A Little Shuffle Equals Big Change

Monday morning I settled in at my desk and logged in to my Capital One 360 account to check on the status of my April payment. I expected to see the balance of my car loan sitting at $3,442; My April payment had left my bank account last week, but it seems to take forever for those payments to clear!

Instead, I  saw this:

Remaining balance on car loan as of April 4th, 2016.

My April payment had already cleared, and my balance was officially below the $3,000 mark. I took a deep breath, logged in to my bank accounts, shuffled some money around, and paid off the loan. The total payoff amount ended up being $2,962.26 (accounting for accrued interest).

And just like that, I’m officially debt free!

I expected to have a feeling of relief wash over me. Excitement. Maybe a feeling of joy and accomplishment. Instead, I found myself feeling a little bit terrified!

The decision to pay off my loan after it cleared $3,000 was something I’ve been thinking about and planning for months. Why $3,000? Because it’s an amount I could pull from my emergency fund, without it dropping below $1,000. Yep, I raided my emergency fund to pay off my car loan. And no, that isn’t the reason I feel slightly terrified.

Emergency Funds are a complicated topic, and people have various feelings on how much money you should keep in one. Some people reason that, as long as you have a large amount of credit, you don’t need any cash savings. The problem with that is credit can quickly dry up after a job loss, or if your credit score takes a hit (say, if the person you co-signed a student loan for defaults on said loan without your knowledge). Plus, I don’t have a credit card. Dave Ramsey recommends having a $1,000 emergency fund while you’re in debt, and then building it up from there. A lot of people recommend having 3-6 months worth of living expenses.

I feel most comfortable having $5,000 in the bank, strictly for emergencies. But I tend to vary that depending on what else is going on in my life. When I was socking away money to remodel/sell my house, I was comfortable with a smaller emergency fund, because I had other cash available in my accounts. In January, I dropped my emergency fund down to $4,000 so I could help Bryan with some of his bills while he was laid off, while still concentrating on paying off my car loan.

Now that I was so close to having the loan paid off, I chose to lower my cost of living over keeping a large cash reserve. But what if something happens? Aren’t I worried about not having enough money to cover an emergency?

No, not really. Sure, there are definitely “worst case scenario” or totally unforeseeable things that could happen where not having enough cash could be devastating. But, for the most part, I have most of my bases covered:

  • What if I got sick, or injured? I have really great health insurance through work, with low deductibles and coinsurance. If something really serious happened, and I didn’t have the cash on hand, I could work out a payment plan with the doctors/hospital.
  • What if something broke or was destroyed? The biggest things you have to worry about in this instance is your house and car. I no longer own a home, and I have renters insurance in case there were a fire or anything. I have car insurance if I was in an accident. If my car needed a major repair, and I couldn’t pay for it now, there are people in my life who have extra vehicles that I could borrow until I could pay for the repair. Or Bryan and I could carpool. It wouldn’t be ideal, but it also wouldn’t be the end of the world.
  • What if I lost my job? Well, I have 3 weeks vacation pay, which would now cover at least six weeks of expenses. With the lower cost of living, I could take pretty much any job, even temporarily, to cover my bills. Bryan is starting to work more regularly, so I could always lean on him to cover more of our expenses if things looked really dire.
  • What if Bryan and I broke up? This is highly unlikely: Our relationship is stronger than ever right now, and things are going really great! But, if something devastating and unexpected were to happen, I’d be okay. Two incomes are always nicer than one, but I’ve had no problem supporting us while Bryan was laid off, so I’d be perfectly capable of supporting myself, especially with one less expense. Even if I had to move.
  • What if I got really sick, lost my job, and became uninsured? Well, I would have been screwed either way! I have short-term and long-term disability insurance through work. But, those only apply if you’re still employed with the company; I’ve seen them fire people after their 12 weeks of FMLA was up, but before the 36 weeks where they were eligible for long-term disability. Hopefully that wouldn’t happen. But, if it did, at least the car is paid for, so it’s one less bill to worry about, and one less thing to worry about losing. Without a loan, I could drop to liability only insurance, and save some money. We could sell it if things got really tight. Sure, having an extra $4,000 in the bank would be nice. But, with an extra $370 bill each month, it wouldn’t go as far. Again, it’s kind of a toss-up. And a losing situation either way!

Besides, it won’t take long to build that emergency fund back up! If nothing changes, I can put $330 each week towards building it back up. By the end of April, it should already be over $2,000!

So why do I feel afraid?

Because what do I DO now that I’m debt free?

I’ve been in debt since the age of 17, when I signed my first set of student loan papers and headed off to college. The last few years, debt repayment has been my biggest priority. But now the debt is gone. Do I stay where I am now, and start socking away cash for retirement. Or for a house? Do I try to find a more fulfilling career, even if it pays less, or doesn’t have as great of benefits? Do I invest that money into myself, and escaping the 9 to 5 world? (Or 7:30 to 4:30, as it were)?

For now, I can concentrate on building back up my emergency fund to $5,000. I will probably start testing the waters on a couple of other ideas as well. Nothing needs to change overnight, just because I’m debt free. But, at some point, I need to figure out what my long-term plan is. Of course, I’m not alone in the decision: Bryan and I will decide together what works best for us.

So, I’m officially debt free. I bought myself a Starbucks for lunch to celebrate, and considered the implications. After all, debt free is a new type of freedom for me. I don’t owe anyone anything! That opens up a world of possibilities for me!

  • Cindy W.


  1. Congratulations, what a great feeling.
    Invest in yourself …

    1. I reread that and realized it may not sound right. Like I’m planning on getting a boob job or something. LOL! I have some ideas for side hustles that would require some startup capital. Nothing major. I could probably start with $500-1,000, and reinvest from there. Eventually, with enough work, planning, and luck, I could potentially replace my full-time income. Now would be a good time to try something, when I have the extra income coming in, and the safety net of a job with great benefits. But, there’s always risk. And I wonder if I’m dedicated enough right now to put in the time. Smart enough to roll with the ever-changing world. But I also realize that, if I don’t do something, I’ll always have that feeling of “what if”.

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