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Switching from an impulsive spender to a saver mindset is not as easy as you think it would be. It’s actually quite difficult. Every time I went into a store, I had to buy something. Rather it was $1 or $100, I justified it in some way. I didn’t care that we didn’t have any savings or that we heavily relied on credit cards as our emergency fund.
Last year, I made the decision to work towards getting my family out of debt so that we could finally work towards being financially independent. I knew I had to learn how to break my impulsive shopping habits and replace them with smarter ones. Learning new, healthier habits is the foundation of growing your wealth after all. I instantly stopped buying things just because I wanted to and made a decision to only spend intentionally on things my family actually needed and would use.
September marked an important milestone in our life. For the first time, my husband and I have savings. And not just any savings. A savings of $10,000, which is earmarked to purchase a new (to us) car. Below is the method I used, and you can use it to – no matter how much your family makes per year.
Personal finance is a topic that a lot of people struggle with. I’ve read a lot of personal finance books, such as The Total Money Makeover by Dave Ramsey, Living Well, Spending Less by Ruth Soukup and Broke Millennial by Erin Lowry. These books gave me the foundation I needed to help me understand basic money management and that our finances were out of control. They also helped me understand that the next logical opportunity was for me to sell my car so that we can increase our snowball, which will help expedite our debt-free journey. The many virtual friends I’ve met in the #debtfreecommunity helped as well.
Set a clear goal
In February, we became credit card debt free for the first time in over five years. If you’re familiar with Dave Ramsey and his teachings, we were following the snowball method and my husband’s student loans were up next on the list to tackle. They are currently in forbearance until January 2020, so we decided to evaluate our financial situation and determined that it would be best if we worked towards getting rid of my car. It has a hefty payment of $665/month. Yikes, I know. Eliminating that payment will increase our snowball tremendously.
We set a goal to save $10,000 in six months to purchase a new (to us) car before working hard to pay down the underwater balance of the car so that we can sell it back to the dealership. Our reasoning behind saving the $10,000 first rather than paying down the car’s balance was because we didn’t want to have to secure a loan to cover the underwater balance of my car if we happened to find a cheaper car first.
We begin visualizing this goal and spoke life into it. This would then serve as our guide map moving forward.
Created a zero-based budget
The process of creating a zero-based budget is simply assigning a job for every dollar. Every single month, we created a spending plan for our money. If you tell your money where to go, you’ll never wonder where it went.
Figured out a savings schedule
My husband and I get paid on opposite weeks, which works out to us getting paid weekly. Naturally, it made sense for us to follow this schedule for our savings as well. Considering our take-home pay and our expenses, we determined the best way to put money back on a weekly basis without over drafting our accounts or relying on credit cards to get us to our next payday. Being a month ahead helped us tremendously since we’re currently funding next month’s bills with this month’s income.
Paid ourselves first
“Don’t spend what’s left after spending; spend what’s left after saving.”
Paying yourself first is a simple concept, but it’s so hard to follow. Every time we were paid, we instantly determined how much we were able to save. The amount we saved each week varied, but since we are currently a month ahead on our bills, it’s a lot easier for us to determine how much we could save each week. Our savings were determined before paying bills or distributing our weekly allowance. If you want to save a specific amount or percentage as you are paid, automating your savings is a great way to get started if you struggle with paying yourself first.
Separated my savings
Many people leave their savings in their checking account or house their savings in the same bank as their checking account. That’s the easiest way to spend more than your budget allows. Every week, as soon as we were paid, I transferred funds out of our checking account at our local bank into our high-yield savings account at Ally Bank. Since the funds were out of sight, they were out of our minds. It was as if the money was nonexistent, so we didn’t think about spending it.
Participated in a no-spend challenge
I have a whole blog post dedicated to how to crush a no-spend challenge. Incorporating no spend days into my goals monthly plus tracking our spending helped us stay on track. This is a very important step. It helps you learn to be intentional with your spending, appreciate everything you already have, and get creative when it comes to having fun. Participating in a no-spend challenge monthly has helped me realize that life is much more important than about acquiring things. Gifts aren’t even my love language. Cutting our excessive spending helped align our budget and everything else sort of fell in place.
Meal planning + pantry challenge
Pantry challenges were introduced to me in the #debtfreecommunity. You simply create meal plans using food that you currently have in your pantry, freezer, or refrigerator, only buying fresh fruit and vegetables as needed. I pushed myself to accomplish pantry challenges during five paycheck months so that we could maximize our savings. I gave us a budget of $100 to spend on fresh items for the month and got creative with the meal plan. Pantry challenges are a lot of fun and also help to prevent food waste. Let’s be honest. How many of you have had items in your pantries for months that you haven’t used? Try adding those into your meal plan for next week.
Used the You need a budget (YNAB) app
YNAB is my secret weapon. This isn’t a ploy to get you to download the app, but honestly, we wouldn’t have been able to save as much, as fast as we did, if it wasn’t for the app. YNAB lets you set up goals by a completion date, which helped us stay on track. We were able to see how much we needed to save each month in order to reach our goal.
We use our debit card for every purchase and YNAB helps us stay organized and monitor every purchase we make. Being able to see exactly where our money is going allows us to see the “big picture” at any moment. Remember, saving isn’t about how much money you make, it’s about how much money you’re able to keep.
There you have it! Nine ways we were able to save $10,000 in just five and a half months. I hope these tips were helpful to you. Even if you only begin to incorporate one of these steps in your monthly goals, you’ll begin to see your savings increase little by little or you’ll be able to pay off debt and be well on your way to living a life that you’ll one day enjoy.