I recently mentioned that I amazed my debt-free-minded-self after calculating the exact amount of debt we’ve retired. With $10,000 in debt left, I’m sure you might wonder why I call myself a debt free diva. After all, I’m not yet debt free. The answer is simple: As a man thinks in his heart, so is he (borrowed from Proverbs 23:7). Six years ago, WonderMan and I decided that we were no longer comfortable living enslaved to our lenders. Six years ago we started planning our Freedom Party.
Of course, back then we didn’t have it all together. Heck, we’re still learning and making adjustments. Our path from then to now hasn’t been a straight shot. It’s been a winding road of ups and downs, leaps forward and stalls, wins and losses. Our only constant has been keeping the end goal in mind…debt freedom. As we accomplished minor successes, our resolve to reach the goal grew stronger.
What is a Freedom Party? This is the ultimate, cash-funded celebration one is entitled to host once free from debt’s strangle hold. There are no limits on the type of Freedom Party. Host a back yard barbecue; a basement party complete with DJ; a swanky water-front picnic; a quiet celebratory dinner with family and friends; a fantabulous get-a-way. The only rules are: 1) pay cash for the soiree and 2) share your debt freedom journey with those who care to know.
How do you plan a Freedom Party? Implement a debt elimination process. Our Freedom Party plan follows:
- Create a monthly budget. Each month account for all income and expenses. Post the budget somewhere visible to help with accountability.
- Build a Mad Money Fund. This stash represented our mini emergency savings. The Debt Free Divas suggest you begin with at least $1000.
- Identify all outstanding debt. Author David Bach recently tweeted, “You can’t cure what you won’t face.” Be boldly honest because knowing is half the battle.
- Pay off debts in order from smallest to largest. We didn’t concern ourselves with interest rates or comparing minimum payments. We addressed the smallest, and then moved down the list. Achieving quick wins helps build momentum.
- Complete a 6-month emergency fund. Save six months of expenses in a liquid, but harder to access bank account (i.e. online savings account with no debit card). Only use this account for actual emergencies. Christmas shopping does not count!
- Save and pay cash for your Freedom Party. Have a great time! You’ve earned it.
I love a good party. What type of Freedom Parties may be in your future?