Here’s an 18-minute interview about the Save $1,000 in 30 Days Challenge

December 2 5 Comments latest by Coel

Here’s an interview I recently did about the Save $1,000 in 30 Days Challenge. I decided to ask you guys what questions you wanted me to answer, so I collected a ton of interesting questions from the Challenge email list and sent them to the interviewer.

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.

(4 votes, average: 5 out of 5)

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5 Comments latest by Coel

Tip #24: Cut your commute expenses by 40%

December 2 29 Comments latest by Susan

This is Tip #24 of of the Save $1,000 in 30 Days Challenge. (See past tips.)

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

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).

* * *

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.
3. Want to submit your own savings tip? Submit a money tip here. Most of the tips you guys submit are absolutely horrible, so if I use your tip, I’ll send you something cool.

(8 votes, average: 3 out of 5)

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29 Comments latest by Susan

Tip #23: Go cash-only for 15 to 30 days

December 1 21 Comments latest by ngk

This is Tip #23 of of the Save $1,000 in 30 Days Challenge. (See past tips.)

Today’s tip is to use cash during the 30 Day Challenge. No, this is not an unusual tip, but I’m going to try to add some nuance to it besides “CREDIT CARDS ARE BAD!!!!!” Most people who recommend using cash recommend using only using cash, because they think that credit cards are evil. They are wrong.

Credit cards can be extremely useful because they offer excellent consumer protection, tons of bonuses, financial automation, and they’re an interest-free loan if you pay them off in time. Most importantly, if you use them responsibly, you build your credit. And if you think credit doesn’t matter (I’m talking to you, Dave Ramsey fans), take a look at how much it would cost you to get a home loan these days:

(Check your credit score here.)

The tradeoff with using credit cards, of course, is that it’s much easier to overspend. I wish I could quote you research on whether credit cards cause more spending, but the data are murky and biased, so I’ll just share what happened with my own personal experience.

Case study: Using cash to save 18% in 2 weeks
Recently, my credit card got stolen. I had to wait about a week before my new credit card arrived in the mail, so I withdrew a few hundred dollars in cash. Once I got my credit card, I was lazy and didn’t call to activate it for another week, so for two weeks, I was paying with cash. And because all of my subscriptions sent me a note that they couldn’t process my card, I had to actively decide if each one was worth it…resulting in over $100/month of savings from canceled subscriptions.

Interestingly, not counting the subscriptions, I spent about 18% less over that 2-week period.

Why using cash cuts your spending
1. You’re forced to be a conscious spender about what you pay for. Rather than blindly using your credit card and deferring whether it’s worth it or not until your bill comes — by that time, it’s too late — using cash forces you to make that decision when you pay.
2. You withdraw a limited amount and watch it dwindle. It’s very primal: Since we’re more motivated by loss than by gain, each dollar you physically spend will cause you pain…the good kind of pain.

How to make this tip work: Use the Envelope System

“The envelope budget system has helped me save money because it allows me to see REAL money being spent rather than using my debit card. You basically take out what you expect to spend on each category (eating out, clothes, household, etc.) each paycheck and put it in envelopes or a filing system. You only spend that amount per pay period or month and that’s it! As time goes by, you can see where you really need to cut back because you’ll have money left over in areas that you shouldn’t and probably realize you eat out too much!

After a few months, I’ve been able to trim off a good $100 per month on things I finally realized I need to cut back on once I saw REAL MONEY being used.
–Antoinette Andrews, Memphis, TN

You can read a more detailed writeup on the Envelope System here.

TO DO: Use cash for a limited time period — say, 15 to 30 days. Use the Envelope System to decide how much you want to withdraw. If you’re illiterate/too lazy to click that link, just withdraw $200 and force yourself to make it last for 2 weeks.

Don’t try to use only cash forever — it’s just not a smart financial move. But for the next 15-30 days, measure how much you spend using cash. If you use a personal-finance system like Mint or Quicken, manually enter your transactions within 2 days so you don’t forget them.

And remember: The point isn’t to save hundreds of dollars using this tip, but to force yourself to actively spend and notice what you’re overspending on. Eventually, using credit cards responsibly is a positive thing. Using cash is an excellent way to force yourself to consciously notice where your money is going, and adjust your spending going forward.

Total savings: $50 to $300

* * *

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.
3. Want to submit your own savings tip? Submit a money tip here. Most of the tips you guys submit are absolutely horrible, so if I use your tip, I’ll send you something cool.

(6 votes, average: 3.33 out of 5)

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21 Comments latest by ngk

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