Saving Strategy #1

Hello!

Do you want more money?  I'm betting you do just like the rest of us!  I want to share a strategy , that helped me to become debt free in less than 4 years, of when I decided being debt free was a priority.  It's so simple you'll say duh!  But a lot of people discount how effective it is.

So you have your debt or specific goal.  You pick only one to focus on until that debt is paid off or that goal amount is reached.  Ie:  You have 3 credit cards, a car payment and your mortgage.  Pick one credit card to focus on.  OR you have a couple big things you want.  You want to buy a house, go on a vacation to Rome and you want to buy a big ticket item for your home.  Pick one.

Then for the goal create a seperate account only for that particular item, or store the cash in an envelope only designated to that item, and nothing else.  Discipline is required for this to work.

Then look at the things you typically do.  Do you go out to eat a lot?  Do you buy coffee every day?  Is your grocery bill always really high, and you're not sure what you spend it on?  Maybe you spend a lot on Uber or transportation?  Shopaholics anyone?  Daily drinks at a bar?  Maybe you typically get a large bonus once or twice a year that you have already spent...

Step 1: Determine what you do frequently.

Step 2:  Commit to whenever you would normally do that thing, you take that amount of money and pay it towards your credit card or transfer the money to that specific goal account.

*Side note* This is on top of paying your monthly minimums that you were already paying.  And if its a credit card and because you have paid off so much your minimums are lower, you still pay the amount that you were paying before. 

For example you have been paying $200 minimums on your credit card for a while now, but because you've been so disciplined after you heard about this strategy that now your minimum payments have been reduce to $100, you keep paying $200.

Lets use Uber as the example.  Say you live in a big city and take Uber a lot, its cold, and it saves you so much time rather than taking the bus, or you run late a lot and so now you have to take Uber to get to work on time.  Sound familiar?  I know I have done this, and I know there are plenty of you that do this too.  Every ride is somewhere between $6-$30 average.  If you're in New York I know it can be A LOT more that that.

Average out how often you take Uber per day, and how much is each ride usually?  If you take Uber 1-3 times a day and its usually $6-$15, then every single time you opt to take the bus, walk, or share a ride with a friend, you make a payment of $6-$15 to the credit card that you committed to paying off.  So yes, that does mean that some days you might make three separate $6 payments to the same credit card.  One might say why now wait until the end of the day and pay $18?  You could.  But most people aren't that disciplined.  And if you are committed to this new practice, it will become sort of like a game.  Often you will end up choosing to take the bus or walk so that you "get to" lower your credit card balance by $6.  If you wait until the end of the day this strategy loses its potency; and more than likely you'll forget at the end of the day.

You can even do this with several things.  For example every time I choose to buy a drip coffee instead of a late, if I choose not to drink, and I went shopping with my friends, and there was this gorgeous dress I really wanted.  But I resisted.  Look at the price tag of that dress and make that payment, when you get in the car and drive away.  Make that $2 payment that you saved because of choosing to buy a drip coffee instead of a late.  And if you decide not to drink that night when you're at the bar getting dinner, make that $7 payment to your credit card when you are paying the check.

If your grocery bill or any other bill is very high of you are able to reduce it, you take the difference of what you were going to / or normally pay, and use that amount to pay your credit card.  For example your grocery bill is normally $400, on the times you go to the grocery store and you only spent $100 (what??!!) then you make a $300 payment towards that credit card.

If you make more money than the average bear, or are in commissions work.  You can apply this same principal to your bonuses.  But in this case, you will have to change your point of view on these bonuses.  Look at the word: bonus = something extra... something you were not going to get otherwise.  So you take that large amount and put it towards paying off debt or saving for a big ticket item.  IF, before reading this article you used to spend the money you knew you were going to get, then use the bonus to pay that off, there will be an adjustment period.  If you were use to spending the bonus to pay off things you already bought, knowing the money would come.  One idea is to take as much of that bonus as you can and put it into an account and sit on it for as long as you can.  Then the next bonus will be to pay for things you want.  Doing this will change your habits over time.

This method is exactly how I paid off my brand new car two years early.  And how I paid off very big student loans a couple years earlier than I had calculated.  And still use this method to save.

I know it sounds trivial because the amounts are so small, and it seems ridiculous to make so many payments throughout the month.  But this method works.  Plus the trick is not to cut yourself off from the things that you want.  Just simply notice the times that you choose not to indulge, or maybe commit to cutting back once a week, then replace that typical purchase with a payment towards your financial freedom. By implementing this strategy you do not feel deprived, and you will actually feel excited to walk instead of take Uber, or cook at home for your friends instead of going out to eat.

*Note* In order to become debt free, once you pay off one credit card, you move on to the next.  Applying this principle + the original minimum payment you were making when it was high ($200 from the example above).  

Try this method for three months and I know this will be a new way of living for you.  Let me know what ended up happening for you!

​Much prosperity, Jessica