30 Days Without Spending: Are You Up to the Challenge?


Wallet locked upEvery year, the top New Year's resolutions are to lose weight, pay down debt, and save more money. While gym floors are packed in January and plenty of people start a diet, getting a handle on your finances can be overwhelming.

But as with any regimen, the key to trimming your spending is to have a plan. So right now, while your resolve is still firm, kick your financial resolutions into high gear right out of the gate with a month-long spending diet.

Keep your card in your wallet
Start your spending detox by setting a tangible goal -- anything from paying off the holiday purchases you charged to scraping together an emergency fund to saving enough money to take an all-cash, paid-in-full vacation.

The rules of the exercise are relatively simple: Commit to spending only what is absolutely necessary. That means no movies, no theater tickets, no coffee shop runs, no gifts, no restaurant meals, and no shoe-buying splurges.

Researchers have found that it takes about 30 days to break a habit, so the idea of the challenge is not simply to generate some extra dollars for that one month, but also to wake you up to the reality of unnecessary spending.

What is "necessary" spending?
Most people have three big spending categories: necessary monthly outlays for things like rent and utilities; work-related spending, such as commuting, takeout lunches, clothing and dry cleaning; and purely recreational spending for social activities and entertainment.

Clearly, it's impossible to cut all spending for an entire month. You still must pay your mortgage or rent, car payments, insurance premiums utility bills, day care and other essentials. But there are big expenses in each of the three spending categories where keeping costs down -- even to zero dollars -- can pay off in spades. Food is a good example. Of course you need to eat. But for one month, can you avoid relying on carry-out or restaurant meals? Start by using up your existing groceries and then being a mindful shopper when you do go to the grocery store.

Get creative with your cost-cutting. For example:

  • Carpool or ride your bike to work instead of driving or taking the bus.
  • Shop your closet for "new" outfits created out of items you haven't worn in a while.
  • Borrow books and movies from the library instead of buying or renting them.
  • Organize a potluck recipe-sharing evening instead of going out with your friends.
  • Give a homemade gift or offer your services instead of buying a present.
  • Check for free activities in your community.

One easy way to track your spending is to sign up with a free service such as Mint.com. You can also use financial software programs, mobile phone apps, or pencil and paper -- whatever works for you.

For extra credit, keep track of what you don't spend (like that that $2 on coffee or $20 on a pizza delivery) so you can direct specific dollar amounts toward your goal.The key is to know where your money goes and to categorize it.

Finding your motivation
For most people, New Year's resolutions are quickly broken. But you may just find that keeping track of the money that's going toward a financial goal is motivation enough to stick with the spending diet for more than just 30 days.

If you need more incentive, plan your own "prizes" for reaching certain milestones. Perhaps after one week of eating only home-cooked meals you can treat your family to a pizza night; just be sure that the cost of the reward doesn't wipe out any progress you've made.

For those who are are motivated by monetary rewards, SaveUp.com, an organization that promotes saving money by offering prizes, has its own "SaveUp No Spend Challenge" that offers a prize-linked savings plan that operates under sweepstakes laws in all 50 states and the District of Columbia. Register one or more credit cards, and every day that you do not use plastic gets you one entry toward $10,000 in cash prizes.

Throughout the year, you can win prizes such as a weekly gift card drawing, vacations, cars, and a $2 million jackpot from SaveUp by making deposits in your regular registered savings account, checking account, investment account, or retirement account and by making payments on your credit card debt, car loans, mortgage, or student loans.

Will you take the no-spend challenge? Whether you choose to register with SaveUp or are motivated by the need to revamp your budget, let us know how you do on the 30-day financial detox diet.

Michele Lerner is a Motley Fool contributing writer.

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Spending fell sharply during the recession. But at least for spending by the rich, it bounced back. Yet due to the pattern of spending, the jobs created per unit spending decreased. When someone decides to purchase a product that is twice as expensive, productivity may have roughly doubled but this does not help with job creation at all, given the signaling utility which is inherent in the purchase decision.

This is well seen with the term "frugality fatigue" that I came across recently. A Bloomberg article on it even alludes to the pattern of increased spending at high and low ends and decreased for the middle. But why would "fatigue" play a role in increased spending? Simple, people think that it is *better for the economy* if they avoid 'wasting' money on frivolous products, even if this type of waste is precisely what leads to job creation in normal times.

A NYTimes article on sales of luxury goods also mentioned this attitude, that people attempt to spend less (or show off less) even if they can afford to do so.

Along with people working more because they think the deficit is proof of a lack of national wealth, this is why models that do not include these misunderstandings did not predict the length of the economic crisis.

January 08 2013 at 3:50 PM Report abuse -1 rate up rate down Reply
Adey Jarvis

Are you seriously suggesting a Carpool is cheaper than taking the bus? Really? You need to look at your figures.

January 08 2013 at 10:04 AM Report abuse rate up rate down Reply

I suggest that fools check their FACTS. The Federal deficits have SHRUNK every year since Obama was elected.
For 2012 it was DOWN by over $200 billion dollars compared to 2011 and was $1.1 trillion.Yet when Bush was in office from 2001 to Jan 2009 the deficits went up by 15% each year, now they are at least going down under Obama. The deficits are not caused by extra or new spending___we have deficits because LESS people are working and less people are paying taxes now. Spending has not gone up+++instead tax income has gone down.

January 08 2013 at 6:59 AM Report abuse -1 rate up rate down Reply

Reality Lesson 101 for Ronald Reagan lovers. He was a great spokesman for the USA and that is all that he was. For those too young to remember or too dumb to remember: During the Reagan years we had a recession with 8% unemployment and we had the 1987 Stock Market Crash that wiped out more wealth of the wealthy, pension funds, mutual funds and IRA account money in a single week than was created in the prior 20 years. If you were wealthy you would know that.
Reagan also handed Free Citizenship to 10 million Illegals aliens and rewarded they with Citizenship for entering Illegally. That action encouraged millions of more illegals to enter the USA, hoping some old softie like Reagan would grant them citizenship also. In 2012 alone Obama deported 409,000+ illegals___that is more than Reagan and Bush senior combined deported in their 12 years in office..

January 08 2013 at 6:49 AM Report abuse +1 rate up rate down Reply

The White House just cannot do that. Obama still gets his perks, menu served by the CHEF, the CEOs gets their bonuses off laid off employees, temp employees time to go home. Whats all the fuss about? Time to ground the Air Force Ones at $180,000.00 per hour!

Good article, exactly what I'm doing.

January 08 2013 at 2:11 AM Report abuse rate up rate down Reply

Regrettably as much as cutting spending sounds, it also makes a shaky economy shakier. If you want jobs, then you need to create the climate for creating those jobs and that means we spend. Our government needs to cut out spending in places such as foreign aid to countrys that need to take care of themselves and we never get paid back anyway. We do need to create jobs, such as replacing infrastructure, that is worn out and has been for years. Our citys are falling apart and yet we save money? Do it later and it becomes more costly. For the last five years, people have cut back to the point of stupidity. Yes we need to make cuts in spending, but those cuts need to be in the fact we are supporting nations that are in much better shape than we are, so they need to bail out their own economys. We need to stop China from controlling their currency to make their products cheaper, and most of those jobs were outsourced to China and belonged in America in the first place. Go ahead and quit spending and you can kiss your job goodbye.

January 07 2013 at 11:53 PM Report abuse rate up rate down Reply

Republicans don't care if we go back into a recession. Their job is to deliver and maintain low taxes for the rich and big corporations. They always knew low taxes would create huge deficits that could eventually be used to justify cutting spending the rich and big corporations have no use for. That moment is now. Senator Turtle from Kentucky said so himself this morning.

January 07 2013 at 11:50 PM Report abuse rate up rate down Reply

The Great Depression provided many clear examples of what happens when myopic focus on balancing the budget by cutting government spending during a catastrophic down turn. Economists still revere monetarism. But, monetarism as it works in the US (through the banking system) simply does not work in stimulating an economy when no one wants to take chances on investing ahead of revenue streams that are highly questionable.

It may take a generation to work through the problems right wing economics have advocated since Reagan. The data are overwhelming that these policies are fraudulent. But, no on is willing to clean house of their authors and advocates.

Like the French of old, the world has fundamentally changed, and they understood and could see nothing wrong with their world view.

January 07 2013 at 11:34 PM Report abuse +1 rate up rate down Reply

Maybe look at the other side of the balance sheet too. That is produce more income. Start a part time business, etc. If you enjoy it, it will not be "work" and gives you less time to waste your money. I did that 11 years ago, and it is to the point I make just as much on the weekends as I do at work during the week days. And it will continue though retirement too.

January 07 2013 at 7:06 PM Report abuse +1 rate up rate down Reply

I'd do anything to put more Liberal Regressive Democreeps out of work.

January 07 2013 at 4:43 PM Report abuse -3 rate up rate down Reply