Archive for the ‘tips’ Category

File your taxes with your iPhone?

January 29, 2010

I hadn’t heard about this — Intuit has released an iPhone app (awkwardly) named TurboTax SnapTax that lets you take a picture of your W-2 and file your taxes right from your phone, if you would file with a 1040EZ. Impressive.

SnapTaxThis app isn’t going to work if you have dependents (as one reviewer notes) or if you have anything but the simplest tax filing to do. I also can’t imagine you’re getting optimal tax advice for all situations from such a simple process. But, whatever! If you have a simple tax situation and especially if you might otherwise file late, you’re better off getting your taxes done as easily as possible.

USAA‘s iPhone app has a similar function to deposit checks with the iPhone camera, and I use it all the time. Such a great convenience over having to hook up the scanner. Compared with going to an accountant, SnapTax would probably be even more convenient.

I haven’t tried the app (my tax situation isn’t simple enough for it), but speaking as a direct competitor of Intuit, I’m impressed with this idea and would love to hear feedback from people who have tried it.

A coffee pot is not an "investment"

May 22, 2009

Last week, I wrote a post called “Focus on needs, not products,” that talked about a way to save money by thinking differently: focus on what you need your money to do, not a specific product that you want to buy. If you think about your needs rather than products, you can evaluate a broader set of choices and wind up saving a ton. I gave an example of buying a charcoal grill instead of a gas grill I’d been lusting after, and how I saved 90% of the cost by caring more about grilling than a particular type of grill.

I saw something on Boing Boing Gadgets today (a blog I read and generally like) that made me think about this again. All of the “gadget” or “new toy” blogs are incredibly dangerous if you’re trying to save money, since they’re designed to talk about how this cool new product is just so completely, amazingly cool that you simply must have one right now — now usually being right as it is released, when it is more expensive than it will ever be again. (Joel Johnson’s rant on this topic (warning: eyeball-searing levels of profanity herein) is well worth reading.)

The Boing Boing Gadgets post was about a cool French press you could buy. Here’s what they had to say:

MontanoFor our special theme day on coffee, I decided to review the Bonjour Montano French press — not because it’s new (it came out in 2007), but because it was by far the coolest looking commercially sold French press out there. I was digging the brushed stainless steel leaning-tower-of-Pisa look. It makes eight cups of coffee, which was perfect for when I had a pancake birthday party for my dog Malcolm last weekend. At $70, it’s on the high end of the French press market, but think of it as an investment into the overall coolness factor of your kitchen appliance collection.

I use a French press every morning, and love it, so this one definitely hit too close to home for me. Ooooh, a cool new French press. I’ve had mine since college…..maybe a new one? But fortunately my resistance to thinking like that is pretty high these days. Let’s think about this for a second:

  1. I already own a French press. I’ve had it for over 15 years now and it still works great. Unless I break the glass carafe, it could easily last for decades more. What problem would I solve by buying another one?
  2. This one has a cool shape. Um….why do I need to spend money on a cool shape?
  3. The post suggests that you think about it as “an investment into the overall coolness factor of your kitchen appliance collection.” What would be my expected return on that “investment”?

Yeah, I don’t need to buy this, I thought (quickly). The “need” — morning coffee — is already met by something I own. Save the money for something I need and don’t have.

Maybe you don’t already have a French press, and want one. Should you buy this one? Perhaps, if you have people over for breakfast and coffee all the time, and want to impress them with your sense of style. Or, say, if you film a cooking show in your kitchen. 🙂 But otherwise, you should focus on your desire for a morning coffee, and not “the brushed stainless steel leaning-tower-of-Pisa look” that makes this pot “by far the coolest looking commercially sold French press out there.” Cool looks, brushed steel, and resembling Italian architecture will not help make better coffee for you in the morning.

I went to Amazon and looked for the cheapest, new French press I could find. It turns out you can buy a 3-cup French press from the same manufacturer as our leaning-tower-of-overpriced-coffee option for a mere $12.90 — a $57.05 savings. It’s like an 82%-off sale you can make happen just by thinking about it! Somehow I’m willing to bet that the coffee you get from either model is exactly the same. Let’s paint a picture of the savings:

French press choices
(Coffee cup pictures from Refracted Moments™ and Teo. Used under Creative Commons license.)

So, yeah. While I love the boingers, I hate having fallen into this temptation even for a second, and despise being told that a coffee pot is somehow an “investment.” An investment should make you money. The best way to have money you can actually invest, or save, or use for something you really need, is not to spend it. Removing temptations to spend — unsubscribing, for instance, from blogs that are all about cool new products you can buy — and focusing on your needs instead, is the best way to do that.

Focus on needs, not products

May 11, 2009

One mistake I see people make a lot is to think of their money as a way to get particular products or services they want. I want to buy this particular television because it has the cool new feature thingy and I just can’t live without it. A very common mistake — one I make all too often myself.

Why is this a mistake? Isn’t it great to have a particular goal and to work towards it?

It certainly is great to have a particular goal, and sometimes focusing on that goal with a specific picture or product in your mind can help get you there. For instance, (Wesabe advisor) J.D. Roth has a great story about saving for a Mini Cooper that shows how this can work — in his case, spectacularly. The very first big purchase I made as a kid (a Vectrex game machine, for the record) worked the same way for me — keeping that thing in mind kept me saving.

But in many other cases, fixating on a particular product can bring out all of your worst financial habits. This is, in fact, exactly what marketing and product catalogs and television ads and promotions are all designed to do: to get you to want to spend more because you believe it will bring you something special. I was flipping through the Design Within Reach catalog today and saw a pair of water hose spray nozzles for $70.00. Wow, I thought, “Within Reach” of whom? Why would I ever need to spend $70.00 on spray nozzles, no matter how well-designed? The catalog told a story about elegance and efficiency and clean design, and by absorbing that story, one might be tempted to spend $70.00 on a product that sells for $5.00 at the local hardware store. (For the record, I was not tempted — in this case, at least.)

Some of your needs or wants will always have a newer, better-seeming product available. Shaving products are hilarious this way: since shaving is a pain and many people hate it, every year a new product comes out with more and more blades or lubricants or whatever else they can think to add. (Check out How Many Razor Blades Do I Really Need? for exhaustive research on this topic.) Each one costs more, and maybe each is a little better than the last. Should you just upgrade every year, and spend more and more and more shaving as time goes by?

A great way to budget is to flip around your way of thinking. If you fixate on a product, the only financial question is how to get the best price for that product. If you fixate on the need, instead, you can ask, what are the range of products available to meet this need? Would a low-end or mid-range purchase meet my needs in this case? If so, great! You just saved money, probably a lot more than you could save by shopping for the best price on a high-end purchase.

I saved a ton of money with this way of thinking when I went to buy a grill for our back yard. I started out fixating on a high-end Weber gas grill I had seen at a friend’s house — available on Amazon for a mere $700.00 (gas not included). Think how quickly I could be grilling! How much space I would have to grill! Maybe I could find a really good used one for $500.00, if I spent a bunch of time and got lucky. But then I stepped back and thought, what do I really need, here? I want to be able to cook over an open fire in the back yard. Do I really need that much space, or that much speed? I wound up buying the classic Weber “One-Touch” charcoal grill for $70.00 — a 90% savings. (Given how durable they are, I probably could have gotten one on Craig’s List for nearly nothing.) It’s perfectly good enough for my needs — any time I want to grill, an extra half hour heating the grill while I prep the ingredients is no big deal.

Buying a high-end product can be fun and can be rewarding and a motivational goal. Sometimes it can be worth it. Just don’t tell yourself it’s anything else, and try to make lust for a particular product be the exception, not the rule. If you focus on the needs you want to fulfill with your money, you’ll find you have a much wider range of choices, and much greater opportunities to save.

Free preview of Wesabe advisor Ramit Sethi’s new book!

March 10, 2009

screenshot_6.png“This isn’t your grandma’s house and I’m not going to bake cookies and coddle you.  A lot of your financial problems are caused by one person: you.  Instead of blaming the economy and “corporate America” for your financial situation, you need to focus on what you can change yourself.”          — Ramit Sethi

Ramit fans, rejoice!  The straight-talking creator of the I Will Teach You To Be Rich blog has authored a soon-to-be released book, also titled I Will Teach You To Be Rich.

And because Ramit is a Wesabe advisor, we scored an absolutely free and absolutely awesome perk for our members – an advance peek at his book, including the first three full chapters in PDF format.  Just click here and enter your email address.  We’ll send a link to the first chapter this Thursday and the next two over the next couple weeks.  NOTE: This is, as the folks on TV like to say, a limited time offer – you need to sign up by 7 p.m. Pacific time tomorrow (Wednesday, March 11) to get the chapters.

While the book targets 20-to-35-year-olds, it has practical, get-off-your-butt advice for people of any age.  It includes a six-week program showing how to optimize your credit cards, eliminate late/overdraft fees, spend consciously and invest sensibly.  Read this book, and you will save money.

I Will Teach You To Be Rich will be available starting March 29 at Amazon.com.  Congratulations, Ramit, and thanks so much giving our members an advance look.

New Feature: Cutback Tool Helps You Save On Recurring Monthly Expenses (Or How I Caught WaMu Skimming My Savings)

January 14, 2009

Looking for a quick, sustainable way to make a positive impact on your bottom line? A great place to begin is by examining your recurring monthly expenses – those automatically billed, month-in, month-out charges. We’ve launched a new feature called the Wesabe Cutback Tool designed to help you see and save on these memberships, subscriptions and fees.

The Cutback Tool looks for trends in your monthly spending, and flags recurring items on your account transaction page. Next, you’re asked if you’d like to cut back on these items, and are shown the resulting annual savings. If you choose to cut an expense, we’ll show you how long you have to cancel the service before you get charged again, and provide cancellation reminders.

You can track your progress on the Wesabe Cutback page, found on the left side of your Accounts page. The Cutback Summary page keeps track of suggested cutbacks, current cutbacks (those you said you want to axe), as well as any recurring monthly expenses you chose to keep.

In addition to helping find services you can cut out (dang, I haven’t been to the gym in three months) or cut back (do I really need 768 cable channels?), the Cutback Tool is also great at identifying ongoing fees or charges you may not even be aware you’re paying. Several beta testers reported charges of $14.95 for freecreditreport.com, a credit monitoring service they understandably thought was actually free (let’s see…wouldn’t $15amonthcreditreport.com be a more honest name?).

I took a look at my recurring expenses a few months ago (pre-Cutback Tool) and decided to cut Netflix (to avoid the wrath of the red envelope loyalists, let me clarify… I think this is a great service if you are watching movies, which I wasn’t doing). When it came time for me to try out Cutback, I figured it would flag my monthly Doctors Without Borders donation, which it did and I want to keep, as well as this darn $3.95-a-month Earthlink account that I need to cancel. But wait… my Cutback summary said I had a recurring $5 charge to Washington Mutual. Huh? Before firing off a “found a bug” email to Cutback engineer Brad, I checked out the expense.
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Sure enough, WaMu has been dinging my savings account for the last six months. I had transferred money out of the account during the summer and haven’t touched the account since, so I wasn’t checking my statement. Ends up my account balance of $295 was below the “account minimum” of $300 (which I didn’t know about), so every month, I’ve been paying a fee. I know I should be more of a fine-print reader, but since I’m not, I’m sure glad the Cutback Tool caught this for me.

Five Ways To Make Any Financial Resolution A Success (Guest Post From J.D. Roth)

January 8, 2009

This guest post is from one of Wesabe’s new Advisory Board members, J.D. Roth, who writes about smart personal finance at Get Rich Slowly.

With the holidays over, most of us turn our thoughts to the coming year. We begin to make resolutions to improve our lives. Many of our goals are financial: get out of debt, open a retirement account, save for a trip to Europe.

Although we each have different aims, the methods for reaching these goals are largely the same. To achieve financial success, you need to exercise good financial habits, and to make the most of the tools available to you. Listed below are five of the most effective ways to make any financial resolution a success.

Track your spending
By tracking your spending, you demystify money – you begin to perceive it as a tool. You gain a sense of power. You no longer feel that money controls you, but that you control money. Logging your expenses paints a picture of your spending habits as they actually exist, not as you think they exist. Using this information, you can alter your habits. This is an essential money skill, and it’s easy, especially with Wesabe.

Optimize your accounts
For eighteen years, I was an account holder at a large national bank. I paid an $8 “service charge” every month, as well as many other fees. I received terrible service and earned no interest. Over the last couple of years, I’ve finally begun to optimize my accounts. If you haven’t already done so, consider the following:

  • An online high-yield savings account. Even in this era of low interest rates, it’s still possible to earn about 3% on your savings. Internet favorite ING Direct currently offers a 2.75% APY and HSBC Direct offers a 3.00% APY. (I opened an account with ING Direct last year and love it!)
  • A rewards checking account. Believe it or not, it’s possible to find checking accounts that pay interest. Online checking accounts generally pay between 1% and 3%, depending on your balance. But you can usually find an even better deal through your local bank or credit union. Check out this huge list of rewards checking accounts by state for rates as high as 6%! (Those marked with a red asterisk are available nationwide.)
  • A rewards credit card. If you know you have trouble with credit, it’s best to avoid plastic altogether. But if you’re able to use credit responsibly, make sure your credit card is paying you. Avoid cards that carry an annual fee. Find a rewards program that matches your lifestyle. But don’t choose a card just because it offers a signup bonus or because it gives you a discount at your favorite store. Read the terms and conditions. Understand the card’s limitations. Remember: your goal is to pick a tool, like a vacuum cleaner. You’re not looking for a one-time bonus, but a long-term relationship you can live with.

When optimizing your accounts, it’s important to choose systems that work for you. I signed up for a rewards checking account at a local credit union, but the nearest branch is five minutes out of my way. I never use it. I had to compromise by opening on online checking account instead. I earn a lower rate, but it’s an account I’ll actually use.

Fund your retirement

The current economy gives a lot of people the jitters. But if history is any indication, now is a great time to be buying stocks for your retirement. Take advantage of any employer-matched opportunities, such as a 401(k). Also consider starting a Roth IRA.

Don’t know where to begin? Many experts recommend index funds – mutual funds that track a stock market index. For more ideas, check out Wesabe’s simple investing group.

Educate yourself
Nobody cares more about your money than you do. One of the best ways to take control of your personal finances is to embark on a program of self-education. Pick some of the best books about money, and borrow one at a time from your public library.

Want to learn more about investing? Try The Four Pillars of Investing by William Bernstein. Need to get out of debt? Read The Total Money Makeover by Dave Ramsey. Looking for the proper balance between money and meaning? Check out the new edition of the classic Your Money or Your Life by Joe Dominguez and Vicki Robin.

Boost your income
While you can go a long way to meeting your financial goals by reducing your spending and using the right tools, nothing supercharges your progress like a boost in income. If you have the discipline to save your extra earnings, you can get out of debt more quickly, or save to meet your other goals. How can you find more cash?

  • Ask for a raise. Perhaps the most effective long-term strategy for boosting your income is to seek more money at your current job. Over the past few years, I’ve had several readers write to tell me how they’ve given themselves a raise through ambition and ingenuity. Here’s one example.
  • Switch employers. Unfortunately, not every employer is able or willing to offer raises, even when they’re merited. If you’re in a position where a raise isn’t possible, consider finding a new employer. Yes, this can be a hassle. But often the increase in salary makes it worth it.
  • Take a second job. Many people find that the best way to get out of a financial hole is to temporarily take a second job. Nobody wants to work more than 40 hours per week, but sometimes that’s what is needed to get out of debt or to save for a house. Just remind yourself that you’re doing this for a short time. Here are some good ways to earn extra income on the side.
  • Sell things. A few years ago, I was $35,000 in debt. When I finally made the decision to turn things around, one of my first steps was to sell a bunch of the stuff I’d bought with that $35,000. I used eBay, Craigslist, garage sales, and the Amazon Marketplace to sell thousands of dollars in CDs, DVDs, games, and comic books.

Another effective way to increase your income is to pursue entrepreneurship. While working to defeat my debt, I started a small computer consulting business. It didn’t generate a lot of income, but it did provide $2,000 a year that I wouldn’t have had otherwise!

The road to wealth is paved with goals
In 2008, I tried something new. Instead of making resolutions, I set goals. Mere semantics? Perhaps. But I found that when things went wrong, I didn’t give up on my goals as I had abandoned resolutions in the past. I didn’t lose my way – my goals were still there, urging me along.

Experts say that goals should be “SMART” – specific, measurable, achievable, realistic, and timed – but from my experience, what matters most is passion. You have to care about your goal. It has to be important to you. The goals that are most attainable are those that you want more than anything else.

Goals are the fundamental building blocks of success, not just in personal finance, but in every area of life. Without goals, you are living reactively, letting life push you around. With goals, you can live a proactive life, steering toward a destination. When you have an end in mind, it’s easier to see when you’ve made a wrong turn. You know where your path is supposed to lead.

Budgeting is hard. Don't bother!

December 12, 2008

When you hear the word “budget,” does your brain get thrown back into the foggy haze of tenth-grade algebra class, when the clock seemed to slow to a complete stop? Or worse, do you find yourself back at your algebra final, panicking over the red letter ‘F’ you could already see coming on your report card? You’re not alone.

Budgeting — and budgeting software — can be completely overwhelming. You finally decide to get your finances in order, you sit down to learn how, and the next thing you know you’re being asked to give a precise, to-the-penny guess for your lunch spending for each of the next 12 months. Um, $87.45? The joy repeats every month of the year, when you get to “rebalance” your budget to correct for your imprecise guesses. Hang on, let me spend five years becoming a Certified Public Accountant, and then I’ll get right on that.

For some people, a full budget of this kind is exactly the tool they need to keep track of their finances. I’ve met people who can tell me within a dollar how much they have left to spend on food for the month. Tracking every cent gives them a feeling of full control, and spending the time that takes to maintain keeps them focused. But I would estimate less than half of a percent of the people I’ve talked to about money management fall into this “amateur accountant” category. The rest of us need something easier — something that doesn’t require certification to operate.

targets

I’ve long advocated what I refer to as “hot spot budgeting” instead. Choose a couple of areas where you know you have trouble keeping your spending under control. Then focus your attention just on those targets. If you have trouble with a couple of areas, do one at a time instead.

Why does this work? Most of your regular expenses are fixed or non-discretionary — for instance, your rent or mortgage probably don’t vary every month, nor do most of your bills. A few, though, are relatively easy to change, and are big enough in your spending that changing them has a big effect. For me, it’s restaurants — when I eat out a lot, I have a bad month, and when I don’t, I have a good month. Likewise with books. If I keep my spending under control in just those two areas, the rest of my “budget” is painless.

Wesabe has long had a feature called “spending targets” to help you do hot spot budgeting. It has, though, been one of our best-kept secrets. Finding the feature (which was hidden in a drop-down menu on the spending summary page) was nearly impossible, and it was subtle enough in the interface that getting updates and keeping on track was tough.

Today, we changed all that, and made targets a ton easier and a lot more visible. You can now set and view your targets right from your Accounts home page, in a lovely set of graphs designed by our graph wizard, Tim. (These graphs are made completely in Javascript — no Flash plugin required.) You can view your targets in big, clear text; as pie charts; or as bar charts. Go ahead and add a couple and see how easy it is.

Also, when you’re just getting started with targets, seeing a big red mark on your home page when you overspend can be very discouraging. By default, we won’t show you overspending on targets — your graph will just show “$0 left” when you reach the amount you targeted. However, some people like seeing how far off they were in their guesses, so we’ve added a “show overspending” toggle. Click the gauge icon (the one that goes into the red) to enable display of overspending.

I’ll admit that I actually liked algebra, but I’ve never liked budgeting. Spending targets — focusing on just the “hot spots” in my budget — work for me in a way that budgets never did. Give it a try and you’ll see why. And nice work, Tim, in getting this great feature the exposure it deserves!

The "great" customers are the first to go

December 8, 2008

A few weeks ago, a number of newspapers reported that consumers were receiving letters from their credit card providers, cutting their credit limits — and some reports suggest that as much as $2 trillion more may be cut in the next year and a half. Wesabe employee Debbie posted a Wesabe Groups thread about the topic, asking if anyone had had their own limit cut — and so far, that thread has 50 comments from Wesabeans about getting notices like these.

Reading everyone’s comments, I noticed a pattern…

“American Express cut the credit limit for a small business from $25K to about $2K. And the guy’s credit record was perfect…”

“it was only my banana republic card, but they cut my limit by half, and i have a very good payment history with them…”

“I just got an email from AMEX saying they’ve cut my limit by about $10,000 on my amex blue card…I have had a perfect history with them and been a loyal customer for years…”

“My GE Money Bank (Banana Republic/GAP) was cut from $1500 to $300! The account was in great standing…”

“They also cut my limit also by $15,000. I have been with them for over 10 years, paid over the minimum and on time and have never been over the limit…”

“My Sears card limit was lowered from approx $5,000 to $3,000. I have had the account open for 5+ years, never missed a payment, and never been late.”

It goes on like that. Do you see what I see?

One person after another reports that they are a “great” customer, that they pay over the minimum or pay off their full bill every month, that they’re never late, and that they’ve had the card for years — and still, their limit was cut. Why would they cut my limit when I’m such a “great” customer?

Well, that’s just it. If you pay off your bill and never carry a balance, you’re not a “great” customer to a credit card company. In fact, they refer to you as a “deadbeat.” If you’re never late, or never go over your limit, you’re never paying late or overlimit fees. If you don’t use your card, you’re not incurring interest charges. You’re the worst kind of customer: an unprofitable customer.

Credit card companies make up to one-third of their revenue from fees (known as “fee revenue.”) The best customers for credit card issuers are those that max out their limit, pay the minimum every month, go over limit from time to time (incurring more fees), and best of all, pay late (more fees) but do pay eventually. (A customer who goes bankrupt is less profitable.) They call such customers “revolvers,” and revolvers — those with perpetual, high balances — are where the money is. (For more on this, see the excellent Frontline/New York Times series, “Secret History of the Credit Card” — which was one of the inspirations for me to start Wesabe.)

So, whose credit limits are being cut, now that the economy is turning down? The limits of the deadbeats, the unprofitable customers. Debbie’s post doesn’t have a single response from a “revolver” about their limit being cut, and no wonder. The credit card companies need all the profit they can get.

And don’t we all. A limit cut may feel punitive, especially if you were counting on your credit cards as emergency resources. Think of it instead as a blessing in disguise — the profit they’re missing is money you’re keeping in your pocket. Being a “deadbeat” credit card customer is a great accomplishment — savor it, and frame that letter from your credit card company.

7 Tips To A Successful No Spend Month… from the experts

December 8, 2008

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Those who joined Novembers ‘No Spend Month’ not only reported plumper bank accounts but a deeper understanding between ‘wants’ and ‘needs’ and radically better spending habits. They also found themselves with a chunk of free time which they put towards more meaningful activities, like developing much loved hobbies and spending quality time with friends and family.

Here are 7 tips and tricks for a successful No Spend Month, from those who have done it before. A special thanks to GirlNextDoor and CymbidiumKelly for their interviews, where all of the following content came from. For more great advice, check out their new blogs, Girl Next Door Finance and The Centsible Life.

1.    Examine your spending habits for the past few months. Weed out all your non-essential expenditures and entertainment costs, such as movies, eating out and shopping. Settle on figure that covers all of your essential costs for the month.
Creator of the No Spend Month, Kelly, advises that after you come up with a figure, “scale it up by 25%… this is more manageable without being too constrictive.”

2.    Analyze your motives for ‘non-essential’ purchases. Think about why you swing by Peets everyday at 3 p.m., swift through the Sale rack at Old Navy or head to the movies. Since these are the purchases you’ll be cutting, it’s helpful to identify why you make them (you’re tired, you want to find a great deal, you want to get out of the house).

3.    Begin developing counter-habits. This way you’re prepared to battle impulse habits. Get a can of Maxwell’s for the office kitchen, plan to work on a new hobby each time your hit with the shopping bug, and have a stack of library books (or movies from the library) waiting each time a “night out at the movies” occurs to you.

4.    Choose a realistic time period to launch your No Spend Month. If you know the next month is filled unusual activities (or lots of extra spending), like out-of-town guests or a whirl of birthdays, start it next month. Then again, if you’re feeling tough, a month like December may be the ideal time to buck up on your discipline.

5.    Use a money management tool, like Wesabe or PearBudget, to track your spending. Set up budgets in each of your spending categories and check in daily to stay on top of your spending.

6.    Figure out the things you enjoy and how you can do them for free. Love buying books, stock up at your local library. Love to eat out? Invite friends over for a Potluck.

7.    Focus less on changing numbers and more on changing habits. GirlNextdoor wrote that she found this more beneficial than constantly working to keep spending to a bare minimum. She wrote:

“Instead of just trying not to spend money, evaluate what you want to spend money on and its relative importance to you. Focus on why you want to spend money on an item, rather than its cost…”

Instead of fixating on “but it’s only $3.50” or “but it’s 70% off! I will never get a deal like this again!” think about why you really want the item, what value will it add to your life, and evaluate if you really need it. One of the most powerful lessons reported by those who completed their own No Spend Month was a much deeper understanding of their “wants” and “needs”, and how easy it is to mix them up. Proactively thinking about this will help ingrain better spending habits for the future.

8.   Find a support network to check in with and post your progress. CymbidiumKelly shared that she started her No Spend Month in the Wesabe Community because she knew it would keep her honest with herself about her family’s spending. She shared that “It was great to know I could go to Wesabe when I was feeling frustrated or discouraged about financial matters. I always felt that everyone participating in the discussion was really supportive and encouraging. It kept me motivated when I would have otherwise wanted to give up.”

Wesabe's First No Spend Month Pulls Smashing Finish!

December 5, 2008

December has arrived and Wesabe’s first “No Spend Month” has finished with a bang.  As we told you earlier this week, the brains behind the Month, CymbidiumKelly, was featured in USA Today and on the Today Show and CNBC to talk about how her family is shaping up their finances.

Kelly launched her “No Spend Month” last month in Wesabe Groups as a way to get a hold on her family’s spending and pay off debt. She was inspired to start her project because she’d “have the support of other Wesabeans. I knew it would keep me honest.” She felt that tracking her spending in the Wesabe community was great way to hold herself accountable.

Within a day of Kelly’s first post, a flood of other Wesabeans followed suit, discussing ways to cut their spending to bare necessities.  They also began posting their progress in the “No Spend Month” discussion. Between the faltering economy and upcoming holiday season, many agreed that November was an ideal thirty-day stretch to buck up on discipline and get serious about curbing spending.

Member Ilovetea decided to join after seeing her 401(k) value plummet 48% and Wesabean AmilcarKabral began his month after losing his job. He wrote that though the month of November was already going to be tight, not spending “is more fun when you do it intentionally and not as a reaction.”

Member Maribeth said,“I think this is a great idea…however, I am frightened at the idea of holding myself accountable. I’m going to start on Sunday, November 26. I think eating/drinking out will be my main challenge. I’m sure most of you can relate. Football Sundays at the bar are a fall tradition. However, when I think of which goals I can accomplish within this month (saving $500 for an emergency fund, saving for a down payment on a house, cash for Christmas presents), I think it will be extremely rewarding in the end. This is one of the many great things about Wesabe. I continue to learn and never feel like I am going at it alone.”

Lit added, “We have been trying to drop our debt load by $1,200 a month for the last four months. Have not succeeded yet but this… might help. November 2008 here we go!”. And, QwnofCash wrote, “Wow!! What a great idea! I think it’s a good opportunity for all of us to discipline ourselves and to prepare our families to endure this dark period…”

While many of those who followed the No Spend Month reported plumper bank accounts, their results far exceeded an extra wad of cash. Bullshalo13 wrote that the month helped her “realize how much money I spend on things I don’t need.”

GirlNextDoor shared that the participating in the No Spend Month drastically changed her thought process around spending money: “Instead of asking ‘can I afford this right now?’ (to which the answer was usually ‘yes’ as my wants tend to be relatively inexpensive), I ask myself  ‘Do I really need this? Do I have a use for this? Is this going to add value to my life?’ – the answer is not so clearly ‘yes’ for these questions!”

Though GirlNextDoor has always tracked her money, the No Spend Month helped her curb impulse spending. Instead of tracking where her money was going (after the fact), she’s consciously thinking about where it will be going ahead of time.

Similarly, KristenR1010 reported that she “didn’t realize how much my little snacks have added up. It seems like nothing to run to the corner and get a cup of coffee or a bagel, but I’ve saved so much money this week by not going! As for clothes shopping, it’s been hard to resist the holiday sales that are starting, but I’ve managed not to spend a dime. I’m taking my ‘no-spend zone’ all the way until I have to buy a few (inexpensive) Christmas presents. The best Christmas present for myself will be when I save enough money to pay off the next credit card!”

And after the month, creator Kelly shared that her biggest realization was how much money you can save from all of those little purchases you make without thinking. “I learned that I am fairly dishonest with myself about money, thinking a want is a need or thinking we will make up for (indulgences by saving more) next month,” she said.

Participants also found themselves with a lot more time on their hands. Not spending money means forgoing activities like happy hours, nights at the movie theater, dinners out, and shopping with friends. GirlNextDoor commented, “Since I was actively trying not to spend money, I avoided situations where I would spend money as much as possible- which left me with more time at home. I finally took the leap and started a personal finance blog, which is something I’ve been contemplating for 6 months!”

Desertrat wrote that she and her significant other “both now have library cards, and we’ve taken to going on walks and playing board games, something we’ve also gotten our friends to do.”

Jessie88 shared that she and her fiancée are “curling up with hot coco and a good book or magazine, even a nice movie”. Like Desertrat, Jessie88 and her fiancée started becoming more acquainted with their neighborhood and parks. “Heck, we go swing…and I like to walk barefoot through the sand. It’s free, we also go there to look at the stars,” she said.

All seemed to agree that spending money can be a great distraction from more meaningful activities. Kelly wrote that her family often used to find themselves “going somewhere we can spend money when we need to get out of the house. The biggest thing I learned from the No Spend Month was to stay at home! We have so much to do and that needs to be done there, and, we spend the largest percentage of money on our home, so it makes sense to enjoy it as much as possible. I also realized that if we’re paying for something we should enjoy it! We have Internet access at home, a Wii, DVDs, etc. We were able to entertain ourselves and the kids with what was on hand.”

Interested in starting your own No Spend Month? Tune in Monday to read the tips and tricks of those who have successfully completed it!