8 tips for cutting debt with a 'No Spend Challenge'
By Allie Johnson
January 27, 2016
If you went a little crazy over the holidays, and you're snowed under a stack of credit card bills, a No Spend Challenge might help you dig out of debt.
A No Spend Challenge, also known as a spending fast or spending diet, is a pledge to not spend money (or at least not to buy nonessential items) for a set period of time.
That means parking your plastic, derailing your debit habit and checking your use of checks.
Think back to basics. Do keep the power on, the house warm, and the car in the driveway (as much as possible). Don't eat out, don't race out to see the latest movie and don't go near the mall.
Some personal finance experts recommend a No Spend Challenge lasting a month. Others advocate pledging to stop spending for a week or — if you're deep in debt — a year.
If the idea of No Spend Challenge intrigues you, here are eight steps to help you succeed:
1. Set your own rules. You can aim to buy no nonessential items, purchase only fresh produce for meals or even ban certain items from your shopping cart. For example, as part of a plan to pay down more than $33,000 in credit card and credit line debt, Michelle Summerfield, the blogger behind Budget Bloggess, swore off buying a long list of items, including: jewelry, fancy face creams, nail polish, sporting goods, DVDs and dating services.
“Personalizing the rules for your no-spend month is the secret to success,” says Stephanie Jones, who blogs about personal finance at Six Figures Under. She recommends choosing rules that challenge, but don't overwhelm you. Her family has used a no spend month each year to help pay off more than $90,000 in student loans. “Boxing yourself into a one-size-fits-all challenge would just cause frustration and failure,” she says.
Personalizing the rules for your no-spend month is the secret to success. Boxing yourself into a one-size-fits-all challenge would just cause frustration and failure.”
— Stephanie Jones,
who blogs about personal finance
at Six Figures Under
2. Don't stock up before you start. Other than topping off your car with gas (if you need it to get to work) and maybe buying a jug of milk for the kids, don't stock up on stuff before your “fiscal fast” starts, says Jeff “the Ultimate Cheapskate” Yeager, author of multiple books on saving money, including “How to Retire the Cheapskate Way.” The point isn't just to shift your spending to another week or month, it's to use what you have at home and actually save money, he says. Yeager claims to be the originator of the “no spend” concept. He called it a “Fiscal Fast” in 2002 when writing his first book, “The Ultimate Cheapskate's Road Map to True Riches.” That book was published in 2007, at the start of the Great Recession.
3. Make room for fun. “Fun doesn't have to cost much,” says Barry Myers, financial coach for the frugality site Humorous Homemaking. During no spend challenges, the Myers family digs out DVDs they haven't watched in a while and plays board games, he says.
Judy Williams, a marketing coordinator in Saint Francis, Wisconsin, says she and her husband bundled up and went for walks, visited their local heritage museum and attended classes on essential oils and juicing at a nearby library during a spending diet in February 2015. “We knew some of the stuff, but it was a great way to learn more for free,” she says.
Want more ideas for frugal ways to have fun? Anna Newell Jones, who blogs at “And Then We Saved” about how she used “spending fasts” to pay down $24,000 in debt, offers a list of cheap or free date ideas and free family activities. For example: Go on a self-guided architectural tour in your city, learn origami or go geocaching (all you need is a GPS).
“There's so much terrific stuff in life that doesn't cost any money,” says Yeager.
4. Fix stuff instead of buying new. If an item you rely on breaks during your spending fast, see if you can repair it instead of springing for a new one. For example, Summerfield grabbed some electrical tape to repair her cellphone car adapter during her No Spend Challenge. She also figured out how to replace a blown fuse that made the power seats in her car inoperable. The bonus: As she honed her “MacGyver skills,” in six months she paid $4,700 toward her debt, she writes on her blog.
There's so much terrific stuff in life that doesn't cost any money.”
— Jeff Yeager,
author of “Cheapskate” book series
and other personal finance books
5. Get creative with substitutions.Need something? Go shopping in your house, Yeager says. For example, when Yeager and his wife ran out of toothpaste during a fiscal fast, they brushed with baking soda from the pantry.
During Williams' spending diet, she needed something to weigh down the back of her car so it wouldn't fishtail in the snow. A friend suggested she buy a few bags of kitty litter, but that wasn't an option because she wasn't spending money and she didn't have a cat. Instead, she scouted in her basement and found stacks of old textbooks to put in her trunk. “See if there's something you have at home that could do double duty,” Williams says.
6. If all else fails, go without. If you can't fix an old item or scrounge up something else to act as a stand-in, see if you can do without. For example, Myers says you might not need to go out and buy that expensive ingredient for a dish you're making. “If the recipe calls for a quarter teaspoon of something, you can probably just leave it out,” he says.
7. Track your results. Sit down and take a look at your finances and your budget to see where you're wasting money during a typical week or month, Yeager says. And play with a credit card calculator to see how much you'll save in interest and how much time you'll cut off your repayment schedule by reducing your total debt by the amount you've saved. “A lot of people are surprised by how much they save,” Yeager says.
8. Learn from your mistakes. A No Spend Challenge can teach you about your money habits and how you better manage your finances and budget going forward. For example, Summerfield fell off the wagon three months into her No Spend Challenge by buying a blazer and some other stuff on her “banned items list.” Looking back, she realized the problem was emotional spending due to stress at work. “What's done is done, and all I can do is move forward and keep my discipline,” she wrote.
Overall, a No Spend Challenge is a great way to reduce your debt and also to recalibrate your attitude toward spending, Yeager says. “It might open your eyes to a different way of living,” he says.