In the spring of 2018 I set a goal to shop for a automobile for $20,000 and so as to pay cash for it by 2020. My calculations confirmed that in order to reach this intention, I needed to keep about $1,000 every month. Even thinking of the reality that my family has a sufficient income, the opportunity to position aside this sum of money turned into close to not possible. But the concept have been born and it intrigued me.
Especially for handoutcluster, I’m going to tell you what “wasteful” habits I have fought in order to save enough money for the car of my dreams.
My name is Polina, I live in Saint Petersburg and, in 2018, we were planning to purchase a new car. We already had a 10-year-old car that required more and more attention day by day. It would cough, sneeze, break down, and we had to constantly “fix” it. Once, the car broke down during our trip to the countryside for the celebration of my mom’s birthday and we missed the biggest part of the event while trying to get the car working.
Moreover, we were expecting a baby and we needed a bigger car with 5 doors, instead of the 3-door car that we had. We decided to buy it without taking out a loan, even if it wasn’t new.
In order to reach a financial goal, one needs to understand how much money they have.
Now I can confidently say how much money we spend on each category of life. I can also plan our expenses one month ahead. But 2 years ago, I couldn’t begin to imagine how much our family spends on products. We would always make unplanned purchases — if we wanted something, we would buy it. Since the moment I set the goal, I started to write down all my expenses on a notepad, on a daily basis. I divided them into 4 categories:
- compulsory: housing, mobile phone services, internet
- routine life: products, detergents, animal food, self-care products
- entertainment: meeting friends, museums, cafes, food delivery
- force majeure: treatment, medicine, repair
I spent one month investigating where all the money goes. By the way, the fact that we had started to write down all of our expenses, made us think before making another purchase, “Do we really need it?” I related to the process of saving money like a competition with my own squandering, at the end of which, a cool award was waiting for me. It was important to not worsen the quality of our current life because we were going to need to continue saving money for a long time.
Bad habit #1: Spending our entire salary
I created a new rule — to “pay myself” monthly and signed up for an automatic transfer to my online bank account. On the day I was getting my salary, a significant amount would automatically get transferred to my savings account — $300. Money in that account wasn’t just sitting there, but I was earning interest on it. The biggest motivator was the fact that if I withdraw it, I would lose all the bonuses.
In order to make the process of parting with this money easier, I was imagining that I was paying a loan for my car. But in fact, the money just stayed with me. I was simply hiding it from myself. It was extremely difficult, but I made an agreement with myself that I’d spend the rest the way I wanted, but I actually couldn’t. Right after getting my paycheck, and seeing only half of it in my account, my wish to spend it on shopping or at restaurants instantly disappeared.
I had months where I was able to increase my monthly payment to myself and because of this I managed to save more. I ended up saving about $6,000, where about $200 was my interest for just having money in the account
Bad habit #2: Ignoring the opportunity to save money on obligatory bills
I would always think that public utilities were extremely expensive, but it turned out that it is possible to decrease those bills. Apart from installing water and electricity meters, replacing all the light bulbs with LED ones, and getting the habit of switching off the water if we are not using it, we also took the following measures:
- We started to use additional lamps instead of the main ones in the evenings.
- I would use the dishwasher and the washing machine after 11 PM only (it’s cheaper than in the afternoon).
- I started to exclusively choose the washing mode. Heating the water up to 140°F requires more electricity than washing at 90°F.
Thanks to these useful habits, we started to pay $20-30 less per month. And it added about $500 to our bank account over 1.5 years.