My Saving Grace
Posted by Christi | Filed under Christi
When paying down debt, savings is often one of the farthest things from our minds. It was for me, anyways. “Pay yourself first,” I would hear. “ORRR,” I thought, “I could pay down my debt since I’ve got so much of it.” On paydays, if I found an extra $100, you bet your patootie that I was going to put that extra payment on my credit card. What good was it sitting in a savings account earning next to nothing? That wasn’t going to help me!
Then I got a significant tax refund. At this point, I was around $35 000 in debt. I had a balanced budget that I could live with and was actively attacking my debt load. I wanted so badly to see my credit card balance decrease by a couple thousand. But instead, I put $1000 from my refund into a savings account. What for? I wasn’t sure. But I followed the advice of the pros.
MY $1000 “RESERVE FUND” WAS ONE OF THE BIGGEST CONTRIBUTORS TO MY DEBT FREEDOM! I can not stress the difference this $1000 savings account made in our life. When I miscalculated, under planned, or just plain overspent, this reserve fund was our saving grace. The reserve fund meant I was safe. It also gave me a sense of pride, knowing I consistently had $1000 sitting there if something were to happen. You NEED a reserve fund if you want to get out of debt. Can you help me down from this soapbox now?
Let’s be clear. I’m a planner, but I can’t plan for everything. Despite my efforts, some unexpected expense comes up every couple of months. Every once in awhile as I’m planning out my next pay cheque, I realize that I don’t have enough to cover everything. When I didn’t have a reserve fund, I reached for my credit card for every “emergency” (*cough* CLOTHES) that came up. Now that I have a fund, I borrow a couple hundred dollars from my $1000 reserve fund when I miscalculate. Do you know how hard it is to do that? To be on the receiving end of an IOU… from myself? To see my beautiful $1000 savings go down to $600? My heart hurts. I get sad. I don’t want it to go away!
The reason I am so passionate about my $1000 reserve fund, is because of how I feel when I have to borrow money from it; from myself. Do you know how much harder I work to get that savings account back up to $1000? Way harder than if I had borrowed the money from my credit card! When I was under a mountain of debt, regardless of how much I owed on my credit card, be it $5864 or $400 less at $5464, all I saw was that I was in a lot of debt. I didn’t care to work any harder than I was already working to pay that extra $400 back. But, if my reserve fund went from $1000 to $600, it looked different. It felt different.
I had a complete mental shift. For the first time, I actually noticed when I didn’t plan properly. I noticed if I was overspending. I noticed that I probably didn’t need to go and spend $300 on clothes because I didn’t like my wardrobe. I started noticing my behaviours. I came to realize that credit cards were too “out of sight, out of mind” for me. And that awareness, my friends, has changed my entire financial picture. Today, I am in control, I am aware, and I am excited to see my savings grow.
Do you work harder when you see your savings balance decrease? I encourage everyone to try and create a reserve fund if you don’t have one. It just may become your saving grace.
- Christi (@ChristiPosner)