An Interesting Way to Save

For those of you who do not know, I am a mortgage loan officer. I get to see a number of ways people are able or unable to handle their finances in a way that most people are never able to see. I see tax returns, bank accounts, credit, you name it. I see it.

A few days ago I ran across a man that had a very interesting way of saving money. Everytime he deposited his paycheck he would buy a savings bond. One the first paycheck of the money he would purchase a $100 savings bond. One the second paycheck he purchased a $200 savings bond. And it just so happened that I reviewed his account where he received 3 paychecks during the month and he purchased a $500 savings bond at that time.

So every month he was guaranteed to save at least $300. When I questioned him on why he decided to utilize a savings plan that was fairly uncommon, his answer was amazing.

This individual had been incarcerated for 13 years. He had been back out on his own for just the last two years. He had been a thief. He had been arrested multiple times. He never knew how to use the money he had. He said that he was concerned that he would be unable to handle his money now that he was a free man. When he purchased the bonds he was taking the money out of his account just like it was any other expense. It was never in the account for him to use. He was "paying himself first" as many good frugals know.

Well, that was a good story of someone who was setting their life straight but then he gave me the kicker. He said that the bonds also gave him a boundary. It helped him to determine what was important and what was not. Whenever he was tempted to cash in one of the bonds, he knew that he would have to make a trip into the branch, talk to a manager or assistant, who would then have to enter all the information on the bond to determine it's value, and only then could he receive his money.

He actually made a physical barrier to his money! He couldn't spend the bond at a ATM or pay for dinner with it. It wasn't "money" until he made the trip to the branch to cash it in. He would have to make a special trip just to cash in the bonds.

Now, I don't advise anyone to save using bonds. There are many vehicles that will accrue interest in better ways, faster. But the idea here is clear. Open an account that if you are tempted to use it, there is some barrier in your way. Open a savings account with no ATM card. Open an online account where you have to make transfers and may experience a slight delay to get your money. This will allow you time to make sure that you are accessing the money for the right reasons and not spending on impulse.