There seem to be an infinite number of frugal living tricks to save money, but I want to share some basic principles I adopted to pay off $25,000 of debt and save up a 3 month emergency fund in 13 months.
Stop spending money. The best way to save money is to not spend it. I love how Jeff Yaeger, author of The Ultimate Cheapskate’s Road Map to True Riches: A Practical (and Fun) Guide to Enjoying Life More by Spending Less, defines this concept as “skipping the money step.” According to Jeff, “the easiest and cheapest dollar you’ll ever make is the one you don’t spend.”
Even though I’m never averse to exploring ways to save money on the products or services I purchase, it’s almost always more cost effective to not make the purchase in the first place. Let’s say you want to buy a digital camera. You hunt for the best deal on websites like PriceGrabber or Amazon and check for coupon codes at RetailMeNot. Unless the digital camera is free after you maximize your savings by applying a coupon code to the lowest price, you’ll still need to spend money to finalize your purchase. Of course I’m not saying you should never buy the things you enjoy. But, I am saying that if you want to save money, a great way to do so is to hold on to your cash by not spending it.
Look at how broke people handle their money, and then do the opposite. Once you make the decision to travel down the road to financial freedom, your financially destitute relatives, friends, and coworkers may even offer you a few choice words of “wisdom” on how to manage your finances. I want you to listen to them carefully. When you find yourself modeling their behavior, be reminded that you’ll get the same results they’ve been getting.
Know your weaknesses. Remember the character Pookie, played by Chris Rock, from New Jack City. Pookie was kicking his crack addiction and getting along just fine before he went undercover working in a drug manufacturing plant. Don’t make the same mistake Pookie did. If your inability to refrain from stocking up on last season’s sandals – even at rock bottom prices – got you into a financial mess, stay out of the mall and any where else you’re prone to suffering a relapse.
I can’t remember where I heard this quote, but it’s fitting. “If you break your arm in three places, then don’t go back to those places.”
Make excuses to not spend money. Last Saturday I met up with a friend at the flea market. I parked my car near one of those Pay to Park stations. About 15 minutes prior to my 2-hour parking pass expiring, my friend and I headed back to the parking station to add more time. It wasn’t until I put a quarter in the machine that I realized I didn’t have the option to add more time to my current parking pass. I’d essentially waste $0.25 by adding money to the parking machine 10 minutes before my old parking pass expired. So, I retrieved my quarter from the parking machine and waited. My friend thought I was insane for refusing to give up the quarter. I told her it was a beautiful day and that I enjoyed standing outside chatting with her. Next time I’ll park my car for free on one of the residential streets and walk the 3 or 4 blocks back to the market. I could use the exercise.
I’m sure the example I provided may seem silly to most people, but we come up with so many ridiculous excuses to spend money, why not start brainstorming ways to save money that are equally outlandish?
Do you have any experiences you’d like to share that are relevant to the 4 ways I’ve listed to save money?
Are there any other principles you’re living by to either get out or stay out of debt?
Originally posted May 13, 2009