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Harness the Power of Impulse Saving

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Have you ever gone to the mall and impulsively bought something you hadn’t intended? Have you ever gone to the grocery store and walked out with a couple things you didn’t plan on getting? Sure, we all have. I’ve gone to the supermarket for some chicken, eggs, and yogurt only to return with coffee filters and a package of pork ribs because both were on sale (coffee filters are never on sale, probably because a package of 100 only costs $2 anyway and you can conceivably use it for 100 days!). It’s called impulsive buying and here’s a close cousin of it that is very powerful but less often used: impulse saving. Here’s one great way you an impulsively save:

Impulse Saving & Debt Paydown

Get a yourself a six-sided die (or more sides if you prefer) and roll it. Take that number, multiple it by ten, and put it in a savings account or pay down a debt. Do it every single time you get a paycheck and learn to live without the money in your budget.

If you don’t have a die, figure out another way to randomly generate a number. If you truly can’t afford to save up to $60 a month without feeling great pains, multiple the number by $5 so the top impulse saving amount is $30. If you truly can’t afford to save up to $30, you need to re-assess your financial situation, but for that’s a topic for another time.

To facilitate impulse saving, electronically link up your bank accounts or set up electronic bill pay. This lets you quickly and easily save or pay down debt in a handful of clicks. Without electronic means, the transfer of savings or pay down of debt is made less efficient to make smaller transfers and payments.

Why Do This?

Saving money and paying down debt is hard and any little trick you can take advantage of will be to your advantage. I think impulse saving is a lot like snowflaking (an idea and term first coined by PaidTwice, someone please clarify if I have this wrong). With snowflaking you generate more income through various means and put it towards your debt. With impulse saving, you force yourself to spend less of the unplanned “noise” in your budget by “spending” it first on savings or debt. The ideas are close cousins but slightly different in where the funds come from.

So, why should you do this? Because we impulsively buy stuff all the time. No matter how disciplined we are, there is always noise in our budget that we simply cannot account. Rather than fight it, take advantage by spending it before you get the opportunity to spend it. If you impulsively save it first, then you are less likely to impulsively spend it. This won’t prevent you from impulsively spending but if you do, the impulse savings are cutting down your debt. It’s like improving your worst case. (worst case is nothing, you spend but already paid down by that amount; best case is that you pay down debt)

How Good Is This Idea?

Let’s take an example to illustrate how powerful this can be. If you have $8,000 in credit card debt at 19.99%, it would take 11 years and 1 month of $400/mo payments to clear the debt. By paying down an additional $30 a month, (less than the average impulse save of $35, but you get the idea) it takes only 10 years and 2 months, a difference of eleven months. If eleven months doesn’t sound like a lot, remember it’s eleven months of $430 payments, or $4,730! If you combine this idea with some debt consolidation by way of 0% balance transfers or peer-to-peer lending marketplaces, you can do some serious damage to your debt.

So, if you have some debt, consider some impulse saving, it’s the latest thing in debt busting since snowflaking!

{ 14 comments, please add your thoughts now! }

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14 Responses to “Harness the Power of Impulse Saving”

  1. paidtwice says:

    Hey cool idea! I like it a lot! :)

    Thanks for the link!

  2. Frugal Dad says:

    Impulse savings…I really like this idea. I have done this before by putting something back at a store and immediately writing a check to myself for the amount. For instance, I was really coveting a new Xbox game a while back and went so far as to visit a store and ask for one out of the case. I read the back case, held it a while and put it back. I immediately wrote out a check for $40, the money I would have spent on the game, and deposited in savings the next day.

  3. Joshua says:

    I love this idea. I’m going to start this on my next paycheck. I never would have thought of something that ingenius.

  4. Chuck says:

    I like the spirit of this idea. How about a variant?
    If you make an UNPLANNED purchase for $X, then you must put away $Y=a*$X.
    You can make any number like a=0.5. This way, you are discouraged to impulse buy and if you do, you have to stash away some money. Of course, this all hinges on how you define unplanned.

  5. You need to add another die to the mix :) Or break out the Settler of Catan game and if the pirate strikes double the amount.

  6. jim says:

    Chuck: Very clever, it’s just harder to keep track but it would be a great dis-incentive to impulsively spend (much like how tracking every penny is a dis-incentive).

  7. The Other Schmitty says:

    Cool post but your example is flawed. The average extra payment would be $35 per month, not $30. So you’re saving even more!

  8. jim says:

    Shoot you’re right, I’m a fool. Made the fix.

  9. GBlogger says:

    I like the idea mostly because some folks will find it fun and may do more saving/investing than they might have without this. But I think it has more power for folks with credit-card debt with the meatier interest rates of Jim’s example. If you don’t have credit-card debt, the yields on savings accounts are getting low — and the amounts are probably too small to get into, e.g., the stock market.

    What I really love is the catchy name — “impulse saving.” A bit of fun plus a catchy name. I hope it catches on!

  10. Justin says:

    Your example confused me until I figured out how you came up with the numbers. It shouldn’t take 10+ years at $400/mo to pay off $8,000. It should take around 2 years. Adding $30 a month will save you a couple of months.

    Your numbers of 11 years and 1 month assume you pay 5% of the remaining balance every month starting with $400 and going down each month. Increasing it to 5.38% of the balance saves you 11 months and $395.71 which isn’t quite what you intend.

    Random savings is an interesting and unique idea (to stay on topic).

  11. Monevator says:

    This reminds me of the classic novel The Diceman. I had to put down that book when reading it as a teen because I realised truly anything is possible in life. It’s interest to see an idea of how to turn that around to something more constructive than what happens in the book (career breakdown, affairs etc!)

  12. Mary Sue says:

    1d6 Saving Roll vs. Finances! Bwahahaha!

    (Whoops, is my geek showing?)

  13. kazari says:

    I do something simple, but not so random. Each week, when my pay comes in, I pay all outstanding bills and look at the balance in my ‘bill-paying’ account. I round it down (to either the nearest $10, or nearest $100, depending on the balance). And I move the difference into our high-interest savings account. It isn’t always much, but it’s always something.

  14. Paul says:

    Love the idea! but not completely new. My accountant advised me to do this years agao. And he called it Impulse Saving too. It definitely works because people will actually do it.


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