The ‘Truths’ About Savings & Debts are Lies

There is something so refreshing about coming to the end of the year, looking back on all that happened, and reflecting on what we want to take away as our lessons and our accomplishments. We think about the joy, we think about the pain, and we toast the New Year to what we want moving into the next year.

It’s a clean slate, a fresh start.

It’s forgiveness.

It’s a rebirth.

We say to ourselves we “aren’t looking in the rear-view mirror – that’s not the direction we are going” as we post and Pin® all the uplifting memes to keep motivated. We get out our day planners, our dream boards and chalkboards, and we come up with the best-laid plans. We say to ourselves… “this year, it will happen,” thinking about how much the goals we set for ourselves are making us smile. We say, “I’m willing to work for these goals…this year, it will happen.” These beautiful dreams have price tags, and in the pit of our stomach is the lingering reminder that we need to set financial plans around making these dreams come true.

This year, it will happen.

Why this year?

What happened last year?

Let’s be kind to ourselves, there is a reason we end up setting certain goals every year. It has a little something to do with debt.

So often we figure out the means to the end, but then we don’t plan beyond achieving that one thing. We reach the top of that mountain and we give ourselves the victory of the achievement, but then what?

We aren’t conditioning ourselves to wait for something. We seek instant gratification and we avoid being uncomfortable for too long. The harsh truth is – we will pay twice as much money for things…because we don’t want to wait. We don’t want to say no. We need it now. We can pay it off.

Our inner dialogue continues these amazing lies:

“If only I could win the lottery”

“I only have a credit card for emergencies”

“I live paycheck to paycheck”

“I don’t make enough money”

“I’ll never be able to do those things”

“It’s too expensive”

“There’s no way I’ll be able to save the 6 months of salary in my savings account, so why bother saving”

“I’ve made it this far without saving, why start now”

Do these sound familiar?

Deep down, we know these are just excuses. The root of many financial problems starts with one neglected area: Savings.

Let’s say we won the lottery, for example, we could wipe away all our financial problems, right? There’s our clean slate, a fresh start. This year it will happen, right? The fact is, there are some alarming statistics that lottery winners go in debt by the amount of their earnings. They end up bankrupt.

What happens if we don’t change our behavior, even when there are millions involved?


That’s right.

We get the same results.

Truth: Getting our savings account in order is one of the most impactful things we can do to better our overall financial position. If we had just $2,000 in savings would we have needed to whip out a credit card when we needed new tires on the car last year? Probably not. Luckily, the cliché advice of getting to 6 months of salary in savings is not the place to start, so let’s not let that be an excuse. Besides, if we have half our year’s salary available in a bank account it’s not earning as much interest as that much money really should be.

Savings and debts go hand in hand. We don’t have one because we have the other.

Let’s talk about how to realistically do that.

Treat savings accounts like a bill we must pay. Allocate a certain amount of savings each month as if it’s a bill we must pay. Get $500 in there, first. Then double that and get to $1,000. Now, double that and get to $2,000. These are small numbers, right? It’s also more than most have at all in savings. Feel free to change the numbers but these numbers work very well for most folks. You could also think about any amount that you’ve needed last year in an “emergency” and set that as your first minimum goal. It’s not about the numbers, it’s about the behavior that goes with it.

It’s about doing something different and letting this become a priority like our bills are and have been.

Do not set up a debt reduction plan until the savings account is reached. What? Isn’t it important to pay off debts first? Not unless we have the plan in place to remain debt-free. What happens halfway through a debt reduction plan when we have an emergency? An unplanned hospital bill, vet bill, water heater replacement, tree fall on the house? Ooops. This is a big reason those best-laid plans fail. Getting the savings account in place first is temporary.

There are huge longer-term rewards once we discipline ourselves to focus on having that foundation.

Be patient: wait to get there. That’s right. Nothing. Don’t add to any debts. The only bill we can pay more on is our savings bill. Allow time to get there. When we say no to things we are saying yes to so much more down the road. Once there, think of the savings account as an emergency fund. When we dip into it for these emergencies, we pay it back. It’s like our own revolving line of credit, interest-free. We keep it there, always. Not a huge amount, just enough to use when needed. It will be needed.

Prepare yourself for what you will need to say no to – to yourself and others.

When we have savings, we can start to pay off debts with the freedom of knowing we have an emergency fund that will keep us out of debt. We can set additional savings goals tied to the things and experiences we want. We can focus our efforts towards long-term savings so we can benefit longer from the effects of compound interest over time. Yes, it’s that simple. It’s the one thing those lottery winners never did – and they had millions.

Squash those lies and start a new dialogue.

“Yes, I can do this”

“I make enough to live within my means”

“This is temporary”

“I have the tools to make this work”

“I have a plan”

Let’s do something different this year. Let’s pay ourselves first.


Sarah Cobb is a mom, stepmom, and former Accredited Financial Counselor® serving military families and communities. She uses her training and experience in financial counseling to help others.

You can contact Sarah via Twitter @sarahcobbafc


The \'Truths\' About Savings & Debts are Lies