Are you wondering whether it is possible to save for your dream vacation, second home, and your child’s college education while you are still struggling to pay off the debts?
To answer your question: Yes. It is possible to save money while you pay off your existing debt. People who are debt(early in their life) are known to be the ones who create a secured life in their retirement age. With debt, you also get the leverage that you need to stay disciplined, spend responsibly and save for your future.
Here are a few tips on how to save money while paying off debt.
1. Set up a debt repayment plan
A debt repayment plan might sound like a debt management scheme provided by the government. But it actually is a strategy that any debtor can build and implement– all by themselves.
Basically, you have to evaluate your expenses in the past three months. Create a personal income sheet(using Excel or Google sheets) with expenses in one column and income in another column. Once you are done with this, you can filter out the expenses that are fixed in one column(in another tab of the same sheet) and variable in another column.
Saving money requires you to have immense discipline. Without a personal income sheet, you simply will fail to save money while paying the debt.
2. Automate your savings
“Always pay yourself first“ Robert Kiyosaki
Most people pay everyone else first and settle for what’s left at the end of the month. This is a wrong way to manage your personal finances. Always pay yourself first and then everyone else. If you fall short of money, find ways to make more money the next month.
To get started, you need to consult a customer care representative of your bank and set up an automatic deposit for your savings account. You can link your checking account with your savings account. After every paycheck you receive, a certain portion of the money will automatically get deposited in your savings account. Remember to never withdraw money from this account to pay off your debts.
3. Embrace the situation and deal with it
Without facing a financial crisis you will never know how to prepare and deal with it– when it happens the next time. This is why rich people are known to be unafraid of starting over. They have learned their lessons by going bankrupt or losing all their money. Since you are spending more than 50 percent of your current income to pay off your loan, you won’t have enough left to save. But this does not mean you should save at all.
In the back of their mind, everyone knows it is possible to save money while still paying off debts. But they need support and assurance from other people to feel like everything is going to be fine in the end. There is nothing wrong with seeking help. Reading blogs like this one will give you the much-needed push that you currently need.