How To Save £1000 in 90 days

Hi there

The full title of this post should really be ‘How To Save £1000 in 90 days..So You Can Use It To Pay Off Some Debts!’. Funny that isn’t it? As quick as you get it it’s gone!!!

So what’s the story behind this idea? Well, you know how you always want to save a bit of money but when you go and look up how to do it and you start making plans, you never seem to get going…or end up reaching your goal. There’s always a reason. You have to spend your money on something, and you didn’t know about that something when you made the plans to save some money!

So I thought I would try an experiment based on reading up on the subject and on how much I earn each month (doing my scientist day job). I am going to try this method because it provides an easy focus with only a few critical steps and it avoids over-complicating saving money and getting myself distracted.

Now I found the idea for this method from reading a lot of saving advice sites and having a look at what I was paying in loan repayments each month. I am just about to finish (in July 2010) paying off a £5,000 loan which I was paying off in 3 years. It was about £155 pounds per month with the interest. I also have another loan that I’m paying off in 4 years where I pay about £200 pounds per month. For some background, I took the loans for a car (the first one) and to consolidate debt, to invest in some musical instruments and learn some new skills through training courses (the second one).

So whatever I spent or didn’t spend my money on, these amounts were coming out of my account each month. Obviously it is part of a loan agreement, but it also is something I can’t do anything about. The money goes out regardless.

So it got me thinking.

A lot of sites say you should ‘pay yourself’ something. Well that’s easy to do: you transfer money over to another account like you are paying a loan. Except that you are paying yourself the loan.

Okay… no real fantastic insight here. But then I thought, what if I didn’t try to penny pinch everything and set myself a realistic goal, say, £1000 in 90 days. Since I was paying myself..and this is £334 each month, the money was already saved (unless I needed to use it – more of this in a bit). I would then need maybe 3 other things to do rather than overburden myself with ideas.

So the second idea was to give myself a lower limit. This is £200. This means that I make sure I have around £200 left in my account at the end of a month (plus or minus £10). So the first month, £200 needs to set aside, but then the next month you can spend £200 more…why? Well because the £200 is there from the last month so you don’t have to save it again.

Now I can try and focus on 2 other things: eat packed lunches rather than always buy the canteen food – that’s about £80 quid per month.
Use the bike to work so you don’t drive so much – probably save about £70 per month on petrol, but I’m not so sure.
There are maybe a few little other things that can help.

So , here is how I’m doing it. I have rounded and simplified the numbers slightly:

My salary after tax is around £1850.
I pay £450 in rent
I pay £200 for the second loan
So I have £1200 a month of which everything else comes out.

At the moment it looks pretty easy. I take £334 out at the start of each of the 3 months so each month I have £866 to play with.

So

90 days from the start of July
£866 to play with each month

And here are the other steps to help save some more money:

Have a £200 stop limit each month
Use the bike to work more – as in once or twice a week
Make your lunch at home at eat it at work

There is a caveat: In July I pay about £200 to finally pay off the loan, so it is looking a little tighter and will require a bit more focus.

And so it brings me to the first hurdle…I needed to use my debit account to pay for a £376 a/c compressor for my car. And that was the cheapest I could get it. I was originally quoted £700 which I wasn’t going to pay knowing I could get it cheaper. I would have liked to put it on a credit card so the money didn’t come out of my main account but I had to pay by cheque. So my first £334 had to go back into the account.

So my action step this month is to still try and pay myself at least £100.

There are other things that I’m going to put on my credit card and pay off in chunks when I can. In fact the plan to do the Save £1000 in 90 days was a way to misdirect myself a bit so that I could pay off my debt and still have money to spend each day.

I know it’s not the ideal way but this idea is to try a simplified method without complicating it too much and stressing myself out.

Anyway thanks for reading, and I’ll update as I go along from time to time.

Micky