1. How much money do you spend each month?
2. Where does it go?
3. Where do you want it to go?
4. Are you rich?
5. What does rich mean to you?
6. Hey, how’d you pay for that iPhone?
7. How much do you automatically save each month?
8. Why’d you pull your money out of the stock market?
9. You’re always thinking about cutting down on spending. Ever thought about earning more money?
10. OMFG, are you REALLY planning to buy a house for the tax deduction?
11. If your employer has a 401(k) match, do you max it out?
12. Then pay off debt, invest in your Roth IRA, and — if you still have money left over — max out your 401(k)?
13. Once your money is in those different accounts, have you invested it according to some simple rules of asset allocation?
14. In the next ten years, you’ll have to pay for a wedding, new car, have kids, take vacations, etc. How much are you saving each month for those things? (In last week’s Scrooge Strategy tip, I showed how to do this tactically, along with a pre-built spreadsheet.)
15. 6 months ago, if I had told you the stock market would be on sale for 50% off, would you have invested more, less, or pulled all your money out?
16. You’re always complaining about money, but have you read even one book on personal finance?
17. When was the last time you said “no” when someone asked you to do something that involved spending money?
18. How do your friends handle their money, and how do you think it affects you?
19. What’s the one thing you could do today to start getting rich?
20. Why haven’t you already done it?

[Update]: Download a PDF version of these questions for easier sharing.

In November 2008, I launched the Save $1,000 in 30 Days Challenge, where I offered ultra-tactical tips to save money and earn money using on credit cards, gas, automated savings techniques, and more. (See all the tips.) It turned out to be a huge success. Tens of thousands of people participated. You left over 1,000 comments. Together, we’ve all saved more than a million dollars.

Today, to continue those tips, I’m announcing a new program called The Scrooge Strategy. This is a subscription program that you can sign up for today to get new savings tips — about one per week — and continue saving even more money.

Perfect if you need ongoing strategies, tactics, and reminders about saving money
As a member of The Scrooge Strategy, you’ll receive an email to you each week with a new savings tip. As with prior tips, it will include a fresh way of looking at saving money — not more of the same old boring tips that nobody listens to. As a member, you’ll be able to request a savings tip in your particular challenge area: Maybe it’s eating out, or shopping, or spending too much on electronics. I’m also including a panel of expert writers, who will help you save money and conquer that problem area.

These tips work
I spend hours writing each tip, which tend to be 4-6 pages long. They include super-tactical tips with screenshots, phone numbers, call scripts, and my own tips on what to watch out for. As a member, you’ll get one tip per week — just enough to focus on for the week. Plus, each tip is a constant reminder to stay focused on cutting costs, earning more, and optimizing your spending.

“It’s like having a smart, articulate, and inexpensive financial advisor that calls you all the time to check in.”
–Matthew Earle, Boston, MA

“Tips are excellent–I really like Ramit’s emphasis on psychology and it is slowly but surely making me think about purchases I make, especially unplanned ones.”
–Kevin Foster, Blacksburg, VA

“So far, for 2009 I will be saving $660.60 over the course of the year (and I’ve only made 2 changes so far)!”
–Stacy Miller, St. Albans

Useful even if you’re already incredibly frugal
Remember, The Scrooge Strategy operates under the C.E.O. model of Cutting Costs, Earning More, and Optimizing Your Spending. Even if you’re already incredibly frugal, you can still save money!

And those were just my free tips. With each Scrooge tip — sent out weekly — I include tons of resources and details that I painstakingly research. Instead of saying, “Create a plan!” I include a spreadsheet with already filled-in data to get you started. Instead of telling you how I saved money traveling to Vegas, I show you the screenshots of the sites I used, including where to get coupon codes and a call script of exactly what to say when you call the hotel. Each tip is full of tactics to save you money, earn you money, and optimize your existing spending.

Contributors include millionaires, famous personal-finance bloggers, and Harvard MBAs
I’ve put together a dazzling panel of contributors. I’ll continue sending my own personal-finance tips, but by signing up, you’ll also receive tips from J.D. Roth (who blogs at Get Rich Slowly), Erica Douglass (who runs erica.biz and sold her web hosting company for $1 million), and Chris Yeh, (who graduated from Stanford and then, traitorously, went to Harvard for his MBA).

What other people have said about my savings tips
“What really sold me on The Scrooge Strategy is that the step-by-step guides make saving money so easy that I seriously have no excuse not to evaluate my financial goals. Sure, I’ve theoretically known that that I needed to shop around for car insurance… but did I ever get my Google on and actually do it? Not until you laid out a couple of links for me. That tip alone saved me $1800 annually — and BONUS — now I actually know what the hell my insurance covers.”
–Lesly, Houston, TX and Scrooge Strategy member

“This actually really worked for me! So I will be saving $30 a month on cable for the entire upcoming year and receiving an upgrade in service! How fantastic is that!! Love this challenge!! It’s the bomb!”
–Cindy T.

“The one selling point – specific high quality personal finance tips that is logical yet achievable at the same time.”
–Karthik Sainath, San Francisco, CA and a Scrooge Strategy member

“You can save well over a couple thousand dollars just with this tip alone. That’s more than some people save in a whole year.”
–Caleb

“IT IS FANTASTIC! My husband just lost his job (this was after starting Scrooge), but with the savings we’ve implemented so far, and the additional savings coming up soon, I don’t think we are going to be in danger of falling off that financial cliff that many families are teetering on right now…and I really do credit a lot of that to this program. Also…IT DOESN’T MATTER AT ALL whether you make a lot of money, or a little money, this is good information/knowledge for anyone if you are willing to just do it.”
–Stacy Miller, St. Albans and a Scrooge Strategy member

“I just wanted to say Thank You for this challenge! So far this month I’ve saved $264.49 and it’s only the 17th of the month.”
–Mary C.

“I’ve been able to save on my home phone ($20 per month) cell phone ($5 per month) and Gym ($10 per month) resulting in a $420 a year. In addition, being introduced to the concept of having no spending days has helped me to control my expenses, an additional saving of approx $240 a year. By using my cards wisely, I was able to get 2 free round trip tickets this year and a cash back for using my American Express Blue Cash card of $154.”
–Paras Nanavati, Los Angeles, CA and a Scrooge Strategy member

“I have been working on implementing the tips. Since these are all monthly charges, $72 X 12 is $864 dollars (in savings) for a year and that is more than I net in a 2 week pay period. That’s not a bad start!”
–Rhonda

“I called my insurance company (progressive), and asked what kind of stuff prompted discounts. Apparently, me being a student saves me about 40$/month! $480/year for a 3 minute phone call. Sweet!”
–Brad

Bonuses: Sign up first and stick around
I’m throwing in a couple bonuses if you sign up before Thursday, 1/15:

• Private webcast: I recently threw a webcast to 200 people. If you sign up before Thursday, 1/15/09, I’ll invite you to a private Scrooge-members-only webcast, where I’ll try to answer any questions you can throw at me. What’s the research on asset allocation? How do you negotiate for a complimentary suite at a hotel, or improve your resume? What should you say in your initial email to meet a busy CEO?

• Free personal-finance books for the first 30 members. If you’re one of the first 30 people to sign up today, I’ll send you a free personal-finance book of your choice: The Bogleheads’ Guide to Investing, The Road to Wealth by Suze Orman, or The Money Book for the Young, Fabulous, & Broke by Suze Orman. Your choice, and I’ll pick up all costs including shipping. These books actually cost more than your first month’s membership, so this is a deal Scrooge would love!!
• A special bonus gift for long-time members: If you stay subscribed for 12 months and continue saving money, I want to thank you for being a long-term member and saving money using the Scrooge Strategies tips. I’ll be sending you something in the mail — a real, physical gift. I haven’t finalized the details yet, but I promise it’ll be awesome.

Details of membership
These tips are chock-full of tactics, tips, and resources that work. I charge for membership in the Scrooge Strategies program because I spend hours on each tip and I know they’ll save you money (like I wrote about in Stop Being Cheap and Pay Money to Save Money). “But Ramit,” you might say, “how can you charge after you just told us to cancel our subscriptions?” Here’s why: I guarantee you’ll save more than you spend each month. That’s why — because you’ll be saving more than you spend, each month. If your membership fee doesn’t pay for itself, you can cancel your membership at any time (in fact, you can get a 100% refund within 60 days of signing up). There’s no catch. I hate catches.

If you know me, and you’ve been reading my blog for 1 month, or 4 years, you know that I only put out high-quality stuff. I’d like to ask you to give The Scrooge Strategy a try. See if you like it. I have a feeling you will (and if not, you can get your money back). Consider what you spend on lunch twice a week. In exchange for one lunch, let me send you tips that will save you more than the price of the system. You’ll get access to savings tips that will give you new strategies and tactics to save money — by cutting costs, earning more, and optimizing your spending — and get a weekly reminder so you stay on track.

To get started, click here for more details and an instant signup form.

Today, on this last post of the Challenge, I decided to write down some of the ways I’m saving money in 2009. Alone, each doesn’t seem like much. Together, they add up to a rough estimate of about $25,000 of savings in 2009 — a surprisingly high number.

Remember, these are tips that work for me. The key has been to take my lifestyle, then fit these tips into them — not try to force 59835321 changes in spending on day 1. Sure, I’ve changed my behavior, but it’s been a slow process of many years. If you’re just starting to save money, I encourage you to take your current behavior and set small milestones…like optimizing what you’re currently doing, before you decide to change your entire financial behavior.

All right — let’s get to the tips.

1. Whenever possible, I buy airfare for family and friends so I can earn significant amounts of points (usually they reimburse me). In 2008, I maxed out the number of points I could earn on my credit card — and I didn’t even travel that much. Since I earn points for each dollar I spend AND each mile that’s flown, one trip to Europe or Asia adds up to thousands of points that I can redeem for trips (like this $600 trip I paid for using points). Note that this only works if you have no credit card debt, a credit card that pays for miles/dollars spent, and you travel a fair amount. Total savings: $1,500/year.

2. Any time I purchase something over $100 (roughly), or any time I travel, I review the deals offered from my credit card, insurance, and workplace. In particular, when you’re traveling, the deal doesn’t end when you get to the check-in. As any Indian father will tell you, you always tell your kids to wait in the car while you go check in at the front desk (this is because you bought a room with 1 bed for a family of 6). The trick is: Always ask the front-desk if they have a “complimentary upgrade.” Many times, you’ll get bumped up to a suite. Same with car rentals. Total savings: $100/year.

3. This seems like a minor point, but if you don’t have all your account information in one place, it’s a huge barrier to finding deals and among them. Personally, I hate having to search around for all my account logins. I set up a PBwiki (or use any password service) where I store all my information. Just create a table like this:
URL LOGIN PASSWORD NOTES

As a result, any time I have to make a major purchase, I just work down a checklist of sites to see if any of them has a coupon/discount/deal available. Total savings: Hard to say.

4. Any time I buy something online, I take 20 seconds to search for “Bloomingdale coupon” or “JCrew coupon,” which usually saves me 10%-25% off. Easiest thing in the world. Total savings: $300/year.

5. I call all major service providers (cable, cellphone, insurance, etc) and negotiate them down once a year. They hate me for this. I love it. If you’re not comfortable with this, find a friend (just look at your Facebook for someone named Raj or Ramu) and offer them 50% of whatever they save you. Total savings: $800 per year.

6. When I buy major purchases like cellphones, cars, or even coats, I buy the best and hold it for the long term. That sounds obvious, but most people who buy really nice stuff like to buy nice stuff all the time, meaning they never keep something for the long term. Here’s a video on holding things for the long term that I did with more details. And here’s a writeup on the technique of only buying something new when you get rid of something old. Total savings: $500 per year.

7. I work on entrepreneurial side projects that are fun and may someday be profitable. For example, I didn’t start iwillteachyoutoberich.com to make money (in fact, I lost money on it for the first 3 years because I didn’t want to serve ads), but now it’s generating a modest amount each month. Many people are greedy and try to make money too quickly, but is there a project you’d do for free, for years? Would other people care about it? If so, that’s a great potential side project. And if it happens to be pro-social, I’m funding a $2,500 scholarship that might help (deadline mid-Jan). Total savings: Hard to quantify, but I’ll ballpark it at $10,000/year.

8. I perform regular maintenance on my car. Extremely regular, with extreme documentation, so that when I sell the car, I’ll be able to show how incredibly anal and weird I am about documentation for big purchases. Compare this to the owner of a used car who has a car in fair condition (not great) who, when you ask about maintenance, shrugs and eats a bagel. Who would you rather pay an extra $1,000 to? Total savings: $200 (I’d estimate it’s actually about $3,000, but you have to spread that over the next 15 years, which is the ballpark of how long I plan to keep the car).

9. I just set up automatic withdrawal to my savings account. This is the simplest and most effective technique of all. If you set up $100/month to your savings account, you will save $100/month. Yes, there are a lot of people who can’t afford that much. Those people are probably not reading this blog. Instead, you’re probably wasting that money on stupid things like eating out, dry cleaning, and late fees, but you just don’t realize it. $100/month turns into hundreds of thousands of dollars over a lifetime, and you can set up an automatic transfer.

In my own ING savings account, I’ve set up multiple sub-savings accounts, including:

(To the 238593285932 people who are going to write me asking how to set up sub-savings accounts: In ING Direct, log into your account >> Open an account >> Orange Savings Account >> Orange Savings Account (from the drop-down). Create the nickname, etc, and you’re done. I don’t know about other accounts.)

The trick is automatic transfers. You’ll work around the amount in your checking account if money is transferred automatically to savings…but it’s incredibly hard to be proactive about taking money you earned, and seemingly ‘giving it away’ to your savings account. We know we’re more motivated by loss than by gain. Sidestep the entire argument and make your savings automatic. Total savings: $1,000/month.

Next steps: Well…we’ve reached the end of the line of the 30 tips to save you $1,000 (see the other tips here). Guys, it’s been a thrill. I spent about 150+ hours writing these tips and was blown away by the response. Tens of thousands of people participated and saved hundreds and thousands of dollars. So thank you for joining in. If you’ve saved using my tips, please let me know how much you’ve saved.

If you liked this tip, check out my Premium tips — one long, tactical tip per week. Save money or get a 100% refund.

Today’s tip is to spend money on things that will save you money in the long term.

Too many people think that “saving money” is about cutting costs relentlessly until they can cut no more. And then…what? Who wants to live like that? Reading some of the frugality sites, it becomes clear in about 2 minutes that you can’t outfrugal a nutty frugal person. And as they say, if you win the rat race, you’re still a rat.

I’ve been crystal clear that when you buy things you want, you should focus on the value, not the cost. That’s why I bought a new (not used) car. It’s also how I distinguish cheap vs. frugal people.

“Saving money,” as I’ve described in this Challenge, is about cutting costs, earning more, and optimizing your existing spending. Instead of constantly looking for ways to cut your spending, sometimes it’s ok to actually spend more in the short term if you’re saving in the long term. This is a bewildering and frightening thought to many people, most of whom don’t read personal-finance blogs, leaving me free to mock them openly.

A great example of this is something like the Entertainment book (or any coupon book). I bought one a couple weeks ago because I can make the $20 back, guaranteed, plus much more. The key, of course, is actually using the coupons when you would ordinarily be going out anyway.

In this simple example, it’s easy to see that the money you spend will be directly made up. Still, many people don’t even want to spend for something where the ROI is so clear. For many people, buying something to save money down the road is unfathomable, confusing, and just plain weird. Those people are crazy and need to understand that long-term savings are still savings, even if you spend a little money right now.

That’s also why this lady who once sat next to me would have been 100% right to pay $2,000 for a computer class.

A fun example of nutty cheap people
To get myself geared up to write this post, I checked out one of my FAVORITE old posts: Stop Being Cheap and Go Buy Something Valuable Today. I had done an earlier webchat and told people I might be starting a paid podcast service. People freaked out:

person1: don’t charge though
person2: yeah, please don’t charge
person3: I have universtiy debts to pay for… =… O(
person4: It feels punitive
person5: your good karma will come back to you muliplied if you do not charge
person6: because people dont want to pay lol my guess is you will lose many readers if they have to pay
person7: No charge….comeon! you cant ask us to pay to learn saving
person8: one thing that would concern me if you charged is that the quality of material would need to match the fee
person9: i think you should charge. you weed out the ppl who aren’t willing to make basic investments in their investments
person10: dont charge
person11: frankly your latest work hasn’t been great ;(
person12: we cheap don’t charge. we hear to save money here XD
person13: suze orman does not charge for her show
person14: Dude, there are people who CAN’T pay. (Me, for example, here in Bangladesh, I don’t have a way to pay for stuff in the web.)
person15: you’ve been giving out quality information for free, i think i’ve gotten used to it…
person16: Charging is not a succesful business model for editorial content on the web, currently
person17: people dont know what the advice is worth before getting it but you have to pay first
person18: you will NOT attract new audience members by charging….existing ones, maybe
person19: Payment is a barrier between the reader and the important information; I would think you of all people would understand how dangerous it is to erect even minor barriers for people.

You really should check out the entire post.

These are exactly the kind of people who are overly focused on cost, not value. They see something that costs $10 and fail to realize that they could save $500, or $10,000, with the advice inside. Do you think any of them have ever bought a book on personal finance? Or attended a course to learn something after they graduated from college?

Of course not. Because it’s transparently easy to see money going out of your pocket right NOW, but it’s harder to understand that you’re actually investing in yourself. And when you invest in yourself, there’s no upper bound on what your return can be.

Applying this to your life: Paying for something that will save you money
Let’s get tactical. What can you buy that will save you money over the long term?

I’ve subscribed to a magazine called Before and After, which gives you great tips/advice on making beautiful designs for websites, graphic design, etc. It’s helped me take some drab stuff that I came up with on my own and make it look a lot better. And based on the rates I pay professional designers, I’ve saved over $800 for the work I’ve been able to do.

What books have you bought to help you save money? Have you picked up something from Suze Orman? Here’s an entire list of books I recommend. Or maybe a book on your job. Come to think of it, when was the last time you asked your boss to attend a conference or buy you an industry publication? At work, I encourage our employees to ask for any resources that will help them do their job. One person asked to attend a conference, which paid for itself in about 4 days when he presented what he’d learned.

The other day I was at Border’s Books and I bought my first audiobook. I forced myself to skip the business section (my friends always make fun of me because I have a bookshelf overflowing with business books, which all look the same to them…they just don’t understand). I bought Madeleine Albright’s Memo to the President Elect CD: How We Can Restore America’s Reputation and Leadership to try to learn from a true leader. It cost $40, which seems outrageously expensive, but there was one line in there that will probably save me tens of thousands of dollars over a lifetime if I apply it. Paraphrased, she said, “It’s sometimes worth trading off efficiency to get others involved and do the right thing.” I had never thought of it like that, and you can bet I’m applying it in business.

Or a trip — when was the last time you invested the money to go meet someone interesting for business? When I was in college, I cold-emailed Seth Godin and told him I wanted to be his intern. I pushed hard to meet him in person and told him I would fly out to New York anytime. He invited me, I bought a ticket, and the rest is history. How much was that $300 plane ticket worth? Over my lifetime, from the things I learned from Seth and the connections I made (including my book agent), it will probably be over $250,000.

Paul from ResultsJunkies puts aside thousands of dollars each year in a “networking budget,” which he uses to meet interesting people, take them out to dinner, etc. This is similar to my idea of The Best $20 You’ll Ever Spend, which is literally the easiest way to invest in yourself.

If it were me starting to think about how to spend money to save money for the first time, this is what I would do:

1. Pick an amount for your “Strategic Spending-to-Save” account. For example, I might start with spending $50 each month on anything that I think will eventually help me save (books, courses, taking someone else out to lunch).

I logged into Mint and added a category: “Spend to Save”

2. Spend the money! Do it each month. At the end of the month, you should end up with $0 in that account. Don’t let the money accumulate. In fact, just like hitting on a girl in a bar, if you don’t do it in the first minutes, you probably won’t do it at all. In the first 5 days of each month, commit where you’re going to spend that money.

I set up a budget for $50/month:

Ironically, unlike the rest of your budget, if you are under your target of $50 for the “Spend to Save” category, you’re doing something wrong. Spend the money to save!

You can open a Mint account here.

3. Come up with a crisp list of things you will spend on. Not sure where to start? Check out the Personal MBA list of 2008 books and the I Will Teach You To Be Rich bookstore.

3. Don’t lie to yourself. Don’t rationalize that buying jeans is going to save you money because you’ll hold it for the long term. No you won’t. You bought those Sevens last year and here you are buying new jeans. Buy something that you could show to your mom, dad, or high-school teacher and say, “I’m buying this to invest in myself and save money.” If you can look them in the eye and say that, it’s probably a pretty good purchase. Books are always a good bet. Courses too. If you have other ideas, leave them in the comments!

4. Apply what you learned. There are millions of people who buy self-help book after self-help book and never apply what they learn. If you do one thing, do this step. Apply just one thing and you will win.

Total savings: Unknown at first, but $50 to $1,000 per month once you start applying it.

Last thing to do
1. Check out the other tips in the Save $1,000 in 30 Days Challenge
2. Leave a comment on this post describing how much you’re saving with this tip and any unusual techniques you use to make this tip work.

If you liked this tip, check out my Premium tips — one long, tactical tip per week. Save money or get a 100% refund.

Today’s tip is to use a featured called “price protection” whenever possible, which lets you protect yourself from price drops. In plain terms: If you buy something and the price goes down, the company will refund you the difference.

Price protection is something you hardly ever hear about, but it tends to be applicable to very expensive purchases…meaning you can save a lot. Here’s how it works: When you make a purchase, occasionally the price will drop shortly thereafter. (For example, on flights, or if you bought the original iPhone and the new 3G iPhone came out a few days later.)

The trick is, many times you can often get refunded the difference. If you imagine a flight dropping $200 (which is very possible), or a new computer dropping $100, that can add up quickly. Let’s take a look at some examples.

Purchases on your credit card
Your credit card will often offer price protection guarantees(more about unusual credit cards rewards).

Here’s an example from Amex:

And my own credit card, the Citi Premier Pass Elite, offers this:

Retail Purchase Protection2
Most items purchased with your card are eligible for protection against accidental damage or theft for up to 90 days from the date of purchase.

Price Protection
If you buy something with your Citi card and then see it advertised in print for less within 60 days, you will receive a refund for the difference up to $250 (excludes Internet purchases and certain items).

Since I am a huge nerd and make virtually 99% of my purchases online, I haven’t used the price protection offer yet. But one day, I have a bright dream that I will purchase something offline and avail myself of the generosity of the corporate automatons at Citibank.

Price protection for travel
Orbitz has an automatic price guarantee that most people don’t know about. You don’t even have to do anything — they’ll just mail you a check if the price drops. (However, I book a lot of flights and I’ve never gotten a check…so can anyone verify this?)

A new travel site on the block is Yapta, which also monitors flights and will refund you the difference in a price drop.

As a sidenote, my favorite travel sites are Mobissimo and Kayak, which give me awesome travel deals.

I don’t really like that ad showing up right above this line but I’m too lazy to crop the photo.

Price protection for general retail purchases
Whenever you make major purchases (say, over $200), you should have a checklist of things to do. Check for discounts, add it to your auto-monitoring for price protection, etc. I’ll talk more about this in another post.

But for now, check out PriceProtectr, which lets you enter your purchases from 150 stores (Costco, Apple, BestBuy…) and automatically monitors the prices to see if you’re eligible for price-protection refunds. Check carefully, though: They still list Amazon as one of the stores they monitor, but Amazon doesn’t do price protection anymore.

Note: Don’t do this for $20 purchases. Don’t waste your time. Just focus on the big 5-10 purchases you make per year and optimize those.

Total savings: $10 to $30 per month

Last thing to do
1. Check out the other tips in the Save $1,000 in 30 Days Challenge
2. Leave a comment on this post describing how much you’re saving with this tip and any unusual techniques you use to make this tip work.

If you liked this tip, check out my Premium tips — one long, tactical tip per week. Save money or get a 100% refund.

Today’s tip is to use barriers strategically to save money.

It comes from Liz Steihart of Los Angeles, CA:

With regard to all emails from retailers or etailers: remove yourself from their daily or weekly email lists. I don’t care if you love the shopbop.com emails, or the updates from Old Navy. Remove yourself and you won’t be tempted to internet shop impulsively because there is a new collection out, it is a new season, there is a sale.

Liz’s key insight is to use barriers to prevent yourself from spending money.

In my original article on barriers, I defined them in two ways:

Active barriers, the kind that stop you from doing something, and passive barriers, whose absence actually stops you from getting things done.

* Active barriers are physical things like the plastic wrap on my food, or someone telling me that it’ll never work, etc. These are hard to identify, but easy to fix. I usually just make them go away.
* Passive barriers are things that don’t exist, so they make your job harder. A trivial example is not having a stapler at your desk; imagine how many times a day that gets frustrating. For me, these are harder to identify and also harder to fix. I might rearrange my room to be more productive, or get myself a better pen to write with, etc.

Read the entire article and check out some examples of barriers.

How to apply barriers to your personal finances
1. When I wrote about how I track credit card receipts, I mentioned that I keep a folder on my desk that I check once a week. This is incredibly useful when it comes to actually managing my receipts. If I kept the receipts all around my house — or even in a folder in the next room — I wouldn’t bother checking the receipts. The barrier and activation energy to locate, gather, and sort the receipts would be too high.
2. Lots of people talk about freezing their credit card in a block of ice, or hiding it with a friend. If you have a problem with self-control, make something as difficult as possible to reach. Watch too much TV? Smash your remote control with a hammer (send me the video, I’ll post it). Eat out too much? Stock your fridge with perishable goods and force yourself to eat at least 50% of them before they go rotten. Your food goes rotten too fast? As soon as you get home, cut everything up and put it into bags that are ready to consume (more about packing lunches here).
3. Liz’s specific point is great: If you find yourself spending too much on shopping, make it harder for yourself to shop! Unsubscribe from all magazines and email lists you’re on. The simple fact is, if things are automatic, you will do them. And as the excellent book Nudge demonstrates, you can engineer whether these automatic things are good or bad.

Key point: Don’t just look for where you’re spending today. That’s surface-level. Look deeper to see what’s causing you to spend, and if you decide you don’t want to continue, then eliminate those causes.

Total savings: $10 to $200 per month

Last thing to do
1. Check out the other tips in the Save $1,000 in 30 Days Challenge
2. Leave a comment on this post describing how much you’re saving with this tip and any unusual techniques you use to make this tip work.

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Today’s tip is to get rid of one service provider you’re currently using (a housecleaner, dog groomer, etc.) and learn to do it yourself instead. This is a small step to take that can amount to huge savings over the long run. And yes, it’s targeted at people who may be using a cleaning lady, gardener, etc. If you’re not, there are plenty of other tips for you.

This tip was submitted by Kris from Franklin Park, NJ who writes:

Stop using one service vendor, and come up with a plan to do it yourself. We fired the cleaning lady, and made it a family project to get the job done ourselves. It takes the family only 2 hours collectively. Even though the kids do very little, we got them involved and and we make it a contest with the kids to see who can vacuum faster. This same trick might work with the dry cleaner, dog groomer and probably many more.

The average American household spends $10,000 on local services like home improvement, entertainment and personal care.

To apply this tip, think about all of the things you’re paying someone else to do that you might be able to do on your own. For example, instead of paying to get your oil changed, learn some auto maintenance and do it yourself. Or:

• Cut your own hair or do your own nails.
• Cook your own meals.
• Get rid of your personal trainer or gym membership altogether – run or bike instead.

By the way, as a trick to make this actually work, I’d suggest just picking one provider and cutting costs deeply, rather than cutting costs 10% across a few different providers. This can be either quitting cold-turkey, or extending the time between visits.

Total Saved: $20-$100 / month.

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Last thing to do
1. Leave a comment on this post describing how much you’re saving with this tip and any unusual techniques you use to make this tip work.
2. Want to submit your own savings tip? Submit a money tip here. If I use your tip, I’ll send you something cool.

If you liked this tip, check out my Premium tips — one long, tactical tip per week. Save money or get a 100% refund.

Today’s tip is to earn more money by freelancing on the side. It sounds harder than it actually is — I’ll show you how below.

As I wrote during the presidential debates, you really have two levers to control when it comes to your money: Making more (revenue) and spending less (costs). Most Americans only think about cutting costs, resulting in frugality websites that frantically try to out-do each other with the most inane and meaningless tips of all. Don’t eat out at all! Scrape foil off the sidewalk and use it to pack your lunch! Ok, I’m sure I’ll do that.

We forget about the lever of earning more money, which is the most powerful of all. You can do this in a bunch of ways:

• Negotiate your salary at work (I’ll write about this in an upcoming post)
• Start a second job (yes, about 4 billion people in the world do this…instead of reading blogs)
• Freelance for something you’re very good at

And on and on.

The money is there, but it’s really hard to get the initiative to try to earn more money, knowing that you’ll probably fail the first 10 times. I can’t help you with the initiative, but if you’ve decided to earn more, I can show you how. Today, we’ll talk about the freelance route, Q&A-style:

Q: What’s freelancing?
A: It’s just doing part-time work for something you have a particular expertise in.

Q: But I don’t have any expertise!
A: I bet you do. Can you do math? Then you can freelance by tutoring kids in algebra. Do you know how to hike? Then, with a class or two, you can become an instructor for the local recreational hiking class. If you play tennis or you’re a web developer…you get the idea. Think about what you’re good at, then ask yourself how you can use it to help people.

Q: But I really don’t have any expertise.
A: Really? Do you speak English? You can tutor a foreign student easily. When I was in college, I consulted for a couple venture-capital firms teaching them about YouTube and social networks — stuff that I used every day. (I’ll never forget being in a professional conference room and showing a bunch of partners how guys check out girls on Myspace…it may have been my life’s crowning achievement.) The key is, think about what you know and who would want to know it.

In January 2007, I posted a job ad for various positions. I ended up hiring a guy named Jeff as my book researcher — which means he has the ability to dig up anything, any time, and quickly. Could you do that? Besides Jeff’s amazing research abilities, he was being able to connect his skills (’I'm really good at finding information’) with an opportunity he saw. More importantly, he took the initiative to (1) reach out to a site he read regularly, (2) turn in a great application, (3) show that he could do the work over a trial period. He’s now a regular paid consultang on multiple projects with me — all because he took the initiative to reach out.

Q: Ok, I know what I want to freelance for. What now?
A: Go to the places where people would want your skills. If you’re tutoring kids, go to Craigslist and search for “math tutor.” It literally took me 15 seconds to find this “Tutor needed” post — which pays $15/hour.

Email all of your friends and let them know you’re looking for a position. Tell them specifically what you’re (1) looking for, (2) what skills you have, and (3) put it in an email that they can just forward. A friend of mine named Ian did this yesterday, and I forwarded his resume to a few friends, a couple of whom are really interested. People want to help you.

Q: What should I avoid?
A: I avoid Elance because everybody tries to undercut everyone else (but I LOVE it when I’m hiring). By contrast, you should definitely look at Craigslist since (1) there’s an incredible amount of buyers and (2) everyone else is so horrible that if you can write a half-decent sentence and restrain yourself from including a picture of your penis, you can almost certainly get a freelance gig.

Don’t be utterly concerned with making top-dollar on day 1. Check out this great post by Ben Casnocha, who describes the professional-speaking circuit. I can tell you that I spoke for free for many years before charging even a little…and it took even longer to charge significant rates. When you see a consultant who charges $150/hour, it took a long time to build up that skillset. Be comfortable starting modestly.

Q: What kind of money can I make freelancing?
A: This is important: You should first plan your goals with freelancing. Do you want to make enough to cover your weekend going-out costs? If so, then you only really need to make about, say, $100 per week. That’s about 5 hours @ $20/hour, or 7 hours @ $15/hour. Once you have your goals, you’ll have a better idea of how to package yourself to buyers. In general, first-time freelancers can charge $10 to $25/hour, but it really depends on your skills, location, and market demand. For example, I pay some of my contractors over $150/hour, but others work for free to develop their skills and build a relationship for future work down the road. Although the eventual point is to make money, don’t lock yourself in to charging high rates up front. See On Greed and Speed for more on that.

Example:: If you tutor for $20/hour, 4 hours/week, that’s about $320/month. Not bad. If you tutor for $20/hour, 10 hours/week, that’s $800/month. Now we’re talking. That’s money you can save, invest, and spend on the things you love.

A final point about lazy people who complain and do nothing to earn more money
Nothing makes me angrier than people who complain about their financial situations but do nothing to solve it. If you truly believe that you can’t freelance for anything, that’s The Shrug Effect in action. Look, almost anyone can earn more money, but most of us sit on our asses and complain about taxes instead of trying to earn more. Yes, it’s hard. Yes, there’s no clear path. But the rewards are enormous, and I’m not just talking financially.

You can’t think of anything you’re good at? Ask yourself what you’re doing right now: You’re reading my blog. Do I have any needs? Of course I do — I want to grow my site, add cool new content, etc. So how might you be able to help? Think about it tactically: “Hmm…I read Ramit’s site…maybe I should email him and send him a bullet-pointed list of things I’m good at that might help him. Who knows if it’ll work? But I’ll do this for my favorite 20 blogs and stay in touch with them over time.” In fact, I’m looking for a book reviewer and someone who can help me design a great-looking Powerpoint presentation. Please get in touch if you’re interested.

Do you read magazines? Send an email to anyone who was featured in there and let them know you love what they’re doing, and you’d love to help out in [3 SPECIFIC WAYS]. Nobody does this, so you’ll stand out. At the very least, you’ll quickly find out what skills people are looking for. Do the same for interesting people you meet online. Tell your friends what you’re looking for. And don’t be afraid to start off small (or free).

Email template that you can use:

Hi Mike,

My name is Ramit Sethi and I’m a recent Stanford grad. I’ve been reading your blog for two years (I loved the post about using virtual assistants and got BOTH of my brothers to start using one), and it’s really helped me be more efficient with my work.

It occurred to me that you’re probably interested in growing your blog. I might be able to help. I’ve done video editing (http://www.FAKESAMPLESITETHATYOUDID.com) and Powerpoint design (http://www.BLAHANOTHERFAKESITE.com). Imagine doing a great video on using virtual assistants, then distributing it through your newsletter. I could do one for you in about 2 days if you’re interested.

How about chatting later this week? My # is XXX-XXX-XXXX or I can give you a call at your convenience.

Thanks,

-Ramit

Total savings: $100 to $1,000 per month

Get advanced tips to earn more money. I’ll be running a private 1-week advanced course on earning more — with materials, scripts, tactics, and techniques that you won’t see on the blog.

Join the free advanced course to earn more money.

Check out the 18-minute interview below!

RSS readers: Can’t see the MP3 file? Check out the full interview page here.

Questions in the interview:
* Ramit, how many people are taking the $1000 challenge?
* What is the demographic of your blog readership AND what demographic (in terms of income) is your challenge aimed at? (Mrinalini Kamath, New York City)
* What is the most useless thing people try to do to save money (i.e., they think they will save money, but they instead lose money). Investing doesn’t count. (Aaron Thorne, St. Louis, MO)
* Once you’ve saved 1,000 what should you do with it? straight into savings? Into a CD? Cash under the pillow? (Mike Koehler, Oklahoma City)
* Why do you care if others get rich? (Chris R Rinehart, West Des Moines, IA)
* How do you respond to the level of criticism you have received in regards to participants saving money? Many are claiming to save significantly less than you have forecasted. While individual results may vary, do you feel your saving predictions are/were accurate? (Alex Furst, Columbus, OH)
* If you consider the number of people taking this challenge, the average amount they would have saved so far, and add that all together – how much money has been saved total since you started this challenge? I’ve saved $360, if that helps. (Troy Costlow, Chicago)
* You wrote about a couple of very useful web sites — BillShrink and a site called Stickk.
* In your day job, you’re co-founder and VP of marketing for PBwiki – tell us a little bit about this venture.
* One last question: You want to get rich? you want to get famous? You want to get paid to give speeches? Get a book deal. Ramit, how did you get yours?

If you haven’t already checked out the Save $1,000 in 30 Days Challenge tips, scroll down on this page to see them.

If you liked this, check out my Premium tips — one long, tactical tip per week. Save money or get a 100% refund.

Today’s tip is to cut your commute expenses by 40% using two techniques: Carpooling and working from home.

Tip #1: Carpool
Carpooling is a sacred cow for Americans, which is exactly the kind of expense I love to cut. We spend incredible amounts of money and time commuting. As Gallup reports, the average American spends 46 minutes commuting to/from work each day. But any advice that suggests you sell your car and exchange it for a bike is totally irrelevant for the vast majority of people. Instead, I propose something much more modest.

Forget carpooling 5 days per week. Try carpooling 1 day per week. That’s hardly inconvenient, yet you save about 50 days of carpooling per year. At the peak of gas prices, I spent about $65/week on gas. If I carpooled just 1 day per week, that would equal about $465 in savings over 1 year. (Note: Here’s how I save more money on gas.)

The key: Start small. Don’t try to turn into Al Gore on day #1. Set a smaller goal so it’s sustainable: Try 1 day per week. That’s it.

First start, then optimize
Yes, technically you have to factor in the costs of driving your carpool buddies once every few weeks, but for the sake of simplicity, we’ll just exclude that. In fact, forget all barriers. As usual, it’s easier to ramp up once you’ve started:

“During this past summer I spent as much as $300 per month on fuel not to mention wear and tear on my vehicle. I am currently paying $45.00 per month to ride the Van Pool. An instant savings of $255.00 per month on fuel. Take that OPEC!”
–Marcos Martinez, Katy, TX

Use these sites to start:

• Craigslist Rideshare (link takes you to SF Bay Area)
• Carpoolworld

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Tip #2: Work from home
Consider asking your boss to work from home. In The 4 Hour Workweek (see my book review here), Tim Ferriss outlines how to ask your boss to work from home.

Sherwood: Hi, Bill. Do you have a quick second?
Bill: Sure. What’s up?
Sherwood: I just wanted to bounce an idea off of you that’s been on my mind. Two minutes should be plenty.
Bill: OK. Shoot.
Sherwood: Last week, as you know, I was sick. Long story short, I decided to work at home despite feeling terrible. So here’s the funny part. I thought I would get nothing done, but ended up finishing three more designs than usual on both days. Plus, I put in three more billable hours than usual without the commute, office noise, distractions, etc. OK, so here’s where I’m going. Just as a trial, I’d like to propose working from home Mondays and Tuesdays for just two weeks. You can veto it whenever you want, and I’ll come in if we need to do meetings, but I’d like to try it for just two weeks and review the results. I’m 100% confident that I’ll get twice as much done. Does that seem reasonable?
Bill: Hmm…What if we need to share client designs?
Sherwood: There’s a program called GoToMyPC that I used to access the office computer when I was sick. I can view everything remotely, and I’ll have my cell phone on me 24/7. Sooooo…What do you think? Test it out starting next Monday and see how much more I get done?
Bill: Ummm…OK, fine. But it’s just a test. I have a meeting in five and have to run, but let’s talk soon.
Sherwood: Great. Thanks for the time. I’ll keep you posted on it all. I’m sure you’ll be pleasantly surprised.

Read more of Tim’s script in the section called “Disappearing Act: How to Escape the Office” of The 4-Hour Workweek.

The point is, during times when we’re all supposed to be doing more with less, if you can be more productive while working from home, your boss may seriously consider it. Most people never ask, so they never have the chance to trial a work-from-home strategy…even one day per week. (At PBwiki, the company I co-founded, we actively encourage people to work from home once a week.) What’s the worst he could say — no?

Just remember, your boss doesn’t care about you — he cares about how much you can (1) help the company and (2) make him look good. Frame your request accordingly.

Total savings: $100 to $300 per month if you apply both these tips (i.e., you’d be saving on your commute 2 days per week, or 40% of your commute).

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Last thing to do
1. See other tips in the Save $1,000 in 30 Days Challenge
2. Leave a comment on this post describing how much you’re saving with this tip and any unusual techniques you use to make this tip work.

If you liked this tip, check out my Premium tips — one long, tactical tip per week. Save money or get a 100% refund.