I’ve devoted the last few blogs to the topic of savings because it’s important. This blog too is about savings. But rather than serving you another sermon, let’s do things a little differently – by hearing the inspiring story of a young person who pulled off the financial feat. The story is published by Business Insider and is reproduced here for the benefit of this blog’s readers. Visit the Business Insider website for this and other stories.
Dena Botbyl, 29, New Jersey
Why I saved: To pay off some of my $60,000 of credit card and student loan debt!
How I did it:
I set some very specific financial goals, namely getting out of debt (At the time, I was making around $50,000 a year, but I had a lot of credit card and student loan debt.) And then I practiced visualization, which is all about imagining yourself once you get to your goals. But the key to visualization is detail. For example, it’s not enough to imagine yourself this time next year with $10,000 in the bank. You must get specific: What will you be doing exactly? What will your lifestyle look like when you reach that goal? What will you do with your free time?
Once I was done with the visualization exercise, I got to work by putting about $1,000 of each paycheck into savings every two weeks via automatic deposits—and sometimes that was half my salary! I also cut out excesses, like eating out too much and shopping for accessories. Plus, I applied any extra money toward my savings, rather than spending it. Six months later, I had $10,000 in the bank.
What he did right (this portion is added)
- Set a concrete goal (to pay off $60,000 of unsecured debt).
- Consider the trade-offs before working out a sustainable savings plan.
- Enroll in an automatic deduction plan (a “standing instruction” arrangement in the Singapore context) to enforce regular savings.
- Back up the intention to save by cutting out non-essentials.
- Monitor progress in achieving goal.
Review: Well done, Dena. To my readers: Dena’s actions are exactly what was covered in Blogs 3 to 6.