For some, a challenge, that is, a game is an effective way to step of the effort. It can also serve as a spark for those who are ready to change.

A few Yakezie bloggers (Single Mom, Rich Mom, Barbara Friedberg Personal Finance, Money Funk, and Move to Portugal) recently started a challenge about who can reduce variable costs the most over the next month.

To win, I recommend the crowbar method. It’s very simple as it is essentially a 100% reduction (don’t spend any money) and as such it will win. Of course this will only work because the competition only runs for a month. For longer challenges, you’d need something like the 21 day makeover.

I never really thought deeply about tricks to reduce discretionary expenses. What used to work for me, though, was

  • Walk everywhere. One is less likely to go out to buy something discretionary if it has to be paid for with physical activity.
  • Only carry $20 in cash. No plastic. This means not only does one have to walk to shop, one also has to walk to the bank. And one can not spend more than $20. (Without another trip to the bank of course.)

Fun ways to add to the competition is to allow the proceeds of selling stuff to add back on the expenses. Much of my discretionary spending is driven by selling old stuff. This keeps the total amount of stuff I have at an appropriate level and that makes the choice of homes much more flexible than if I had a lot of unused stuff around. It also provides a natural brake on spending. It is easy to just pull out a credit card. Too easy; so there is no challenge. If, on the other hand, the acquisition of new stuff or even the purchase of an experience (for shame 😛 ) depends on “making a sale”, it becomes much more satisfying.

Originally posted 2010-06-10 10:12:32.