It’s been two whole weeks since I paid off my debt and it’s definitely had time to sink in. When I got paid on the 15th, exactly $0 of my paycheque went towards paying off debt! (well, except $475, which went to paying myself back) Most of it went into savings in one account or another, and it was so nice to know that the bulk of my paycheque was being put in the bank.
It’s also been really nice thinking about all of the different things I could possibly do with my money. Sure, there isn’t that much of it to go around, after all, I’ve only been in the work force for two and a half years, so I’m definitely not rolling in cash. But still, with the little bit I do get to play with, it’s nice to think about the possibilities.
Of course, there are a few things that are going to claim some of my paycheque, things that I’ve been putting off for two years in favour of paying off debt. One of those things is bulking up my emergency fund.
A Bigger Emergency Fund
I’ve been skating along these past two years with an emergency fund that ranged from $2,500 to $2,000. Having this baby savings cushion was SO helpful because it insulated me from most small emergencies. Car repairs, vet visits, etc were all paid for out of the emergency fund, and I definitely recommend taking the time to build a small one if you’re in the middle of paying off debt.
My emergency fund sits in a Tax Free Investment Savings Account which means that I can contribute $5,500 annually to that account and it’ll grow, tax free. Starting in January, I plan on taking advantage of the full $5,500 contribution room, because I want to fully fund my emergency fund.
Moving from the idea of paying off debt to saving a large sum of cash is a huge mind frame shift that I’m still not totally on board with. I mean, I spent the last two years worrying that an emergency would completely wipe out my progress, and now I’m just going to save up enough money to not have to worry about it? Crazy.
Yes, saving for retirement. I’m really young at the moment, so compound interest is on my side when it comes to saving for retirement. Pretty much every financial book I’ve read and every single financial blog has said that you can never start saving for retirement too early, so that’s what I’m going to do. I’m going to start setting aside $500/month in December to go towards retirement.
Again, coming from a debt repayment mind frame, the idea of setting money aside for 60-year-old-Jordann seems kind of crazy. A month ago I was fighting to scrape enough pennies together to make my final debt repayment, and now I’m pondering retirement strategies? Seriously it makes me feel positively wealthy even though my net worth has barely budged between now and then.
This mind frame switch definitely hasn’t come easily to me. For the first, oh probably ten days or so, I refused to answer questions about what my next financial goals were, because honestly I didn’t really believe it was time to move on to my next goals yet. I had JUST gotten out of debt, surely an economic shit storm was headed my way that would put me right back into debt? I was basically just waiting for the world to say
“Nanananana fooled you, you silly girl, you couldn’t have really believed it would be that simple, could you?”
But that blow never came, and I think I’ve finally accepted that I really and truly am debt free, and now it’s time to start managing my money, like really managing my money. I can’t wait.
Do you save? Is it easy or hard for you? I want to know!