Here is our current plan to live debt-free and stay debt-free -

1. We fully-fund four retirement accounts – my wife’s Roth IRA, my wife’s Pension Plan, my Roth IRA, and my 403b.
2. We save money for future ‘major purchases’ – newer cars, new furniture, new appliances – in our ING DIRECT Savings Account.
3. We are saving for a future home purchase in our brokerage account.  While not as tax-efficient as our retirement accounts, we have ready access to this money.  Should we need to purchase a home before we can pay full-price, we can use the money in this account for a healthy down payment.

We live on a strict budget, we fully-fund our retirement accounts, and we save as much as we can for future purchases.  Instead of making payments to an automobile loan, we make a ‘car payment’ to our savings account.  Instead of making mortgage payments to a mortgage company, we make a ‘mortgage payment’ to our brokerage account.

I like having interest and time work ‘for me’ and instead of ‘against me’.  Now, when I want to buy something, I save up for it, and then I purchase it.  Radical, I know!