Want to get rid of credit card debt or any other debt?
Want to use your brain and get creative?
Try this experiment:
Want to save money? Don't shop
For a group of California friends, it was at first an experiment in earth-friendly living: Reduce waste by forgoing any new nonessentials for six months. But it produced a profitable side effect with a different sort of green.
"We all saved money," says Shawn Rosenmoss, a senior environmental specialist for the city of San Francisco. "Even though I had always been going this way, and always saved money by shopping at thrift stores, I saved money."
The thrifty bunch called themselves "The Compact," a group of friends in the San Francisco area who agreed not to buy anything new for six months except for food, medical necessities and toiletry items. Buying secondhand was OK since battling consumerism was the point, not saving money.
But they did save money. "I actually had a lot of credit card debt and paid off quite a bit of that," Rosenmoss says.
She also noticed that she was giving more to causes she supports because she had a little extra fiscal breathing room.
John Perry, who works for a Silicon Valley high-tech firm, estimates he saved "a couple of hundred dollars a month."
One thing that made it easier: a wider array of high-quality secondhand merchandise, he says. "I do think the availability of secondhand goods is growing exponentially," says Perry.
The financial gain has "been an unexpected reward, but it's not why we did it," Perry says. "When you stop disposing of disposable income, you can start to put it toward more meaningful things."
His big splurge was to pay ahead on grad school student loans and over-pay the mortgage. In addition, he's contributed more to his son's 529 plan. "The last statement I got, I was very pleased," he says.
"I wasn't really budgeting," Rosenmoss says. "I just noticed that things were happening." At bill-paying time, she'd realize, "I can pay more of my credit card bill this month," she says. "I was very excited about that."
"This year I'm going to start tracking it more intentionally," Rosenmoss says. Her goal: be debt-free by the end of this year. It's "like an albatross hanging from my neck," she says, adding that there's now just $5,000 to go.
Perry is so far ahead on his student loans that his next payment isn't due for months. "I think I'm getting farther and farther ahead," he says. And he's building extra equity (as well as reducing the interest expense on the loan and shortening the loan term) by overpaying the mortgage.
Consumer adviser Clark Howard thinks the friends' agreement sets a great example, providing both savings potential and peer support. "The need to shop is so often emotional," he says.
"We don't realize what a consumer culture we're in until we say we're just not going to shop," says Howard, co-author of "Get Clark Smart: The Ultimate Guide to Getting Rich from America's Money Saving Expert."
Kids, do try this at home
For the friends involved, the plan works because even though it saves money, it's not about the money.
"The point was just to stop consuming," says Rosenmoss. "To see how much we could not consume this year."
The four solutions the group used: "reduce, reuse, recycle and rot (compost)," she says.
Clothing swaps became one favorite for Rosenmoss and her children. Participants pay to get in, bring clothes they want to trade, and the entry fees go to a good cause. "It was very cool for my kids," she says.
Want to try your own version of a lifestyle that goes light on the shopping? Here's how:
Get support. The core group of friends who drew up "the Compact" (as they dubbed their agreement), leaned on each other for solutions to supply challenges they encountered. They even met for monthly potluck dinners at one another's homes. Over food, they'd trade tips and sources for recycled, local and reused goods. (Yes, there was even some good-natured "spying" to see who might have been bending the rules.)
"It was helpful for us to have this group of friends to do it with, and joke with and borrow things from," says Rosenmoss.
Keep it upbeat. One reason the Compact worked: "It was a personal challenge among friends," says Perry. "It was intended to be fun."
If you try it and have trouble, or break from the plan once in a while, don't be too hard on yourself. "It's not intended to be painful; it's intended to be liberating," he says.
Plan ahead. It's not the big things that get you, it's the little things you have to have now, says Rosenmoss. One time she caved when an assembly project required a special $12 drill bit. "I ran down to the local hardware store," she admits.
In hindsight, she realizes she could have simply borrowed it if she'd asked around beforehand. To live without shopping requires "more planning," says Rosenmoss. "You really need to plan."
Be more creative. For one child's birthday, the gift was a trapeze party, says Rosenmoss. Not only did she buy the experience at a benefit auction, but her kids loved it. Plus: "We requested that they not bring any presents," she says.
Think local. Since Compact members like to encourage small local businesses, gift certificates for local services (such as dance lessons or a massage) are gifting favorites.
"Where we would have bought something in the past, like for Valentine's Day, now we go out to dinner," says Perry.
Shop less often. When Howard works with families trying to trim their debt load, he tells them to get out of the stores. His advice: shop for perishables every two weeks, and nonperishables every six weeks.
"I learned that with couples who can't control spending, it is recreational," he says. "They will just buy."
This technique helped one couple making $65,000 pay off $30,000 in credit card debt in just 15 months, he says.
Focus on alternatives, not deprivation. The point isn't to do without something, it's to see if you can get what you need without buying new. And many times what you can do "depends on circumstance," says Rosenmoss. Once you decide you need something, find out if you can get it used, rent it or borrow it from someone you know.
Try it for a short period. Forgoing new items encourages people to "eliminate wasteful spending and divert money saved toward more important goals," says Ric Edelman, author of "The Truth About Money: Real Advice from One of America's Most Successful Financial Advisors." "But it's like a crash diet. It's not sustainable."
It worked for Compact members in part because it fit their needs and beliefs. So draft a plan that suits your own lifestyle.
"Begin by challenging all your assumptions about your lifestyle; every purchase you make." Edelman says. "What these folks are demonstrating is that much of what we do with our money is pointless and can be omitted without signs of loss."
And try out your new shopping strategy first for 90 days, says Howard. "Ninety days is a time we can all get our arms around," he says.
Separate wants from needs. "Don't just shift shopping from the market to secondhand," says Perry. Like a lot of middle-class families, he's discovered "we pretty much have everything we need."
Clothing for fast-growing kids remained one consumer item his family continued to need, and in a steady stream. That's where secondhand stores come in handy. "There is so much secondhand kids' stuff that is virtually new," Perry says.
Enjoy a well-earned sense of perspective. After cutting back on consumerism, group members have a whole new eye on some shopping traditions.
While Rosenmoss admits "a little weirdness" sometimes at not giving traditional birthday or Christmas presents, she's found that her kids are "pretty much OK" with a shopping-free lifestyle.
Compact members know that their plan has been done before.
"We're not doing anything new," says Perry, who helped launch the effort. By tackling the project as a group, he hopes they have made it "easier for people to come together, and talk about things they didn't talk about."