We have completed Baby Step 1 ($1000 emergency fund), we are working on Baby Step 2 (paying off all debt using debt snowball), and we are less than two years away from moving on to Step 3 (3-6 months living expenses in an emergency fund). We have been budgeting and setting funds aside for recurring expenses in sinking funds. We have more saved up now than we have in our entire marriage (all earmarked funds, of course), we have less debt than we've ever had, not including the house. Because of this peace, financial setbacks are small problems instead of terrible tragedies.
Take for instance the day sometime in late March that we deemed it was too warm to live without turning on the A/C. So, we turned it on. Air was blowing. It was warm. Something was not right. Well, we knew that repair would be expensive, so we stuck it out, waiting for tax refunds and another paycheck. We ran ceiling fans and slept with the windows open. It was not really a problem because we are really only home in the coolest part of the day--we got our air conditioning fix elsewhere. However, when school ended and the kids and I were here during the day, it was unbearable. So, we got it fixed. When the man quoted the price, we didn't even bat an eye. We were able to write a check for it right then. Because we have an emergency fund for times such as this. And now we have A/C.
On top of that, we were still able to make a major loan payment this month with all the extra hauling butt we have been doing. So, here's the debt thermometer for the end of May/beginning of June:
We are halfway through this thermometer! Maybe we can knock this one out by the end of the summer (August!). We have just less than $28k to pay off (remember we started with $105k, and started the debt thermometers when we had it down to $55k)!! This is exciting, indeed!