Is it possible for a struggling 20-something to get completely out of debt (including student loan debt) using a one-year shopping ban and living on 51% of her income?
Today I’m featuring an outstanding article written by Laura Shin for Forbes. As you read it, give special attention to the great quote below from Mr. Money Mustache, a blogger who retired at age 30.
Laura Shin writes:
“Four years ago, Cait Flanders, a personal finance writer in Vancouver who turns 30 tomorrow, pulled out her credit cards and faced the truth she had been avoiding for years: She was $19,800 in debt, and most of it had been frittered away.
Student loans accounted for $3,600, but as for the rest? “I don’t have a great answer for it. I just lived a lifestyle I couldn’t afford,” she says. She wasn’t even a big shopper, and her rent ($870) is below average for her city. It was mostly just inattention to her finances: “If my friends were going to dinner, I never wanted to say no. So even if that meant going out to dinner every day of the week, I said yes.”
She started a blog, Blonde on a Budget, which now gets about 30,000 readers monthly, and after two years of scrimping — one haircut, no travel, no dining out, putting as much as 55% of her monthly income toward her debt — she was debt-free.
But afterward, she relaxed her budget. Though she didn’t fall back into debt, she would only save 8% of her monthly income even when she intended to put away 20%. She did hit that goal a few times that first year out of debt, but “considering I had once been doing without up to 55% of my income, that’s somewhat underwhelming,” she says.
Then she saw a blog post by Mr. Money Mustache, a blogger who retired at age 30, in which he said that every permanent decrease in spending has a double benefit: it increases the amount of money you have each month to put into savings, plus it also lowers the amount you need every month for the rest of your life.
Around the same time, her sister had boasted to her of saving 20% of her income. “I said, ‘Whoa whoa whoa — you live at home and are going to school. Do you need 80% of your income?’ And I thought, ‘Why don’t I give myself the same advice?’” she says.
One day, not able to find little things — a can opener, a razor blade — in her one-bedroom apartment, she realized her cupboards were overflowing with junk. “I’m spending $5 here, $10 there … It’s nothing crazy — an extra lotion or shower gel — but then you have eight of them. I was consuming just for the sake of consuming. I thought, ‘I need to stop buying and just use up this stuff I already have.’”
A month later (and a year ago today), she embarked upon a year-long shopping ban. Over the year, she got rid of 70% of her stuff, lived on just 51% of her income ($22,000 USD) saved 31% (about $13,500 USD) and traveled on the last 18%, with two trips to New York, one trip to New York, Boston, Philadelphia and Washington, D.C., and other trips to Portland, New Orleans, Denver and her hometown Victoria and Toronto several times each (total cost of travel: just under $8,000 USD). Here’s how she did it.
What were the rules of the shopping ban?
There were two things I knew I had to stop buying. One was takeout coffee. When I was getting out of debt, I’d let myself have a small budget for coffee, but as soon as I was out of debt, I let myself get takeout coffee every single day. The other was books. I owned 50 books I hadn’t read, and yet I was constantly buying more of them.
I also banned other mindless things — like, I used to buy a new nail polish but then actually wear it twice the entire year. I couldn’t buy candles, notebooks, magazines or electronics. I was not allowed to buy clothes, except for a couple things I realized at the beginning I would need. I did a massive declutter and realized how much stuff I never wore. I’ve always been someone who wear the same five things. So I challenged myself to live with a small number of items.
What parts of the ban were most difficult?
The first month was really tough because of the no coffee and the no books. It was fascinating to realize what my triggers were and the habits I’d built around both those things.
With coffee, my habits were that if I was really tired in the morning, I’d tell myself it was OK to get takeout coffee. Not being able to do that was eye-opening, realizing how many times in the past I’d justified that purchase when it takes two minutes to make coffee. Also, if I was going to run errands, for some reason, I would always buy a latte beforehand.
Buying books was a big one, because I’d want to buy a new book, but if you spend $25, you get free shipping, so I’d add extra books. It got worse when I got an e-reader because you don’t even swipe a card.
Five months in, on black Friday, I almost broke my no new electronics rule. My e-reader is pretty busted. I have to use a pin to hit the reset button to turn it on. I saw the e-reader on sale for $40 or $50 and they’re only $100 so it was a huge discount, which never happens, so I convinced myself that I needed it. Within five seconds of purchasing it, I was like, what did you just do. Sure my e-reader is annoying, but it works. So I immediately canceled the order. And then I realized I barely use my e-reader. I didn’t use it for a month after that because I’d been borrowing books from the library.
Why did you get rid of your stuff?
One, I realized how much I already had. But also, I would see things I wasn’t wearing or all the books I hadn’t read yet, and it would make me feel bad. So I opened up every closet and drawer and pulled everything out and asked myself, ‘When was the last time I used this?’ ‘Am I actually going to use this in the next couple of months?’ If not, it had to go.
Books were also interesting because I got rid of a bunch of books that I hadn’t read yet. I used to buy books because I wanted to portray a certain perception of myself, like I would be the kind of person who had read that book. But none of those actually interested me, so I got rid of those too.
So, in the summer, I got rid of 43% of my stuff.
How do you know it was 43%?
I kept inventory. I’m not kidding — I actually wrote down how many things I kept and how many things I got rid of. I didn’t count things like 10 knives, but I did count things like pens. Pens are another thing you stockpile. I had 30-something pens, and I was like, I might run out of three a year, so I have 10 years’ worth of pens right now. So I donated the pens to one of the charities that gives to schools.
I didn’t throw out very much unless it was socks that had holes in them or products that were used. I donated all my clothes to a store where the proceeds go to two charities in Vancouver. I donated all my books to the library. I sold a few things I knew I could get $100 for, like a juicer or an old camera.
But about the 43% — that’s just how much I got rid of last summer. Throughout the entire year, I got rid of 70% of my stuff. I read a bunch of books on it, but they would talk about decluttering in the sense of organizing, so it would be like, declutter your home by buying storage solutions. But that’s not the problem — the problem is you have too much stuff. If you actually don’t use something, it takes up more mental clutter even than physical clutter.
Before you started the blog, you went out to dinner all the time, but to pay off your debt, you stopped. Did that change your friendships?
No — I didn’t have a problem saying to people, ‘Let’s do something at your house instead,’ or ‘Let’s have a barbecue.’ Once you suggest it, it’s surprising how many people will agree with you because, honestly, most people can’t go out as much as they think they can. They’re also thinking, yes, it would cost $5 or $10 instead of $30 to go out. It just changed the way I hung out with people — we’d go for coffee, walks or hikes.
Once you started the ban, how did it affect your relationships if you were also no longer going out to get coffee with people?
I never put a ban on going out for meals this year. The coffee ban was that I wasn’t allowed to get coffee by myself anymore to break a bad habit. I would still go out for meals, but only once a week, so maybe a couple dinners and a couple brunches in an entire month.
I will say a lot of my friends think I’m crazy. Everyone is astounded I haven’t bought stuff for the year. They kind of think I’m a freak. The coolest thing is how many of my friends said, your shopping ban inspired me to not to make this impulse purchase.
How much were you earning?
When I started the blog, I was making about $39,700 USD, and throughout this shopping ban, including freelancing, I’ve earned $57,900 USD — though after taxes I took home $43,700 USD.
But as of yesterday, I’m a full-time freelancer.
My leap into freelance has been a weird byproduct of this entire experience for the last year. I was always chasing career success, and I thought what I made annually would attach to that. Along with the shopping ban, I decided I wanted to live off 50% of my income, so I had this goal in mind and now I very comfortably live on $1,600 USD a month — a very full and rich life. I realized it’s wonderful to earn money but my career success would be more dependent on whether or not I enjoyed what I was doing.
Freelance is like the opposite of early retirement. I still have to work, I’m not living off savings, but when people retire early, it’s so they can work on the things they want to work on. Freelance is the same way. It’s a different kind of success, and one I’d rather go after.
You decided to make the ban stricter halfway through the year. Why?
When I started this job, I remember vividly saying, I was never going to become the kind of person who made their own cleaning products, I was just trying to spend less. But as time has gone on, the idea of making my own stuff interested me quite a bit, as does gardening and having vegetables and fruit I had grown myself. So I planted a garden and cut cleaning products in favor of creating my own from vinegar, lemon and baking soda. But since announcing that, I have been traveling a lot so I never ran out of the supplies I already had and never got to make my own cleaning stuff.
And for that reason — I haven’t even announced this on my blog yet — I’m actually going to do the ban for two years.
Really? Just so you can make your own cleaning supplies?
Also because in the last few months, it almost became too easy. I don’t need anything. I never think about clothes or shoes or needing anything, so in some ways this will just be my lifestyle. But I just want to challenge myself again. So in the beginning, I’ll, again, create a short list of things I am allowed to buy throughout the year — like, since I wear the same clothes all the time, I do need more shirts.
And more out of curiosity’s sake, I want to keep track of every single thing I buy — like every single toothpaste. I think it would be really eye-opening. You don’t need to buy a box of ten toothpastes. That’s probably a two-year supply.
What intangible benefits did you get from the ban, whether psychological or spiritual or something else?
I feel like the best version of myself right now. In getting rid of stuff and not being able to buy more, I’ve come to grips with who I am as a person. I’m very comfortable with myself. I don’t need to buy or own anything that will make me look or will make people think of me a certain way. I live a very good life with what I have. I don’t need more and don’t need the newest or latest of anything and don’t think it will make me feel better.
Getting rid of stuff also gives you time back — I don’t spend my weekends cleaning because I can easily organize everything I own. It frees up time to focus on the things you do want to do. I’ve tackled more projects and gotten more writing done and been able to increase my freelancing and quit, because I don’t care about anything else.
It’s shown me what’s mattered most to me. What I care about is having good relationships with my family and friends and accomplishing other goals like the writing and being able to quit my job and being able to travel more. Buying things is not important to me.
Now it’s gotten to a weird place where I feel not only uncomfortable spending money but I had to go into a mall to buy a baby present in a mall recently, and I felt almost sick in there because I was surrounded by ads. I felt overstimulated from being inside the mall. I don’t like the energy in there.
Any other plans for the second year of the ban?
I want to focus a lot more on simple and sustainable living, and on being more resourceful in general. I think one thing I’ve noticed is how much we pay for convenience, whether it’s takeout food or buying products vs. just fixing them. Recently, a pair of my workout capris ripped. Previously, I would have thrown them out. Instead I learned how to sew, fixed them, and they are perfectly fine and will probably last another year.”
Check out the slide show: How To Successfully Complete A Year-Long Shopping Ban.
Laura Shin is the author of the Forbes eBook, The Millennial Game Plan: Career And Money Secrets For Today’s World.
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