Here’s a savings tip that will change the way you save and has the potential to really help you build wealth and enjoy peace of mind while doing it.

So how does it benefit you to pay yourself rather than your debt? Think in terms of any type of debt the majority of people – and probably you – have. There’s usually a school loan involved if you’re younger, credit cards, mortgage and car loans, as the major debt most of us will experience.

Now if you’re in the place where you’re debt is out of control to the point of being unable to service it, that’s a different issue all together and must be dealt with differently than we’re talking about here.

Let’s assume you’re able to pay your debt and survive, but you have little to put away for savings or investment when you’re through for the month.

One fantastic thing you can do is celebrate when you get one of those debt loads paid off. Now here’s the secret though. Rather than using that money to pay down other debt, start to sock it away in savings or an investment vehicle of some sort on a monthly basis.

Think of it! Rather than paying an institution you owe, you’re paying yourself what used to be paid to the institution holding your debt.

Not only is that psychologically exhilarating, but it puts real money in the bank or whatever you’re investing in, and it won’t take long before it becomes a nice sum.

The idea of not only paying down debt, but now no longer having that debt and instead putting it away for your future is something just can’t be beat in personal finances and money management. It’s turning the tables on your lender and making yourself the payee.

Again, this works when you’re still able to pay off your debt without suffering the inability to pay your bills. If your debt is so out of control that you struggle to live, obviously that’s the priority to deal with.

But assuming you’re doing okay but just want to quicken the timeline of building wealth, take that money previously used to pay down your debt and invest it rather than spend it.

This works great because you see double the results in the first month. Say you have a $100 payment each month. You not only don’t have to pay that any longer, but you have an extra hundred to sock away for the future.

Tags: money management, saving strategies, Savings Tips

This entry was posted on Saturday, February 13th, 2010 at 7:00 am and is filed under tips. You can follow any responses to this entry through the RSS 2.0 feed. Both comments and pings are currently closed.