10 Mental Barriers to Paying Off Debt: You Aren’t Saving Money

rfz_mental_barriersAt the start of The Debt Movement, we introduced the topic of mental barriers that prevent us from paying off debt. Why? Because even the best-laid plans can fail and, when that happens, we’re left to wonder what to do about it. The fact is, good intentions and solid planning are important but they won’t move us forward without self-awareness. So for the rest of The Debt Movement, we’re going to talk about each mental barrier that prevents us from paying off debt so they can be conquered once and for all. Remember, there’s a lot more to securing a solid financial future than simply crunching numbers in an Excel spreadsheet!

Mental Barrier Number Five: You Aren’t Saving Money

Do you ever think to yourself, “I’d love to build a savings account, but I don’t make enough money to save more than a few dollars a month. So what’s the point?” If so, then this is a mental barrier that could also be preventing you from paying off debt!

You might be wondering what saving money has to do with paying off debt. The connection is mental. Debt can be accumulated for many reasons: living above your means, not earning enough to cover your needs, or simply not paying attention to your finances. But no matter the reason, once we realize that debt is a problem, it’s often far enough along to wonder how we’ll ever get out of it. That leads us to the question above – what saving money has to do with debt payoff. If you don’t feel that whatever money you save will make a difference in the long run, then you likely don’t feel like whatever money you apply to debt payoff will make a difference in the long run either.

Why Savings Matters – My Story

If you’ve been reading this series over the past few weeks, then you’re used to me breaking things down into a step-by-step method to conquering the mental barrier. I’m not going to do that today. Instead, I’m going to share my story with you to help you see how I’ve come to learn the importance of saving – even if you can’t save much.

I started my career as a bank teller making barely enough to cover the bills and not saving anything. I also wasn’t keeping a budget. In other words, I put no effort into optimizing my finances. One year later I found another job earning more and put every single dime into a savings account so I could achieve my long-time dream of moving to NYC. I still wasn’t budgeting but I went on a total spending freeze. I packed lunch, ate dinner at home, and almost never went out. Within three months I had enough of a starter fund to move to NYC.

Once I moved I was lucky enough to find a job with a decent salary within a few days, but I still didn’t have a balance in my finances. Why? Because the economy crashed the first day of my new job. There I was in an office on Wall Street, nervous and excited to start my new career, when news came out that Lehman Brothers collapsed. Everyone at my company was besides themselves in fear of what would happen. The spending freeze continued.

I never got over that fear of losing my job and for the next 3.5 years I saved everything I could and applied the rest to debt payoff. I finally started a budget that I followed to the T. For the first time ever, I felt somewhat in control of my financial situation. Although the situation wasn’t perfect, I realized the difference a budget could make. I knew the difference because if I splurged on even one extra dinner out, my budget would suffer dramatically until the next month. But I was still able to have a social life if I stuck to the plans. Little by little, my debt was dwindling and I was nearing financial freedom.

Then I quit my job and moved to San Francisco. Between the drive across the country and then the job search, I lost control of my budget. Then working long hours and taking awhile to get acclimated to my new city dug me down even further. I started ordering dinner in, eating out at lunch, and buying coffee every day. I stopped budgeting and so too I stopped saving. Although I was giving myself the things I thought I wanted, I actually felt dejected because I didn’t know where my money was going. I needed to start a new budget to get control back.

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Why Saving Even A Little Makes a Big Difference

What’s the biggest shift in all of these scenarios? My mental state. My pay and living expenses fluctuated, but not nearly as much as my mental state. The time that I felt the most confident and in control of my finances when I was earning less and saving more. That was the only time I kept a budget that I stuck to and I understood where my money was going.

So maybe you think saving a few dollars a month won’t make a big difference. Maybe you even think eating out to lunch or buying coffee every day won’t make a big difference. I’m here to say that, even if making small changes doesn’t drastically decrease the time it takes to reach your goals, it will increase your confidence in managing money. It’s a domino effect. When you budget and keep your spending lean, then you’ll inevitably find more ways to save. This doesn’t happen overnight, but a change occurs over time and suddenly it’s more gratifying to see a savings account grow or debt decrease than it is to have conveniences like dinner ordered in. With that comes more creative ways to save and to pay off debt. It’s a win/win situation!

Stay tuned next week as we move on to mental barrier number six. And don’t forget to join The Debt Movement and help us reach the movement’s goal of paying off $10 million of debt in 90 days!

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  • I think people get discouraged that they aren’t saving enough, so they just don’t do it. You are right when you say that it doesn’t matter how much as long as you do it.

    • Shannon_ReadyForZero

      Very true Grayson. We need to learn to reward ourselves for putting away what we can, and then inevitably we find more and more ways to save.

  • Sharyl

    I started the 52 week savings challenge and I shared the info with a few of my friends. You don’t realize how quickly your savings can add up just by setting a few dollars aside each week. I opened an online savings account at Ally with a “catch up” deposit that got me up to week 7 and am making deposits every week. It might be a tiny amount, but at this time next year, I’m going to have a nice little vacation fund!

    • Shannon_ReadyForZero

      Wow, that’s awesome Sharyl! What a great idea and you’re right that a small amount can make a big difference over time. Please keep us posted on how this goes for you :).

  • John S @ Frugal Rules

    I think that many see that they can only save a small amount so they do not even bother. If they’re making unwise choices on top of that, then that’s even more money they’re losing out on saving. For many I think it’s the actual discipline of saving they need to start…even if it’s $10/week or something like that, the amount you’re saving should not hold you back from actually doing it.

    • Shannon_ReadyForZero

      Definitely John, getting into the habit of saving is almost more important than the amount of savings itself. It’s inevitable that the amount of money saved will grow once doing this becomes more of a habit and can even become a fulfilling experience.

  • People need to have a long-term perspective when it comes to savings. Think about how it will feel in 25+ years when the monthly savings and investments have really grown. Even small amounts consistently saved month in and month out can accumulate to big gains in that timeframe. That’s what keeps me going with saving money.

    • Shannon_ReadyForZero

      That’s absolutely right Brian! Time flies and every little thing we can do now will make a huge difference in the future, although it can be very hard to look ahead during the present time.

  • Tehani

    One cannot save money if there is nothing to save.