What We’ve Accomplished Since Paying Off $80,000 Of Student Loans

I just wanted to give everyone a quick update on our financial journey. We were stoked to finally pay off Tori’s $80,000+ of student loans just a few short months ago. We knew that wasn’t anywhere near the end of the road. The first thing we did was increase our retirement investment amounts, but after that we knew we still had some major legwork to do to get our finances into tip top shape.

We quickly set a financial goal of saving six months of expenses in our cash emergency fund. We did have a smaller emergency fund while we were paying off Tori’s student loan debt, but we used a tiny bit of that cash to help us pay off Tori’s loans.

We felt that, as part of our next step on our financial journey, we needed to top off cash emergency fund to 6 months of expenses before we started working on some of our other financial aspirations. After all, emergency funds provide great peace of mind that you’ll be OK financially for a few months if something horrible were to happen. That comfort would help us sleep at night!

Mission Accomplished

I’m happy to announce that we recently fully funded our 6 month cash emergency fund. We were able to continue using the momentum from our debt pay off to fill the emergency fund. Since we were so used to spending such a small percentage of our take home pay, we simply continued living like we had been while we were paying off the debt to fill up the emergency fund.

We did splurge a little bit here and there but now that the debt was paid off we felt comfortable spending just a little bit more money. One key to our quick success was that we made sure we didn’t commit to any new recurring expenses and we didn’t make any large purchases. Those types of decisions had to wait until we filled up our 6 month cash emergency fund.

What’s Next?

So, what’s next for us now that our 6 month cash emergency fund is full? We like having our full cash emergency fund, but ideally I’d like to have a little bit more cushion to feel comfortable. The problem is, I don’t like the idea of having more than 6 months worth of expenses in cash due to the fact inflation will slowly devalue our cash.

We decided our next step is to invest 6 months worth of expenses in investments! That will give us 12 months worth of expenses in total which I’d be much more comfortable with. Of course, the value of our investments will fluctuate, but I intend to continue investing even after our 6 months of expenses in investments is complete. Eventually, even if there is a 50% drop in the market, we’ll still have at least 6 months of investments in our taxable investment account. However, that’s a much longer term goal.

The question is, how quickly do we need achieve our goal of having another 6 months of expenses in investments? That’s what we still have to decide! We’ll probably still work pretty aggressively toward this goal, but we’ll probably start to allow for a bit more leeway in our finances. We do have other things we’d like to do with our “extra” cash flow, like decorating the house, putting up a fence in our back yard and taking a vacation or two this year. Now that we’re out of the woods and we have our six month cash emergency fund fully funded, I think it’s time we add just a little bit more balance to our financial lives!

What would you do if you were in our position? Would you continue living our current lifestyle and put off the other things we want to do to finish our 6 months of expenses in investments? Or would you loosen up the belt a little bit and get some of your other goals going?

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About Lance Cothern

Lance Cothern, a Certified Public Accountant (CPA) licensed in the Commonwealth of Virginia, is the founder of Money Manifesto. You can read more about him here or connect with him on Facebook, Twitter, Google+ or Pinterest.


  1. Congratulations on staying with the program! It’s good to see a solid role model, showing what can be done. As for investments, something to consider would be preferred stock. Why? It doesn’t fluctuate much (up or down) and usually pays around 7-8%. People gunning for growth consider them boring, my wife and I love them because they have much lower risk and the reward is not that far from the long-term S&P average…

    • Thanks for the kind words William! Preferred stock could be an option, we’ll have to look into it a bit more. I understand the concept through my accounting classes but haven’t paid much attention to it outside of that.

  2. MrsFinancialFreedom says:

    Well done on saving up 6 months worth of expenses as its always good to know that if anything was to happen, you would have some money to fall back on.

    As for loosening up your belts a bit, I would say go for it! You have done brilliant and deserve to treat yourself. I set myself mini goals and once I achieve them, I always allow myself a little reward as it helps keep me motivated.

    All the best

  3. I know that some experts say the emergency fund should be in cash accounts but we also have invested a portion of our in our brokerage account. Stocks and bonds are very liquid if you need to sell them, and while you hold them they add interest or dividend income to the fund, or grow in share value. This isn’t the place for speculative investing, however. Just go with good old blue chip stocks that pay a nice dividend, or safe bonds, perhaps even municipals so you don’t have to pay tax on the earnings. That should help keep inflation at bay.

  4. Holly@ClubThrifty says:

    Great job, Lance! If I were you, I would continue what you’re doing…it’s obviously working. I don’t like to have too much cash on hand either, so I wouldn’t keep funding my E-fund.

  5. I think its a great idea to make your money work harder for you considering you’ve already worked hard to earn it. I understand that you do need some cash to had for the unforeseen but a proportion would be better used for investments.

  6. Anne @ Unique Gifter says:

    I’m not a huge fan of gigantic emergency funds, but their existence should be tempered by job market stability and whatnot, for an overall risk picture. Piling your funds into the market sounds like a great plan to me.

  7. Quite frankly, I think 6 months is more than enough of an emergency fund. I’d get going on other goals (BTW, AWESOME JOB on accomplishing both the student loan payoff AND the nice emergency fund). Then, I’d take the 5 of the 6 months worth of efund you have right now and I’d invest THAT. It’s liquid enough that you could get it back out if you needed it, and the one month of efund you did keep in the bank should suffice for the handling of any other emergency. Just my 2 cents. 🙂

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