I also love your idea of building up a 6 month emergency fund. I’ve done so and I find it very comforting not having to worry about money like I used to.

Just to be clear, once the debt is paid off, it will be a matter of saving up the money for a vacation. None of it will be financed with credit.

We are not talking a very expensive one (no Walt Disney World or exotic locations). Most likely it will be us driving to a bigger city for some of the things there (museums, imax theater, zoos, etc) to enjoy a few things we don’t have much of where we live. Along the way, we’ll camp in campgrounds or stay in mom & pop motels. It should take about a month to save up for (using current numbers).

Early Retirement Extreme – We do have over $3,000 in the bank, and all of the above assumes we still have that when we are debt-free. If we don’t, then it’s likely we will get money in our savings before vacationing.

We have only been to one “zoo” (very, small one) once and we’ve only been to the movies with our son once. He has also never been to a dinosaur exhibit (there are none where we live). We want to expose him to more, and we can’t do that unless we venture out and spend some money.

There is a balance.

However, I would recommend a 3 month safety net in your savings before leaving for the vacation (just to be cautious)!!!!

Good luck Tricia! I love reading your blog!

http://www.nicethingsbaddebt.blogspot.com

In fact I think I’d take my previous debt payment & do all of the above! Divide it up equally & enjoy using my money for me, instead of using it all to service debt.

If I’m debt free except the house, here’s my order of goals:

1. 6 month emergency fund.
2. Max out retirement contributions.
3. Some sort of extra mortgage payment, double if possible.
4. College savings for the kiddos, max if possible.
5. Set aside some savings for eventual car replacement (depending on age of car).

If I have not had a vacation in several years like you, then I put it between 1 and 2, as long as I’m paying cash.

I would save $1000. And then I would take the $40 a year I get for free in interest and blow it on used books and CDs.

Then I would save $10000 and use the $400 a year on eating out or on a fancier wardrobe.

Then I’d save $100000 and use the $4000 a year to pay all the rent or all the car expenses or possibly a collection of utility and cable bills, or maybe the entire food budget.

Then I’d save $100000 more and then I’d retire.

A large amount would go to retirement and some to charity, of course.