My challenge: Saving for big-ticket items
After graduating from college in 2003, I moved into an apartment in Philadelphia with a roommate and got a job. But I was young and didn't know how to manage cash flow. I racked up thousands of dollars in past due bills and credit card debt.
It became really stressful and was a wake up call to either figure things out or make more money. My parents helped clear my debt, and the last thing I charged on my credit card was a new laptop. But I put myself on a payment plan right away. I projected the day I would become debt free: it was 18 months away.
But now it's been three years and since that day, I haven't used a credit card at all. It was hard at first, and I have had to make a paradigm shift to really figure out how to anticipate and prepare for expenses before I have them.
My solution: I'm a goal-oriented person, so what works for me is to open up different savings accounts for every purchase goal I have. It's a concept I read about called incremental savings.
I have several ING Direct savings accounts (they don't require a minimum balance) that I use to save for various things: emergencies, a house, car repairs, vacation, electronics (I really like gadgets) and furniture. I have a certain amount automatically withdrawn from every paycheck to start saving toward each goal.
It's basically a credit card in reverse. Instead of having what I want now and owing the cost plus interest, I delay gratification for peace of mind. When I own it, I own it.
NEXT: Dawn Tulman