Paying off debt and saving money are not mortal adversaries. While your financial situation ultimately dictates which one you should focus on first, you can do both at the same time. If you fly by the seat of your pants with no budget and no strategies, you are effectively increasing the chances that you'll fail or fall short on both initiatives.
Put Pen to Paper
Don't scoff. Many people -- you are not necessarily one of them -- budget as they set out to save by writing down their income and expenses, but they fail to include expenses that often eat away at hundreds of dollars every month. You should keep track of every muffin, every soda, every coffee, every shot of Peach Schnapps that you spend money on. Likewise, if you downloaded a song, paid to stream a movie or put quarters in a vending machine, mark it down. It all adds up.
Decrease Discretionary Spending
When the pen to paper list of income and expenses is straight, chart a course for making your monthly payments. Save your credit card bills for last. Put shelter, food, healthcare, transportation and other necessities at or near the top of the list. When you get to the credit card bills, if you don't have enough cash left over, don't shortchange your landlord or skip breakfast; rather, cut as much discretionary spending as possible. Put the savings toward your debt.
Pay Yourself First
It pays to put one expense ahead of musts like food and shelter -- savings. Yes, consider savings an expense. When you get paid, invest a chunk of your money -- exactly how much depends on how comfortable you are and if you're really struggling to make ends meet -- in a brokerage account, mutual fund, money market fund or just save it in a savings account or money market deposit account.
Make It Automatic
This advice should be as common as not going outside with wet hair and telling her she looks good when she asks no matter what: Make savings and debt payments automatic. Virtually every bank, checking or savings account, or creditor you have facilitates automatic monthly payments or transfers. If you budget in automatic payments, you save yourself from going past due on a bill or "forgetting" to save one month.
Pay More Than the Minimum
Don't budget the minimum payments for your debt accounts. If you do, you're a hamster in a cage. If you pay a $200 monthly minimum payment on a $10,000 credit card balance at 19.99 percent interest, it will take you nine years to pay the debt off. Double your payment to $400 and you eliminate the balance in less than three years. Enough said.
When you make a purchase, write it down. Before you go to bed at night, sit down at your computer screen. Log in to your checking account, round up each purchase to the nearest dollar, and transfer those cents into a linked savings or investment account. Some banks even provide this as a service, automatically rounding and making the transfer to savings for you.
Don't Blow Extra Dough
If you get a raise or a bonus, or find a few grand in a briefcase in an alley next to a DeLorean, don't blow it on beer. Put the booty towards your debt payments, into savings or investments, or both. Double.
As a writer since 2002, Rocco Pendola has published numerous academic and popular articles in addition to working as a freelance grant writer and researcher. His work has appeared on SFGate and Planetizen and in the journals "Environment & Behavior" and "Health and Place." Pendola has a Bachelor of Arts in urban studies from San Francisco State University.