3 Simple Money Habits That Changed Our Life

We're wrapping up our Detox Your Money Challenge with 3 simple money habits that changed our lives! We aren't done sharing money tips though, be on the lookout for more coming soon!

>>>> If you feel like you need to detox your money, get help here.

3 Simple Money Habits That Changed Our Life

1. We avoid buying on impulse. If we do, we return it.

Impulse buys, whether they are at the grocery store, department store, or gas station, can eat up a large chunk of your budget without you even really realizing it. If you are out with friends and decide to stop and get a coffee, there goes $4. Then you pick up a few items at the checkout at the grocery store and there's another $10. These small expenses really add up over time.

We aren't immune to these. I would say that Costco is the place where a lot of our impulse buys happen (maybe because that seems to be the place where we spend our time shopping!). We will end up with a lot of stuff we needed and quite a few things we didn't. Once we get home we realize we probably didn't need another flannel shirt or more bowls so we return the items we don't use. As long as you haven't used something and it fits within the store's policy, there's no reason to not return something you aren't going to use.

2. We spend less than we earn.

This one sounds easy but tends to be the hardest for people to accomplish. Your main bills (mortgage/rent, utilities, etc.) should be pretty consistent each month. Figure out what those are, then add in the variable expenses like groceries. This is the minimum amount of money that you need to make. If you don't make that money at your current job you have a few options or a combination of options. You can find a way to reduce those expenses even more, look for another job, a second job, or start selling things you don't need or use. We made thousands of dollars last year selling things we no longer used.

If you do have extra money left over after your bills, use it to pay down debt, start an emergency fund, or save for retirement! Keep in mind while shopping that it doesn't matter how good of a deal it is if you don't need it!

This might be a good place to mention that we actually DO use credit cards. We actually use credit cards for every single purchase we make. The difference is that we pay them off in full every single month. We use them to accumulate points for cashback and/or travel. Credit cards are often times more secure than debit cards as well. This strategy only works if you actually pay them off in full every month. If you rack up credit card debt in the name of getting points the amount you pay in interest will likely outweigh any credit you receive.

3. We don't care about what other people are doing or buying.

This is commonly referred to as keeping up with the Joneses. We've both always had our "blinders" on when it comes to what other people are doing. We don't care about what kind of house, TV, car, etc that someone else has. We focus on our goals and what we need to do to accomplish them. Trying to keep up with what other people have will leave you broke and exhausted. Keep your focus on you and your family.

I hope these give you a fresh perspective and try to incorporate them into your life. You may also be interested in 3 Simple Fitness Habits That Changed Our Life and 3 Simple Eating Habits That Changed Our Life.

Join one of our popular Money Saving Challenges and read through more finance related posts below!

RELATED:

• 18 Ways to Save $15,000 in 2018
• How We Ditched Cable TV
• 6 Simple Ways to Save Money (and Calories!) at Restaurants

5 Smart Ways To Use Your Tax Refund

According to data released by the IRS, the average tax refund this year will be about $2,900. Without a doubt, you’re relying on that refund to provide a nice cash infusion after a spendy holiday season, so we wanted to give you a quick rundown of some smart ways to put your refund to good use.

However, before we get into those ideas, we want you to make you aware that getting a refund is in no way free money! Hopefully, you know this by now, but the money you’re getting back from Uncle Sam is money you should have had last year. That’s almost $250 extra each month that you basically let the government borrow for free! If you would have put that $250 extra from last January’s paycheck into your 401(k) or Roth IRA in an S&P 500 index mutual fund, you’d be $55 richer today...and that’s just the return on one month’s pay for the entire year! If that doesn’t convince you, the $2,800 average refund from the prior year would now be worth $3,500 if it was sitting in that S&P 500 index fund at the start of 2017! If you’re not in a position to save for retirement, that $250 extra each month could be used to eliminate the need to go into debt.

So, if you’re getting more than $500 back this year, we suggest updating your W-4s with your employer to have the additional amount automatically added to your 401(k). The withholding rates are changing this year as at least 80% of American taxpayers will see an increase in their take-home pay thanks to the 2017 tax reform, so even more reason to update your W-4! You can use the IRS withholding calculator (to be updated by the end of February) to fine-tune your withholding to make sure you maximize your take-home pay. You can also seek guidance from your tax advisor, a local Enrolled Agent or your HR department if you’re not sure how to change your W-4.

If you rely on your refund as forced savings, that’s fine, but use the money wisely rather than splurging on something when you have debt you can pay down or savings that need to be optimized. With that said, below are 5 smart ideas on what to do with your refund.

>>>> Ever feel like you need to detox your money?

5 Smart Ways To Use Your Tax Refund

1.  Pay off/down credit card debt:

According to a study recently performed by NerdWallet, the average household credit card debt is nearly $16,000 and Americans pay an average of $904 in annual interest on the revolving debt. What better way to put the average $2,900 refund to use than to pay down a huge chunk of your credit card debt? If you have balances on multiple cards, pay down the balance with the highest interest rate first in order to save on accrued interest. The good news is that 41% of respondents to a NerdWallet survey say unnecessary spending is what has caused them to rack up credit card debt...stop spending foolishly and put your refund to work!

Use one of our money saving challenges to pay off debt quickly!

2.  Pay off/down student loan debt:

According to the same study, average American household student loan debt is about $47,000. Sure, student loans carry relatively low-interest rates, so your priority should be paying down credit card debt if you have a balance on a card with a high-interest rate, but this is the next area to tackle given the magnitude of the debt. What’s more, this greatly enhances the return on investment you’re getting on your education as you pay down the debt faster than your income level increases...this is finance savvy at its best!

3.  Save for your “rainy-day” emergency fund:

If you don’t have at least 6 months of take-home pay in a savings account, but you are in a good position with your debt, pour your tax refund into your savings account. According to a survey conducted by GOBankingRates.com, 57% of Americans have less than $1,000 in savings...this is great for retailers and banks, but terrible for your wallet! If savings are too low, you can’t handle emergency expenses and are forced to go into debt to fund those expenses. Putting those expenses on your credit cards makes them at least 15% more expensive based on the average interest rate charged (so, a $1,000 emergency expense is actually $1,150 on a credit card if you don’t pay off your balance in a timely manner).

RELATED: 18 Ways to Save $15,000 in 2018

4.  Save for a down payment on a new home or, if you’re not in the market for a new home, pay down principal on your mortgage:

If you know you’ll be in the market for a new home in the near future, putting your refund into savings toward a down payment on your purchase is a certainly another great idea. You should try to save for a 20% down payment in order to eliminate the requirement of wasting money on Private Mortgage Insurance (PMI). PMI is paid to protect the lender in the event of default and never gets refunded to you. PMI is expensive - as much as 1% of the value of the home, so a little more than $200 per month on a $250,000 home. If getting a tax refund is like giving an interest-free loan to Uncle Sam, consider PMI and interest-free loan that is never paid off!

If you are renting with no intention of buying, keep pouring that money into your emergency fund!

Note - if you’re paying PMI and want to learn how to eliminate it - read this!

5.  Save for an awesome vacation:

We opted out of giving an interest-free loan to Uncle Sam long ago, so we like to think of the extra money we get each month as going toward our vacation fund and we’ve taken some amazing budget-conscious trips over the years. If you’re in a great position with debt and savings then bon voyage! Here are some ideas for really cool trips that don’t have to break the bank.

Other ideas:

• donate to charity
• pay off a car loan
• open a Roth IRA
• make an extra mortgage payment, and/or refinance your mortgage

We hope you were able to get some ideas on what to do with your tax refund or how to stop giving Uncle Sam free money, but please let us know in the comments section if you have any questions. Also, share this post with someone that you believe could benefit from it...our goal is to help those millions of Americans that are either in debt or have trouble saving. Thanks for reading!

18 Ways to Save $15,000 in 2018

If one of your main goals for 2018 is to get your personal finances in order, then we have put together a great game plan to help you! Below are the first five steps/tips that we recommend you take:

• Set a goal – we recommend saving six months’ worth of your income
  • Related: Money Saving Challenges
• Develop a plan – the ideas below may help you reach your goal, but it’s important to do a financial review to determine where and how much you’re realistically able to save
• Make it difficult to overspend – carve out a day each week (for example, No-Spend Mondays) to avoid spending frivolously on things you don’t necessarily need to collect or consume (excluding crucial recurring expenditures like gas, bills, groceries, etc.).  Have this same day serve as a time to complete your financial review to help you avoid impulsive purchasing.
  • Related: No Spend Money Saving Challenge
• Make a list of helpful financial guidelines (ours are coming soon!)
• Track your spending using a site like Mint.  There are several websites and apps out there, but we’ve used Mint for many years and highly recommend it due to its simple approach to budgeting.

Now, if you are looking for ways to save even more money you are in the right place! Below is a list of 18 ideas for 2018 to help you save $15,000!

Disclosure: This post may contain affiliate links. Check our disclosure policy for more details.

If you really want to step up your game, join our Detox Your Life Challenge! Also, join us on Instagram, Pinterest, and Facebook for more tips!

18 Ways to Save $15,000 in 2018

1.     Max out your employer’s match on your 401(k) to earn free money and save on your current year tax bill

A single person making $40,000 annually and setting 6% of their pay into a 401(k) will save approximately $500 in taxes by utilizing the tax deferral and will receive $1,200 in “free money” assuming the employer matches 50% of the 6% contributed.  This means that your out-of-pocket contribution of about $1,900 per year is actually worth $3,600.

Speaking of taxes, here are 5 smart ways to use your tax refund.

$1,700 total saved annually ($1,200 earned + $500 saved) 

2.     Declutter your home and sell things you no longer need (or cash in on those impulse buys you made)

List items like furniture or other items of significant value on Facebook Marketplace or Craigslist.  If it’s something small and you’re not worried about shipping, list it on eBay and start racking up on cash to help you reach your savings goal.  Take clothes you wear less than once a month to your neighborhood consignment shop (we've had great luck with Plato's Closet) if they’re not worth anything on eBay.

A great starting point is this checklist of 10 things to get rid of for a clutter-free home. You can also take part in our 30-day minimalism challenge.

Our story coming soon on how we earned over $8,000 by decluttering and simplifying our home.

Easily earn up to $1,000 annually  

3.     Skip the weekly bar/pub visits

It’s okay if you want to engage in social activities a couple times a month for big celebrations (friends or family birthdays, closing a big deal at work or delivering a high-quality project/presentation to your boss), but it’s not necessary to hit up the bar or pub multiple times a month just to unwind after a long workweek.  Instead, go for a hike on the weekends and unwind with nature – several new studies are showing time in nature is beneficial for your mental and emotional well-being. Read about our hikes here.

Check out these 6 tips on how to save while dining out.

About $1,300 saved annually

4.     Reevaluate your gym membership options

Boutique gyms like your local CrossFit or Orangetheory are very taxing on your wallet.  Instead, try out one of our workout plans and shoot to spend no more than $40/month on a standard gym membership (Orangetheory unlimited and CrossFit are about $150/month on average). 

We just transferred to Workout Anytime after waiting to secure the best deal and paid $420 for two years total for the Friends & Family plan – that’s only $17.50/month for both of us!!!

We have a ton of free workouts on the website and also offer workout plans that cost less than the price of one session with a personal trainer!

About $1,300 saved annually

5.     Ditch the dish or cut the cable!

If you need more to watch than Netflix or Amazon Video, go with SlingTV or PlayStation Vue (if you have PlayStation).  According to our research, the average cable and satellite TV plans cost more than $120/month.  Compare that to SlingTV’s plans of $20-$40/month or PlayStation Vue’s plans of $40-$75/month and you can save big!

Related: How We Ditched Cable TV

SlingTV savings of $960 - $1,200 annually

PlayStation Vue savings of $540 - $960 annually

6.     Turn your free-time into cash

Why waste time watching Netflix when you can turn your free-time into easy cash by taking online surveys?  Check out https://www.frugalforless.com/best-survey-sites/  for the best survey offers.

Earn at least $1,000 annually by spending only two hours a week (you can use those two hours saved by not going out and buying drinks and come out at least $2,000 ahead!)

7.     Seriously, it’s time to kick Starbucks to the curb…and this is more than financial!

I buy some really great 2-pound bags of organic coffee beans at Costco (or 5-pound bags on Amazon) for only $9 when they’re on sale, which works out to only 24 cents for a strong 12-ounce cup of coffee.  24 cents!!!  Compare this to the average $3.25 spent daily on coffee from Starbucks and you spend about $1,200 annually versus $160 (incl. coffee grind and brew machine) for good, freshly ground organic coffee from home. And, no, don’t use a Keurig either!  Here are some reasons why.

About $1,000 saved annually

8.     Start bringing lunch from home

Quit dining out for lunch and eat at your desk – you’ll be more productive and save money.  You may even be able to leave earlier on Fridays thanks to the increased productivity. Plus, you can eat much healthier by making your own lunch!

We have a ton of recipes that you can make and take for lunch!

Average of $1,200 saved annually – assumes average cost $12 per lunch when dining out versus $4 from home – three times per week

• 2x per week savings = $832/year
• 3x per week savings = $1,248/year
• 4x per week savings = $1,664/year

9.     Limit (or avoid) impulse purchases at retail stores

Grocery and warehouse stores are laid out in a way to make you spend impulsively.  If you have a Costco membership then you know this concept all too well!  Whitney will carry something in her hands around the store to determine whether or not she really needs the item (psychologically, it makes perfect sense).  You can try this approach or simply challenge yourself to pull three things you don’t need from your grocery cart at checkout each week. 

About $500 saved annually

10.  Limit (or avoid) impulse purchases online

Speaking of impulse buying, shopping online is even more dangerous given how simple it now is to place an order with a couple clicks and have it at your door within 2 days.  If you’re considering making an online purchase that is more than $50, wait 48 hours before making the impulse buy.

If you have a serious problem with online shopping, remove your stored credit card information from your browser and delete your account. Chances are you will avoid making the impulse buy if you make it more difficult to make a purchase by adding barriers.

About $500 saved annually

11.  When dining out, have water instead of soda, tea or alcohol

A couple dining out twice a week should save about $500 annually

12.  Skip appetizers and desserts

Appetizers and desserts add up significantly over the course of dining out throughout the year and they’re completely unnecessary.  If you must have a dessert, always share – it’ll fatten up your wallet and slim your waistline!

A couple getting app’s and dessert once a week can save approximately $500 annually

13.  Take advantage of Amazon’s Subscribe & Save

Find $200+ worth of items you purchase on a monthly basis, such as personal care products, cleaning supplies, coffee, pet food, supplements, groceries, etc. and put them on Amazon’s subscribe and save to earn 15% off and save at least $30/month. Our list of what we buy on Subscribe & Save is coming soon!

Learn more about Subscribe & Save here.

At least $360 saved annually

14.  Simple vehicle maintenance translates to easy savings!

Inflate tires to proper PSI (or even 1-2 PSI higher than recommended), reduce your speed by 10mph, turn off the A/C whenever possible, roll your windows up and turn on the vent on the interstate and you’re on your way to saving big on your fuel bill.

At least $300 saved annually

15.  Evaluate your transportation options

Take advantage of carpooling with coworkers or do a ride share - www.erideshare.com and www.carpoolconnect.com

At least $500 saved annually

16.  Compare auto insurance rates.

Shop around for the best car insurance rates and save big!  Learn more here. Also, ask if there is a discount if you pay in full. We get a significant discount on our auto insurance by paying for a full year.

At least $750 saved annually  

17.  Replace frequently used light bulbs in your home with LED bulbs

Sure, LED bulbs are much more expensive than incandescent or even CFL bulbs, but the extended life of LED bulbs will more than offset incandescent bulbs if you use them for more than three years.  The savings in energy costs will really add up if you start to change a large number of the commonly used bulbs. You can find this at most home improvement stores or on Amazon.

You can experience up to $100 annual savings if you change out 10 of your most commonly used light bulbs  

18.  Ditch (or at least reduce!) bad habits (such as drinking and smoking)

If you are a drinker, keep track of how much you spend on buying drinks while dining out and also how much you spend when you pick up a bottle of wine or a six-pack at the grocery store. See these numbers can be really eye opening!

The average pack-a-day smoker spends over $1,800 per year, so kicking the habit can save you about $1,800 annually

What should you do with your savings?

1. Build up an emergency fund

2. Pay off credit card debt

3. Open a Roth IRA and pour $100 a month into S&P Index Mutual Fund (Vanguard)

4. Take a vacation – shoot to save at least $2,500 and take advantage of rewards credit cards if you are paying off all credit card balances each month