Saving my emergency fund, reaching goals and creating new ones

After 10 months of going scorched earth and saving my fully funded emergency fund, it's complete! It has been almost 12 months since Matt and I left for our big USA Adventure. 4 weeks, 6 states and countless landmarks. We started in Las Vegas after the 14 hour flight from Melbourne, then over to Boston, where I purchased my first Dave Ramsey book, The Total Money Makeover. 4 hours on a train between Boston and New York and I'd almost read it all. That's when I decided and committed to his fool proof plan to financial freedom, the Baby steps. If you don't know who Dave Ramsey is or what the Baby Steps are, I've listed the baby steps below.  

1. Save $1000 towards your starter Emergency Fund. 
2. Pay off all debt except your home using the debt snowball (paying down debt from smallest to largest, regardless of interest rate)
3. Save 3-6 months in expenses, in savings
4. Invest 15% of income into retirement
5. Fund Higher education for children, regardless of their age
6. Pay off home mortgage early
7. Build wealth and give

Thankfully, I didn't have any consumer debt, so I could go straight from Baby Step 1 to Baby Step 3. After working 18 hours a day, 7 days a week for almost a year, I paid cash for our holiday, no credit cards, only electronic funds transfer and debit cards. It was an amazing feeling to enjoy the fruits of months and months of hard work. To make it even better, I didn't come home to a mountain of debt that I'd have to repay, before getting started on the baby step journey. When we got to New York, we walked past a Barnes & Noble bookstore, I had to go in. This is where i purchased another 2 finance books. I became obsessed, reading late into the night and on every train ride. 

Now, it's time to start baby step 4, 5 & 6, paying off the mortgage and student loan. The student loans in Australia are a little different to those in the US. The government loans money to students wishing to undertake higher education. They then must pay the government back once they starting earning over a certain threshold. It's withheld from their take home pay through tax, until the loan is paid back. You can also make voluntary repayments, to pay it off early. The difference with HELP loans vs. a loan from a bank, is that it is indexed at the rate of inflation. Which is currently 1-1.5%. 

So how am I going to make this happen, what are my next steps? 

Well, my next goals are: 

1. Buy a new to me car (my current car is 13 years old, with 208,0000km on the clock)
2. Pay extra on my home loan, 
3. Make voluntary payments toward my HELP loan
4. Stash a little bit into savings so that I can travel, because I love to travel, and I value tremendously the ability to so, but I have to be able to cash flow it, each and every time.

I currently have $309,813.52 in Mortgage debt; $38,700.00 in HELP debt; and saving $15,000 toward a new car. 

So how am I going to make it work? I've decided that I'm going to put the most into my home loan. It has the highest interest rate of all my debt at 4.59%pa. 

For now, I've decided to pay things off and the amount would be dictated by a percentage of my pay that's left over once all necessary bills & utilities are taken care off. Instead of a dollar amount. If I make more money, the percentage stays the same, but the amount increases, and the same goes if I was to make less money. 

• Car Repair/Replace fund - 25%
• Savings - 25%
• Mortgage - 40%
• HELP Loan - 10%

After contributing the last $126.63 to complete my emergency fund, I was lucky enough to be able to contribute the following to start my new sinking funds. 

Car Repair/Replace - $90.83 

Savings - General - $90.83

Addition mortgage repayment - $145.33

HELP Loan - $36.34

In celebration of completing my emergency fund I decided to celebrate with a dinner out at a Japanese restaurant close to home. I enjoyed every bite, it was $44.30 for 2 people, including drinks and dessert. 

In conclusion, it's time to close another chapter of this journey. I've celebrated the completion of Baby Step 3. After 10 months of stashing every cent I could towards my rainy day fund, it's finally complete. Along with the willingness to become debt and financially free, come so many emotions. That of motivation, desire, excitement and sometimes, frustration, fear, fatigue and impatience. For me, it has been so worth every sacrifice. To watch my emergency fund grow from cents, to dollars, to $10,000, it has made such a significant difference in my life, it helps me to sleep better at night. If you're questioning whether you need an emergency fund, don't. It puts padding between you and life, it makes an inconvenience out of a perceived crisis, and when a real crisis does happen, it allows you to focus on the important  things and not about the money.