I’m excited to share an interview with Shawn Richard from The Smart Fi today! Shawn is a friend of mine, and I’ve enjoyed reading his financial savvy, particularly when it comes to the area of saving money. One concept he talks about at length at his site are “No Spend Days.” If your budget could use a jump start, I hope you’ll draw some inspiration from his interview.
First, tell me a bit about your blog. Why did you start it, and what is the primary message you’re hoping to share with readers?
The Smart Fi blog was born from an idea to share my family’s journey to Financial Independence (Fi) and break free from the rat race. Part diary, part how-to posts, my writing is geared toward the novice investor who is looking to pay off debt and begin to build wealth.
From a very young age, personal finance has always intrigued me. I remember opening my first Roth IRA and being fascinated by the account statements showing I had made money without actually doing work. From that day forward, I realized my money could work just as hard as I do. It wasn’t until the catchy term FIRE (financial independence retire early) was coined that I really focused in on the purpose of our journey, make work optional.
What do I mean by make work optional? The typical American family spends everything they earn. But what if you lived off of half of your income? By living off half of your income, each month you work you are “buying” a month of your freedom. In essence, the half of the monthly income you save can be used at a later date to fund a month of not working.
Instead of working until age 65 like mainstream America, you could afford to take a lower paying job that you love at age 50. Or even retire early and volunteer for your favorite charity. Creating a financial cushion in your life buys your freedom.
Happiness does not come from a perfect house, like you see on HGTV and a shiny Mercedes in the driveway. Happiness comes from the freedom to design the life that you want to live.
One of the topics I’ve seen you talk about before on your site are “no spend” days. Can you briefly describe what a “no spend” day or period of days is?
No-spend days are one of my favorite savings hack. If you follow any “debt free” social media accounts (there are thousands on Instagram) you will see the definition behind a no-spend day varies widely. There are no-spend days, no-spend months, and even no-spend years.
My favorite way to utilize no-spend days is to dedicate a month where I designate a certain number of days as no-spend days. As an example, my wife and I have decided that in May, we are trying to hit 10 no-spend days.
If you are interested in more information about no-spend days, you can read my entire article I wrote on the subject recently, No Spend Days Done Two Ways.
What qualifies as a no-spend day? I like to employ a very strict set of rules for my no-spend days. Quite simply, if I spend any money on a given day, it is disqualified as a no-spend day. Gas, for the car – disqualified, a gallon of milk from the corner store – disqualified. So you can imagine, it is difficult to get to a place where you can string together 10 of these kind of days together in a month.
What is the end goal of a “no spend” day for your family? Is it to pay down debt, increase savings, or something more?
The end goal of a no-spend day is to get you to think differently about your money. Mindless spending is a cash flow killer. By that I mean, most middle class families have some “fluff” in their budget. In our case, we were trying to get to a place where we could harness that “fluff” from our budget while not degrading our quality of life. In the end, we have no problem spending money on items or experiences that bring us joy. It was the meaningless purchases we were trying to eradicate.
“The Latte Factor” was a phrase coined by David Bach years ago. He even turned the idea into a book. The premise of the book is that mindless daily spending can add up to hundreds of dollars per month. If that money were used to build your personal wealth instead, you could have saved hundreds of thousands of dollars over your lifetime. You could literally change the trajectory of your financial life by cutting out expenses that don’t bring you joy.
One of our family’s major financial milestones is to pay off our mortgage. This is the last hurdle to becoming totally debt free. The money we save from our May no-spend days will be earmarked for paying extra principal on our mortgage payment. It is a guaranteed way to get 3.375% return on our money. Much better than any savings account currently offered by banks.
What kinds of benefits have you seen from “no spend” days? Any cool stories to share of what you’ve been able to achieve?
We live dangerously close to a grocery store. You can literally see the store from our driveway. This has built a safety net into our lives that while convenient, can really put a dent in our grocery budget. Because when we run out of milk, we walk to the store and instead of just buying milk, we walk out with $30 worth of other stuff we didn’t need. This kind of mindless spending costs us hundreds of dollars per month.