If you’re like me, we’ve started a little later in life and saving/investing can be a challenge. In this journey, I’ve found that if I haven’t saved some money by now, investing in any kind of significant amount of money will be difficult. Thank God I was putting money away into several different accounts that I didn’t need to live off. It wasn’t a lot but it was something. Here are 4 ways to save money while paying down debt.
1. Save As Much As You Can, As Long As You Can
In order for me to save, I had to play a mind game. I figured if I didn’t see it, it didn’t count. So, while working at Fox Sports, I started to put money away for savings and investing. They offered direct deposit at that time and I was able to split my deposit into 3 different accounts. It went like this:
- E-Trade: $25
- ING-Direct: $25
- Checking: Whatever is left
In this scenario, I was saving a total of $50 out of each paycheck and forcing myself to live off what was left. The money was automatically put into the other accounts and it was out of sight. This didn’t seem like a lot of money, but it was difficult at first. Once I forgot about it, I stopped noticing. Then one day, speaking with a friend about a stock, I remembered I had money in an E-Trade account. When I checked it, I had $500! I later invested that money into Ford Motor Company and made a small fortune… relatively speaking.
The point of this story is to encourage you to put something away! It is easier if you have the ability to automate it as I did, but if not, do something. Over time, you will have extra money to try out a stock or even get in on a real estate deal. Check out Tips for a Financially Disciplined Musician where there are additional saving scenarios to try out.
2. Limit Spending Habits Temporarily
Just about every article I read regarding saving money always has a section around spending habits. This is something everyone should do and I recommend taking baby steps. You can do it temporarily if you have trouble as I do/did. It is possible to LIVE while saving aggressively. Try it for 1 month and see how it works out for you. Pack lunch for 1 month and not buy it. Cook a dinner that can last a few days or even a week vs. something new every night or even going out. These seem nominal but can go a long way.
Use time as your benchmark and govern yourself accordingly. Discipline is the key and there are plenty of tools to assist. Check out Organizing My Finances with Personal Capital.
3. Pick an Account and Crush It
Select one credit card, personal loan, store card, etc. and focus like heck on it. If it’s a credit card, cut it up, throw it away, and focus on paying it off completely! This is something I had to do while playing a mind game with myself on saving because my spending habits sucked. I had to keep from using that card, so I just got rid of it. Then I shifted my focus to paying it off. I still, to this day have the account but that card is long gone.
After doing this 3 times over, I am now down to 2 cards and crushing it. Yeah, it took almost 2 years to pay them off, but I did it! I am still saving money, investing, and working to pay off the balance on the remaining 2. Traditional logic would be to pay off the debt and then save, but that is no way to live. No one’s focus should be to only pay off debt and live afterward. This is in line with the whole Learning How To Profit First methodology.
You can do it!
4. Tell No One What You Are Doing
This might sound strange but, I have found that by not telling anyone what I am doing helps me stay focussed. My thought is, if you tell someone what you are doing, you will look to them for support and/or validation at some point. You have given yourself a reason to do it or give up. Saving and paying down debt is very personal. It comes with its own level of stress and frustrations. Remember, it is your journey and no one else’s.
When my brother left to join the United States Marines, he was on his own. I did not join him. We did not communicate often about what he was doing as it was his journey and had to face all trials on his own. He wasn’t alone in that there were other Marines striving to achieve the same goal, but he wasn’t broadcasting it as a badge of honor until he completed the first step which was boot camp. He needed to stay focused and not hear my opinions or what I think he should do or not do.
The point is, others might understand what you are doing and may even want to do it themselves, but this is your conviction. If you want to start out with someone then, by all means, do so! Just remember you own this and the victory on the other side of your personal accomplishment. You got this!