By just cutting out those little things here and there, you can make a big difference to your future savings or your past debt. Either way you'll be much better off. Also, by starting now you can help reduce both the time you'll need to pay off your mortgage and the time you have to wait to retire. Sounds good doesn't it and in all honesty, it almost sounds too good to be true.
ECRD - Or "Little Sacrifice" to You and Me
So what's an "ECRD?" I hear you say. Well, it stands for Expensive Coffee-Related Drink. What it means is those habits for which there are easy but cheap substitutes or which you can cut out entirely. You know what I mean, that takeaway coffee you get from the cafe mid-morning. That chocolate bar you buy on the way home from work. That magazine you really just don't need (and contains no redeemable information in it anyway). It turns out for each of these things, you are paying exorbitant amounts of money for something you can conjure up yourself for pennies.
As for the acronym, ECRD, I think it's a terrible phrase so instead I shall call these new habits "Little Sacrifices". Why? Because it fully describes what you're doing, rather than what they are. It also keeps them in perspective a bit more in your head; they are both a sacrifice but in reality they are only little.
My 10 Little Sacrifices
This is a copy of my list which I drew up a couple of weeks ago. It might be a good starting point for yours:
- Takeaway Coffees: at $4 or $5 a time, these babies can add up to something over $1,000 a year
- Fast/Takeaway Food: at $6-12 a pop the cumulative amount adds up real soon
- Magazines/Newspapers: which you can probably read on-line anyway
- Chocolate Treats: already expensive at $1.50-$2.00 a go, a snack each workday afternoon adds up to over $400 a year
- Breakfast on the Go: buying on the go eats into your paycheck
And possibly some more controversial ones:
- Going to the Cinema: adds up over time, especially with added snacks
- CDs/DVDs: think about renting rather than buying
- Books: these too can be gotten at the library
- Satellite/Cable TV: think about how many channels you actually watch and then how many you actually need
- The Car: I'm not (yet) saying do without but consider walking or riding for those little journeys
All For the Win
I'm sure you don't agree with my list above, after all it is quite specific to my circumstances but this is what I recently came up with to stop me spending all those extra dollars every day.
My typical day used to go something like this...
Get up late and grab breakfast on the way into work ($3). Takeaway coffee mid-morning ($4.50). Eat out lunch ($8-15). Chocolate in the afternoon ($1.60). Supermarket or take-out for evening meal ($5-$15). That's about $30 spent, every single day, excluding anything else. How does $7,500 a year sound?
And add in the odd purchase of a DVD, CD or book on the way home, watching a film on TV in the evening and maybe a beer or two at night (oh right, I didn't mention alcohol!) and it all adds up.
Zero Dollar Days
The best thing about all of these Little Sacrifices is that none of them are too big to say that you can't do them. Since I started my plan to Retire at 40 I have gone without (or substituted) a number of these things for other, cheaper options.
I always eat a healthy and filling breakfast at home. I have Milo or coffee in the office mid-morning. I've been walking home to have lunch (double benefit of exercise too), no afternoon snack and instead of paying lots for cable, I have joined an all you can eat DVD service to get films sent to my house. I've also been making healthier - and cheaper - evening meals.
This leads me on to my next plan, which is to have more Zero Dollar Days. So far, I have had three of them and the first time I had one I couldn't believe that I had gone through the entire day without spending any money whatsoever. It didn't feel real. Now that I've had three, I want more. It feels a lot more real now.
Your List
My challenge to you is to go and make your own list of Little Sacrifices and see how many you can stick to over the next two weeks. You'll probably realise as I have, how much you've already saved in just two weeks. It shall be my two week anniversary tomorrow and already I can see a healthier me and a healthier bank balance.
Let us know some of those "Little Sacrifices" you have also made in your life.
6 comments:
Totally agree
* I havent bought a coffee at work for years. I limit myself to two cafinated beverages per day which consists of instant coffee at work.
* Takeway food for lunch is one I have recently cut down on. I have a $25/pw budget for lunches but have had a few $0 weeks the last 2 months.
* dont buy magazines/newspapers ... plenty of stuff to read online and they have magazines at the library.
* rarely buy snacks/drinks.
* eat cereal at home daily
* havent been to the cinema or rented a dvd this year, don't watch much tv, don't have satellite/cable tv ... cough bittorrent cough
* lots of good books at the library
* still have the car but only use it once a week (was once a month before house hunting started).
I could add clothes shopping, approximately half of my clothes come from a second hand store and the rest from kathmandu sales/factory shops and the like.
next up, slashing the phone bill and selling old junk I never use on trademe.
yes, small savings take you long way towards your final goal. but there is a thin line between frugality and saving money. That line should not be crossed.
TD
http://inquisitiveaboutfinance.blogspot.com
You sound like a really smart guy. I'm trying to emulate a lot of the same habits.
Regarding books/magazines/newspapers, I think a lot of people really get down on them because it represents things we want to get to, but never do.
What I've done is take a hard look at what I actually read, use regularly and what I don't.
What I found was that while I used to get Newsweek and other general interest magazines, most of them didn't end up getting read, because I'd read my newspaper everyday and then listen to NPR for the specialty coverage that Newsweek et al provides.
What I did end up doing was cutting my newspaper down to 4 days a week from 7 (if I could only have 2 I would do that), cutting out all my general interest magazines but keeping my specialty craft magazines, since I look at them and use them regularly (craft magazines are almost like books in how much information they have in them!), and only buy craft books and the series I read. No more bargain books for me!
In total with my husband doing the same, we have shaved $50 a month off of our budget, with no noticeable difference in our quality of life in terms of reading entertainment. I'd much rather have that then super TV or something!
In terms of coffee, I've simply found it easier to make my own coffee like drinks by taking the office coffee, adding soy milk (like my previous latte habit) and a bit of Splenda to it, and it tastes exactly like the one from the shop. If you know how to make the basic drinks they construct, you can make them yourself much cheaper.
We still have satellite (cheaper than cable), but my husband and I make good use of it since a lot of the content we watch can't be found elsewhere online or offline. I'd rather be paying for the satellite and taping it ourselves than paying $50-60 for DVD sets which don't get watched nearly as often!
Good luck on your quest. I think I'm going to be checking your blog regularly!
@Don: thanks for the tips. You do realise however that a lot of my new habits are learnt from you :-) Hopefully other readers also get the benefit from them.
@tapan: yes, you do have to be careful not to cut all the interesting things out of your life, but I did mention that a lot of these things can be 'replaced' with something cheaper. In the end, you get the same stuff, but for less money :-)
@Concetta Phillipps: thanks! Remember to subscribe to the RSS Feed to keep on reading. Thanks for your info. You're right in that a lot of the things we do to save cash, don't actually affect us in the long run. No loss whatsoever. And thanks for the tips about the coffee.
First, great post! This really makes you think of the smaller things that make the difference to blowing your budget.
A couple of months ago, my boyfriend and I decided to start making dinner together most nights of the week. He wanted to learn how to cook, and I wanted to save money.
That lead into me being able to bring lunch with me everyday from home, and not have to eat out. I also bring fruit with me for breakfast to the office, have coffee at home in the morning, and have something to look forward to after work.
In addition to saving a LOT of cash by making our meals, I get quality time with him everyday.
It takes time to build new habits and expectations around daily spending.
At this point (2 yrs effort) about 5 out of 7 days are "no spend days" for me. There's no occasion for me to spend cash when I a) ride my bike to work (free parking) or park my car on a free side street and (b) almost always bring my own food for the day, including snacks and shop at the supermarket no more than once a week if I plan right.
Good luck and lots of encouragement to everyone who is working to develop these more frugal money and life habits.
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