Jul 15 2008

How $10,000 can feel

I think $10,000 in debt feels way different than $10,000 in savings would.

With $10,000 in debt, it looms over you like a dark cloud or an unwelcome houseguest. Interest rates on debt are typically much higher than they are for a savings account, so just by making a minimum payment of $250 at 14 percent interest, you’ll be treading water for a long time. It’ll take 20+ years to pay that $10k off. That $10,000 might as well be a million dollars, for how it can make you feel.

Impossible to eliminate. Locking you into a job you hate. Miserable.

On the other hand, I’m imagining $10,000 in savings feels quite a bit different, even though it’s the same amount of money. For one thing, it’s your money. You saved it, and it’s now working for you by earning interest and allowing you to purchase things with cash. It probably didn’t take you 20+ years to save, either. If an unexpected expense pops up, you can tap your savings and your regular budget won’t be affected. If it weren’t there, you’d just go deeper into debt.

To me, $10,000 in savings sounds like less money than $10,000 in debt. The debt figure can feel impossible to conquer. Once you have several thousand in savings, it’s easier to say, “That wasn’t so hard! Let’s keep going!”

In about a year’s time, our financial pendulum has swung from several thousand in debt to several thousand in savings. It feels completely different to be in the black.



9 Responses to “How $10,000 can feel”

  1. Congratulations on swinging the pendulum!

    I know what you mean when you talk about how onerous debt feels. I named all our debts after infamous villains. They feel like villains, and naming them makes it easier to get motivated to attack them.

    When we have finally beaten all our debt villains, I wonder if I should start naming our savings and other assets? I think I will name them after things that multiply, like “Rabbits” and “Tribbles.”

    Ginkgo100’s last blog post..Just say no to credit cards

  2. Congrats on getting so close to your saving goal! You guys have done a great job. When we saved up a $10,000 down payment on our house, I felt the same way. Shows what you can do if you’re all-out committed to it.

  3. Congrats on the savings! It DOES feel different:) We are still building ours. It’s inspiring to see others reaching financial goals. I know it took some discipline and sacrifice.

  4. Good for you Kacie. You and your husband are preparing a great financial foudation for your child(ren). Keep up the good work.

    Hadias’s last blog post..Menu Plan Monday

  5. I agree with the feeling. I can tell myself that even as a highschool student I was able to save at least $1000/year (same in college, I think). And while I wasn’t paying rent, I was also earning considerably less. So $10,000 doesn’t seem bad at all.

    In debt though. Bleh. But I try to tell myself it’s like savings. Only there isn’t that nice increasing number in my bank account to make me feel good about it. Less bad just isn’t the same.

  6. you bring about a good point. weird how the same amount of money can feel like two completely different things when it’s the difference between PAYING interest and ACCRUING interest that’s working for you. i’m eager to be out of the red and into the black…i’ve got a long road ahead of me though.

    tiffanie’s last blog post..personal finance challenge

  7. It’s interesting too – how fast you can save up that money when you don’t have the debt. We’ve found that since we retired our last debt a year or so ago that it’s a lot easier to save – and the savings pile up faster! Since getting rid of our last debt we’ve piled up a $2000 emergency fund and over 20 thousand for our 6 months of expenses. Now we’re saving for our trip to europe in september! Being debt free is very freeing!

    Pete @ biblemoneymatters’s last blog post..Money Matters

  8. You are doing great at saving money. You won’t have to worry at all during maternity leave because of smart planning now.

  9. It’s strange for me, if I have $10,000 to spend on anything (that I have saved) I am very hesitance and cautious. On the other hand, if I was to borrow $10,000 to spend on something, I’d be less likely to care about my purchase. Makes no sense I know, so I just don’t borrow.

    Frank’s last blog post..Ask Us Anything!

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Hey! I'm Kacie, wife to Shane and mother to Jonathan (7), Vivienne (5) and Amelia (2) . I write about my family's finance: how we save money, improve our spending, and plan for the future.

I hope I can inspire and encourage you to improve your situation. See disclosure.

I'm adopting a much slower-paced posting schedule, and treating this as a hobby blog now.

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