Todd Christensen Profile Picture
Staff Writer at Debt Reduction Services

Households who follow a budget and save money and repay debt simultaneously.

You Can Do Both: Pay Down Debt and Build a Savings

With a name like Debt Reduction Services, we obviously care a great deal about helping our clients to get out of debt. What a great achievement that is for them! Definitely something worth celebrating. Short- and long-term benefits of being debt free include increased peace of mind, greater financial stability, and improved quality of life, not to mention bragging rights at family gatherings.

It should come as no surprise, then, that Debt Reduction Services also cares about and promotes other personal and household financial habits that bring similar benefits, such as planning your monthly expenses (aka “budgeting), controlling impulse spending and preparing for unexpected purchases.
However, the habit of contributing regularly to savings is and always will be the first rule of personal finance. “Pay yourself first” should never become a trite slogan. It holds the power to change lives, households, and communities.

Consequently, we recommend that, even for those who are working hard to get out of debt, you continue developing a solid habit of savings. For anyone trying to get out of debt, we may not expect you to place equal amounts into your savings plan as you do your debt management plan for the moment, but even a few dollars a month will help you build this most critical habit. For others who may already be debt free, regularly depositing perhaps 10% to 15% of your net income into a savings plan should not be an impossible dream.

Whether you put a small amount into a single savings account or whether you utilize multiple accounts, here are a few savings goals to consider working on:

• An initial emergency fund of $500 within the next 6 to 12 months
• A long-term emergency fund sufficient to pay critical bills for 3-6 months
Additionally, as you cultivate your ability and discipline to save for likely future expenses as well as unexpected ones, here are a few types of accounts you might consider contributing small amounts to each month:
• A gift giving fund for birthdays and holidays (perhaps $10 to $100 per month)
• A vehicle maintenance fund for oil changes and new tires, for example (perhaps $10 to $40 per month)
• A vehicle replacement fund (perhaps $40 to $200 per month)
• A vacation fund
• An appliance and furniture repair and replacement fund (perhaps $50 per month or more, depending upon how old your current furniture and appliances are)

Change your mindset to celebrate savings as it helps you stay out of debtSuch savings funds will greatly decrease any future need for using debt as a backup plan (while also eliminating interest paid on such loans). Granted, in many households, coming up with this much money each month to put into savings may dramatically cut into current standards of living. However, it is virtually guaranteed that your vehicle will need to be repaired and eventually replaced in the coming decade or so. You can also be certain that your household appliances (washer, dryer, refrigerator, etc.) will need to be repaired and even replaced during that same time period. The result of not saving will be multiple periods of high stress when these occurrences hit your unprepared household, followed by years of additional debt, additional interest payments, and additional financial anxiety.

Each savings goal needs to be considered not as an amount to contribute or as a balance to achieve but as a commitment worth celebrating. Seriously. Celebrate the fact that you open a goal-oriented savings account. Celebrate your first deposit. Celebrate the day you set up a direct deposit or an automatic transfer of money into your savings account. It is time we stop seeing saving for the future as a boring burden or a restrictive economic requirement.

Instead, let’s celebrate every step in the savings process.

To help you commit to building upon this important habit, we invite you to complete and submit the following “Celebrate Savings” commitment form. By submitting this form, you will receive from time to time additional tips and ideas on building your savings funds, as well as a quarterly “accountability” email to remind you of your savings goal, to encourage you along the way, and to celebrate your commitment.

For more motivation, check out our free, 27-minute “Simplified Savings Strategies

Please Take This Brief Survey Regarding Savings

*Be assured that we will never provide, sell, or otherwise give your email address or the accompanying savings information to any other organization. We may report aggregated savings information to our regulators and funders, but it will never be personally identifying.


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6213 N. Cloverdale Rd. Suite 100 Boise, ID 83713

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