After much angst and hand-wringing CodeMonkey and I have decided not to downsize to a small apartment. I'm happy with the decision, though it will slow our savings rate marginally.
However, I did take the money I had stashed to pay for deposits and moving costs and put it toward my last student loan. We're now totally and completely debt free, just about four years after I graduated from college, and we haven't received any of CodeMonkey's windfall.
It still doesn't feel quite real, but I'm looking forward to getting that payoff notice in the mail.
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