Money Talks, So Should You

Q&A: Make short-term sacrifices for long-term financial gains

Mechel Glass
by Mechel Glass, Dimespring Contributor  (@CredAbility)

When my daughter was sick a few weeks ago, the medicine her doctor prescribed smelled bad and tasted even worse. Like most children, she resisted at first, crying at the prospect of having to swallow the medicine. But after two days she was still sick. I convinced her that she wouldn’t be able to ride her bicycle and play outside until she got better.

Eventually, she decided that a few seconds of discomfort from taking the medicine would be worth it.

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Among the toughest decisions we face every day is making a short-term sacrifice in the hopes that it will pay off as a long-term gain. It’s difficult for two reasons; first, we must give up something we want and second, we are hoping that the long-term gain is worth the sacrifice.

We need to apply this logic to our financial lives. By taking our medicine on the front end – whether that’s spending less, saving more money from each paycheck or investing a higher percentage of our pay in a retirement savings plan – it will save us plenty on the back end.

This lesson is applicable to our finances at any time, but it’s particularly valuable since so many families are affected by the latest partial government shutdown. To make certain that your finances are healthy once the holidays are over, here are a few short-term sacrifices that you can make now:

Resist the temptation of credit card offers. Open your mailbox on any given day and there is likely to be another offer for another credit card. Shred these offers without opening them and you will be less likely to be tempted by teaser interest rates or offers to consolidate your credit card bills.

READ: How to improve your finances without a financial adviser

Pay more than the minimum amount on credit card debt. Making only the minimum payments on credit cards will often take years to repay the debt. On a $5,400 debt, if you pay $135 a month, it will take you 5 years and 2 months to pay off the balance and you will pay $2,908 in interest. Increase your payment to $175 per month and you will pay it off in just 3 years, 6 months and pay $1,905 in interest. Use bonuses from work or other unexpected gifts of money to reduce your credit card balances.  

Create a priority spending plan. The easiest way to take control of your money is to set out a plan for how you will spend it. This is not glamorous and can be something of a task, but it gives you the power to decide where your money goes. The plan should be flexible and include monthly expenses such as mortgage or rent, utilities, food, transportation, entertainment and clothing. Make sure your expenses are not more than your income. If they are, go back to the plan and make adjustments.

READ: When is debt considered 'good' debt?

Build a savings cushion. Once you begin paying down your credit card balances, you should begin to build a savings cushion for emergency or unexpected expenses. Your goal is three to six months of living expenses put aside in a savings account. With this cushion in place, families are better able to withstand a temporary loss of income, particularly if it comes from a job furlough, and you will not have to put these unexpected expenses on a credit card.

Develop a strategy for your financial future. Set aside time at least twice a month to manage your finances including paying bills, balancing your checking account and analyzing your expenses. Begin thinking about, and planning for retirement—consider where you would prefer to retire, how much money you will need to live the lifestyle of your choice and what you need to do now to get there. Establish a retirement fund and contribute to it on a regular basis.


Mechel Glass is vice president of community outreach for CredAbility. She is responsible for coordinating community outreach and financial education activities across the agency’s regions and developing new education programs for both classroom settings and online. Glass, a U.S. Army veteran, is also co-author of “The Veteran’s Money Book,” scheduled for publication in April 2014 by Career Press. The book can now be ordered on