The beginning of a new year has a way of putting things in perspective. It's a time for looking back, reflecting on what we've accomplished and deciding what we want to do in the coming year. In that spirit, a new Fidelity Investments survey has revealed 2019’s top three financial resolutions: Save more, pay down debt, spend less. (No surprises there.)
Big goals can feel even bigger from the starting line, so let these stories of how people crossed those money goals off their 2018 lists inspire you to take the first step.
"I wiped out the last $6,000 of my student loans.”
Ashleigh, 37, a blogger in Knoxville, Tenn.
“At the beginning of this year, I had $6,000 of student loans left to pay. After a decade of teaching, I’d spent the last two years as a stay-at-home mom, and wasn’t making as much progress on my debt as I wanted. If we continued making the minimum payments, it’d take another two years before we’d be debt-free.
I was itching to get there faster after I realized how much money I was throwing away on interest (7.25 percent really adds up!), so I started brainstorming better options.
My biggest wins were figuring out how to make money from my blog through ads—which helped me increase my after-tax income from $320 per month to $1,400 just 10 months later—as well as meal-planning and eating at home more often. That alone now saves us $300 per month, compared to our old habits. My husband Ryan even sold his Toyota 4Runner and bought a used car using $2,500 from our savings, eliminating his $250 monthly car payment. These moves required some ramp-up time, and a few sacrifices, but have been well worth the payoff.
I made my last student loan payment in October and feel an overwhelming sense of freedom. We've since redirected my loan payments to our emergency fund and retirement accounts.”
“We slashed our spending by 19 percent in pursuit of a huge passion project.”
Evan Sutherland, 27, and Nikayla Sutherland, 25, online business owners in Pullman, Wash.
“2018 was a huge year. Nikayla and I had finally launched a business we’d been working on for months. We went all in to make it grow as quickly as possible—which included me dropping out of grad school and her saying so long to a sonography career.
Extreme, I know, but we’d realized that 50-hour workweeks for the next 40 years wasn’t for us anymore. We craved purpose and passion, which fueled the idea for our business: an online course that teaches people how to budget successfully.
Since we weren’t yet generating income, we began living off our savings (which was in good shape from years of prioritizing building it up). Every dollar mattered, so even though we were already living pretty frugally, all unnecessary expenses went out the window—from a spending a few bucks on coffee to video game splurges.
Living on the bare minimum definitely isn’t glamorous or easy, but we’ve been buoyed by the fact that we're working toward something special—so we keep chugging. All told, we reduced our spending by 19 percent last year, mostly by keeping the status quo: I’ve worn the same pair of shoes for two years, get hair cuts as infrequently as possible and usually stick with the same simple (and cheap) menu every day. We also try to optimize our electricity usage for the season, which shaved 30 percent off our average bill. Entertainment consists of playing games together at home or watching Netflix.
These sacrifices are paying off. Our business is now bringing in enough to cover half of our expenses, and our savings account is healthy enough that we’re not worried about running out before our monthly income sustains us.
Once we’re there, we’ll probably loosen the reins a little bit, but there are some frugal habits we’ll definitely keep up. Taking long walks together and playing games for fun isn’t just free—it’s also an opportunity to connect. Pulling back our entertainment spending has taught us to appreciate just being with each other.
Despite the challenges, this experience has been the greatest of our lives. We're building a business we're passionate about, and the harder we work, the more we'll ultimately earn. That’s all the motivation we need.”
“I saved $22,000, thanks to couponing, credit card rewards and side gigs.”
Alexandra Tran, 34, a marketing strategist in Seattle, Wash.
“One of my 2018 New Year's resolutions was to significantly up my savings rate. I already had good money habits, like funding my Individual Retirement Account (IRA) and other long-term savings and keeping my expenses low. (My mortgage is just 14 percent of my income, for example.) But I’ve got my eye on early retirement in about 10 years, so I really wanted to challenge myself. So I set an intention to sock away about a quarter of my $80,000 salary—and ended the year with $22,000 more in savings.
I started with some easy wins, like shopping less and limiting myself to one of everything (i.e., one black jacket instead of two styles). I also scaled back entertainment spending—skipping the movie theatre in favor of Netflix and volunteering at special events (which cost as much as $300 a head!) to gain free entry. These moves didn’t add up to much regular savings, but they got me in the mindset to consider how every dollar counted toward my goal.
Next, I looked for simple ways to maximize everyday financial moves. For example, I took advantage of my bank’s offer of $200 for moving some cash into a money market account. And I got strategic with credit card rewards and coupons.
I have a few cards that offer 2 to 5 percent cash back on rotating categories (like groceries and gas), and I charge everything—from transportation costs to utilities, food, pet supplies and even my mortgage. I use an app called Debitize, which automatically earmarks cash from my checking account to cover my credit card purchases. This way, I don’t accidentally overspend or revolve credit card debt.
I also scour weekly supermarket specials and time necessary shopping around big sales at outlet malls. Stacking coupons on top of in-store discounts—and paying with cash-back cards—has gotten me up to 80 percent off before. Overall, I’ve whittled down my $150 weekly grocery bill to about $40.
My most effective move, by far, was finding ways to earn more. I recently began renting out my guest room to students for $700 per month—easy, passive income. I’ve also downsized my belongings by as much as 60 percent. As a former impulse shopper, I had a lot of nice clothes and home goods that I wouldn’t miss, so I sold them on sites like Poshmark and Mercari, raking in thousands (and the lion’s share of my savings for the year).
Offloading unwanted stuff online may not be a sustainable savings trick, but it took the pressure off needing to find more ways to cut back and helped me leapfrog toward my big savings goal. There’s a psychological benefit, too: Letting go of material things that don’t serve me in favor of a bigger savings balance actually felt great.”
January 7, 2019