Automatically Saving What I Used to Spend on Debt Repayment

When I was in debt, I paid $600 on my credit card. I also paid $350 on my car loan.
That's $950 a month unavailable for other things including paying bills and saving.

As I did that, I put some money into my 401k and I saved $50 to $100 a month.

So, technically, that means that since none of my other expenses have changed dramatically since I was paying off my debt in 2008, I should have a minimum pf $1,000 available to save.

But, since I paid off my consumer debt in June I haven't been saving anywhere near $1,000 a month.

Hmmm...

I went back to my budget and spending record. For one thing, I spread the money out I had been saving into other spending categories, especially ones where I often went over. And, besides that, I just kinda started shopping and what not again!

I took a look at my savings goals for 2009 and I thought I could reach them faster if I saved the money I used to spend on debt. After all, I was living before that and having a pretty good time. So I must not NEED the money available to spend each month.

My plan for February is to have that $1,000 deposited automatically into my e-fund, vacation fund and 401k automatically from my paycheck. Even with this money going to savings, I will have enough left over for recurring bills (rent, cell phone, etc.) as well as other things I have to spend on each month (like food and public transportation). I also factored in expenses I pay annually, dividing the totals by 12 and adding that amount to the money that will be automatically deposited into my e-fund.

So, that's the plan. I will see how February goes. If it's smooth and I don't go overboard spending (thought I left some room to play!), then I should be good to go!

DH

Comments

[Kameee]

Sounds like your definitely on the right track for success! I give you congrats on having the self-discipline to sit down and come up with a savings plan after having to budget for awhile. That can be tough! Those store certain beckon with promises of things aplenty to buy! Good luck.

[Sistah Ant]

Excellent plan!

[debtmaven]

Don't get off track!

I am worried about the same thing happening to me when I get to be in your position. I expect it will take me 5 years to get there though, so by then I hope it's a habit to just live within my means, budget, and sock the rest away, either for debt OR savings.

By the way, your blog was the first one I really read when I first found the PF blog world. It has given me a lot of inspiration, and I'm glad to see you talking about money savings, frugality, and all that. More power to you!

[LAL]

Were you dave ramsey gazelle when you paid off debt? If you were then that's why there is no money. You aren't meant to live without any extras.

Nor should you be living without saving for key items like car repairs, home repairs, replacement clothes, replacing home furnishings, etc. Stuff that all gets put on the back burner while you are paying off debt.

It's great to pay off debt, but the EF isn't to be tapped for every little expense. Known expenses should be planned, like 1% to the home repairs annually. Pets get $100/month, vacation $100/month stuff like that KWIM?

[Kristy @ Master Your Card]

I went through the same thing when I paid off all of my debt. But for me, it was simply because I had lived so long without that I wanted to have things. But, I quickly realized that I was on a fast track to being back where I was, so I sat down and worked out a plan.

It's good you caught this early on and re-focused your money into a positive outlet. If you didn't need the money to live off of, then you probably could have put it in savings and been better off. But, at the same time, you have a life to live and I'm a firm believer in doing so. Money can't go with you to the grave. Set yourself up financially to be comfortable, but it isn't the end all, be all of life. At least, not to me anyway.