Swapping Bad Habits for Good Ones
One of the challenges I give my fams is to find a way to swap bad habits for good ones. It’s a great challenge because it makes people both think and act. And since they’re usually fighting internal demons on the bad-habit-front, they’re grateful when I make ‘em stop.
Sometimes, in anticipation of my arrival, people will change what they’ve been doing before I even get there. There’s the guy who watched me flush Dan’s cigarette’s down the toilette, who gives up smoking before I even get there. And there’s the chick who having watched me toss Bev’s credit cards behind the fridge, decides to stop carrying her credit card so she won’t be tempted.
One of the best ways to get rid of bad habits is to replace them with good ones. It works because if you just take away something, you feel a loss. And the loss is all you can think about. But if you substitute something else for what you’re eliminating, then there’s no LOSS, just CHANGE.
If your socializing is costing a ton of money because you meet in bars, over dinner in restaurants, or at expensive outings, you can substitute a less-expensive, equally as satisfying social encounter. Instead of meeting in the pub on Friday night, have a Friday-night-game-night. Each week you decide what your next week’s location, game and food theme will be, and then you all chip in. If it’s taco night, someone brings the cheese, someone else the vegis, someone else the salsa and shells. That’s no more expensive (except for the gas) than having dinner at home.
Okay, here’s the kicker when it comes to replacing bad habits with good ones: Figure out what you’re saving a week by eliminating your bad habit.
Let’s say you’ve decided to eliminate coffee on the road by substituting home-made coffee and you’re saving $20 a week.
You take that $20 and multiply it by 52 to get how much you’d save in a year.
Then you go to an online savings calculator plug in your annual savings, a reasonable interest rate (say 6%), and the number of years until you retire.
If you’re saving $20 a week and you’re 30 years old, eliminating that one bad habit will mean $84,000 in your pocket. Yup, $84,000! That some pretty expensive coffee.
Now, I know money isn’t a motivator - Yeah, yeah, I read Abraham Maslow too - but often people aren’t aware of the long-term financial cost of sticking with a bad habit, and this exercise puts a positive spin on it.
You can’t say you don’t have the money to save if you smoke, drink booze, buy lottery tickets, have more than four pair of shoes, eat cookies, never drive car that more than four years old, pay more than $20 a month for bank charges or carry a balance on your credit cards. Since you have the money to waste on bad habits, you’re just making excusing for not saving.
What you need is a good habit. Then saving will become a snap.
So, how much are you planning to save this year?
April 23rd, 2008 at 9:23 am
I’m 27, and after reading your blog for a while my wife and I have changed some of our habits (e.g. we have a budget now) … we are now saving/investing >40% of our income. Honestly, it’s unbelieveable to see how fast the savings grow. And, like you said, we don’t feel loss, but we do feel change - and it feels good!
April 23rd, 2008 at 9:24 am
My husband and I are hoping to save over $8K in our RRSP this year. As well as setup an emergency fund. We want to eventually max out my husband’s RRSP limits since I have a pension fund. I totally agree that small purchases everyday can add up. My husband and I virtually spend no money on food at work since we always pack a lunch. Once you create the habit it makes it so much easier to save money.
Thanks for the great tips Gail!
April 23rd, 2008 at 9:27 am
Gail, you are the Money Guru who has changed our lives forever.
We had this bad attitude to saving - we are young, there’s plenty of time to save, no need to do it this year, we’ll start next year… well, after watching your shows since you started, ‘next year’ came about 2 years ago.
Now I treat savings like a bill - each month when the pay cheque is direct deposited into the bank account - on the 2nd of each month, out comes the ’savings bill’ {we treat it as a fixed expense} straight into a high interest savings account that no one is allowed to touch. Each year we adjust the savings to 20% of the pay cheque.
And the bonus is - I feel physically better because I don’t worry any more about the future, no headaches, no sleepless nights, etc. Gail you rock!
April 23rd, 2008 at 11:34 am
Gail, I am printing off today’s post and giving it to my family! Thanks very much.
By August I expect to have $2,000 in an Emergency Fund and will have paid off my credit cards! It is so different than anything I have done in the past because my mind set is different. Reading your blog every day, keeps me motivated and a daily post from you keeps things interesting!
April 23rd, 2008 at 12:27 pm
This puts a totally different slant on things for me. I’m quite proud of myself for setting up several different savings accounts (all for different things) and paying myself first EVERY pay cheque into every single one, but for some reason I’ve been arguing with myself about whether or not to keep my cable…It’s not that I don’t have time for things I like, it’s that I’m doing “more important” things, like, um, watching that show on Slice about saving money…*ahem*…
I have to admit that here in the north, cable is a nice distraction during the looooong winters. I think it’s just a matter of making the phone call. It’s not like I have nothing else to do - or can’t find anything else to do - and I can watch Gail on-line after all…
April 23rd, 2008 at 3:54 pm
What am I planning on saving this year? By Christmas time my hubby and I hope to have accumulated $30k into our little house fund and then next year is all about buying or building a home. It is shocking how quickly savings can add up once you really put your mind to it!
April 23rd, 2008 at 4:37 pm
My savings goal for the year is 20K to be used to buy a new car (well a new used one) in the spring. We both have generous retirement money from our employers but I am hoping to put $1500 or so in my RSP.
April 23rd, 2008 at 5:04 pm
I have changed the habit of saving what’s leftover after the bills are paid to saving first and scheduling it like a regular bill every direct deposit payday. I’m saving for various home renovations and building up the emergency fund. Also, any goverment child tax benefit and childcare supplement is deposited directly to my son’s RESP - so we don’t even see it and we can’t touch it!
April 23rd, 2008 at 6:33 pm
My hope is that I will be able to contribute $3,000 into my RRSP this year. I have already had $3,000 put away as emergency fund. By the time I pay off my student loans (hopefully it will happen some time next year), I will have more money putting towards my RRSP and towards a down payment of a place of my own…..
April 23rd, 2008 at 9:03 pm
How many savings funds are you supposed to have? I have a reno fund, and an emergency fund. my house is too busy to put money in jars - too many people coming and going - so what do I do for things like clothes/gifts etc? Do people really put money into a bank acount for that, or just “hide” it in an envelope?
April 24th, 2008 at 12:11 am
Chloe:
I have one emergency / cash flow fund to which I have easy access. I keep a list of what should be there, why and how much.
The savings account is hidden from easy access. This is intended for bigger emergencies and mid-term savings.
To me, the list is the key (it would be part of the budget-binder under aa section called ‘likely expenses’) so I can keep track and remind myself WHY the money is there. I know I will have to pay the car insurance and it is not money available for ‘fun’.
Gail: Why isn’t there a ’savings/emergency’ page in the binder you provide on the show? It can list those budget-buster expenses.
April 24th, 2008 at 6:04 am
Hi Marie, I leave the emergency fund/savings in their account — and coach them to use the auto/debit to a remote savings account for that money. Or to put “savings” into an RRSP. When the TFSA becomes available, it’ll be the perfect vehicle for accumulating emergency money.
Chloe: If you have an account for “accumulating” money you “plan to spend” — money for things like clothes, vacations, gifts, insurance (if you pay annually), and you keep a spreadsheet or list where you break out the individual amount you move to the account into the subgroups, you should be fine. So, for example, if you’re budgetting $50 a month for clothes, $30 for gifts and $100 for vacations, each month you’d move $180 to your savings account and add the individual amounts to each of your categories. Then, if four months from now you took out $200 to buy clothes, you’d deducting it from your “clothing” category so it wouldn’t affect the other categories. In the end, you’d always have a running total of how much you were “accumulating” for each of your “planned spending” categories.
April 24th, 2008 at 7:50 am
Chloe: everyone does their budget differently. I know people who keep jars/envelopes. I also know people who open 5 or 7 saving accounts, each account for different purpose.
I have several bank accounts as well: at PC financial, I have a chequing account where my paycheques go and my bills paid; and another chequing account for my discretionary expenses (i.e., coffee). Every time I get paid, I put some money into that account. And I would only take cash out from that account. And then, I have a saving account at Citizens Bank. That is where I tuck away my emergency fund, my travel fund, and whatever I need to save for the foreseeable future. (And then I have an RRSP, but that is a different story). On my computer, I keep a excel spreadsheet where I keep tap on my saving account, dividing up the money for different purpose. I also keep a spreadsheet on my computer about my monthly budget and expenses. No, I don’t have a jar system. But the spreadsheet serves the same purposes for me. Looking at the numbers on my computer screen, I know when and how I might come close to overspending my money. It doesn’t work for everyone. Chloe, at the end, you yourself have to figure out a way that works for you.
April 24th, 2008 at 2:15 pm
My accounts are very similar to Angela’s. I have a specific purpose for each of them (travel, etc.) and put a certain amount from each paycheque into each one. I have decided to put a “deposit cap” on each account that I feel, for the moment at least, will be sufficient. For example, I’ve got an account - easily accessible should I need it - for the vet for my three cats. I’ve decided $1500 is a reasonable “cat emergency” cushion and won’t deposit any more into that fund once I reach that cap. That way I have the funds if I need them, but can also relatively easily replenish once I’ve dipped into it. It’s not an unreasonable, scary amount to attain.
It doesn’t matter how much you put in or how you choose to track it or organize it, just that you do it. If you can only afford $5 one paycheck, but $25 the next, it’s the consistency that matters. Once you start seeing the amount growing, it’s easier to put aside the money towards it. It’s the habit - as Gail says - that’s most important to ingrain in yourself, so that you pay yourself first (RRSP) and feel like you’re getting somewhere.
Balance can be hard, but it is definitely achievable!
April 24th, 2008 at 7:16 pm
Thank you for the questions, Gail.
I haven’t really been thinking in terms of “how much”. Currently, my savings are at $2000, but I would like that to double by the end of the year (this is more than the pay yourself 10% idea though). My RRSP is much lower, but I did just begin that this year. I intend to increase my $25 payment each month to $50.
My only debt is my student loan, but I am realizing I should try to be more realistic with paying it off, after the above post. Paying my 15% takes me back to my original payment amount I set up. I *don’t* have to pay it off in 4 years - I can take a little longer, but put plans in place to take care of me, if something happens.
April 25th, 2008 at 6:25 pm
I just saved myself $18,000!
Cable = $60 p/mth; $720 p/yr; $18,000 over 25 yrs (assuming retirement at 65).
I called and cancelled it today. I will be without cable as of June 1, so it wasn’t QUITE cold turkey, more luke warm, but I did it. $60 a month more for either debt payment or into my house account…
April 25th, 2008 at 7:08 pm
Way to go Annie!
You won’t regret it! I haven’t had cable in more than 20 years and haven’t missed it one bit. You can always borrow videos from the library if you are stuck for something to watch (cost $0 and you get to keep them longer than from a video store too!)
Beginning of June is a good time to lose it, the weather should be somewhat decent then, depending on where you live, and you can find some nice outdoorsy things to do instead.
April 26th, 2008 at 1:49 pm
Thanks Christina!
I’m already trying to decide on which of a million things there is to do to do first! Dog walking at the Humane Society, catching up on my reading, getting out for hikes, taking photos with my new camera.
With 17 hours of daylight already, it’s not like it’s hard to find light to get motivated.
Next up: cell phone. To keep or not to keep, that is the question.
April 26th, 2008 at 2:44 pm
Cell phone:
Do you need BOTH a landline and a cell? Do people need to be able to reach you 24/7? How are your phones linked with your internet provider?
Our cell phone is for emergencies only and VERY few people have our number. Cost: $100/yr (not $20+$7 times 12 months) prepaid. Offers the peace of mind needed on road trips and the occasional running around.
So what is the value of each for you?
April 27th, 2008 at 11:57 am
I only recently got a cell phone. I use a pay-as -you -go plan which cost under $20/mth. I went without on for ages but I do appreciate having the access. We are building a cottage over an hour away from home and I want hubbie to be able to call if an emergency arises. As well he works outside the city which is a lot of Highway driving in the winter. It gives us both peace of mind for emergency situations. I won’t be moving to a regular plan anytime soon.
Annie: Good for you for cutting the cable. It’s amazing what we can watch on the internet now.
I’m really looking forward to when our car is paid in full. We plan to drive it to the ground. Once the car payments stop, we’ll continue those monthly payments into a repair account, and then funds for the purchase of our next car.
I recently started taking out my spending money in cash. I am finding it much easier to budget and think about my purchases now that I am not “swipping” them.
As for savings, I have 2 automatic deductions into an ING act. One is for savings/emergencies and the other is a car fund. When I recieved a raise in pay this January, I started putting the difference in a savings account for our next car. My father-in-law leases his car and puts very little KMs on it. So we’ve decided to buy it out when he returns the car in 4 yrs time, provided it hasn’t had major troubles. It will be like getting a 1 yr old car, for the cost of a 5 yr old one. I’ve been so pleased to see my savings grow!!