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Are You Trapped In The "Savings Ceiling"?

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Written by David Lowrey - Owner of Stress Free Property Management

One of the biggest roadblocks to financial success is what I call the “Savings Ceiling.”  It is in my opinion as an Apollo Beach Property Manager, one of the number one reasons, why everyday people struggle making progress toward financial freedom.   What is it, you say?

Well it took me until I reached my forties as the owner of an Apollo Beach Property Management company to notice this phenomenon, and the insidious way it keeps people broke.  Have you ever noticed that most people have a certain number they need in savings to feel secure? 

It could be $2000, $5000, $9000, or more in a savings account.  The number really doesn’t matter.  It is just the psychological number people have that makes them feel secure.   Once they reach this number then a strange thing happens...

It’s like the brakes have been released, and the family starts rolling fast toward luxuries, vacations, and impulse purchases.  This is not meant to be a judgement.  I suffer from this, and in my opinion, everyone has this tendency.  You were holding back to get your savings up, and now, it’s time to loosen up and enjoy life.  You work hard and deserve it, right?

That is a loaded question of course.  Yes, we all deserve to enjoy life and can’t spend every waking moment saving and investing for the future.  But what happens is the economic car of your life starts gathering speed and purchases start to accumulate. 

All of a sudden, you notice your savings account has dropped in half or more, and you slam on the brakes.   You realize you kind of got a little too loose, and you start tightening up.  Need to get that savings account back up.  Need to pay down those credit cards. 

And the cycle continues along this loop for 50 years.  I was on the same track well into my twenties before I discovered a book, “The Richest Man in Babylon.”  It introduced to the idea of compound interest and paying myself first.  Up until that time, I wanted to someday be well off, but I had no plan or idea how that was going to happen.  So, life just sort of happened to me.

I remember working in a textile mill in Danville VA making $7.10 an hour and living in a boarding house, after dropping out of college in 1995.  I decided to open a saving account and try and put as much money away as possible.  It took me about 9 months to save $1000.  I remember vividly going every Friday and depositing my money in the bank and making a note on my saving booklet of the amount. Up until that point, my saving plan was paying down my credit cards.

The goal was to save enough money to put a down payment on a fixer upper home.  I would need to find someone who would provide seller financing, and I would do all the fix up work myself.  The only problem was I had no experience fixing anything, no tools, and no capital to complete the renovations. 

Since I was so young and naïve, I didn’t know enough to let that stop me. I didn’t end up buying anything in Danville, VA because I was working other plans at the same time.  I got a job working as a delivery driver for a supply house company with offices all over the country.  In about 6 months, I got promoted to Lakeland, FL as an assistant manager, but that is a different story.

The point of this article is to give some thought to reading the “Richest Man in Babylon” and reflect a little on what I call the “Savings Ceiling.”  Does it show up in your life?  The best exit from this cycle of  bouncing between the “Savings Ceiling” and low or no savings is a financial plan.  Even a modest or naïve plan will start the ball rolling and other opportunities will show up along the way.

If a person simply read one book a year on finances and applied 10%, they would become a millionaire several times over.  Another great resource are the books by Dave Ramsey.  I wouldn’t take his advice about mutual funds, but his “Debt Snowball and “Baby Steps” are some of the best financial tips you will ever find.   Good luck!

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Monday, 21 January 2019
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