Last year was a super successful year for me financially. I finished paying off my debt and so for the first time since I started college, I was officially debt-free!
Not only was becoming debt-free a massive goal on my life list, but it was also a big accomplishment because I wanted to start freelancing. And for me, there was no way I could take the big scary leap into self-employment if I still had debt hanging over my head.
So I spent 2014 making and saving as much money as I could. Looking back over the year, I was able to finish paying off my debt and save up 6 months of living expenses as my safety net.
Curious how I did it? Here are some of the biggest tricks I used.
Be frugal when eating out
Let’s preface this first tip with a note: if you can stop eating out altogether, you totally should. Eating out is expensive so choosing not to eat at restaurants is one of the quickest ways to save money.
Buuuut for me, eating out is how most of my friends socialize and I couldn’t imagine cutting this social time out of my life. What I did instead was create a few money saving rules for myself when I did go out to eat.
The rules are pretty simple: no drinks, no appetizers, and no desserts.
Just a pop can cost you $3, an appetizer up to $10, and dessert will probably be $7. By following this simple rule, I'm saving myself $20 every time I go out to eat.
Put a percentage of your paycheque into savings.
Most companies will allow you to designate a certain percentage of your regular paycheque to be deposited right into your savings account. If your company doesn’t allow to split your pay like this, then you can set up an automatic transfer into your savings account with your bank instead.
Take advantage of this ability! Figure out what percentage you can set aside without really missing it. Maybe it's 5%, 10%, or even more.
Because this amount goes right into your savings account, the temptation to spend it no longer exists. You just get to watch your savings balance grow every paycheque, no effort required.
Get a second job
I know not everyone will have the time to manage a second job, but this was probably the biggest help for me last year. On top of my usual 40 hours at my corporate gig, I worked another 5-10 hours a week at Sportball, coaching kids in sports.
There are two things I recommend with finding a second job. The first is to find a job you enjoy. If you’re going to be spending more time working, you definitely don’t want a job you hate going to. Even if it pays a little less money than you could make elsewhere, enjoying the extra work you do makes up for the difference in pay.
The second thing I recommend will sound familiar now: have the pay from your second job deposited directly into your savings account. Again, now you won’t be tempted to spend it and you can just watch your savings balance grow.
Implement a 24 hour rule
I would be lying to you if I told I never bought myself anything fun or frivolous while I was saving last year. My willpower is nowhere near that strong.
What I did do though was implement a 24 hour rule. Whenever I found something outside of my basic needs that I wanted to buy, I waited 24 hours to see if I still wanted it. I told myself if I was still thinking about it and still wanted it a day later, then I could go back and get it.
And you know what? About half the time, I completely forgot about whatever it was I found. Which made me glad I didn’t spend the money and bring useless clutter into my house.
When you’re looking to quit your traditional job and build your own business, it’s important to start off on the right financial foot. Having no debt (or at least less debt) along with several months savings tucked away allows you to focus fully on your business with confidence.
And even if you’re not planning on starting a business anytime soon, these tips are still great for paying off debt. Or you know, just saving more money because it’s an all around good thing to do.
PS: Like this post? You'll probably enjoy 9 Tips to Create an Awesome Life List too.