I still hear people saying “I can’t compete against professional investors…they’re pros and I’m just a little guy.” Wrong. I am going to hammer this in 1 billion times: It’s not about being the smartest person or knowing insider investment information. Take Erik, for example, who’s doing it with just a little discipline and common sense.
My fiance and I got engaged in May 2005. We decided to get married on Sept. 17 2006 and made the decision to pay for it ourselves, and not go into debt doing so. This was not an easy task – we bought our first home a few months prior to getting engaged and at the time I was working full-time while and my fiance was only working seasonal jobs.
We looked at our expenses for two months and saw where money was going. Then my fiance started what she called the “cash diet”. At the beginning of every month, we’d withdraw an amount of money enough to cover groceries, gasoline, eating out, and miscellanious expenses that came up. The money was placed into seperate envelopes and stayed at a central location in our house, so we could not spend the cash on whim while we were out. In order to spend money on something, we’d have to plan ahead so we had it with us. Our bills would just be paid online as we recieved them, and nothing would go on credit cards. Through this cash diet, we estimated we could save at least $700 a month.
Amazingly this change of perspective worked. Our first month we saved over $1000, despite having some expenses that we did not expect. More importantly we felt like we were actually SAVING, and not living paycheck to paycheck. We don’t feel like we are giving up any luxuries and the peace of mind is great.
The cash diet worked so great in fact, that by the end of the month we’ll have enough in the bank to pay for the wedding. We’ve decided to keep on the diet. Hopefully this will save us enough to go on a honeymoon and after that – who knows?
Secondly, far too many people think they need to have a new car every 2 years. I drive an 11 year old Geo Metro that I got FOR FREE – someone just gave it to me. Since I do my own repair work, it’s really cheap to maintain and drive. It’s really reliable and have never done anything more than routine maintainance on it.
A friend of mine was poking fun at me, trying to get me to ditch the car and get a brand new one. He was particulary amused by one of my mirrors, which I had broken off accidently when I was carrying a ladder. It had only been a few days since that happened and I did not have a replacement yet, all I did was strap it down with some twine to hold it in place temporarily.
I asked him how much he paid, per month, for his car. $350. I told him that for what he pays in one month on his new car, I could buy a new mirror, new floor mats, new seat covers, oil change, and still have money left over to go to a few nice dinners. This car’s function is to get me from point A to point B and as soon as it can no longer do that safely and reliably, I’ll get rid of it. (But I’ll replace it with another used car).
I get a lot of laughs out my old car, but the one who laughs loudest is me… all the way to the bank.