It’s funny that out of all the days to open a new account I choose today – right after my thesis on condensing bank accounts – but I’ve stumbled onto a great way to kick this “challenge everything” mission into higher gear, and I think the benefits will far out shadow the rule break :)
If you recall, one of the main areas we’ve been able to cut back on with our “normal” expenses is with our cell phones. We switched from Verizon Wireless w/ iPhones to Republic Wireless and Android phones, and because of it we’ll now be saving a little over $100 every month. Which is a lot of freaking money for doing a very little amount of work, would you agree?
Of course you would.
Only, it seems $100 a month is sexy the first few times you hear it, but after a while starts to seem “normal” again as the initial excitement wanes. At least that’s what I’ve gathered from my wife so far… I don’t think she truly understands just how AWESOME keeping wads of your hard earned cash is!
The last few days she’s been hinting at how she misses her iPhone for this reason and that, and all of a sudden my “But honey! We’re saving $100/mo!” fits of joy aren’t getting the responses they used to. Instead of the “I know I know, it’s totally worth it” replies, I’m now getting “Yeah yeah yeah… the things I do for you and your crazy missions.” Not what a man of my stature wants to hear ;)
So how do you make saving money sexy again??? How can you show just how INCREDIBLE cutting back recurring expenses really can be over time???? Well, this is what I’m going to do about it:
I’m opening up a brand new – separate – savings account to house all money saved going forward from each and every challenge completed.
My $100 savings from switching cell phones are going in there, the $30 cut from our monthly car insurance premiums are going in there, and soon the money saved from our cable/phone/internet bills – and future challenges – will go in there too (more on that when we wrap up the series).
If a hundred dollar bill isn’t exciting anymore, you better believe *thousands* of dollar bills will be! Especially when you can physically see it instead of mentally think it. I imagine that’s much harder to ignore than what seems to be just “one-off” savings in your head as it seems my beautiful wife of 6 years is doing. And it’s actually very much like a marriage if you think about it.
Sure we celebrate an anniversary every year, but when it’s your 6th or 10th or 20th that $hit starts to hit you a bit different! It’s not just “a year of being together,” it’s “Holy crap – look at all the years we’ve spent together! And now we have two kids and a house and a cat and yada yada yada,” Haha… It becomes more of a *whole picture* type deal than just a sliver of a piece – putting things into a much better, and important, perspective. Both in life, and with this case money.
So, that’s the plan. Starting today all saved money actually gets saved.
Cutting expenses is hard, but it takes a real hustler to then *put those savings aside* so it COUNTS. Anyone can save $50 on something, but if you then turn around and spend it on something else does it really count as saving money?
So that’s what we’re after here: a 1-2 punch where you do the dirty work to save the money in round 1, and then in round 2 you knock it out by stashing it away and completing the process. Every dollar saved will actually be a dollar saved, and not just for a hot minute until it gets dispersed elsewhere.
And with this strategy comes just one rule: No touching for 12 months
It’s all fine and dandy to put money aside somewhere, but if you don’t restrict yourself from getting all grabby with it, what’s to say you wont’ just xfer it back out a few weeks/months later?
So we’re putting a timeline on this for 12 months where we’ll pour it all in and then sit back and watch it compound*. We’ll fantasize about all the things we can do with this money throughout the trip, and then at the end of the 12 months pull the trigger and call it a day. A year should be enough to really show how powerful incremental savings can be, right? And how important it is to always watch your expenses, especially the “normal” ones?
[*compounding because of the money you’re continuously putting in every month – not due to interest rates. Don’t any of you get your panties in a bunch on how smarter it is to put the $ in X, Y, Z account ‘cuz that’s not the point of this exercise here. Plus it’s only temporary anyways.]
I’m pretty excited about this because I think it’s going to have other effects too. Like:
- Keeping that high of saving going strong! (Much harder to ignore a continually piling of cash)
- More incentive to keep cutting recurring expenses since it means recurring balance increases too
- A better understanding of operational/spending money since savings are separated out
- A great way to keep LIFESTYLE INFLATION in check (you won’t even notice the extra money!)
- And ultimately just a fun new experiment to help keep your finances more interesting than normal
I’m also going to take this a step farther and allow the following to be included in this new account too:
- Any money we receive out of the blue (like change I find on my walks)
- Any money we receive that we weren’t counting on (like gifts)
- And any money we get back from returned items, refunds, or any other situations where money had already been spent but then comes back to us unexpectedly. And I won’t cheat by buying stuff only to return them so it “counts” to go in this account, haha… though it wouldn’t be the worst crime ;)
What do you think? So far so good?
Every month I’ll keep ya updated on the current balance, and what that month’s savings consisted of, and then I’ll be sure to email it to my wife a 2nd or 3rd time every month for good measure :) If this doesn’t shift her perspective, I don’t know what will!
Check out what this guy recently told me regarding these challenges:
Hi J. Money,
Thanks for the awesome article. It is very inspiring, and it convinced me to start challenging everything as well.
Since reading this article, I have done the following:
1. Satellite TV – reduced by $15 ($60 down to $45) by switching to a lower package that still has our preferred TV channels, but I am working on convincing the wife to drop completely :)
2. Cell phone – reduced by $90 ($160 down to $70) by switching my phone line to Republic Wireless $10 plan and moving my wife to a single line plan with Verizon ($60) – I am trying my hardest to stick to the $10 Republic plan but may have to go to the $25 plan whenever we go out of town away from my wireless networks :-/
3. Internet – reduced by $25 ($55 down to $30) by doing a quick online chat with a representative to ask them how I can lower my monthly payment because I have noticed another competitor offering lower cost/higher speed. They quickly gave me a monthly bill credit. Maybe I should try this with my satellite bill as well! :-D
Total savings so far: $130 per month
If this guy opened an account and dropped these savings into it, he’d have $1,560 to play with 12 months from now. And that’s not including anything *else* he saves on throughout the journey. That’s pretty powerful. And much more so when you can look into an account and physically see it there vs. just thinking about it in your head. When was the last time you did that with any of your savings from the past decade or so?
“You know that $5 I save from drinking coffee every day at home now? I now have $17,802 in my account to max out my Roth IRA for the next three years – woopee!”
Yeah, no. I guarantee most of that has already been spent on stuff you can’t even remember anymore.
So join me in this experiment if you like what you see
There’s really no way for you to lose, and I’m 90% sure it’ll help grow your savings even faster. Open up a new account with your present bank or at a place you’ve been wanting to test out for a while – it doesn’t matter – and then start putting in the difference of all the bills you’ve been cutting along this Challenge Everything journey with us. Or from your own.
Perhaps I’ll even make one of those reward charts circa 2nd grade to track everyone’s progress on, haha… Only instead of putting shiny gold stars next to everybody’s name, I’ll put in the total $$ amounts people are saving ;)
Either way, I’m excited to see how much it all ends up to in the end. It’s one thing to save and pat yourself on the back, but it’s a whole other to then put the money aside and not touch it. If you’re already used to spending it anyways, how will you even notice it’s gone?
Now off to USAA to go open up that account… I’m gonna label this bad boy “Challenge Money” in my profile. Or better yet, “Proof my wife married a financial rock star,” haha… Yeah, let’s go with that one.
See you in 12 months!
PS: I’m serious about that poster board.
[Money street cred: @Saigon]
Jay loves talking about money, collecting coins, blasting hip-hop, and hanging out with his three beautiful boys. You can check out all of his online projects at jmoney.biz. Thanks for reading the blog!