There are entire blogs, like the Frugalwoods and 1500 days to freedom, that have dedicated their time to focus on living and talking about their frugal lifestyle. I have compiled a list of actionable tips from their lives and from my own that will provide you with the framework of how to build healthy frugal habits.
In this article I will provide you with one of the top 5 things that will help with developing the frugal habits that will become the foundation for you to pay off debt faster, save money, and reach FI faster.
Impulse buying can be one of the most detrimental actions to your path to FI. The great thing about it though is that it is controllable! As I’ve stated before, your habits drive about 50% of your daily activities. If you can control your impulse buying, then you can cut years, YES YEARS, off of your work life!
I looked back at my Amazon account at the end of last year and started adding up all of my “impulse” buys over the course of a year. It ended being around $100 a month! Just $100 you say? Well, if I took that $100 and invested it into my low cost, broad based index fund (VTSAX, VOO, …), then at a conservative interest rate of 6 percent it would have resulted in $100,000 in 30 years! Check out the excel spreadsheet SavingsPerWeek in the Engineer Toolbox section to input your own numbers.
So, armed with that information how do I change my habits to prevent me from having to work longer to make up for the $100 purchases? It’s simple. When I am at the store or going through amazon’s endless pages of items I will write the item down in my little blue book I keep with me. I then spend the next 72 hours thinking about the opportunity cost of this item and decide whether I truly need this item.
There is a website www.camelcamelcamel.com that will track prices on Amazon and can even send you alerts if an item reaches a specific price! If you don’t need an item right away this is the perfect place to utilize to get the best price out there.
There are also occasions during this period where I have looked at other sources (craigslist, ebay, etc.) to see if I can save money on that item. Example, I was in the process of building an indoor playground for my daughters and I needed a plastic slide to let the girls slide down from the second story of their playground into a ball pit. Even though I had a deadline (per my wife) I took the time to look at craigslist and ended up finding one a couple was selling for only $40 where the box stores were selling it for $110!
Impulse purchases are a result of consumers wanting instant gratification. Marketers and retailers exploit this natural human nature to sell their products. That’s why at grocery stores the checkout lines have low priced easy to grab items to purchase. By utilizing the 72 hour method you have the ability to overcome this marketing technique and supercharge your path to FI.
Once you have made the 72 hour rule part of your life you will find yourself thinking just a little bit different every time you go to the grocery store, every time you go clothes shopping, every time you are out at an entertainment event. And it will seem as if you are sacrificing that instant gratification and it will not be easy. But, once you have overcome the natural human nature it will become a habit that you share with every member of the FI community. And once it’s a habit, you won’t give it a second thought. Stay strong. It will pay off!
Take away points:
- If it’s not a heck yeah, then it’s a NO!!!
