Author Topic: Reverse spending creep 2014  (Read 5142 times)

Frugal Ninja

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Reverse spending creep 2014
« on: February 28, 2014, 01:19:47 PM »
Here is the challenge....implement a change that will result in a 1% reduction to future costs every pay period in 2014. (I know I am late with the gauntlet throwing on this one, but I started this myself at the beggining of the year and have found it to be a great way to tackle my expenses....and wanted to share and get feedback)

Disclaimer:  Unlike my name suggests, I am in NO way currently a ninja in the art of frugality.  However, all ninjas must start somewhere and Id like some training partners for this training mission. 

My own personal rules:  Take my 2013 yearly expenses, and make one change that will result in a long run decrease of said expenses by 1% and repeat this every pay period this year.  These changes must be sustainable in the long term (eating only out of the cuppboard for a week might save me 25 dollars in groceries, but it is a one time event as my cupboard inventory is only replaced by spending money...however, the purchase of new energy efficent lightbulbs may cost money up front, but switching to energy efficent lightbulbs will save a few dollars a year as long as I am using energy efficent lighting.)

My numbers:
2013 Yearly Spending  $33,410  (oh, the face punches will roll when you see how much I have been wasting)
Yearly 1%  $334.10
Monthly 1%  $27.84
Biweekly 1%  $12.85
Weekly 1%  $6.43

My method:  I created a savings account in which I will "snowball" my savings into...increaseing contribution by an average of $12.85 biweekly every paycheck as the challenge continues.  The money in this account will only be used for purchases that will furthur reduce lifetime spending (until they reach a point where investing these dollars will result in a lifetime gain greater than the result of thier value to cost savings). 

This goal has a long term approach, however I realized in the beggining that it may not actually decrease this years actual spending (gasp)....as the goal of reducing lifetime spending sometimes has up front costs.  However,  at the end of the year...there should be a sustainable rate of deposits going into this account that is equal to 26% of last years expenses....and at no actual upfront cost as it will be fueled by the actual savings (sweet as I already had been living paycheck to paycheck...and cant afford to pay cash upfront for a new energy efficent water heater, even if it is going to result in me having MORE money.) 

Here are my results thus far: 

Week 1:  Wow, the fruit was really hanging low.  I called my cell phone provider and asked to lower my rates...just simply asked. Results 40$ a month off my bill....for the same exact services I was already using.  Call time 4 minutes and 38 seconds.  First biweekly deposit into the account $18.46 (1.44% savings...boom crushed my biweekly goal)

Week 2:  Credit Check.  I grudgeingly admit, I have carried a credit card balance for as long as I can remember....due to no savings and unplanned for cash "emergencies"...like car repair or a traffic ticket. I have been paying what my unmustached former self saw as a measly average of around 26$ a month in interest.  I opened a chase freedom rewards card at 0% and got $150 cash back reward.  I did the math on a balance transfer and decided that just using my new card for all my purchases for a few months and paying off my old one would essentially transfer the balance, and cost me less than the transfer fee..so I started using it for everything. (Luck would have it, I was able to put a vacation rental house for my family reunion on this card, and was paid back with a checks by my family members...balance transfered free...and nobody cared that I got the rewards points on top of it, as they were just glad I stepped up and took care of it!)  Results:  26$ a month or .93% of my yearly expenses gone.  Plus the net effect of the 200$ and the eventual bonus points (an additional 1%-5% on any current expenses I am able to pay with the card)

**Risk....if I am unable to pay off my credit card in the next 15 months, this savings becomes an larger expense really fast.  To eliminate this I have been using "short term" cost cutting and money making strategies such as eating the food in my cupboard, selling things on craigslist, and avoiding purchases.  However, with my building savings snowball, it should be paid off with no issues. 

Week 2 continued:  This one hurt, but 1% is 1%...well actually 2%!  I stopped and bought a pack of ciggarettes....exact cost on the register $6.43.  Not unaware that this was EXACTLY 1% of my weekly average spending....it was no longer a "small expense" to me and I told the cashier I changed my mind.  Walked out of the store 1% more frugal and transferred an additional 1% into my snowballing account.  Hours later as my first cravings really hit, I remembered that I had bought a pack earlier this week and may have one left in my car.  However instead of going to look for it...I realized that I average at least 2 packs a week and went and transfered another 1% into the snowball!  Wow, looking at the big picutre of life really makes smoking seem stupid....what the hell was I thinking!

Week 3:  While still stongly questioning my resolve to quit smoking, I decided not to make any "sacrifies" this week.  So I needed to cut 1% without giving anything else in my life up.  I however had my first depoist cleared into the "snowball account" and decided to spend money on a used "automatic thermostat adjustor thingy" on ebay.  18$ shipped.  Results:  Unknown, but as I never even thought to adjust the heating or AC down when I was away from home before this, I am guessing its going to be significant.  I transfered an additional $1 a paycheck to the snowball fund...as it was only a dollar and at least it would pay for the device over the next year if it didnt save me any money.

Week 4:  It was the last Sunday in January, I sit to plan and make my last 1% change for the month and check my progress...when I realize my mistake.  I was only supposed to make 1% change every OTHER week...and I was sitting at 4.37% when I should be trying to get to 2%.  So I gave myself a break...and only shot to make a .63% change that day.  That breaks down to about $4.05 a week...which I EASILY could cut from my grocery budget (I realized as I had been living comfortably out of the food in my cuboard for over 2 weeks now).  Lowered my grocery budget accordingly in my mint account, transferred the difference to the snowball. 

Now from here I can continue to tell the the story of how my February went...but this post is already way longer than I had anticipated.  I can write furthur if anyone is interested in hearing, but you get the point.  As of today I am at 13%, and really have actually had to use any of the "snowball funds" as I had previously anticipated...thats halfway in 2 months!  I thought this was going to take a year!!  What is more...is I actually have a lot more in my "spending account" than usual, despite having a 300$ car "emergency" repair.  Apparently, being aware of the effect of the little things automatically made me more frugal..as $0.92 a day is 1% of everything I spend!! 

Anyway, long story long.  I am really excited by my progress and I am actually enjoying the process...plan on continuing as long as possible until 1% is actually a struggle to remove from my spending.  I still have a few big expense catagories to look at so I still see room for easy improvement, such as my unmustaician apartment with its long commute from my work, my "entertainment" budget (which seems to be correcting itself on its own now that I found you guys and learned about the utility of my money and life!)

**Mid post life update...I decided to stop writing this and tackle the apartment issue.  I walked down the hall and talked to a bike commuting coworker about where she lives, and was subsequently invited over to dinner and to check out her building.  Rent is $350 dollars a month cheaper...closer to work...closer to family....did I just hit my 26% savings goal!?  I guess ill let you know tomorrow!**




horsepoor

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Re: Reverse spending creep 2014
« Reply #1 on: February 28, 2014, 08:34:07 PM »
Sounds very ninja-like to me!

I love the idea of 1% for a week or a pay period.  Helps with watching the $5 purchases here and there that really add up.  And if it helps you stop smoking, that is FREAKING AWESOME!!!

tariskat

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Re: Reverse spending creep 2014
« Reply #2 on: March 02, 2014, 08:25:43 AM »
Agree. Awesome challenge, damn, and yes stop smoking!! You should run some numbers and add up potential health cost wins, especially if you take up running instead of smoking. That would probably do your last percent right there but keep going! Great job!

meadow lark

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Re: Reverse spending creep 2014
« Reply #3 on: March 04, 2014, 04:51:58 AM »
This is so smart!  Hmm, now I need to think of some tweaks to drop 1%!  Interesting challenge.

Gin1984

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Re: Reverse spending creep 2014
« Reply #4 on: March 04, 2014, 06:36:56 AM »
This is an amazing idea.  I think I will think about this a bit more.  Thanks!

Frugal Ninja

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Re: Reverse spending creep 2014
« Reply #5 on: March 05, 2014, 08:35:07 PM »
Thanks everybody!  Ill consider my first 26% drop a level one black belt.  Level 2 will be the next 26%.  Good thing about the next 26% is it will be of a much lower amount....therefore each 1% will be smaller, and therefore require smaller savings to accomplish. 

happy

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Re: Reverse spending creep 2014
« Reply #6 on: March 10, 2014, 05:56:29 AM »
Very cool :) Please keep posting I love it.

stripey

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Re: Reverse spending creep 2014
« Reply #7 on: March 12, 2014, 07:33:06 AM »
I love this idea! I will have to consider whether I can do something similar... the problem is that for me, the first two months of the year have most of the 'big ticket' bills (3 x professional associations, 2 x state registrations, annual car insurance, annual parking ticket, etc.). I am not a tight budgetter (I just track spending) so maybe not so good for me... although I could see how I go the other ten months of the year...!

Regardless the thread is a very interesting read!


P.S Kind of interesting that my most spendy month is in no way associated with Christmas.

szmaine

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Re: Reverse spending creep 2014
« Reply #8 on: March 12, 2014, 07:51:47 AM »
Wow! Thanks for the inspiration!! Just called my home phone/internet provider and received $20 savings, from $86.80 month to $67ish (one year commitment) - I am astonished at how easy that was!!

Thanks again!!

oceanowl

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Re: Reverse spending creep 2014
« Reply #9 on: March 12, 2014, 09:17:53 AM »
Love this idea! I finally have my husband on board to start the baby step of tracking expenses so we see where we stand, and I'm using you as inspiration for step two-reduction. Thanks!

Mama Mia

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Re: Reverse spending creep 2014
« Reply #10 on: March 12, 2014, 06:32:46 PM »
I love this idea and I'm going to try something similar!

Frugal Ninja

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Re: Reverse spending creep 2014
« Reply #11 on: March 13, 2014, 02:22:28 PM »
Wow! Thanks for the inspiration!! Just called my home phone/internet provider and received $20 savings, from $86.80 month to $67ish (one year commitment) - I am astonished at how easy that was!!

Thanks again!!

Haha Right!?  Ive heard that you can negotiate rates by calling...but I never thought that I could do it.  Hopefully you immediatly transfered your 20$ monthly savings into an investment or savings account ....otherwise they often just become spendings elsewhere in your budget!  Either way, with one phone call you just freed up $240 dollars over the next year...more if you keep that contract longer! 

oldtoyota

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Re: Reverse spending creep 2014
« Reply #12 on: March 17, 2014, 08:56:17 AM »
Very cool!

I did this...yet I did it all at once in a month last year and cut $14,000 or so off of my yearly expenses. I can still find places to cut though (groceries!) and internet (need to call to ask for price reduction).

****

If it helps you, here are some of the ways I cut money (expenses are yearly):

--got rid of land line (savings $876)
--stopped buying clothes (hard to say for sure but at least $1000 per year)
--paid child's tuition early (savings $200)
--cancelled newspaper subscription (savings $420)
--work from home 2 days per week (savings $768)
--stopped parking at subway  (savings $960)
--gave up expensive hobby (savings $2400)
TOTAL SO FAR $5724
--No classes for adults (savings $3,000)
--No lunch out (savings $540)
--No snacks from vending machines (savings $46)
--Reduce grocery costs (savings $3600)

That is actually $12,910. Moving to AirVoice Wireless is/will save another $480 per year.
« Last Edit: March 17, 2014, 09:00:32 AM by oldtoyota »

Gin1984

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Re: Reverse spending creep 2014
« Reply #13 on: March 17, 2014, 09:34:42 AM »
Very cool!

I did this...yet I did it all at once in a month last year and cut $14,000 or so off of my yearly expenses. I can still find places to cut though (groceries!) and internet (need to call to ask for price reduction).

****

If it helps you, here are some of the ways I cut money (expenses are yearly):

--got rid of land line (savings $876)
--stopped buying clothes (hard to say for sure but at least $1000 per year)
--paid child's tuition early (savings $200)
--cancelled newspaper subscription (savings $420)
--work from home 2 days per week (savings $768)
--stopped parking at subway  (savings $960)
--gave up expensive hobby (savings $2400)
TOTAL SO FAR $5724
--No classes for adults (savings $3,000)
--No lunch out (savings $540)
--No snacks from vending machines (savings $46)
--Reduce grocery costs (savings $3600)

That is actually $12,910. Moving to AirVoice Wireless is/will save another $480 per year.
I've never had a land line, I am shocked at how much that cost. 
« Last Edit: March 17, 2014, 02:08:38 PM by Gin1984 »

pipercat

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Re: Reverse spending creep 2014
« Reply #14 on: March 17, 2014, 10:33:11 AM »
  I did the math on a balance transfer and decided that just using my new card for all my purchases for a few months and paying off my old one would essentially transfer the balance, and cost me less than the transfer fee..so I started using it for everything.

I love this, and I wish I had thought to do that when I just did two balance transfers!