How to stop nickel and diming yourself into the poorhouse!
When I made the decision to be more frugal with my finances, I knew that I had to cut out my major unnecessary expenses. In many ways, this was what was easy to do - look at my checking or credit card statement and locate the major expenses that I could could cut out and say, “Well by eliminating a, b, and c - I’m going to save $X amount of dollars.”
At least for me the problem was that I found myself still astonished by the amount of money I was spending every month. While those big expenses were hurting me, I found it was the little expenses that were killing me. Eating out a couple of times a week, even though it was at cheap places, began adding up. All of the times I’d stop to get a Red Bull during the week were adding up too. Basically, at $2 to $3 per expense, I was nickel and diming myself into the poorhouse.
I began to realize that I wasn’t being frugal at all, I had just decided to break the urge to spend $100 on DVD’s and iTunes music into a bunch of $2-3 splurges on little things. The worst part was that these expenses were flying under the radar unnoticed on my balance sheet.
Thankfully, I’ve been able to cut these expenses out of my balance sheet altogether. Here’s my XXX step plan on how I did it, and how you can too:
- Get real with yourself! Before you can even begin to do anything seriously with your finances (or really life in general), you have to “get real” with yourself and be honest and somewhat critical with the financial choices you’ve made. Remember the Red Bulls I told you I was buying everyday? Well I “thought” I needed them, in fact I’m pretty sure I was convinced I actually needed them. Look, I was tired! But the fact is I didn’t need them, and those little suckers add up in the end. Three months ago, I spent about $50 on Red Bulls alone. There’s a huge psychological difference between a few $2 charges or one whopping $50 charge, but if you’re going to “get real” with yourself, you’ve got to realize that in the grand scheme of things - there’s little difference.
- Identify where you’re nickel and diming yourself. Before you can even begin to cut out the problem, you have to realize where it exists. I suggest pulling out all of your credit card statements, checking statements, and any other form of documentation you have. When I did this I took a big legal pad and drew a line down the middle creating two columns. I named one side, “Gotta Have” and the other “Oops!” I then listed each expense I made the past month and put in the appropriate column. To be honest in the end, my opinion of my expenses was a different four letter word than oops! If you don’t have a checking account, ATM card, or a credit card you can still do this too. Just keep a running ledger of expenses for a month (which may skew your spending), or just try to think back what you’ve spent for the past few weeks or month.
- Once you realize you’ve got a “problem,” promise yourself you’re not going to make the same mistake twice. The best news about these little expenses is that when you realize you’re nickel and diming yourself here and there, it’s easy to cut them out altogether. Make a game out of it - see if you can go a day or two without spending unnecessary money. One of the things I’ve done is that whenever I spend money, I get a receipt and at the end of the day I pull them all out of my pocket or take them out of my billfold and I do a quick “trash can analysis” of my spending for the day. It worked for me, and it may or may not work for you - but if not, I’m sure something shockingly easy will. I promise you, it’ll add up quickly and the positive reinforcement you’ll get from a week, or even a month of cutting out the “small stuff,” will allow you to get the “big stuff” down the road.
- Stay “real” and hold yourself accountable. Just making decisions like these are only half of the solution. Action is often meaningless if you’re not going to set out to hold yourself accountable in the end. If you’re your own worst critic then you probably don’t need to - but setting up a “I Didn’t Nickel and Dime Myself to Death This Month Award” might be the perfect thing to keep yourself motivated and accountable. Personally, knowing that I achieved my goal and having some extra money in the bank account feels good enough and serves as my reward. The point is that whether there’s a pot of gold at the end of the month for yourself is just a detail, the fact is you’ve got to be real and honest with yourself as to whether you continued to nickel and dime yourself. If you found you have - the good news is you just found more ways you were nickel and diming yourself, and you know where you can cut out more expenses. If you found that you cut out the nickel and diming altogether - pat yourself on the back, but don’t digress back into silly spending!
Those four steps are the plan that I used to stop nickel and diming myself into the poor house. Sure, they’re pretty general and basic, but they get the job done. I’ll spare you the specifics, but by following the above plan I was able to cut out a HUGE chunk of my expenses. By doing so, I was able to accelerate my debt payments and sleep better at night.
If you have any ideas for ways to stop nickel and diming yourself into the poor house, leave them in the comments section or use the contact form seen above. I’d love to hear them!
Tags: balance sheet, cheap, credit card statement, financial choices, frugal, money
