Here at Alternative Control, we can’t promise you money for nothing and chicks for free — but we can share some common sense tips to help you get your finances in shape. The first installment of Money Hacks for Metalheads and Old Millennials reviewed the basics: knowing your income, expenses, and spending; brainstorming short term, medium, and long term goals; and creating a budget that moves you towards your goals.
(If you didn’t read that already, go back and read it! This column will make a lot more sense if you do.)
The budget area is where we left off because this will be different for everyone. When you are making changes to your budget, there are two roads to go down: spending less and making more. Obviously you’re reading the “Spending Less” column….. No matter how large or small your budget changes will be, there are a couple rules that apply to all situations:
- Pay yourself first. Most of the real financial gurus recommend saving 10-15% of your income, although Grant Sabatier would have you saving and investing almost all of it and retiring at 30. That ship has probably sailed for us old millennials — but no matter what percentage you’re putting away, automate retirement savings as much as possible and remember to increase the amounts if/when you get a raise. For cash savings, once you’ve determined how much you can save from each paycheck, transfer that amount in a separate account the day you get paid. Now that money “doesn’t exist” except to serve your goal. Bonus points if you put the cash in a money market account — but we’ll talk about that in the “Making More” column.
- Screw paying interest. I’d use a stronger verb, but I can’t swear on the internet…. There are times in life where you will have to get a loan. Pay more than the minimum each month if/when you can afford to, and make sure the lender applies any extra to the principal. (Sometimes they “make mistakes.”) Apply most of any windfall, large or small, to loans. Each loan you pay off will mean one less monthly bill, which is more money you can save, buy fancy beer with, pay for 70,000 Tons of Metal tickets, etc. And the less money you spend lining the pockets of billionaires, the better!
Now let’s look at some different goals and how to spend less accordingly….
Goal #1: I have five figures of student loan debt and I want to get out from under it so I can have a normal adult life.
Pray that Elizabeth Warren becomes president.
- That’s probably not gonna happen, so start thinking of other alternatives….
- Cutting out the Dunkin isn’t going to help you in a meaningful way. The best method for tackling big debt is to reduce your biggest expense: housing. If you’re still young enough that your relatives will let you live with them for free or on the cheap, DO IT. Then apply one third to one half of your take-home pay (what you’d otherwise be spending on rent) to your loans. Savings: $800-$1600/month.
- If living with the folks is not an option, consider living with roommates. And if you are renting without roommates, embrace minimalism and find the smallest, least expensive place possible. This also means thinking about your geographic location — do you currently live in, say, the Bay Area? New York City? *cough* Stamford, Connecticut? Or anywhere in Connecticut, for that matter? I can’t tell ya how to live your life, but it could be worth it to relocate. Whatever you end up doing, apply the savings towards your loan balance. Savings: $200-$500/month.
Goal #2: I have no emergency fund and my essential expenses are $2,000/month. I need to save two grand ASAP!
Cut your “fun” spending to the absolute minimum needed for sanity maintenance. If you get Dunkin every day on your way to work, cut back to once a week — or not at all. Put a moratorium on mall trips, new vinyl, and weekend outings with friends. Remember, this is only temporary. Savings: $50-$500/month.
- Examine your spending on food and gas. Can you carpool? Can you cook instead of getting takeout? Can you buy what’s on sale and eat all the random stuff in your freezer before you go shopping again? Where there’s a will, there’s a way… Savings: $50-$100/month.
- Cancel nonessential subscriptions and services. I would argue that a phone is essential. But is cable essential? Probably not. Spotify Premium? Home internet? Maybe, but maybe not if you’re already paying for a smartphone. The gym? Probably not. Go for a jog! Savings: $10-$200/month.
- If you have credit card balances, pay only the minimums for the time being (yes, I know this goes against the Screw Interest rule) and divert what you would have otherwise paid into your emergency fund. Savings: $50-$200/month.
The amount of time it takes to save $2,000 will vary based on how much you were spending in the first place and how much you are able to cut — by the random estimates above, anywhere from three months to a year. Keep reading for some more ways to trim expenses…
Goal #3: I want to take a really cool vacation next year and I think it will cost me $3500. I need to save an extra $300 per month.
This goal example is not as urgent or life-crushing as the previous ones, but the savings tips can be applied to all three.
- Review your insurance policies. Can you get a better rate at another company? Are you paying for coverage that’s not necessary? I did this for real in December and saved $65/month, plus found a much better home insurance policy.
- Like Ms. Emergency Fund, cancel some subscriptions/services. Bye, Netflix! Bye, Suicide Girl Patreon! Bye, HBO Now once Game of Thrones ends! Savings: $5-$50/month.
- Call up services that you’ve decided not to cancel (I’m thinking cable and cell phone) and ask how you can reduce your monthly bill. Chances are, there is something that can be adjusted — again, I did this for real with my cell phone recently and knocked $25 off my monthly bill.
- Whatever you spent on food last month, spend $50 less this month. That’s only $12.50 less per week — look at the supermarket circular for cryin’ out loud! Comparison shop different supermarkets and make sure you are a member of loyalty clubs where you regularly shop. If you’re not, you’re paying artificially jacked up prices for your groceries. Savings: $50/month. (Duh.)
- Use David Ramsey’s snowball method to pay off debts — thus freeing up extra money for savings, eventually. Savings: ???
If you’ve been keeping track, you’ve noticed that the savings above doesn’t necessarily add up to $300 per month, and part of the potential savings is from getting rid of debts. This is where the rule of Paying Yourself First comes in. If you hide “X” amount of money from yourself each month, it just won’t be there to spend on random stuff.
Or as my new favorite person Gary Vee would put it….
Hopefully some of these ideas can help you take the money and run…. TOWARDS YOUR GOALS! But eventually there comes a point where it’s not possible or practical to cut your spending any further. That’s when it’s time to make more money…. Stay tuned for side hustle and passive income ideas in the third installment of Money Hacks For Metalheads and Old Millennials!
On not buying dumb s***: The Millionaire Next Door: The Surprising Secrets of America’s Wealthy
(That’s an Amazon Affiliate link. If you buy the book through it, I’ll get like three cents — so you should really just borrow it from your local public library. 🙂 )