Quantcast Finally Frugal: I think I might be a 'Saver'. . . .

The bumpy road to financial independence. . . .

 

Wednesday, February 18, 2009

I think I might be a 'Saver'. . . .

I know it's really too soon to say for sure, but in looking at my expense-to-income chart and my ING Direct account balances, I think I might be turning into something I never thought possible: a Saver. Never in my wildest dreams did I believe that I could afford to save, let alone find the motivation and determination to actually do it.

In spite of my skepticism, my bank account tells a different story. Over the past two months, I've been able to place almost $800 in my 'internship year' savings account (which I'll use to 'bridge the gap' next year when I'll be forced to work part-time). That's in addition to the roughly $250 I place in other savings accounts each month to cover future school costs, utilities, and bi-annual car insurance payments. In the month of January, I managed to sock away $458, which represents almost 17% of my take-home pay! In February, I'm shooting for a total savings of $675---a definite challenge, but one that I look forward to. Just two years ago, I would have declared this goal 'impossible'.

"Big deal", you might be saying to yourself, finger on the mouse button that will take you away from this page. But to me, it IS a Big Deal (with a capital B, and a capital D). What does this really mean to me? It means that I have it in me to save money. It means I can be a Saver. For someone who grew up in a household in which extra money was spent before it was ever earned, and who lived off credit for 20 years, that's a HUGE deal. It means that when I finally conquer my student loan debt and have my mortgage under control, I can save the money to: buy a "new" used car; replace my computer; take a vacation; make home improvements. I can pay cash for these things, rather than throwing the credit card down at the checkout counter with the never-to-be realized intention of paying it off by the time that 0% introductory interest rate goes the way of the dodo bird.

According to a recent article at ABC News, I'm not alone. Due to decreasing income and the threat of layoffs, Americans have increased their savings rate during the past year from 0.4% in 2005 to 1.7% in 2008. This 2008 average includes a savings rate of 3.6% in December alone. Also driving that higher number is the May 2008 stimulus check---in that month, Americans saved their after-tax income at an astonishing 4.8% (meanwhile citizens in countries like China save closer to 30% on a yearly basis)! Nothing like a recession and the threat of unemployment to send Americans scurrying to the bank at last.

Of course, my own metamorphosis from a credit-dependent spender to a live-within-my-means Saver began not with the recession, but with a little book called Your Money or Your Life. Perhaps it was mere coincidence that I read this life-changing tome just a year and a half before the economy tanked. Or maybe it was some sort of supernatural prescience, who knows. What I do know is that it jump-started my journey into 'un-debtedness', rather than 'in-debtedness". That I rode the waves of the recession last fall while sending my very last payment to my credit card is due in no small part to YMOYL as well as to Dave Ramsey's The Total Money Makeover.

I had no idea when I started living more frugally and paying down my credit balance that I would one day have an emergency fund, that I would learn to keep track of every cent that leaves my fingers, and that I would have the financial fortitude to place money in a savings account long enough for it to actually earn interest. Since I was raised with the unspoken understanding that 'money comes, and money goes (and where it goes, nobody knows)', the psychological benefit of learning that I have control over both my spending and my savings is profound.

As I write this post, it occurs to me that it may sound overly self-congratulatory. It's not meant to be read in that way (although I do feel a certain amount of pride in my ongoing efforts to change my habits). With over $56,000 in student loan debt looming, I've quite a ways to go before I'm truly financially secure. No, what I hope to communicate is that if a person like me, with an average salary---especially when compared to my ridiculously large mortgage payments---can manage to pay off credit card debt and increase savings, so can any of the other folks suffering through this current (though, I'm convinced, temporary) economic recession. It's not easy, and it's not instantaneous. It's a process, a journey, a challenge. But when you reach the point where you can ever-so-tentatively label yourself a Saver, it's worth every moment spent noting expenditures, creating and updating budgets, determining spending priorities, and reading personal finance books (and blogs!)

4 comments:

Cheri said...

I enjoyed reading your post and want to say congratulations! I, too, have struggled with credit card debt and living above my means in spite of earning a very good living. My husband and I went on a mission trip to Africa in 2006 and that began our journey to spend less, purge what we didn't use, and live on a budget. We were blessed to see so many people live joyfully and purposefully with a lot less stuff and money.
It is really difficult to undo years of bad habits, but you are right.... it is an amazing journey and we have discovered that there is a lot less stress by paying cash. It is also interesting when you start to watch where your money goes that suddenly sometimes 20 dollars seems like a huge sum of money. We are slowly buying our freedom back by paying off one debt dollar at a time and it feels absolutely fantastic. Keep up the great work.

Finally Frugal said...

Oh! I LOVE that concept of "buying back your freedom one dollar at a time". The reverse is true as well, I suppose: each dollar spent (especially on credit or on something that is a want versus a need) could be considered to be giving away a bit of our freedom. This will be a great reminder when I'm at the cash register. Thanks for sharing your perspective!

I do know how wonderful it feels to watch those credit card balances fall---keep going! It feels even better when you've sent your last payment! I can't wait to get started on my student loan debt. This one will take YEARS and YEARS but the satisfaction at the end will be immeasurable.

marci357 said...

WhooHoo!!! Yippee!

An old saying: Whether you think you can or you think you can't, you're right :)

Meaning attitude again! Way to set your mind to it and do what you set out to do! You HAVE to congradulate yourself on the milestones because one needs encouragement on this long long walk back to debt-free! Keep up the good work! Whoohoo!!!

Michele said...

Good for you! You do not sound self-congratulatory. And even if you do, you deserve it. You've come a long way!

Related Posts Plugin for WordPress, Blogger...