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Why You’re Not Saving, Even Though You’re Cutting Back

14 November 2012

Have you stopped going out for lunch every day while at the office in order to cut back and save some more money? And have you even started making coffee at home in the morning and bringing it with you to work, so that you can save that two bucks a day? If you have, good for you! But why then, are you still so discouraged? Not seeing any real savings mounting up yet? And, still stuck at zero, are you wondering when you’re going to start really seeing something for your efforts? The problem, says financial guru Gail Vax Oxlade, is that you’re not really saving money at all – even though all signs seem to point to the fact that you are.

As Gail points out, we may go hungry or caffeine-deprived throughout the day in an effort to save; but the mistake we make is that after we’ve saved that small amount, we leave it in our wallets. While we haven’t forgotten about going without, we have forgotten that we saved that money in our wallets for a reason, and so we only spend it on something else. That reason, more than likely, is something just as frivolous and unnecessary as that cup of coffee or that expensive lunch.

So, does it seem like a no-win situation yet? You can’t save, even when you think you are? Well it turns out, all you need to do to start making all those sacrifices worthwhile is to use those savings right away. Don’t leave it in your wallet or even your bank account for “one day, when I can pay off all my debts.” If you’re waiting until you have that much money all at once, you’ll only see your savings deplete rapidly, and that day will never come. Instead take the money out of your wallet, set it aside somewhere (we know for a fact that Gail’s a big promoter of jars) and then use it – quickly. But, make sure you’re using it somewhere smart.

How about, for instance, putting it on your mortgage and paying a little extra each month. If you have a $250,000 mortgage, with a rate of 6% over 25 years, you can save a total of $32,640 – and drop 3 years from that amortization period. That can be done if you can save just $100 extra dollars a month and put it towards your mortgage. You may even have a few extra dollars for maybe just one lunch, or one cup of coffee to get you through the work day. Sounds smart, and a lot smarter than simply leaving that toonie in your wallet to spend elsewhere.

If you think you could shave $100 from your spending every month, taking out a debt consolidation loan for homeowners, and using that savings to pay down that loan, can also be a great option. And if you’re deeply in debt, this could be an even better option than paying off your mortgage faster!

Wonder why you’re not seeing any real results, even though you’ve been cutting back and sacrificing like mad? You may be surprised to find out that you actually haven’t been saving at all – you’ve just been spending in different places. Using that money, in a smart way, right away, is a much better way to help you actually save your money, and pay down debt!

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