My financial life is a sad one. I have been living off my credit card for the past 10 years or so. As a freelancer and contract worker, the credit card has been my life-saver in many occasions . So for now, it is a tool that serves me well.
However, with the benefits of not having to starve myself at times, the ready availability of funds have caused me to rack up significant debt, that, if I don't address now, will be with me till my death. (I'm 55 and just barely make ends meet.)
I've tried a few options to address this. All of it helps in some way. However, planning and analysis of your debt only goes so far. I realize that the first rule of reducing debt is.
Reduce the amount you owe, any chance you get.
I therefore started paying as much as possible into my credit card account. These are actually larger sums of a few hundred or 1 or 2 thousand if I can, when I can.
I realize that I needed to be saving every cent I can to address this huge debt. I had to save, but how? Handling cash is expensive, so I don't want to save physical cash.
The banking platform fees are ridiculous. So to save 50 cents, the fee might be 350 cents, as an example. So that is not the best way.
One of my banking platforms have a neat feature, where you can move money from your main account, to an interest bearing mechanism called a "savings goal".
I started thinking about how to use this to kick-start my debt reduction program for 2023.
Enter the 100 day challenge. Sometimes called the 100 envelope challenge. It seemed an attractive option as it was easy to get stated for someone like me.
I figured this was the ideal mechanism to use for my 100 day savings challenge.
How the 100 day savings challenge works
The 100 day savings challenge works by savings a little each day, progressively increasing that value.
So, an an example.
- Pay $ 1 on day 1
- Pay $ 2 on day 2
- Pay $ 3 in day 3
- ...
- ...Pay $ 20 on day 20
- ...
- ...and so on...
As I mentioned, it gets progressively harder towards the end. As an example, in the last few days of the program, you will need to.
- Pay $ 97 on day 97
- Pay $ 98 on day 98
- Pay $ 99 on day 99
- Pay $ 100 on day 100
So you will need $ 677 just for the last week of the challenge. Well, you do have about 3 months to plan for this, so it is totally doable.
How much can I save.
Over a 100 day period, you will save $ 5050.
Now, get this! If you extend the period to 180 days, you will have saved $ 16 380, and that final figure well over $ 20 000 over a 200 day challenge.
What's not to like? So from day 1 of the new year, I started my 100 day challenge.
(My local currency is South African Rand, or ZAR, denoted by the symbol 'R'. I use that interchangeably with the dollar in the article. The strategy applies to any currency.)
So I saved R 1 on day 1
And R 2 on day 2
R 3 in day 3...and so on.
Now, on day 8, I have accumulated a tidy sum
I now have a tidy sum of R 36, and started earning some interest on it too. Yes, it is only 1 cent, but it's income I never had before.
I like this challenge, because
- it is forcing me to set aside money I normally won't.
- The amounts are initially small, so the entry point is easy.
- Additionally, while I realize it is going to be progressively more difficult to set aside the funds on a daily basis, I have the next three months to reaffirm my commitment to this goal and plan and prepare for it.
- It has an end point, so I can measure my progress towards reaching my target.
Where to from here?
When I am done with the 100 days, I will either pay this towards my debt, or keep it as an emergency fund. Having an emergency fund will prevent me from incurring more debt should I need money in the future.
I might also withdraw a portion of the funds, pay that towards debt or an essential item (not groceries) and continue paying towards a 180 day challenge
Additionally, I am considering taking on a 52 week challenge, where I put aside some money once a week for a year. I'll decide on my starting point, do the math and report back.
I hope you enjoyed the article. More so, I hope it inspires somebody to take on similar action for their own situation.
Always remember
Imperfect action is better than no action!
