My month experiment to find $105
Dave Ramsey is a huge propoent of the “debt snowball” technique. This is great for paying off debt, but finding the funds to do so may be difficult. We can either increase our income, or reduce our expenses to make this possible.
Here’s a great technique I’ve done to reduce a few expenses and get one step closer to financial freedom. You can do the same starting today.
Over a four week period, we’re going to trim some fat from your spending to free up your money for other financial goals or to invest in your future self. Maybe you’re looking at traveling, paying down debt, or getting a nice present for your significant other. Or this could be your chance to retire early!
Select one recurring expense that you can live without this week. I have a weakness for fast casual restaurants, as you may see at the local Chipotle at least once a week. Eliminate that expense at least once this week. The next urge you get to swing by Starbucks simply tell yourself, “Today, I don’t need this!”
Let’s say on average you eat out 5 nights every week. Instead, shop at the grocery store and learn to cook for yourself as one of those meals. You’ll learn a new skill, save a trip to the restaurant, and eat cheaper / healthier for one meal.
My savings? $10.05 for a Chipotle dinner
Let’s build on the success of last week: find a second expense we can truly live without in addition to your choice from week 1. Maybe it’s that iced caramel macchiato you get every Friday before rolling into work. Honestly you’re already amped for the weekend and don’t really need it! Now you have reduced two expenses per week and are already planning that Hawaiian getaway.
Week 2 savings? $10.05 at Chipotle + $7.25 at the movies (I didn’t really want to see Bad Moms anyway) = $17.30
So we’re making great progress, and now we’re going to eliminate one more expense this week? Wrong! Dig deep, because you’re going to find four items this week. It’s going to be tough, but you’re going to start noticing the savings are adding up quick.
Week 3 savings? $6.92 at Wendy’s + $7.62 at Chick-Fil-A + $2.14 at 7–11 + $7.00 at the golf course (I practiced at home for free instead of at the driving range) = $23.68
The end is almost in sight! Making these decisions should be second-nature now. Capitalize on the success and momentum you’ve built to find eight expenses to reduce your spending!
Week 4 savings? $5 at grocery store (didn’t need ice cream this week), $2 at GEICO (right-sized my car insurance, effectively saving money every week), $6.35 at Jimmy John’s, $17 at Great Clips (cut my own hair this week, with mixed success), $7 at Costco (even though I love chocolate covered Acai, I’ll go without), $10.52 at Chipotle, $3.33 at Krispy Kreme, and $3.00 at Cheesecake Factory (ordered water instead of a drink) = $54.20
I saved $105.23 this month! You can also find success following these steps. It’s amazing how little things add up. I effectively gave myself a $1,260 / year raise to do more of what I really want. All this money is going straight into my Europe trip.
For extra savings, take the money you would have spent over the four week exercise and invest it to pay your future self. Betterment, Wealthfront, and Vanguard offer excellent options to start saving today!