reward yourself (but save up and pay cash, of course!).

After that, in your place, I'd sock away 6 months living expenses (I feel better with more rather than less, but that's me, you may feel 3 months is fine) and then jump all over investing for retirement, and then college for your kids if that's a goal for you (retirement comes 1st though!). I agree, Dave isn't the best for financial advice, though he's the best for getting out of debt. I'd get some other books, and also see an independent certified financial planner. Don't go to one affilited with a brokrage house (or whatever they are called), they tend to stear you towards their own products and may not be 100% neutral in their advice. A planner can help you clarify your goals and what you need to do to get there. It may turn out you don't need to save as much as you thought and you can enjoy more of your money today, or that you may need to save more than you think, or anything in between.

And congrats on being debt free!

[disneysaver]

I feel the same way. I focused so hard on paying the debt that now that its done I can't just turn it off. Right now I'm saving an 8 month emergency fund (Suze recommends 8) and when that's done I'll start on retirement. I have a pension from work but will probably need to supplement it until Social Security kicks in (if it does). I've waited way to late to start that! Mortgage is paid, but the taxes and insurance just about equal a mortgage payment. Daughter is 14 hours away from graduating college and we've managed to do that without any debt - so far.... I just need to find something else to obsess about!

I second the "All your Worth" book by Elizabeth Warren. I go back and run the figures every so often to make sure I'm "in Balance".

[PeggyFair]

<<Mortgage is paid, but the taxes and insurance just about equal a mortgage payment>>

So what you're saying here is by the time you calculate the taxes and insurance, it almost equals what you were paying when you had the mortgage? Sorry if this seems like a stupid question as I have never owned a house before. How is this possible?

[simpleyme]

I am not sure about the mortgage about the same as taxes ,as even if they were the same, once the payment is gone the amount you pay would be cut in half;-)

over time both can go up ,but not always I have a rental i bought 18 years ago that has quadrupled in value but taxes are only 100 dollars more a year ,and do to improvements and multiple policy discounts the insurance is lower

taxes on my house I live in have gone up about 200 dollars in the last year due to local bond measures ,every dang one passes here no matter what its for

[Aleta]

Those numbers can be right because we live in Florida and the big debates going on in our government right now is about property taxes and homeowners insurance. I read that some people got socked with about 8,000 to 9,000 in taxes and forget about insurance. I alone last year paid almost $3,500. for my house. We're getting really hit hard down here and it is being said that alot of homes are going to go into foreclosure.

[Ini_g]

Your are doing great, your plan is almost automatized. Maybe if you are looking for a faster growing begin to learn how to participate in more high risk business, and if the information likes you, maybe with a little part of savings you can speed up your plans. But first learn, search for information.

[Vapors]

I had to sell a rental property last year because of the huge increase in property tax. They went up 40% in one year and were scheduled to go up another 30%. At that point my cash outflows were greater then my inflows, so I chose to sell. Honestly I am a lot happier having extra cash in the bank and not in the possible bubble.

Where I live, they can only increase the property tax a little each year for homeowners, but for rentals, they go up to market value.

[Aleta]

That's the same situation in Florida. They can increase only up to 3 percent,.but that doesn't help you when the assessments have doubled and sometimes more than that. Yes, rentals don't have that 3% cap.

[simpleyme]

wow that is not very nice if rentals are charged more it ups rent for renters, landlords will have to charge more to cover it and be sure to raise rent yearly ,that's terrible ;-(

[Aleta]

This is why rentals are so high in Florida right now. The expenses have to be covered. They were considering charging according to monthly rental fees in order to keep rentals lower for people to afford. There are insurance companies pulling out of Florida because of the regulations from the insurance commissioners office.