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Tip #30: How I’m saving $25,000+ in 2009

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

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:

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 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 (now called Capital One 360), 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.


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  1. What percentage is $25,000 from your salary?

    I plan to save 30% this year

  2. I plan on saving 50% of my net income this year.. it’s my new challenge. Dunno how that’s going to work out, but I love that you’re a PF’er.. but not a hardcore “eat toilet paper rolls’ …

    I do agree with saving on the big things which is the gist of your post along with automatic savings. People economize on lattes but then go out and buy a fancy iPod or a car for more than what it costs to have a latte every day for a month.

    Who’s the other major bank you use? I’m moving to the States soon and I want to go with ING almost exclusively, but am sure I will need another bank.

    Fabulously Broke in the City
    Just a girl trying to find a balance between being a Shopaholic and a Saver…

  3. can you explain more about using a wiki to manage passwords, (i.e. security?) and also about password services. These sound like great time saving ideas, but I have concerns about security and am curious if you have suggestions on specific service providers. Thanks!

  4. I didnt exactly participate in the challege, but we do the majority of these things already, and they work.

    This year, we paid off all credit cards and car loans, totaling more than $20K. We now save a little more than 40 percent of our salary every month, and we have an emergency fund.

    At first it seemed like a punishment, but you learn you don’t need half the junk you waste money on…you just think you do. And letting go of all of that “want” is freeing…maybe even better than the cash savings.

  5. Terribly dumb question, feel free to strike me down as necessary. When you break your ING into subgroups do you earn earn the same APR for the total amount or for each sub group? Wait mathematically does it even matter?

  6. A figure like $25000 is meaningless unless its a percentage. Last I heard, thats about as much as a large portion of America’s population makes in the entirity of a year.

  7. What if I said it was 5%? 10% 50? How would that change things?

  8. It would change things because it would mean save 5%, 10%, or 50%, not save your entire income.

  9. #5 – “If you’re not comfortable with this, find a friend (just look at your Facebook for someone named Raj or Ramu) and offer then 50% of whatever they save you. “

    Are you seriously saying that I should try profiling my Facebook friends?

    I agree on your tactic of negotiating, but if you’re not comfortable with it – get comfortable with it.