Want to save money? Don't shop
By Dana Dratch • Bankrate.com

For a group of California friends, it was at first an experiment in earth-friendly living: Reduce waste by forgoing any new nonessentials for one year. 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 one year 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."