Financial Goals (Janssen)

Two months ago, my husband and I paid off the last of our student loans, making us completely debt-free. It was glorious.

Once those were gone, though, we had to figure out what our new financial goals were. This was a little tricky because now instead of having one single-minded purpose for any extra money, we had so many categories we could consider - investing, emergency funds, vacations, a new baby (that makes it sound like we are saving to buy a baby. . . ), cars, etc.

We sat down together, looked over our finances and our budget and decided that our priorities were the following three:

1. A fully-funded emergency fund. Following Dave Ramsey's steps, we had previously had an emergency fund of $1000 before we began pounding away at our student loans. Once you're done with your debt, however, he recommends an emergency fund that could support your family for 3-6 months. We reviewed our budget and decided what that amount was for us and started working away at it as quickly as we could. The good thing about this goal is that it has a finish line - once we got that dollar amount in the account (actually, we have it spread out over several accounts at different banks), we could just leave it and move on to our next goal.  
2. Long-term investing. We significantly increased the amount of money we contribute into my husband's 401(k). Because time is on our side at this point, we wanted to take advantage of that, as well as the match that his company provides. 
3. A down payment fund. We currently are renters and probably will continue to be for the next several years, as we don't want to buy another house until we are certain we will stay in it for at least five or more years (we owned a house in Texas for three years and even after selling it for more than we paid for it, we still would have come out ahead if we'd continued to rent for those years - a house is a money pit). Our goal is to have a down payment of 20% since this would allow us to avoid paying mortgage insurance. We have a fairly good idea of how much the kind of house in the locations we're considering would cost us, so while we don't have as solid a number as we do for our emergency fund, it's a pretty accurate ballpark figure, I think. 

It's not as easy to figure out how to approach these goals as it was with our student loans since we knew it was a short time period where we could be incredibly focused. We're less interested in sacrificing all fun for several years than we were in making do on very little for six months. On the other hand, knowing what our long-term goals are and what the payoff will be, it's easier to be a little more careful and a little more frugal.