A few years ago, I filled out my annual tax return incorrectly…to the tune of several thousand unplanned dollars in back taxes. Since then, I’ve tried every which way to pay off this debt to no avail. I feel like I have a little "debt ghost of Christmas past" that follows me around everywhere, threatening me with yet more dire debt problems.
So when I recently read about a "spending fast," I felt like perhaps this is the one thing I haven't tried that just might work (one woman told U.S. News she paid off $23,000 in debt in just 15 months using a spending fast!).
Read on to learn more about how a spending fast works.
Spending fast 101
A spending fast is a simple concept. For a set period of time, say 30 days, you decide to spend only on necessities. That is a spending fast in a nutshell!
The catch: needs vs. wants
Of course, there’s a catch. You must—must—be able to differentiate your "needs" from your "wants" in order for a spending fast to work.
So you’ll first need to create a Needs Vs. Wants list. You want only black or white items (food/water, shelter, electricity, transportation to/from work) on the Needs side. On the Wants side is anything that falls into the "grey zone"—i.e., you could get by without it during your spending fast.
The motivation: your goals
For me, going on a spending fast is all about getting out of debt. For you, it may be debt, building up your emergency fund, or beginning to save for retirement (or all three).
Setting your goals will give you the willpower to stick to your spending fast, because at the end of your fast, you can dedicate all the cash you’ve saved (from not spending on "wants") towards your goals.
The transition: fast vs. diet
The whole point of a spending fast is that it’s not meant to last forever. A short period (30 days, 90 days, 120 days) will jump-start your efforts to transform your spending habits, but after that, you can downgrade from a spending fast to a spending diet.
On your spending diet, you will give yourself a monthly "discretionary spending fund" that can be spent on "grey area" wants. This money is separate from what you’re allotting towards your needs.
The best part of this is that by now you should have a very clear picture of how much your bare-bones needs cost you each month, so you can figure out exactly how much discretionary cash you can afford to give yourself for wants each month and still work towards paying off debt/saving/etc.
Now your challenge becomes prioritizing your wants—learning to make sacrifices and exercise more discipline in your "grey area" spending.
Note: Many people report that the spending diet is more challenging than the spending fast precisely because they struggle to choose some wants over others!
Finding support during your spending fast
It’s great to recruit a partner or friend to engage in a spending fast with you—this way you have built-in accountability. However, if no one you know is willing, there are other ways (online forums, apps) to find support during your fast.
This is a post by Shannon C. from Texas.