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 living

Doug 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.

Like standing on your head

“Anyone can do anything for 30 days,” says Liz Pulliam Weston, author of “Easy Money: How to Simplify Your Finances and Get What You Want Out of Life.”

She estimates the 30-day spending crash diet can save families an average of $400 and put them in a better position should a job loss or other calamity occur. “If you do this, you have taught yourself what your (financial) weakness are, and you have already experienced the difference between a need and a want,” Weston says.

If you want to try your hand at 30 days of super-frugality, there are several ways to structure your month of not spending.

  • Set a dollar figure for spending for the month and stick to it.
  • Cut out all luxuries without setting a dollar limit
  • Combine a 30-day short-term spending diet with an effort to boost your income.

Setting a monthly limit

Like the Meeks family, you could give yourself a set budget for the month, and then try to fit all household purchases into that budget. Recurring monthly bills such as your mortgage, student loan, car payments, utility bills and credit card bills are excluded from this amount.

Joy Pedersen Harkins, a new mom in central California, limited her spending to $300 last November. This covered gas, groceries, eating out, clothing, entertainment, as well as any extras. To help her stick to her budget, Harkins paid cash for everything and wrapped her credit card in tape so she couldn’t use it.

The limited budget approach can require creativity. Harkins spent only $1 on entertainment for the entire month: on four Oprah’s “O” magazines she found at a thrift store. Her biggest budget-buster was meat from the grocery store. If she decides to do this again, Harkins plans to look for lower cost alternatives to meat to stretch her grocery dollars.

Cut all luxuries

The second approach to the 30-day spending fast is to forgo the set-dollar-amount budget and simply cut out all luxuries instead. In this case, money can only be spent on necessities.

That is how Shannon S. structured her month. “The only things we were allowed to spend on were milk and eggs from a local farmer every week, rent, utilities, gas and anything (needed for) an emergency,” she says. “There was to be no other spending. We did not do any shopping — grocery, merchandise or otherwise.”

Weston and her family bought only necessities in January 2006. “It showed me there were things I was spending money on that I didn’t need to.”

For instance, previously if she had 15 minutes between meetings she would fill the time by buying a coffee. And though she rarely bought new clothes for herself, Weston didn’t think twice about outfitting her toddler daughter with new duds. “It surprised me how much of my spending was automatic.”

The key to making the second option effective is to dig deep to determine what is a luxury and what is truly a necessity, says Harrine Freeman, author of “How to Get Out of Debt: Get An ‘A’ Credit Rating for FREE.”

This will vary from family to family but, in general, recurring bills, gas and groceries would be considered necessities while lattes, restaurant meals, and new shoes would definitely be off-limits.

Just don’t fool yourself: Even groceries can be a luxury item. “You don’t have to eat steak and drink bottled water,” Freeman says. “There is nothing wrong with casseroles and tap water. So many people have forgotten what it really means to live frugally, like our parents and grandparents did. All of those little things add up.”

Combine saving and earning

The third option is to combine a 30-day spending diet with an effort to boost your income. That can be as simple as cleaning out your attic or basement and selling everything on eBay or Craigslist, Freeman says. “You can use what you save and what you earn to pay down debt or create an emergency fund.”

No matter which route you choose, a month of minimal spending can lead to a real, workable and long-term household budget and spur you to permanently cut the fat from your spending.

A 30-day spending diet can be a valuable precursor to a budget you might actually stick to because, “At the end of the month, there is a very real, tangible financial benefit. You can actually see how much you saved,” says Brad Stroh, co-founder of the Financial Freedom Network, and Bills.com. “It gives you a sense of empowerment and control over your money that can lure you into the game.”

Harkins says not spending is like, “fasting before you go on a diet. It forces you to think about every transaction,” she says.

“It helped us to know what we were spending in different categories and how to better organize our budget,” Shannon says. The savings didn’t stop when the month was over either.”We are saving money by learning to live without more and more every day.”

Taking time off from shopping, “has the paradoxical effect of reminding you of the plentitude of your life and how much you already have,” says Judith Levine, author of “Not Buying It: My Year Without Shopping.”

“You learn what you can live without,” says Levine.

Levine cut out luxuries and bought only necessities for an entire year. As a result, she paid off $8,000 in credit-card debt.

“There are so many unknowns in this economy, why wouldn’t you be trying to save more money and cut back?” says Lynette Khalfani, author of “Zero Debt: The Ultimate Guide to Financial Freedom.”  

These days, it’s a mistake not to prepare. “Don’t believe for a minute that whatever your situation, however tidy it may seem that it can’t go awry,” Khalfani says.

You may not slim down the cable television package if you are only scrimping for 30 days, but “at some point you have to ask, ‘How important is my family’s security versus 80 gazillion channels?'” Weston says. “Ask yourself, ‘If I lose my job tomorrow, what would I cut?’ and do it now instead.”

“You’d be amazed how little (money) people can live on once they realize anything goes,” she says. “It’s not that we can’t cut, it’s that we won’t. But these are scary times. You need to focus on your own balance sheet, and it will make you feel better to have money stashed away.”

Super-slim budgets with no room for fun, though, are doomed to fail, Khalfani says.

The goal is not to cut out all sources of joy in your life, it’s to “spend only on those things and experiences that are going to really improve your life, that you use and enjoy a lot, and that will give you a great lift and not just a momentary lift,” Levine says.

The one thing you shouldn’t cut is a contribution to your retirement account because you will lose your own long-term gains, Weston says. If invested wisely, budget cuts can literally pay dividends.

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