Harness the power of impulse saving
Posted
Apr 22 2008, 09:30 AM
by
Karen Datko
Rating:
This post comes from partner blog Blueprint for Financial Prosperity.
Have you ever gone to the mall and impulsively bought something you hadn't intended to buy? Have you ever gone to the grocery store and walked out with a couple things you didn't plan on getting? Sure, we all have.
I've gone to the supermarket for some chicken, eggs and yogurt, only to return with coffee filters and a package of pork ribs because both were on sale. (Coffee filters are never on sale, probably because a package of 100 costs only $2 anyway and you can conceivably use it for 100 days.)
It's called impulse buying. Here's a close cousin of it that is very powerful but less often used: impulse saving. Here's one great way you an impulsively save.
Impulse saving and debt pay down
Get yourself a six-sided die and roll it. Take that number, multiply it by 10, and put that amount in a savings account or pay down a debt. Do it every single time you get a paycheck, and learn to live without the money in your budget.
If you don't have a die, figure out another way to randomly generate a number. If you truly can't afford to save up to $60 a paycheck without feeling great pain, multiply the number by $5. If you truly can't afford to save up to $30, you need to reassess your financial situation. (That's a topic for another time.)
To facilitate impulse saving, set up computer access to your bank accounts or electronic bill pay. This lets you quickly and easily save or pay down debt with a handful of clicks. Without electronic means, the transfer of savings or pay down of debt is less efficient.
Why do this?
Saving money and paying down debt are hard, and any little trick you can take advantage of will be to your advantage. I think impulse saving is a lot like snowflaking (an idea and term first coined by "paidtwice"). With snowflaking you generate more income through various means and put it toward your debt. With impulse saving, you force yourself to spend less on the unplanned noise in your budget by spending it first on savings or debt. The ideas are close cousins but slightly different in where the funds come from.
Let's take an example to illustrate how powerful this can be. If you have $8,000 in credit card debt at 19.99%, it would take 11 years and one month of $400-per-month payments to clear the debt. By paying down an additional $30 a month, it would take only 10 years and two months, a difference of 11 months. If 11 months doesn't sound like a lot, remember it's 11 months of $430 payments, or $4,730. If you combine this idea with some debt consolidation by way of 0% balance transfers or peer-to-peer lending marketplaces, you can do some serious damage to your debt.
So, if you have some debt, consider some impulse saving. It's the latest thing in debt busting since snowflaking.
Other articles of interest at Blueprint for Financial Prosperity:
"5 easy steps to becoming a millionaire"
"Credit card offers and promotions list"
"Top 5 ways to save money without noticing"
