In my last blog post I mentioned my belief that most of us can find $50 a month for saving, paying off debt or investing depending on what your current goals are.
But how do I save fifty dollars when I can’t even pay my electric bill? Or my car insurance? Or rent?
The problem is that most of us never even try. Better yet, try is all we ever do. Trying tends to let us agree without any sort of commitment. Taking action gets us to the finish line.
It might help to think of Finding $50 as a game. (Tweet this)
Since we are thinking in terms of a game, it is helpful to think in terms of levels to beat. For our purposes, I think the 7 Baby Steps used in Ramsey Solutions’s Financial Peace University will do the trick.
The 7 Baby Steps of Financial Peace University
- Save $1,000 as a starter Emergency Fund
- Pay off all non-mortgage debt using the Debt Snowball
- Build up you Emergency Fund to cover 3-6 months expenses
- Start investing 15% of your income for retirement using tax deferred programs
- Save for college
- Pay of your mortgage
- Build wealth and have fun giving some away
The following are areas you might be able to find savings, and if you end up finding $50 in one of these categories alone, keep going! You’re on your way to winning the game!
If your rent is more than 1/4 of your monthly income, and your income is not likely to increase much in the next year or so, you might consider moving to a smaller or less desirable place for a time. Or find a responsible roommate who can share the costs.
This can be the best way to find $50 or more, but it usually takes time to accomplish as housing either has a lease that needs to be ended, or if you own a place you have to deal with the time and effort of selling.
If you own your home but can’t make your mortgage payment each month, you may want to look seriously at selling your property sooner than later. Falling behind on your mortgage can lead to foreclosure and losing everything you put into it.
Almost anyone who currently has cable can find $50 a month or more just cancelling their cable. You can stream Netflix for $12 a month and hit your local library for books and DVDs that won’t cost you anything.
Side benefit: No cable means no commercials telling you to buy unnecessary things every 10-15 minutes. Believe me, get rid of cable for a year and see how much the urge to buy stuff subsides.
If you have a smartphone consider switching to a prepaid tracphone to control your phone expenses. If you have a mobile phone and a home phone, consider getting rid of your home phone. This is usually a $40 a month bill just to have it turned on with no long distance or caller ID.
Many times you can save simply by shopping for a new service provider or reevaluating your plan needs – some of you may be paying for way more than you ever use.
If you can’t pay electric, your internet is going to be useless when your electric is shut off, so lose the Internet for a while and pay the electric and use the wifi available at your library, local coffee shop, or other location. Obviously no internet will mean Netflix won’t work at home, but reading more might actually improve your ability to earn more, as long as you read a few non fiction books.
Given that the internet is relatively inexpensive and is used for education, blogging, online businesses, and on and on, I understand that this may be the item of last resort to cut. It would be very challenging for me to do everything I do without it.
Remember: None of these things are bad things or wrong things, just areas where we might be able to save a bit extra just by paying attention.
Sell some stuff
Even the poorest of us probably have more stuff than we need or use regularly. Stuff that has been handed down or that we picked up somewhere because we thought we might use it someday.
Getting rid of stuff is also cathartic in the sense that it lifts off all the weight of responsibility for taking care of these things or the guilt for never having used them as you intended.
When you are out of debt and making more money, you can always go and buy more stuff, although you may not want to at that point. You might find you enjoy having free space and less clutter.
This one is gonna ruffle some feathers. SELL THE CAR.
Car payments are one of the biggest offenders in the battle over our finances. Leasing a car is even worse. The average car payment is somewhere in the $350-450 a month range. That’s ridiculous! What if you didn’t have that car payment every month? That’s a lot more than $50 right there.
Some of you are already driving an old beater car with no car payment and so this option doesn’t help you. However, I would like to congratulate you on resisting the urge to get into a car that is more than you can afford.
Just to be clear, if you have to finance your car, you can’t afford the car. You can afford the monthly payment, but not the car. Sell the car, buy a good used car for a few thousand that will get you through the next year and pay yourself the car payment you were making to the bank for the next 12 months. If your car payment was $350 per month, you would have $4200 after 12 months that you could use to fix the car, buy a slightly nicer car or pay off some other debt.
If you have a car payment you will never convince me that you can’t find $50 a month. You’re driving it and throwing and extra $50 out the window at the same time (cars depreciate in value rapidly after the first year, so it’s almost like throwing the cash out the window as you drive).
Groceries and eating out
Again this is an area where people spend way more than they realize, and often pay more than they should for many items. Track all your food and grocery related spending for the next month and total it up. Take that amount, subtract $50 and put the rest into a cash envelope for food and groceries. Then use that envelope for any food or grocery purchases. Once it is gone it’s gone, so spend wisely.
Bulk shopping is also an area to save, but not in the way you might think. Bulk shopping is unnecessary for most of us for most things and ends up with us wasting a lot, especially with food. Buy what you need for the week and plan your meals ahead. At most take advantage of two for one specials for the items you use or consume the most.
Avoid the temptation to hit the drive through; 5 trips to McDonalds or Burger King for one person can easily approach $50. If you are a coffee drinker, and you tend to get your fix from Dunkin’ Donuts or Starbucks a couple times per week, start bringing your coffee from home and save around $25-30 per month.
Vacation and Travel
This is a tough one, but if you can’t pay your bills, you probably can’t afford to go on vacation. I’m not suggesting you don’t deserve a few days off, but try staying home and taking some day trips to local parks or museums instead of flying 6 hours away to some resort. You can always do that later when you have saved up and can pay for it in cash. Otherwise your vacation will follow you home and haunt you in your credit card statements for years.
Get a Second (or Third) Part-time Job
First, this is not suggested as a permanent fix, but a temporary solution to help you get to the next level. Part-time jobs offer more flexibility than full-time jobs, and if you work hard and are dependable to show up when scheduled, you will find many employers willing to work with you on this.
While this might be really exhausting for a time, the side benefit is that you are not only earning extra money, you are gaining new experiences and making new connections that will help you advance in your job searches in the future. The idea here is to eventually find a single job that pays close to what your 2-3 jobs are paying now.
I hope this has been a helpful approach. The main thing is to try. If you don’t find $50 this month, don’t quit. Do it again next month. Just keep doing it. And if you have suggestions or comments on any of this, I would love to see your comments below.