Monday, March 28, 2011

Do Money Hacks Work? Yes.....and No

Money hacks are the little tricks and techniques used to help us trim costs and save money. Most of you have heard of the 'latte factor.'  Skip the coffe shop, pocket the $5 and in a month you've hacked $100. In my college days, I started using money hacks before I even knew what they were called. My favorite was rounding up the numbers in my checkbook. I just didn't like balancing the thing and it was easier when the figures were rounded up to the next dollar . I did it for the ease of it all, yet in the back of my mind I knew I'd be adding up a few pennies here and there. Flash forward about four years. Without any work, without any sacrifice that one little maneuver had turned into more than $2,000. It gave a whole new meaning to 'happy surprise.' There were other hacks I liked using such as depositing my coupon savings on a regular basis and depositing the remaining funds in my checking account on payday. If there was $10 left on payday then I would deposit that amount into my savings and live on my paycheck until the next one arrived.

These little hacks, and countless others, worked because I made myself use them. Keeping the latte money in my wallet will only guarantee that it gets frittered away on everyday stuff. What is the point of giving up something or making a sacrifice if you don't put your efforts to good use? I think this is the step that trips most of us up. We know what to do; we just drop the ball on the follow-through.

The key is to make it so easy it becomes a no -brainer.

Here's an example of something I did once and regretted.  I sold a piece of furniture and made about $200. Yay me! Now I had some cold hard cash to throw at a debt and inch my way closer to a debt free future. Yeah, well, no, that's not what happened. I made my sale on a Saturday morning. By the end of the day, we had taken the family to our favorite pizza parlor, purchased a new movie, did a little grocery shopping (although that was already budgeted for), and each of the kids got a little toy. I think we did a little flip flop shopping as well. Monday morning rolled around and I got ready to take the money to the bank. All $65. My jaw dropped and my heart fell. A nice hefty payment just vaporized. The smarter thing would have been to go ahead and prepare the deposit slip, place it and the $200 in a sealed envelope until the bank opened.

If you're making money using eBay, never ever bring the money home. Never. Just transfer your profit from PayPal to your bank. When the transfer shows up as a deposit, go online and make an extra payment on a bill or send it immediately to savings. If you are skipping the latte or lunch, go ahead and figure out how much you are hacking and transfer that amount right then and there. You can't spend it if it isn't floating around waiting for you to swipe your debit card.

There are eleventeen million money hacks and if you put your mind to it, you will find the ones that work for you. Make the saving part of the hacking plan easy and watch the money add up. You have to make yourself do the right thing with those little bits of money because it could very well be the foundation to a financial dream you have (vacation, college fund, rainy day money, new home, etc)

 Hacks are often considered to be small amounts of money and many people don't want to waste their time with them because they feel it isn't worth their efforts. However, you need to remember dimes make dollars and you really do want more money, don't you?

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