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10 Things Learnt From The Two Roommates Who Saved More Than $55,000 A Year

10 Things Learnt From The Two Roommates Who Saved More Than $55,000 A Year

Reading the story of Geoffrey Szuszkiewicz and Julie Phillips, who saved $55,000 dollars in one year by choosing to buy nothing, brings back memories of when my wife and I first got married back in August of 2010.

Coming out of college was rough for both of us. Like most new college graduates, we were broke and had no money.

However, on the night of our honeymoon, we decided to make a savings goal. Our plan was have twenty thousand dollars in cash saved by August 2011. Sarah was still in school at the time, so we were going to have to accomplish this intimidating goal on the salary of an assistant manager in the retail industry.

As you can imagine, this wasn’t easy. Saving money is a lifestyle change; one that is more than anything, mentally and emotionally draining. Like Geoffrey and Julie, Sarah and I also lost friends. We also had doubts and many times wanted to quit.

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However we stuck it out and reached our goal just a few days shy of the one year mark. The decision we made to save gave us a sense of security and peace of mind.

Hopefully you too will find these ten tips I learned useful as you plan to save money.  They are simple and very actionable.

 1. Check your pride; you will need to live minimally.

If you want to save money, you cannot be sold out to the cultural expectation of having nice things. This is because you will need to adopt a minimalist mindset if you are to be successful. Do not confuse minimalism for self-denial. I mean you don’t need a fancy car with a monthly payment. You may have to drive a beat up clunker for a while.  Keep your clothing simple, no buying fancy designer outfits.  Like Geoffrey, you will have to delay the pleasures of travel and consumerism.

2. Decide how much you want to save

You must have a tangible goal set.  Look at your income and decide how much of it you want left your bank account at the end of the year.  Geoffrey decided to save 65% of his take home pay while I decided to save 50% of mine. There is no magic number, just decide how much of your hard earned money you would like to keep. There is an alternative to being a consumer, and it is being a saver.

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3. Whatever is left is your take home pay/ Allocate wisely

Say you make $3,800 after taxes a month and you want to save twenty thousand in one year like Sarah and I did, you will need to save $1,670 every month. This means that you only make $2,130 a month.

That is all you have for rent, gas, groceries, gym memberships, fun money etc. Make sure you allocate wisely.

4. Keep your rent or mortgage no more than 25% of your net income, or get a room mate

This means that your rent or house payment cannot be more than 532.50 if you use my example.

Sarah and I moved into a 350 square foot apartment for 315 a month that year. Geoffrey moved in with Julie to save money on the rent.

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5. The quickest way to get a fifty percent raise is to cut your bills in half

I eliminated my gym membership fee ($60 a month) by working part time as a personal trainer at my local gym. I also cancelled my cable service ($180 a month) for Netflix ($8 a month). We also cut our grocery bill in half by sticking to simple diet foods (rice, chicken, potatoes etc.) I also biked to work, while Sarah walked to class ($200 in gas). All in all by cutting our bills in half, it was as if I received an extra $500 a month. Julie quit going out to eat all together and Geoffrey went as far as to quit getting haircuts.

6. Designate an accountability partner

Every month end, I would show my good friend Jeffery my account balance. Knowing that he was going to see my deposits was enough motivation to deter me from dipping into my savings. If my account was at $1,670 on January 31st, it had to be at $3,340 on February 28th.  Geoffrey and Julie created a website and blog to let the world in on what they were doing and used this medium to keep themselves accountable

7. Save first, pay bills latter.

Saving money is all about priorities. It was my priority to pay myself first. Nothing else mattered.

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8. You may lose some friends

Remember that we are social creatures and as such, your friends may not understand the commitment you are making to secure your financial future. Don’t take it personal. The same people who are now asking you why you are doing it, will eventually ask you how you did it.

9. Don’t try to “keep up with the Joneses”

Don’t try to keep up with the Joneses. For all you know, they may be broke or living pay check to paycheck. Be careful about being pressured to spend especially when you are around friends who make more than you do.

10. Reward your self

Every couple of months, reward yourself. Set aside up to $200 for something you may want to splurge on. This is more of a necessary mental break.

Good luck! May you be able to put away exactly the amount of money you hoped for!

Featured photo credit: Julie Phillips and Geoffrey Szuszkiewicz via finance.yahoo.com

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Published on November 20, 2018

The Best Ways to Save Money Even Impulsive Spenders Can Get Behind

The Best Ways to Save Money Even Impulsive Spenders Can Get Behind

The truth is, there are many “money saving guides” online, but most don’t cover the root issue for not saving.

Once I’d discovered a few key factors that allowed me to save 10k in one year, I realized why most articles couldn’t help me. The problem is that even with the right strategies you can still fail to save money. You need to have the right systems in place and the right mindset.

In this guide, I’ll cover the best ways to save money — practical yet powerful steps you can take to start saving more. It won’t be easy but with hard work, I’m confident you’ll be able to save more money–even if you’re an impulsive spender.

Why Your Past Prevents You from Saving Money

Are you constantly thinking about your financial mistakes?

If so, these thoughts are holding you back from saving.

I get it, you wish you could go back in time to avoid your financial downfalls. But dwelling over your past will only rob you from your future. Instead, reflect on your mistakes and ask yourself what lessons you can learn from them.

It wasn’t easy for me to accept that I had accumulated thousands of dollars in credit card debt. Once I did, I started heading in the right direction. Embrace your past failures and use them as an opportunity to set new financial goals.

For example, after accepting that you’re thousands of dollars in debt create a plan to be debt free in a year or two. This way when you’ll be at peace even when you get negative thoughts about your finances. Now you can focus more time on saving and less on your past financial mistakes.

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How to Effortlessly Track Your Spending

Stop manually tracking your spending.

Leverage powerful analytic tools such as Personal Capital and these money management apps to do the work for you. This tool has worked for me and has kept me motivated to why I’m saving in the first place. Once you login to your Personal Capital dashboard, you’re able to view your net worth.

When I’d first signed up with Personal Capital, I had a negative net worth, but this motivated me to save more. With this tool, you can also view your spending patterns, expenses, and how much money you’re saving.

Use your net worth as your north star to saving more. Whenever you experience financial setbacks, view how far you’ve come along. Saving money is only half the battle, being consistent is the other half.

The Truth on Why You Keep Failing

Saving money isn’t sexy. If it was, wouldn’t everyone be doing it?

Some people are natural savers, but most are impulsive spenders. Instead of denying that you’re an impulsive spender, embrace it.

Don’t try to save 60 to 70% of your income if this means you’ll live a miserable life. Saving money isn’t a race but a marathon. You’re saving for retirement and for large purchases.

If you’re currently having a hard time saving, start spending more money on nice things. This may sound counterintuitive but hear me out. Wouldn’t it be better to save $200 each month for 12 months instead of $500 for 3 months?

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Most people run into trouble because they create budgets that set them up for failure. This system won’t work for those who are frugal, but chances are they don’t need help saving. This system is for those who can’t save money and need to be rewarded for their hard work.

Only because you’re buying nice things doesn’t mean that you’ll save less. Here are some rules you should have in place:

  1. Save more than 50% of your available money (after expenses)
  2. Only buy nice things after saving
  3. Automate your savings with automatic bank transfers

These are the same rules that helped me save thousands each year while buying the latest iPhone. Focus only on items that are important to you. Remember, you can afford anything but not everything.

How to Foolproof Yourself out of Debt

Personal finance is a game. On one end, you’re earning money; and on the to other, you’re saving. But what ends up counting in the end isn’t how much you earn but how much you save. Research shows that about 60% of Americans spend more than they save.[1]

So how can you separate yourself from the 60%?

By not accumulating more debt. This way you’ll have more money to save and avoid having more financial obligations. A great way to stop accumulating debt is using cash to pay for all your transactions.

This will be challenging, depending on how reliant you are with your credit card, but it’s worth the effort. Not only will you stop accruing debt, but you’ll also be more conscious with what you buy.

For example, you’ll think twice about purchasing a new $200 headphone despite having the cash to buy them. According to a poll conducted by The CreditCards.com, 5 out of 6 Americans are impulsive spenders.[2]

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Telling yourself that you’ll have the discipline to not buy things won’t cut it. This is equal to having junk food in your fridge while trying to eat healthy–it’s only a matter of time before you slip. By using cash to make your purchases, you’ll spend less and save more.

A Proven Formula to Skyrocket Your Savings

Having proven systems in place to help you save more is important, but they’re not the best way to save money.

You can search for dozens of ways to save money, but there’ll always be a limit. Instead of spending the majority of your effort saving, look for ways to increase your income. The truth is that once you have the right systems in place, saving is easy.

What’s challenging is earning more money. There are many routes you can take to achieve this. For example, you can work long and hard at your current job to earn a raise. But there’s one problem–you’re depending on someone else to give you a raise.

Your company will have to have the budget, and you’ll have to know how to toot your own horn to get this raise. This isn’t to say that earning a raise is impossible, but things are better when you’re in control right? That’s why building a side-hustle is the best way to increase your income.

Think of your side-hustle as a part-time job doing something you enjoy. You can sell items on eBay for a profit, or design websites for small businesses. Building a side-hustle will be on the hardest things you’ll do, be too stubborn to quit.

During the early stages, you won’t be making money and that’s okay. Since you already have a source of income, you won’t be dependent on your side-hustle to pay for your expenses. Depending on how much time you invest in your side-hustle, it can one day replace your current income.

Whatever route you take, focus more on earning and save as much as possible. You have more control than you give yourself credit for.

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Transform Yourself into a Saving Money Machine

Saving money isn’t complicated but it’s one of the hardest things you’ll do.

By learning from your mistakes and rewarding yourself after saving you’ll save more. What would you do with an extra $200 or $500 each month? To some, this is life-changing money that can improve the quality of their lives.

The truth is saving money is an art. Save too much and you’ll quit, but save too little and you’ll pay for the consequences in the future. Saving money takes effort and having the right systems in place.

Imagine if you’d started saving an extra $100 this next month? Or, saved $20K in one year? Although it’s hard to imagine, this can be your reality if you follow the principles covered in this guide.

Take a moment to brainstorm which goals you’d be able to reach if you had extra money each month. Use these goals as motivation to help you stay on track on your journey to saving more. If I was able to save thousands of dollars with little guidance, imagine what you’ll be able to do.

What are you waiting for? Go and start saving money, the sky is your limit.

Featured photo credit: rawpixel via unsplash.com

Reference

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