Here are some tips on how to save your first USD 1000.00 and it does not include a daily latte or avocado toast. This amount is recommended by Dave Ramsey (DR) and his Baby Steps (BS), a method to achieve financial peace that was published in 1992. The main issue is that, due to inflation, USD 1000 is equivalent to about USD 1800.00, but that is a discussion for another time. According to DR, BS1 is saving a USD 1000.00 emergency fund and it is supposed to cover any emergencies you have while paying off any debt.
- Look through your bank statements and ruthlessly cut expenses. Print out your last 3 months’ bank statements and figure out where your money is going. Are you spending a lot of money at convenience stores or fast-food restaurants? Are you doing any ‘bored’ spending at the grocery store? Figure out these problem areas and come up with a plan to stop it.
- Sell your unused stuff. Remember all your stuff used to be money. We live in a time where you can sell something online and have someone across the country enjoy it. There are so many of these services and it is not just eBay. So, go ahead and start spring cleaning your house by letting someone else enjoy your old stuff.
- Cut back on subscriptions. Back in the day, one of the many recommendations on ‘how to save’ was cut back on the cable. However, the number of subscriptions available means that you can pay about the same or more as your old cable bill. For instance, the average American spends $237.33 on subscriptions, according to a survey conducted by the Waterstone Group. However, in this survey, there are 21 categories, including wifi, mobile phone plans, streaming, and gaming services. There are some that you may not be able to cut out of your budget. However, others like the monthly lifestyle, beauty, or fashion subscriptions can be cut out completely or lessened.
- Consider using your legs as transportation. It is not feasible for everyone to bike to work, however, there are other ways to save on car costs. Call up your insurance company and see if there is a discount or shop around for lower rates. Others in the Dave Ramsey community tout the idea of selling your car and buying a ‘Dave car.’ However, depending on what you have that might not be a great idea, especially considering how fast they depreciate. The value of your car might already be a ‘Dave car.’ Another way to cut down on transportation costs is to set up a carpool with some colleagues who live nearby and find out if you can work from home a couple of days a week.
- Increase your income. This is easier said than done. However, the easiest way is to pick up a side-hustle or a part-time job that will help you reach this goal. Start filling out some job applications today or set up your profile on various websites, you can check out this post if you need some inspiration.
- Downsize your life. If you are able, look for a cheaper, or smaller place to live. It is difficult in some markets but you will also have to consider all the costs associated with living in the area. Ask yourself, is it an easier commute to work and therefore costs less in gas and overall wear and tear on your vehicle? What are the moving costs and the costs of my time to pack everything? After considering all this, it might not be worth moving. Think of it as a math problem, moving does not solve everything, but it might.
- Cut your grocery costs by creating a meal plan. It does not have to be set in stone but at least have a general idea. Additionally, only choose the food you like to eat. You are more than welcome to try new foods but do not buy something you do not like that much because it is on sale.
So, use all the money you earn or save from following these tips and add them to your emergency fund. Once, all that is done, you can pay down your debt quickly. As promised, these tips did not include cutting out a latte or avocado toast, which not all of us drink or eat regularly.