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Let’s face it, not all of us were born with the discipline for saving money. I’m one of those people that was born to two parents who knew the value of a dollar.
They worked very long, hard hours to put food on the table and whatever they earned was not going to be squandered away on frivolous things.
I grew up hearing how important it was to have a nest egg and to make sure you had money in the bank for whatever emergency may arise.
You see, my parents being immigrants, always used cash for their purchases. They never used credit cards, heck they never had any. Credit card debt wasn’t something they worried about. If they had the money, they bought what they needed. If they didn’t, they didn’t buy it.
There was no such thing as borrowing to buy something that they simply wanted. In their minds, that was just stupid. I had this concept instilled in me from a very young age; some of it stuck and some of it didn’t.
The part that stuck was not only useful but necessary. It was the part that taught me that you should always have money saved up for a rainy day; even if just a little. The part that didn’t stick, was the “only buy stuff you need, not stuff you want.”
Enter credit cards into the mix and you have a recipe for debt and possible bankruptcy. I have never been bankrupt, or close to it, but I have been in debt and it is not a fun place to be.
Therapy – of a Different Sort
When I got divorced, I did a lot of what people like to call “retail therapy.” I shopped and shopped and then I shopped some more.
My guilty pleasure was shopping on a site called Rue La La, and I had what you can call a dysfunctional relationship with the site.
For those of you unfamiliar with Rue La La, it is a membership only site that offers high-end merchandise such as clothing, shoes, home goods, travel, etc., at very discounted prices.
The sales can last anywhere from 2-5 days and once that item is sold out, it may not be back on sale for a few months.
This creates a sense of urgency when you shop on the site because God forbid that item you so desperately want and think you need should sell out, then you have to wait who knows how long for it to go back on sale.
So, you hurry, hurry, hurry to purchase the item before it sells out. Just pray whatever it was, fits because if is doesnt, back it goes. No exchanges, boo-hoo!!
Honestly, I blame a friend for introducing me to that addictive site. If she ever reads this, she knows who she is and she knows she’s guilty as charged.
Our relationship, (Rue La La’s and mine) was dysfunctional because it was a very one way love affair. I saw, I bought and then I ran home to see my beautiful packages with the huge RUE LA LA on them and it was like Christmas just about every day.
I shopped daily, yes, daily. I shopped for clothes for myself and the kids, shoes, accessories, home goods, gifts etc. I shopped for high-end items and loved the fact that I could wear these fancy clothes and I didn’t pay full price. And that was the hook for me
Since I was not paying full price, I found a way to justify it. Moreover, I was going through a divorce, so I felt I deserved it.
That was the trap, because when you feel you deserve something, it is very difficult for you or anyone else, to convince you that what you’re doing is harmful or wrong.
Borrow to Get Out of Debt?
$20,000.00 into debt later, and suddenly I’m not feeling so “deserving.” Of course this was much more than I had saved up
Getting myself out of that situation was crucial. The only way I could think of doing it, was to borrow from my 401K plan, in which I had been investing for about 6 years, so I had a pretty sensible amount saved up.
For me, this was a way to get out of paying the credit card’s interest rate which was a lot higher than the interest rate on the 401K loan. No one I knew could lend me a cool 20K, so I saw his as my only option.
Paying off the credit card in one clean sweep was the only way out. I began making changes in my shopping habits. Does that mean I stopped shopping altogether? Yes.
I only bought what the kids and I needed, buying nothing extra. I even left my credit cards in a drawer at home so I would not use them. Thankfully, it worked. I said goodbye to Rue La La, but I wouldn’t necessarily call it a breakup, we simply took a break from each other.
Borrowing From Your Retirement Fund. Is it Smart?
Now, if you take the time think about it and do a little research before you borrow from your retirement plan you may choose not to do so after all for a couple of reasons. Yes, it will get you out of debt. However when you borrow from your retirement savings you are doing two things wrong.
- You have to pay that money back in installments, as soon as you borrow it, and even if you are paying yourself back, it means your paycheck will be reduced by whatever amount you’re paying. Therefore, you have less money each paycheck.
- The amount you borrowed is not earning you any money and your retirement funds suffer.
Don’t let this happen to you. If you’re not good at saving, there is help, you’re not alone. Gone are the days that you have to have a piggy bank at home, or stuff money under your mattress so you don’t use it, or have a bowl to put your $5.00 bills until they accumulate.
You can now automate your savings via mobile apps. Two apps that stand out for me and which I have used, are Qapital and Acorns.
These two apps both have similar concepts but differ somewhat in execution; they both help you save money automatically but they do it differently.
Savings Concept: Qapital
Qapital asks you to set up a “goal” basically asking you the reason why you want to save this money. Your goal can be whatever you want and whatever amount you set it up to be. They then give you different options to reach this goal.
- Round up (spend 1.25, .75 cents goes into your account). The .75 cents comes out of your account and into the account you have with Qapital.
- Save money for each week of the year
- Guilty Pleaure (save a certain amount of money each time you shop at a particular store or watch a certain show or eat something you’re not supposed but which you love
- Save a set amount each week. It can be whatever amount you want.
- Free no fees
- FDIC insured up to 250,000.00
- You can transfer money in and out anytime
- No minimum balance required
Investment Concept: Acorns
Acorns also helps you save money, but unlike Qapital, it invetsts the money for you in the Stock Market. Similarly, it gives you options
on how to do this.
- Round up
- Save 5.00 a day (by the end of the year you have almost 2.000.00)
- Fee of 1.00 with investment balance of less than $5,000.00
- 0 to open account $5.00 to start investing
- You can transfer money in and out anytime
- No minimum balance required
In the end, both apps help you save money automatically, and that’s the key. You set it and forget it. You don’t have to remember to do anything. The money just grows and because it’s small amounts at a time, you don’t really feel it.
Before you know it, you have money for Christmas gifts or for that gorgeous bag you have been wanting or the shoes that have been calling your name each time you pass by the store window.
I save my money for year-end tips to building staff and for teachers’ gifts at Christmas and at year-end.
You can choose which app makes more sense to you, keeping in mind that Acorns is making investments on your behalf which means balances will fluctuate with the market.
Thank you for taking the time to read this. I hope you have found it useful. If you liked what you read, please hit the “like” button and if you would like to continue reading posts like this, please “join me.”