Monday, September 12, 2011

What Makes You Feel Powerful?

This post is inspired by Rhitter's post, which was inspired by Suze Orman.

Lately I have been hemming and hawing about what to do with my money now that my only remaining debt is my student loan. Up until now I've been following the Dave Ramsey model of paying down debt and have an emergency fund of $1,000. If I stick with that I should still be paying off my student loan with gazelle like intensity.

For whatever reason I've been reluctant to do so. I want to start saving for retirement in a Roth. I want to start building a house down payment fund, and increase my emergency fund up to three months expenses. I haven't been able to put my finger on why, but in thinking about this post, I came up with an idea. I think those other options make me feel more powerful than paying off my student loan would.

It is appealing to be completely debt free, but I see my student loan debt differently. I don't regret it like I did my other debts. So it doesn't feel as powerful to pay it off. Saving for my retirement in my Roth feels powerful because I can see that I am capable of saving an extra $5,000 per year. Saving for a house makes me feel powerful because although I am single (as in unmarried) I could potentially buy a property on my own. Bulking up the E-fund feels powerful (though not as much as the other two) because it makes me self-reliant, even if some unforeseen event occurs.

I don't think this is always the wisest decision-making strategy. If it made me feel powerful to have nice clothes I couldn't afford, that would be a no-go. But for where I'm at, I think I need to make a "Power Plan" to get me excited about my finances again. Stay tuned for the official plan.

What makes you feel powerful with your finances?


  1. I'm surprised Dave Ramsey only suggests a thousand in savings. I think Suze Orman's idea of having several months' worth of expenses saved makes more sense.

  2. Paying off my student loans! ;) Really though, it excites me to think of all the things my money can do for me when I'm completely debt-free. Even though I feel good about my student loan debt (as in, I don't regret taking out those loans), I still see them as this cloud hanging over me. I want to get that cloud out of the way so I can truly focus on and enjoy saving for retirement, saving for vacations, saving for a house. Not having the loans will also give me the freedom to take a lower-paying job should I ever be so inclined. I won't have to think, "Oh, crap, can I afford my expenses and student loans payments on this salary?" That's a powerful feeling for me. :)

  3. I'm with Red--I can't wait to get rid of my student loans! Although I do agree with you that I don't regret them as much as I did with regards to my credit card debt when I had it.

    I love your idea of a power plan, too. And I agree that $1K in an e-fund is just too little.

  4. Currently I am feeling motivated to save for a house deposit (downpayment). We have no consumer debt, both have student loans and have booked and paid for in cash an overseas holiday so house savings are our major motivator. We got really inspired by watching a home renovation TV show. (P.S in New Zealand we are very lucky that while studying and living in New Zealand we don't pay interest on our student loans so the motivation is low but the feeling of having it paid off will be fantastic.)

    Kiwi girl

  5. I am also surprised that he only suggests $1,000. I've always hears it should ideally be 3 months pay.
    What gives me power? Well, first it's putting the little things into our different savings accounts (we were putting it into furniture, now the little things are being set aside until we can make a big, bonus payment on our credit card.)
    I also get a thrill when I see my savings accounts growing, especially when it jumps from $1,990 to $2,000 (for example)!
    Finally (I guess I have a lot!) I love paying cash for large purchases. Sadly, it hasn't happened lately, but it will when we go to Hawaii, when we eventually buy furniture, and it did happen when we needed our first set of tires earlier this year.

  6. Love the post!!! (Thanks for the love!) I think the empowerment is different case by case. For me, it is getting rid of Capital One! No other card or debt has made me feel as small as they have.

  7. giving it to the poor.