Achieving Another Degree of Financial Freedom (again)

Back in late 2010 we paid off all our consumer debt. We bought our last new car along the way but we basically stayed debt free through 2012. Then we moved to Austin, Texas in early 2013. That move cost us some money and put us back into debt. I'm happy to say that we've done it again and paid off all our consumer debt for the second (and hopefully last!) time. The last two new cars we've purchased both were paid off early; each with two years to spare.

There are two reasons the move put us back into debt. The first was exhausting our emergency fund in 2011 when I was laid off for a number of months. I wasn't able to build it back up before we moved. The second reason is that we short sold our house in Virginia, and that came at a cost - a substantial out-of-pocket cost. That forced us to rely on credit cards to finance the move.

The only debt we have left is a sizable student loan. We haven't even begun to figure out how to pay that off. For right now we are making the monthly payments. We have more pressing shorter term financial goals to achieve before we can make a dent in the student loan. Those shorter term goals are rebuilding the emergency fund, saving for a house down payment, and for a family Disney and Legoland trip.

We're celebrating our debt free(dom) by taking a family vacation. We booked a beach weekend in August.

In the Buffer Zone

Last month we reached a goal that at times and to many seemed unreachable - we stopped living paycheck to paycheck. We obtained our buffer. Our awesome budgeting software "You Need a Budget" commonly referred to as "YNAB" defines buffer as "Your YNAB Buffer is the equivalent of one month’s income which, once saved, will allow you to use paychecks received during the current month for the following month, removing you from the “Paycheck to Paycheck” cycle." It's part four of YNAB's four rule methodology. Rule four "Stop Living Paycheck to Paycheck" is "A money management methodology that removes you from the paycheck to paycheck cycle and allows you to live on last month’s income. Income earned in the current month is not budgeted or spent until the following month." To learn more about YNAB's methodology, check out the method page. Rule Four will explain how to use YNAB to stop living paycheck to paycheck.


Obtaining our buffer wasn't easy. It only took 26 months!  It took that long because of various reasons- I didn't understand how to use the software properly until I started taking the classes (YNAB has killer support). That put me on the right track after a few months. But my balances were off, until the error checking feature was introduced and that fixed my balances. Then I was unemployed for 5 months and spent all my emergency fund savings to pay my bills and feed my family. Finally, with a tax refund and three instead of two paychecks in March (thank you bi-weekly pay periods), I was able to finally get a buffer.

Two months in and it ain't all flowers and kittens. We've overspent our budget the past couple of months. But we're still living on last months income. The best part is we never look at our bank account balance anymore. We use our budget to determine if we can buy something. However we are constantly moving money around categories to balance the budget, something YNAB users affectionately call "whack a mole".

Few people like living on a budget. It's a struggle, but once you get in the "buffer zone" it's liberating. The monkey is off my back.