First Person: We Made Our Money Difficult to Access

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In order to get ahead financially, we have had to make our savings nearly untouchable. My husband and I came up with creative ideas to place barriers between ourselves and our money so that we wouldn't fall into the temptation to tap our savings. Part of our plan involved making a small amount of money extremely accessible because we know we may need money in an emergency. But after putting $500 of cash in a fire-proof safe, we figured out creative ways to 'hide' our money from ourselves.

Owning a home

My husband and I look at our home as a piggy bank. We have no intention to ever take out a home equity line of credit. We know we will always need a place to live. Owning a home outright is just as important as having $100,000 in the bank. If we didn't pay extra on our mortgage every month, I'm convinced we would just spend the money on frivolous things. I know experts say the money would be better off invested in the stock market, but I think no one can really predict future returns in the stock market.

Investing in a 401(k)

I have found it's extremely difficult to access money in a 401(k) because it involves filling out online applications and tax paperwork. Moreover, we are deterred by the fact that we would have to pay a 10 percent early withdrawal penalty to the government as well as pay ordinary income taxes. Even though we could take a loan from our 401(k) plans, it's also a cumbersome process. By putting a percentage of our income into our employee-sponsored retirement accounts, we are less tempted to spend our extra money.

Closing credit card accounts

Although some experts warn against closing existing credit cards because of the damage it does to a person's credit scores, I never listened to that advice. I still have great credit even though I closed all my credit cards except one. Moreover, I have avoided getting an ATM card that allows me to access money in my savings account. I keep a separate savings account so I'm not tempted to move money from savings into checking.

Investing in stocks and CDs

I have found investing in stocks in a regular brokerage account as opposed to a retirement account is also a good strategy for deterring me from spending. That's because if my stocks go up in value and I sell, I have to pay ordinary income taxes. If my stocks go down, I would be locking in a loss and losing money. I am more inclined to leave the money in the stock market for the long run. It's a lot easier to spend money by swiping a credit card or using cash than it is to sell stocks. I also have some certificate of deposits that I'm less inclined to sell because of the penalty for cashing out a CD before it matures.

Although I've heard of people burying gold in their backyard in case of an end-of-the-world scenario, I think that's a big extreme. The real threat is my own temptation to overspend and tap into my savings instead of letting my money grow for the future.

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More from this contributor:

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