Wednesday, March 16, 2011

Save As Much As You Spend

A few years back, we were in terrible financial straits. I didn't know how we were going to pay the bills in a given month, and we were behind in payments on everything! A fair sized chunk of our debt was on amounts owing for missed payments on rent, utilities, car payments, and insurances.

I did what I thought was best at the time, and went to the bank. Surely they would be able to help me. They deal with money and debt every day, right? Short of a loan (which I wasn't asking for), they should be able to provide me with some advice or tips or whatever to help me get out of the predicament that I was in. Naive, huh?

Although the money management specialist I talked with was unable to help me at that time, she did mention something that I totally blew off the second it came out of her mouth. "Whenever you have a car payment to make, put an equivalent amount in your savings account for those months when you are in the low end of your income."

What the heck good was that going to do for me? I needed to figure out how to make up what I was already behind in, and I needed to do something fast!

Eventually, I did what was necessary, took a few hits on my credit report I'm sure, and started clawing my way out of the hole we were in. Bu that absurd piece of advice never left me. It's been lingering in the back of my mind for a couple of years now.

I found a link to another blog post in which the author talks about putting an equivalent amount into savings that she spends on luxury/treat items. What a fabulous idea! For each of us, we would have to define what a treat item or luxury item is. The benefit would be two-fold, as one would have to both cut down on spending AND increase savings!

Kinda of like the absurd idea my crazy banker lady told me so long ago.

I'm hankering with this idea, and how it would work for us in our house. We must, must, must increase savings, but I'm terrible at not touching those accounts. If I were to put those amounts into a locked-in account, like my RRSP, then I wouldn't touch them. The benefit would definitely be that I would be putting away for my future and working on my Yearly Financial Goals at the same time.Win-win.

Keep an eye out sometime later in the month for another post about this. I feel a personal challenge coming on!


  1. That sounds too complicated for me, especially since I'm not spending much on what would be considered a "treat" item. What works "for me" is having multiple savings account that each have a specific purpose, ie. saving to pay for my trailer rental fee. If I were tempted to withdraw from that account for something else I would need to figure out a way to still pay for the trailer fee so once the $$ is in there I DON'T take it out - but that's just me. You just need to find out what works for YOU!

  2. Haha.. I have been thinking about doing the same thing for the past month...but only for clothes: If I buy a shirt or a skirt, I will need to put in the same amount of money I spent on the shirt or skirt into my savings account.

    I am trying to get rid of my "buying clothing" addiction.

    I have enough clothes, I don't NEED anymore!

  3. Thats terrible that your bank couldn't offer you anything of value to improve your situation. Disgusting really that a financial institution can't help with day to day money issues - short of offering you another loan. I was so fortunate to have "Jocelyn" at my bank (BMO) but maybe she only helped me because I got a consolodation loan?!? (I hope not)

    A treat = savings and a treat. Good concept!

  4. That's a great idea! Especially for the "bigger" items! :) Looking forward to more posts on this!