The difference between a spender and a saver is simple:
The spender will blow an entire paycheck (and then charge more on credit cards) to maintain the lifestyle to which he is accustomed.
The saver will already know where that paycheck is going, down to the last penny, and save a chunk of it.
The spender has the latest smartphone, a car he can barely afford, and is saddled with credit card debt.
The saver has a low income-to-debt ratio and lives within his means — even if it means he has a 4-year-old cell phone.
I’m very lucky that I’ve never been a spender. I once was given a credit card at the age of 15 to go shopping, with no restrictions, from what I remember. What did I buy?
A $15 pair of sandals.
The most credit card debt I’ve ever had was $4,500 for a short period of time in my 20s, and it was paid off within a year because I couldn’t stand the thought of paying interest. I graduated college without student loans, paid off my car almost three years ago and am down to my last $600 on my credit card. We’re hoping to pay off Mr. Saver’s credit card balance by April. At that point, we’ll be left with his truck payment (0%) and our mortgage. And I can live with that. It doesn’t feel like a weight on my shoulders.
When do spenders reach the breaking point?
How do you come to the conclusion that saving is more important than spending? Is it when your credit card debt hits five figures? Or you calculate your net worth and it’s negative? Perhaps you wonder how you will possibly afford the winter heating bills as the temperatures drop.
Do you tell your significant other that “Hey, we’ve dug ourselves into a hole here — it’s time to find our way out?” More couples should talk about debt and get one another’s views on it. Are credit cards the work of the devil? Or can they be used as savings vehicles if they offer rewards?
Most people want to better themselves. Schooling costs money. Nicer clothes cost money. Keeping up with the Joneses costs money. But paying off your debts and saving your money for a rainy day are laudable goals.
You don’t have to become extremely frugal, but taking a look at your finances and budgeting based on income and debt repayment can go a long way in bringing you happiness — in a way that money cannot.