Spending Freeze: Is Going Cold Turkey a Smart Way to Dig Out of Debt?

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The first time I heard about someone doing a spending freeze I reacted like any normal, slightly sarcastic, 24-year-old critic would. I muttered, "Yeah, that will end well" and threw in an eye roll for good measure.

A spending freeze (or, as some call it, a spending fast) is similar to the Atkins diet, except instead of cutting carbs, the participants cut out all non-essentials. No movies, no morning lattes, no dinners out, no happy hours, no cable, no new clothes -- the list goes on and on. Money is only to be spent on what it takes to keep the lights on and food on the table. The cash one saves goes towards debt repayment or fattening a savings account.

To me, a spending freeze sounded akin to a yo-yo diet. It also conjured up images of Oprah's "wagon of fat" (even though that episode aired a year before my birth). My first (strong) instinctive reaction to the concept was that people resorting to such extremes with their finances were setting themselves up for failure. It seemed only logical that periods of deprivation would lead straight back to bouts of fiscal gluttony.

Perhaps I Was Wrong

"I decided to do a year-long Spending Fast to try to eliminate my $23,605.10 in debt," said Anna Newell Jones, creator of the blog AndThenWeSaved.com, which she started to keep herself accountable for her spending.

"I was hopeless about my financial situation, and I was sure I would die with my debt," said Newell Jones, who trademarked the term "Spending Fast" after her experiment. "So I was shocked by how effective the Spending Fast was and that through it I was able to eliminate all of my debt in only 15 months."

How Do You Start a Spending Freeze?

Not unlike my original yo-yo diet analogy, Newell Jones also compared the journey of a spending freeze to being on a food diet. Yes, people have to eat, but they should only consume what's good for the body. The same mentality can be applied to a spending freeze.

To determine what was "right," the spending freeze maverick made a list with two categories.

"You create a 'Wants and Needs' list, and that makes buying decisions black and white by cutting out the gray, discretionary area that gets so many people into trouble with money and over-spending," she clarified.

Mistakes Happen

But the best-planned diet can be discarded when a cupcake is on the table, and no number of cleverly made lists can shield us from the lure of consumerism.

"It's not realistic to think that anyone will be do a Spending Fast perfectly," acknowledged Newell Jones, who fell into a splurge trap when a beautiful $200 pair of sunglasses caught her eye.

"I bought them, felt very guilt, realized I didn't truly need them, and ultimately returned them," she admitted. "Mistakes happen, it's about forgiving yourself and remaining committed to the process."

Wait, Maybe I Was Right

I, like your average millennial, love a trophy and wish I could claim victory in the spending freeze debate. Unfortunately, I it appears a spending freeze can indeed be effective both to save money and dig out of debt. Those who stay the course can ultimately change their relationship with money.

"I developed the habit of telling myself 'no,' " said Newell Jones. "I found that the freedom and excitement I got from paying off huge sums of debt replaced my desire to have the items I previously wanted."

Would You Fail?

Even though she's the poster-child for a successful spending freeze, Newell Jones recognizes that it isn't the remedy for everyone burdened by debt. A spending freeze is for the desperate. It's for those who've found other debt-repayment methods to be inadequate. Perhaps most importantly, it's for those doing it because they want to and for no other reason.

"Changing habits is hard, and doing a Spending Fast requires sacrifices," she said. "It's definitely not for everyone, but for those who stick with it, it's completely life-changing."

Those who fail to successfully complete a spending freeze will be required to haul around their debt in a Radio Flyer.

Erin Lowry writes for DailyFinance on issues relating to millennials, money and personal finance. She's also the blogger behind Broke Millennial, where her sarcastic sense of humor entertains and educates her peers. Popular posts include:

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barryaclarke

A spending freeze? As I think back when my wife and I were first married, we bought all new top name furniture and had two new cars. She worked extra overtime and I worked two jobs and we paid for it all in one year. Then on to our first home. Afterwards, we moved three times and 15 years later had a nice home paid for and zero debt. No, it wasn’t always easy, but now looking back on it, it was like a tax free $20,000 a year raise to spend how ever we wanted. But, if your part of the crowd that wants everything now and pay for it later, you’ll now know what to look forward to for your future years when all those had to have toyes are obsolete and your still paying for them ..................

February 23 2014 at 1:07 AM Report abuse rate up rate down Reply
korrection1election

just keep cracking those pavers in half with your sledgehammers ,we will be ready also~KIEV"~:KIEV"~"KIEV"~"KIEV"

February 22 2014 at 7:46 PM Report abuse rate up rate down Reply
hman570

They will not spending money on otherseas countries as they (politicians) have to much money invested in them. The only cuts will come to the American people who are now the lowest paid, over worked, uninsured, broke, tired and just forgotten about by our leadership. Do you think they got rich on the salaries they get paid, NOT. Their corruption is not even hidden these days as they know nothing will happen to them because of the people that own them. Banks, Wall Street, Insurance, wealthy and their greed for money and power. It time we started more parties to let the 2 parties that are just as currupt as the people they selecte for us to vote for. We need lest lawers in Washington and more people that know who to run a country as the lawyers have run this Great Country of ours into the ground. Wake up people or you are going to find out that you are no longer free..

February 22 2014 at 2:09 PM Report abuse +1 rate up rate down Reply
quintondall

yaaaawn. This article is so tiresome and so overwritten about but unfortunately the mere fact is that most people that have a spending problem (as opposed to an income problem as pointed out by commentators - good point) just do not get it.

February 22 2014 at 1:28 PM Report abuse rate up rate down Reply
legacykwst

A spending freeze only works if you have a "spending" problem... meaning that you spend frivolously... you can't distinguish between need & want.... or want it now vs delayed gratification. Usually, a spending freeze will give a person a time out to get "emotional" spending under control. Then, after the freeze is lifted, there will be pent-up demand.... things that you do actually need, which have broken or worn out or become outmoded, will be replaced &/or upgraded. Unfortunately, too many of us are now in a position where the spending problem is actually an income problem. There's no enough income to actually meet very much curtailed needs. We are choosing between money for rent vs money for a decent diet vs money for a vital prescription.... & there is no money for any of those.... so savings vanish & debt increases.... No spending freeze will help this... because to totally freeze spending, one needs to no longer be amongst the living.

February 22 2014 at 12:51 PM Report abuse +2 rate up rate down Reply
weilunion

So the problem is that people spend money? No, the problem is they have no money to spend and thus live off of debt. Why no money? Outsourced jobs, insourced jobs, stolen assets by the one percent, no interest on savings to bail out the one percent and a country owned and operated by mafia banks.

But the corporate media wants me to eat dog food so that the economy can work for a few. The problem is capialism.. It puts profits before people and then blames the people. Wake up America your country is run by a corporate mafia.

February 22 2014 at 12:41 PM Report abuse -2 rate up rate down Reply
bchrist751

It a habit of saying "No" I cannot afford that, rather than saying, well its not that much.

There is a difference between.. Needs and wants. buy the needs save the wants.

February 22 2014 at 10:53 AM Report abuse +4 rate up rate down Reply
bdgrizcp

This article is about personal finance and not government spending. I'm tired of people politicizing everything to make a point--usually an incorrect one, because the national debt is due to a protracted revenue shortfall.

After the end of my disastrous 2nd marriage I put myself on an expense diet. I went from $32,000 in debt to near zero in four years. So it works, as long as you do not have insufficient income. Then you're screwed. To really affect debt reduction, you may have to take on a part-time job.

February 22 2014 at 7:03 AM Report abuse +4 rate up rate down Reply
MJ

Raquetguy1 needs to shut up and stop trolling articles on personal finance. This is not about the POTUS, or Congress but what YOU as an individual can do to take charge of your cashflow. I have worked in finance and have seen that very few individuals regardless of income actually track their spending, check bank statements, and establish written goals as well as a formal household budget.

Until any American starts to treat their money like they are the CFO of it, they will struggle with overspending and too few dollars at the end of the month. Start addressing what YOU can do about the problem that is you own financial incompetence. These articles are meant to encourage those of us who DO want to hold ourselves accountable. Not just pander our political thoughts.

February 22 2014 at 2:45 AM Report abuse +3 rate up rate down Reply
Gumby

Credit cards are like heroin!

February 22 2014 at 12:16 AM Report abuse +1 rate up rate down Reply