So you’re ready for a New Year Money Challenge?! AWESOME! It can be incredibly motivating to focus on new year goals at the beginning of the year.
This money challenge is exactly what our family did to get out of debt almost 6 years ago when we paid off nearly $68,000 in just 16 months. There is no magic formula and no need to pay a financial guru to get you on the road to financial freedom. It all boils down to living below your means!
This 2022 New Year Money Challenge is expanding the concept of living on less into practical categories to help you take control of your finances.
Within each category, you’ll read easy-to-follow advice that’s guaranteed to help you pay off your debt and gain financial independence.
For further money management tips, you may find these articles helpful as well:
We’re SO very excited you’ve decided to take the steps toward financial freedom this year! It doesn’t matter if you’ve started before and failed. It doesn’t matter if you have $10,000 in debt or over $100,000. What matters is that you’re STARTING. And you wouldn’t believe how many people are in the same boat as you, who are making sacrifices NOW so that they can live how they truly want in the future.
Let’s get to work.
2022 New Year Money Challenge
PAY OFF YOUR DEBT
Have a debt-pay-off-strategy and simply START
Whether you start with the smallest loan amount first or the highest interest rate, choose whatever will keep you going and just get started!
Don’t take on any additional debt
If you can’t pay for it in cash, you can’t afford it. New house, new car, new phones, clothes on the credit card, can be put off until you’re in a place that you can afford them. Or there are always cheaper alternatives to these if you truly need them.
Save at least $1000 for an emergency fund
Have some cash to fall back on when an unexpected expense arises. Then you can pull from that money instead of it throwing everything off course.
Live below your means and apply any extra funds toward your debt
Have some extra cash at the end of the week? Instead of celebrating by going to the movies, apply that toward your debt, and then check out a movie from the library for free.
EARN MORE MONEY
People are in the market for just about everything. Find something you can offer for extra cash (a craft, labor, food, service, etc) that people would be willing to have you provide to them.
Pick up extra hours at work
Be willing to pick up the shifts that no one else wants or even consider an additional side job.
Set up 401k
Many employers will match a percentage of what you contribute to your 401K. Hello, FREE MONEY!!! If you’re still paying off debt, don’t go overboard with investing right now and stick to only investing the same percentage your employer will match. We like that this investment comes out automatically from your paycheck before it hits your bank.
Flip items for resale
Scour flea markets, thrift shops, yard sales, etc to buy items at a lost cost and resell them at a higher price. We had a lot of success buying books on the cheap and selling them for a profit on Amazon! But remember not to take on additional debt if you’re still paying off what you owe (eg: don’t go flip houses just yet).
Declutter your space and sell items in a yard sale or online
Clean out your old books, toys, DVDs, shoes, clothes, home décor and list them for sale.
If you have paid off your debt, it’s time to invest! Consider a Roth IRA. Unlike your 401K, a Roth IRA is a self-funded retirement account that you contribute to with after-tax dollars. Your Roth funds can be invested in risky, moderate, or safe investments depending on your goals and risk tolerance. Taxes on all earnings are tax-deferred. Currently, you can invest up to $6000 per year ($7000 if your over 50) per Roth IRA. And opening a Roth IRA online is easier than ever before. We always recommend American Funds or Vanguard to our friends and family.
SAVE MORE MONEY
Cut out non-essential purchases
Put a hold on enhancers such as perfume, specialty toiletries, trendy clothes, décor, vacations, etc. If you’re truly in need of these things, opt for a cheaper or free alternative!
Cancel most subscription services (Cable, Amazon Prime, Netflix, Beauty Boxes, etc)
If you can completely cut the cord on paying for subscription services, you will save a lot of money each month that can be applied to your debt! If you don’t want to go cold turkey, just focus on 1 or 2 subscriptions that are of significance to you.
Check out free books and media at the library
A library card is free and will provide you a ton of free entertainment such as books, DVDs, and music! Plus, many libraries are starting to offer FREE digital streaming as well.
When is the last time you spoke with your cell phone or internet provider about your rate? Is there a competitor you can switch to that will cost less? It’s time to review those monthly charges and get them reduced.
Learn how to coupon
Coupons will help reduce the cost of your grocery bill once you get the hang of the basics! Head to Everyone Loves Couponing for a beginner’s guide.
Earn money back on purchases with apps like Ibotta, Checkout 51
Earning cash back on your groceries is incredibly easy thanks to these money-saving apps! Simply mark the items that you purchased in the app, scan your receipt, and get money back.
Walk, bus, bike, or carpool to work
Cut down on gas costs and help the environment by using these methods instead!
Incorporate “no spend” days/weeks/months
Challenge yourself to a money fast to rack up your savings faster! Simply avoid spending ANY money (apart from your required bills) for a set period of time and stretch yourself to live on less.
Plan out your meals
A weekly meal plan will determine ahead of time what you want to eat which in turn saves you time, money, and gas expenses.
Take your lunch to work
As you plan your weekly menu, don’t forget to include enough for leftovers. Those leftovers can be used for a frugal lunch. If you’re not keen on leftovers, there are loads of easy and cheap lunch ideas on the web that will be cheaper and healthier than takeout.
Make your coffee at home
Deciding to make your java at home will save you BIG bucks when you avoid paying $3-$6 per cup at your favorite coffee shop! Splurge on a favorite creamer or even a bolder blend at home which will still save you more money than paying for a barista to make one for you. Thrifty tip: If you receive a Starbucks gift card, use it to buy ground or whole bean coffee that you can use at home. You’ll get more for your money!
Only eat out for special occasions
Try to make eating out a special treat instead of setting it as your default each week. For tips on eating out on the cheap, check out Break ALL the Rules and Save Money Eating Out!
Don’t pay for anything you can do yourself
Services such as lawn care, hair/nail services, house cleaning, car maintenance, and home repair, are all tasks that most people can learn to do themselves. Before you reach out to hire someone, consider looking up a free tutorial online to see if you can do it yourself!
Buy things secondhand
You can find quality products at a fraction of the new retail price thanks to consignment stores, online yard sales, and resale apps!
Drink water instead of juice, soda, alcohol, expensive coffee
Train your taste buds to crave water instead of paying for higher price beverages. And on that topic, buy a water filter in place of bottled water!
Seek out free entertainment, attractions, events for fun
Do a little digging online to find free fun near you for a night out in place of costly entertainment prices.
For more ideas on how to live frugally, check out How to be Frugal: 42 Habits of Thrifty People.
SET A BUDGET
Review your past expenses
A perfect way to start out this New Year Money Challenge is to review your past 3-6 months of expenses. Then break down each category to see how much money you’ve been spending in each category. Grab our FREE Financial Audit sheet! When we started our debt-free journey, our food and entertainment expenses were a lot higher than we thought they were. Ouch!
Start a new budget to live on less
After your expense audit, set a budget to spend less in each category than you have been previously. And adjust your budget as needed each month.
Set up payments on auto draft
The best way to avoid late fees and/or spending money that you shouldn’t is to pay your bills on auto-draft. Then the temptation to spend that money elsewhere is gone.
Cut out non-essential recurring monthly costs
Review your monthly costs and eliminate what you can to free up your cash flow!
Listen to a money mindset podcast or have a book on hand to keep you focused
Fuel your mind with encouragement and wisdom on your debt-free journey. Some of our favorite financial freedom podcasts are The Dave Ramsey Show, You Need a Budget, and 2 Frugal Dudes. Some of our favorite money books are The Ultimate Cheapskate’s Road Map to True Riches: A Practical (and Fun) Guide to Enjoying Life More by Spending Less by Jeff Yeager, The Millionaire Next Door: The Surprising Secrets of America’s Wealthy by Thomas J. Stanley, and The Total Money Makeover: Classic Edition: A Proven Plan for Financial Fitness by Dave Ramsey.
Get connected with like-minded individuals
Sync up with others who are learning to be debt free and draw support from one another in your local community or online.
Consider going to a Financial Peace University class
If you’re in need of more guidance on learning how to be debt-free, consider attending a Dave Ramsey’s Financial Peace University class near you.
Share your story with others
Verbalizing your reasons and plan for a New Year Money Challenge will continue to validate your purpose and may inspire others to do the same!
Have a weekly planning session
Review how your week went and what you want to accomplish in the near and far future!
Set short, medium, long term goals
Know what you’re working so diligently for! Know your next step, your vision for the next few months, and your BIG dream goal.
Track your progress
Visualizing your progress is incredibly motivating. Come up with a creative way to see all that you’re accomplishing. I love the free charts over at DebtFreeCharts.com!
Discuss potential pitfalls and how to avoid them
Know what triggers your itch to spend and take steps to avoid those triggers! For example, social media accounts that make you want to spend cash, retailer sales emails, certain friends that only like to gather when spending money is involved are common pitfalls that cause people to overspend.
Create fun challenges to kick it into overdrive
Money challenges do not have to be a drag; they’re quite fun actually! Do a copycat recipe night, a no-spend date night in the city, or a no-spend month.
Host fun themed nights at home in place of paying money to go out
Do your own episode inspired by Food Network’s “Chopped” TV Show with ingredients you have in your cupboards, bust out the old game boards, or watch a history of viral videos on YouTube!
Now that we’ve given you a roadmap to start moving towards greater financial impendence, we hope you’re ready to begin your New Year Money Challenge! It may seem scary, unusual, unpopular, or unsatisfying to live frugally. But we promise you that once you get started it becomes easier and even enjoyable.
We’re so excited for you! Challenge yourself this year to do more than you ever thought possible. And, to help stay on course and super-charge your goals, be sure to watch out for these Top Money Mistakes!
Let us know in the comments which these steps from the New Year Money Challenge you’re going to work on first.