You can significantly improve your personal balance sheet in as little as 30 days.
The key is what personal finance experts call the "no-spend month." Also called a buy-nothing month, it's a 30-day period of super-frugality where you cut out all extras, buy only basic necessities and spend as little money as possible.
In 2008, Americans lost $7 trillion in wealth thanks to a plummeting stock market and another $1.2 trillion thanks to tanking home values. To top it off, 2.6 million Americans were handed a pink slip last year and the Conference Board, a nonprofit business research group, estimates another 2 million people will lose their jobs by mid-2009.
With families facing so much economic uncertainty, it's more crucial than ever to beef up your emergency fund and pay off debt.
The no-spend month can be an effective short-term strategy to pad your savings account, free up extra money to pay off debt, realign your spending with your values, and generally cut financial fat.
Spartan livingDoug and Rachel Meeks limited all family spending for food, entertainment, fuel, and clothing -- anything that wasn't a regular monthly bill such as a mortgage or car payment -- to $250 last July. The Meeks usually spend $350 a month on groceries alone.
The Dallas-area family did it by cooking all meals from scratch, using basic fresh ingredients and food from the pantry, running multiple errands on each car trip, and walking instead of driving whenever possible. Doug also took his lunch to work everyday. "Some days were hard, but overall it was fine and even fun sometimes," Rachel says.
She says it saved her family thousands of dollars, and not just in the short term. "Since I wasn't out shopping or doing things that cost money, I had more free time to take a closer look at our regular monthly bills." She found better deals on car insurance, home phone and cell phone services. They found the 30-day spending crash diet so valuable they have decided to do it every July.
Shannon S., who requested anonymity, and her family of four in Michigan cut their budget to the bone and spent as little as possible for six weeks starting last November. She bought only eggs and milk, relying heavily on her pantry for meals. She used washable rags instead of paper towels, made her own laundry detergent, and began using inexpensive homemade alternatives to household cleaners. "This challenge forced me to do things I have wanted to do for a long time but never made the time," she says.
They lowered their weekly gasoline bill to $13, by using the car only to drive to work. She estimates their six week super-frugal stint saved them about $600, which went to the couple's student loan debt. Before their buy-nothing month, Shannon dedicated 25 percent of their income to savings and paying off debt. That number rose to 40 percent during their weeks of not spending.