We Paid Off Our Debt! Now What?

Just 21 months ago, in September 2016, we sat down at the kitchen table, confronted our seemingly overwhelming debt and hatched a plan to destroy it.  Truth be told, our plan and timeline seemed a bit lofty, and we were unsure that we’d end up meeting our goals along the timeline we had developed.  With our sights set on doing our best to make our plan a success, we began the daunting journey of paying off $76,000+ of debt that we had accumulated in just a few years.  Our initial plan got revised a number of times along the way, based on our discipline and resulting success.  In just 21 months (39 months ahead of our original schedule), we made the final payment on our outstanding debt (except for our mortgage) on 6/17/2018.  Not only had we done it, but we did it in much less time that we could have ever have hoped to.

Our next planned step was to start banking the money we had snowballed that was going toward paying off our debt every month.  When it was all said and done, we were putting $3,000+ per month toward our debt, which now meant $3,000+ going into our savings account each month.  Around the same time, we were anticipating receiving a check for the cash out of my state pension that we also planned to put toward our savings.

Our trusty credit union savings account would be able to provide us a .15% APY interest return rate on our balance, which was better than absolutely nothing, but certainly not great.  We love our credit union, but, knowing that we would be feeding our savings account a healthy meal every month, we wanted to make our money work for us.  So, it was time to come up with a better solution.  Queue Google search!

Financial planners, experts in financial fields and the majority of the internet talked a lot about “risk tolerance” as a key consideration when selecting investment options.  Investopedia defines risk tolerance as “the degree of variability in investment returns that an investor is willing to withstand,” and suggests that “you should have a realistic understanding of your ability and willingness to stomach large swings in the value of your investments.”  This was pretty easy for us.  While Josh is willing to “ride the wave,” gaining some and losing some on investments, I have no tolerance for losing money.  Suffice to say, my risk tolerance is non-existent and our financial compass heading would need to be set accordingly.  I lose enough sleep at night about insignificant details and I wasn’t about to lose any more, worrying about some high-risk stock investment that might plummet while I slept.

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We decided to focus our attention on a low-risk no-risk, high yield savings account in order to store our money safely while collecting a slightly better return on our investment than our standard savings account could provide.  After researching a bunch of different high yield savings accounts, we settled on Ally Bank’s Online High Yield Savings Account.  With absolutely zero risk, Ally’s high yield savings account was offering 1.65% APY at the time we opened it, and since we had a loan through Ally before, we felt really comfortable that they would be around for a while and a safe place to store our money.

With no minimum balance and no monthly fees, Ally Bank’s Online High Yield Savings Account was a perfectly easy solution.  Setting up the account took only a few minutes online and the mobile app made depositing my pension cash out check a breeze.  The high yield savings account doesn’t offer any brick-and-mortar banking locations, nor does it offer a debit card for quick access to your money; but 24/7 customer service and transfers between financial institutions met our needs just fine.

Going forward, we plan to continue paying our high yield savings account the amount that we had been paying toward our debt each month and watching our savings account grow, while earning a very safe return on our investment.  In just a few months, and after another round of celebrations about being debt free!, we’ll be preparing to take the next step in our plan toward smaller living, but a BIGGER LIFE!

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