This Credit Free Life

We've been leading a credit free life for 2 years now. We don't use credit anymore. Of course, we still have our mortgage and home equity, but we've been working at paying those off as well.

We followed most of Dave Ramsey's baby steps and were about to pay off over $20,000 in consumer debt in the first 9 months. We were very lucky to have some stocks to cash in, savings bonds lying around, a generous bonus and lots of patience. When our dryer broke, we went 2 months without. When a car died, we went 5 weeks without. Things recalibrated after a year and a half on the plan and we had 4 months in our emergency fund. Four months of basic living expenses saved just in case. I was comfortable with that cushion.

Then emergencies happened. From toilets to trees to cars to dishwashers, we are now down to less than 2 months in the emergency fund. We spent some of the money on non-emergencies (new lighting in the dining room, finishing a bathroom remodeling that began 3 years ago), but most of it was on basic items. The good news is that we used our emergency fund as a credit card, instead of piling on more debt. The bad news is that now we must work really hard to bring that balance back up. We have no more rabbits to pull out of hats and Mark's employer has announced layoffs.

On the other hand, we have that month and a half in the bank and know how to get more flowing into the emergency fund. One of our major decisions this week has been to repair the aging Volvo instead of getting a car loan for a different car. Next bonus maybe we'll plan for a new used car, but that's not until March. We'll just keep plugging along with what we have and stash more away for the future.