Pay yourself first

My foray into the work world started out responsibly enough. Most of every check I earned at my town’s burger joint went straight into my brand new savings account. That is, until I’d accumulated enough to finally purchase my dream car (OK, not really, it was a Ford Festiva). At which point I decided to reward myself for my discipline by blowing every cent on whatever I felt like—clothes, CDs, fast food, you name it. As you might imagine, it really got out of control once I got my first credit card.

Of course, I eventually grew up and started paying the bills. But while my spending wasn’t as frivolous, my saving was still nonexistent. Old habits die hard. As long as I had enough to pay off my minimum balances, I guess I thought I was OK.

There were two problems with this line of thinking, though. First, I didn’t always have enough to pay the bills. Second, I wasn’t thinking of the future. Basically, I was in denial. I finally came to my senses when I realized that, even though I was diligently making minimum payments, my credit card debt was still growing. If I didn’t do something, I wouldn’t be able to keep my car or apartment, let alone have enough to someday buy a house. Living paycheck to paycheck just wasn’t going to cut it anymore. I had to start saving.

Now I try to sock away 10% of each paycheck. If I can save even more than 10%, I will. When I have a rough couple weeks, sometimes I don’t save at all (I’m working on that, though). Of course, I haven’t had the fun of watching my stash build up yet because most of the money has gone to erasing my debt. But I know it will pay off in the long run.

Think about it: If you’re paying minimum balances (often just 2% of the entire balance) on a credit card with an annual interest rate of 20% or more, you’ll be making payments every month for the rest of your life because you’ll barely be covering more than interest. But if you can bite the bullet and cough up a bit of your paycheck each month, you can pay off debt in years, not decades. And every penny you save after that day will be for you, not your creditors.

There’s really no way around it. If you want to stop worrying about whether you’ll be able to make the rent or mortgage, you’ve got to get out of debt. And if you want to get out of debt, you’ve got to save money.

If you’re not sure where to start, why not consider saving the average of $8 a week most Americans are supposed to receive thanks to the new stimulus package? It’s money that you were doing without anyway, right? That same principle can be applied elsewhere, too. Take that gym membership you don’t use—you’re doing fine without that spending leak, so why not just cancel it and save the money?

For lots more ideas on ways to save—and help staying on track—check out our Give Yourself a Raise flyer (and the other cool stuff in our free Financial Toolkit). Or join us at one of our upcoming community workshops in Chicago and Atlanta for in-person advice on debt relief, how to avoid foreclosure and more (not to mention a free dinner and Dell laptop giveaway). And, as always, you can also sign up for a free one-on-one debt analysis. Enough with paying credit card companies. We’ll show you how to start paying yourself.