Simple Savings Sunday #7 – Saving While Paying Off Debt
Welcome back to Simple Savings Sunday. In this series, I show you a difference saving technique each week. My goal is to inspire those looking for ways to save, along with showing you how it easy it can be. Saving really doesn’t have to be that difficult. If you find yourself struggling to save, then you are living beyond your means. I don’t mean to be an ass with this statement, but sometimes honesty can hurt. I know, I have been there too. With regards to my honesty, I am going to provide another little truth. You CAN save while paying off debt. It’s true.
Save Money While Paying Off Debt
There is a big debate out there whether it is better to pay down debt or save for retirement. Most people come down on one side or the other. Some will say that if you have debt, then you need to focus on paying it off. Others will say that depending on your debt, you should save for retirement. I was reading an article from one of my blogger friends. She was asking the question about paying off debt or saving for retirement. What she indicated in the article is what I believe.
I don’t like to conform to many things. Thinking outside the box is one of my favorite things to do. Why should you always follow what everyone tells you? For this reason, I think it is very much possible to save money while paying off debt. It shouldn’t matter if you are saving for retirement or an emergency fund. Saving money is saving money.
My Method for Saving
I have written a few times before about how I paid off my credit card debt. I have also written about how I paid off my debt and saved money. Just because someone says that you should focus on one thing over another doesn’t make it right for everyone. Paying off debt is extremely important, but so is saving money. Most people don’t have enough savings, so why not focus on increasing what you have squandered away?
My money saving method was simple. You take whatever money you are going to pay toward your debt, above the minimum payments of course, and then split it up based on an allocation. My allocation method was similar to how retirement investments are done. When you first start out, you pay more toward debt and then some toward savings. Lets say 90% toward debt and 10% toward saving. As the time goes by and you have paid off more debt, you slowly start to lower the debt allocation and increase the savings allocation. In my final year of debt repayment, I was paying something like 30% toward debt and 70% toward savings. Why would I do this?
The answer to that is simple. Paying off debt should be two-fold. You not only need to free yourself from debt’s shackles, but you also need to change your mentality. You get into debt because you have a spending mentality, but that needs to change. You need to learn how to save and enjoy doing it. When I used my method, I learned how to save by the end. I was saving money and I was watching my bank account grow. It was a great feeling. My spending mentality was getting wiped out and changing to a saving mentality. It was awesome. That is the whole point of my method. If you don’t change your mentality, then you will get out of debt and go right back in. I have dedicated an entire page to my debt/saving method allocation, so check it out if you are needed some more guidance.
One thing you should always remember, paying off debt and saving money is entirely personal. You have to pick what best works for you. I just wanted to provide another method for those that are looking for options. You can fight debt and grow wealth, but it just takes time.
I want to quickly shout out to those that have linked to my work in the past few weeks. Thanks to Practical Cents, Big Day Coming, Color Me Frugal, Money Smart Guides, The Pursuit of Riches, The Amateur Financier, Avant Credit, LifeHacker, Figuring Out Money, and Financially Blonde