Wednesday, May 6, 2009

Save and THEN Spend!

Below I've included a widget from one of my new favorite ideas out there to make your life feel "financially planned." It's called SmartyPig and it is an online savings account (with the highest interest rate I've found anywhere right now - don't worry, it's totally legit and FDIC insured) that allows a more interactive and more rewarding way to save.

With your account you can set up any number of "savings goals" - and with each goal you determine the total amount you want to save and by what date you want to meet your goal. Then you set up an automatic withdrawal - and watch the piggy bank fill up.

Imagine if this is what we did with every purchase? Instead of paying $300/month for a car... imagine SAVING $300/month for a car (and earning 3% interest instead of paying 6%!) and then buying it once you save enough. One thing is for sure... when you borrow money you feel like you can afford a lot more than you actually can, and you end up buying more than you normally would.

I would recommend, that even if you are paying $300/month for your car right now, the MOMENT you make that final payment - vow to NEVER stop making a car payment! You're going to need a car again eventually. If you put continue to make your car payment and save $300/month, you'll be able to purchase your next car with cash - and trust me, earning interest instead of paying interest with your car payment makes a HUGE difference.

This is why I plan on never borrowing again except to purchase a home. Even then I hope that I don't buy more than I can afford. Below I linked the widget just to show you how SmartyPig is turning saving into something social and fun. If my savings goal right now were something other than a goal to give gifts to others, I would ask that all gifts to me be contributions to my savings goal! Maybe I should start saving for something fun instead of practical.

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