Kickstart Your Savings or Debt Repayment Plan with a 30-Day Spending Freeze - DebtGuru Credit Counseling and Debt Management Services

Trying to pay down credit card debt? Want to beef up your vacation savings or your emergency fund? A month-long spending freeze is a great way to jumpstart any savings or debt repayment plan.

Basically, a one-month “spending freeze” works like this: For one month, you only spend money on things you actually need, such as food, rent or mortgage, and utilities. You cover your basic needs, and that’s it — no extras, no impulse purchases, no splurges – no exceptions. Every extra cent goes toward savings, debt repayment, or some other type of major financial goal.

Sound challenging? Well, it can be – but it can also be super-rewarding. After all, what’s better than watching your credit card balance shrink by a few hundred bucks? And with a little preparation, you can drastically reduce your spending without feeling too deprived. You may even find out that you can live (happily!) without some of those “extras” that you thought were so essential.

Want to try it? Here’s all you need to do to plan a one-month spending freeze.

Set a financial goal. A spending freeze is a lot easier to do if you have a goal in mind. Before you get started, write down a few reasons that you want to change your spending habits. You can write down one goal – such as saving up enough money for a vacation or finally having three months’ salary in your bank account – or you can write down a few smaller goals, like curbing your impulse purchases or developing better saving habits.

Review your spending. This is an important part of any new financial plan – but it’s essential if you’re planning a spending freeze. Start by gathering one or two months’ worth of bills and bank statements, and divide your spending into two categories: essentials and extras.

Your “essentials” category should include everything that you absolutely must spend money on: things like groceries, gas, rent or mortgage payments, debt repayment, and utilities.

The “extras” category should include everything else: Trips to Starbucks, restaurant food, entertainment expenses, subscriptions, and impulse purchases.

Add up your total spending for each category. This should give you a good idea of how you’re spending your money each month, which is necessary for the next step . . .

Create a 30-day “spending freeze” budget. Once you’ve got a handle on your spending, it’s time to create the budget that you’ll live on for the next 30 days. As the name suggests, doing a “spending freeze” means cutting absolutely all spending except for the bare essentials.

Your new budget should include the basic essentials only: food, shelter, and utilities. Anything extra should go toward the financial goal you set in step 1.

Get creative and make a game of trying to cut spending on “essentials.” Sure, you have to spend money on groceries, but if can you knock $50 off of your total food budget, that’s more money you can put toward your goal. Browse your pantry before you head to the store – you may find that you can postpone grocery shopping for several days if you simply use what you have in the house already. Or, see if you can carpool or telecommute to work a few days a week to save a few bucks on gas.

Tips for Success

A spending freeze can be a big adjustment, especially if you’re trying to break some not-so-great financial habits. It’s kind of like going on a diet: One of the most difficult parts about it is feeling like you’re “missing out” on something – and once you start feeling that way, it’s easy to slip back into old ways.

Here are a few ways to help you get through your one-month spending freeze:

Surround yourself with good influences. I’ve written before about how peer pressure can be disastrous to your finances – and this is even more true if you’re trying to watch your spending. If you want to make sure you stick to your spending freeze, seek support from understanding friends and family members. Avoid spending time with folks who make you feel obligated to spend.

Look for free fun. Because a spending freeze requires you to stop spending on virtually everything that’s not essential, you’ll need to find fun, free things to do to keep boredom at bay (since you won’t be spending any money on, say, going to the movies or meeting friends for drinks). Check local newspapers for listings of free events like concerts or lectures, invite friends over for board games, and borrow books, movies, and even video games from your local library.

Avoid tempting situations. If you want to make sure you stick to your spending freeze, it’s a good idea to steer clear of places or situations where you might be tempted to treat yourself. Avoid going to your favorite stores – even if you tell yourself it’s just to “window shop.” Same goes for virtual stores or “daily deal” websites. You might also want to edit your email preferences and filter your Facebook news feed to avoid tempting sales pitches from your favorite stores and brands.

Focus on your goal. When you feel tempted to splurge on fancy coffee or restaurant food, take a second to remember why you started your spending freeze in the first place. It’s a good way to stay motivated.

Take stock of your savings – and your progress. At the end of one month, review your spending again and see how much money you were able to save, simply by not spending as much on stuff you don’t really need. You might be surprised at just how much money you were able to put toward your goal in a mere 30 days.

You also might be surprised at how easy it was to cut your spending and go without some of the money-wasting “extras” you used to buy – and you might just find that you can live without a few of them in the long term.