how can i possibly save when i still have these debts?

A common question is, "Why save when I have debt? I would earn such a low interest on my savings and I’m paying interest on my debts at the rate of double digits. It just isn’t logical."

There is no argument against that logic. However, logic does not take into account how we feel. Most people don’t feel good about being in debt. They do the logical thing of trying to pay off as much debt as they think they can afford in any one month. And the inevitable usually happens for most people. They feel the lack of money even more pertinently, and end up spending more, often adding further to their debt. They then feel even worse about their financial situation, and so the spiral goes on.

It's The Habit, Not The Amount

Establishing a savings habit is one to be established now – not when we are earning more, not when we have cleared all debt, not at some future "when", but now. The habit is more important than the amount. Start, even if it is just £5 a month.

Why?

There is no "right" time to establish good habits because NOW is the right time. Have you ever had a time in the past when you were earning less than you are now, and you said, "When I am earning more, then I’ll save"?... Yet somehow, your expenditure has always increased to the level of your income and you still aren’t saving?

Once a habit is established, it is something that we do automatically, without thought. By starting now, you ensure that you have already established the savings habit by the time your debt is fully cleared. It then takes little effort to re-direct funds previously used for repaying debt into your savings account. This is why the habit is more important than the amount.

Also, seeing some money building up is uplifting, helping us to feel better about our financial situation.

Stemming The Tide Of Debt

Another reason for the savings habit is that putting money aside on an ongoing basis will help to ensure that there is money to cover intermittent or unexpected expenses without having to resort further to debt.

By stemming the tide of debt, over time, any outstanding debt will be paid off.

"But, there just isn’t enough money each month! I can’t possibly save money as well!" some people still protest. If your income was suddenly cut by 10%, how would you manage?

I know. This can feel hard. Here’s the thing – our behaviour is affected by what we focus on, and therefore, how we feel. When we feel bad, we are more likely to spend more.

When we have debt to repay and bills to pay, we often feel bad. We feel that we haven’t enough... which, ironically, is why we got into debt in the first place. This cycle of feeling bad perpetuates the spiral of spending and debt.

So, how can you re-focus your thinking in a way that has you feeling good about saving and paying off debt? Can you change your thinking so that you feel good about paying the bills? Feel good because you know that the reason you have the bill in the first instance is because you have enjoyed the service/goods for which that bill is due. Can you focus on the IDEA of how good it feels to be free of debt and hang onto that feeling? Can you stop focusing on "not enough" and deliberately notice what you have plenty of already?

Start Now

Don’t wait until the time is perfect. Start now.

Action Points

1. Decide to start the savings habit now.

2. Open an interest-bearing account and set up a standing order to save an amount each month.

3. List out all the debt that you have outstanding.

4. Pay them off as quickly as you can, prioritising so that the smallest debt amount is paid off first.

5. Focus on what you already have, so that you feel positive about your financial situation. After all, you actually do have money to repay your debts, AND you will soon be debt-free WITH savings.

Quote

"If you wait for perfect conditions, you will never get anything done" - Ecclesiastes 11:4

"Wealth is a habit. It is a habit of your thinking and doing things a certain way" – Wallace Wattles, author of The Science of Getting Rich

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