This is tip #9 of the Save $1,000 in 30 Days Challenge.
Today’s tip is to keep an “Item Budget” in your house — and before you buy something new, you must get rid of something old.
This tip was submitted by Evert from London, UK, who writes:
When buying things like clothes, set a rule for yourself that you can only buy something new, to replace something you already have. For example, from a practical point of view, let’s say you need to have 15 business shirts. Set a ‘budget’ of having 15 shirts, and then when you want to buy one, first throw away (or give to charity) the worst of the other. Can’t make a choice which one to throw out? Guess what: you won’t need a new shirt.
Before buying anything, think ‘how many of those do I need?’and ‘how many do I already have?’, then think again if you really need a new one. The same applies to electronics and all sorts of other stuff (want a Playstation 3? Sell the Wii / blueray player / old laptop / etc. )
Applying the rule will have two benefits: less drawers and closets of stuff you still want to keep but never use, and spending less money because you’re more conscious about what you already have.
Ok, there are 2 things to note about this tip:
First, this is the kind of tip that’s easy to gloss over (“yeah, yeah”) and not do anything about. But I think about this as an active barrier (learn more about barriers) — something you consciously add as a roadblock before you can buy something new. The psychology of having to open up your closet, decide what to give away, and get it to the nearest charity (or garbage can) is enough to stop many of us from buying something new. Plus, it just keeps things neater around the house.
Second, this tip is starting to focus us more on being goal-driven: If you have a goal (“Save $1,000” or “Only have 15 business shirts at any given time”), your decisions become a lot easier. ‘Should I get that shirt? Hmm…let me check my goals. Nope, if I buy that, I can’t save $1,000 this month, so forget about it.’ When you’re not goal oriented, it’s like a neanderthal walking into a crystal shop. Everything is shiny and you’ll buy anything indiscriminately. When you have a simple overarching goal, you have a rubric to measure your decisions against. (You should share this with anyone else in your family so they’re on board, too.)
Personally, I had to buy a new coat last week to go to Chicago. As a result of this tip, I’ve taken out three old shirts from my closet to give away to charity.
Total Saved: From $10 to god knows how much you would have bought otherwise.
* * *
Last thing to do
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 found this post helpful you’ll probably like my new Ultimate Guide to Personal Finance. This is an excellent place to learn more simple ways to improve your personal finance and money management.