Our Terms of Service and Privacy Policy have changed.

By continuing to use this site, you are agreeing to the new Privacy Policy and Terms of Service.

4 of 5
BACKNEXT
Alex Cohen
Alex Cohen
Alex Cohen, 28, is a marketing manager in Philadelphia.
Debt free: 3 years

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 I have a certain amount automatically withdrawn from every paycheck to start saving toward each goal.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

Last updated December 08 2009: 7:38 AM ET
Email | Print | Share  |  RSS
 
google my aol my msn my yahoo! netvibes
Paste this link into your favorite RSS desktop reader
See all CNNMoney.com RSS FEEDS (close)
More Galleries
The 7 biggest investment mistakes celebrities make From betting too heavily on real estate to overestimating future earnings, here are 7 of the most common money mistakes that celebrities make. More
Cotton candy, toothpicks, pet gel -- these products are all made from marijuana Legal cannabis, an estimated $5.4 billion industry, is drawing in entrepreneurs with a variety of innovative products -- from skin patches to pain relief gel for pets. More
Coolest hotel bars for business travelers CNNMoney asked two concierge services for high-flying business people what hotel bars they'd recommend in 5 major U.S. cities. Here are their favorite spots. More

Special Offer