From my experience, paying off debt can actually be an opportunity to learn good habits in saving money. Once you’ve managed to pay off a chunk of debt, it makes it that much easier to save. Here are a couple of tips that I feel work well.
1) Make a budget and stick to it. Challenge yourself to set a tight budget and come in under your estimated expenses.
2) When payday comes around project all bills for the next two weeks and send everything else to the credit cards, perferably online so the payment hits your account sooner.
3) Midway through the pay period look at what you’ve got in the bank, figure out how much money you need to make it through the next week. Then send in another payment with anything that might be left over. This means that you can’t spent what you don’t have and your expenses will likely be much lower.
4) Set goals and track your progress. This keeps the pressure on and makes it all the more satisfying when you pay down your debt.
As you can see, this process can work for paying down any debt, i.e. student loans, mortgage, car, etc. It can also be applied toward savings as well. For example, once I built up this system it meant that I was able to transition right away to saving for our condo and wedding.
Happy Saving!
Miel
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