The Shockingly Simple Strategy that Tripled My Savings Rate

zero day finance triple savings rate

For the majority of my life, I’ve had a terrible spending problem. Unfortunately, this is pretty common. I spent every single dollar that I earned. If you don’t have any debts and you spend all of your money each month, you aren’t really in that bad of shape. Your head is above water. You might not be able to get ahead, but at least you aren’t drowning. Well, this wasn’t the life that I wanted, so I decided to make a change. I started the Zero Day Challenge about a year ago. After a whole year, I’ve made life changing progress, and so can you.

The Zero Day Challenge

The Zero Day Challenge is a simple technique to help you control spending and save more money. It takes advantage of a very simple character trait: competitiveness. Humans are competitive by nature. We compete in sports, academics — we even compete to see who can eat the most hot dogs or crack open the most beers against our heads.

What if we harnessed this competitive nature, and applied it to our finances?

This is a simple, yet powerful thought. The Zero Day Challenge uses this concept. Track your spending on a daily basis. Every time you don’t spend any money (I call this a “zero day,” or a “no spend day”), you get a big fat 0! As the days go by, see how many “zero days” you can get in a row.

may 2017 zero day finance budget

At the end of the month, you count how many 0’s you have. What do you do the next month? See if you can get even more of them! The more zero days you have, the less money you’ll spend. As time goes on, your spending will be cut significantly — which means you have more money to pay off your debts, build an emergency fund, or even save for retirement!

This strategy has helped me save a ton of money. In fact, it works so well that you can see what other people on CNBC, AARP, and Rockstar Finance have to say about it! Seriously, this is a very easy strategy to save money, that you can try for free! The best part? It’s easy. Track your expenses manually, or get a copy of my spreadsheet. Every week/month, count your zero days, and try and do better in the future!

Tracking your spending for an entire year might seem like a difficult challenge. If you are considering it, why not try a week? If you like it, stick with it for a month and see how you do. There aren’t any risks, no “gotchas,” and you don’t need to share your results with anyone. It takes me 10 minutes to track my spending for the entire month, and you’ll save a lot of money in the process.

Now, let’s find out exactly how much money I saved.

1 Year of Zero Days

I’ve been participating in my Zero Day Challenge for the entirety of 2017. I had no idea that I would be able to do so much with so little. I thought “maybe I’ll save an extra couple hundred a month.” I never dreamed that I would triple my savings rate and save $1,000 per week.

The biggest way the Zero Day Challenge affected me was it forced me to see my actual spending in real time. When I started tracking my spending, I did it on a daily basis. After a few days of wastefully spending money, I started to try and spend less. As I spent less, I accumulated more zero days. With more zero days, my savings grew significantly.

As a side note, all of these graphics come from my Zero Day Challenge spreadsheet, as well as my net worth tracker. Both of these are free for my email subscribers. (I’ll be releasing my net worth spreadsheet in the next few weeks!) You can subscribe via the form on the right side of this page, or near the bottom.

The chart on the left shows a summary of my spending, broken down by month. It automatically determines if I beat my monthly spending goal. The chart on the right shows my yearly cumulative spending and zero days. “Average Spending” is my total yearly spending spread across 365 days. “Average Real Spending” is my total yearly spending, spread across the number of days I actually spent money.

zero day challenge summary

Zero Day Challenge summary

This is taken directly from my Zero Day Challenge spreadsheet. Every month, I tracked my spending, and the spreadsheet did the rest. We can see how my spending and number of zero days fluctuated throughout the year. We can see that my spending decreased over the course of the year, and my zero days increased as well. This chart does not include my rent and car payments, because those numbers do not change.

Unfortunately, I didn’t hit my spending or zero day goal. However, I did much better than 2016. I also learned a lot about myself. Over the course of 2017, I had countless cravings to spend money. If I really wanted to spend money, I went for it. But I was able to mostly control my unnecessary spending. Overall, I averaged 15.5 zero days per month. The spreadsheet calculated that I spent an average of $107.71 on days when I spend money.  Given that I had so many zero days, I ended up saving almost $20,000 using this strategy.

In reality, this is just an estimation. However, I saved an extra $36,000 compared to last year.

zero day finance spending trend

Zero Day Finance spending trend

This next graph shows my day-by-day spending for 2017. The blue line shows my daily spending (scale on the left side) and the orange line shows my cumulative spending (scale on the right side). I find this chart really cool because it acts as a summary of the year. I can see spending spikes, and remember what I bought. For example, I bought my family several nice meals in the beginning of the year, and it shows.

We can see that I have a few fairly large purchases during the year (those meals were pretty expensive). The biggest one was in July, where I spent $1,500 on a new laptop (my old clunker died). I also spent almost $900 in December to pay my car insurance premium for the next 6 months. Other than that, I didn’t really spend that much money.

This graph shows me that the majority of my spending comes in the form of many small days. For example, most of my spending is easily below $100/day. When you spend less than $100 several days in a row (or better yet, $0), it adds up. Very quickly.

These two graphs provide a very strong summary detailing my spending habits. In 2016, I spent a total of $57,000. I managed to keep my 2017 spending at $35,000 (including rent!). This freed up an extra $22,000 in cash during the year, and I saved the majority of it. This amount of money is life changing.

Finally, my main net worth spreadsheet tracks all of my income, spending, and savings. In 2016, my savings rate was approximately 20%. With the help of the Zero Day Challenge, I significantly cut my spending. This allowed me to save more money, and I almost tripled my savings rate to 59.24%.

You read that right: 59.24%. Saving almost 60% of my income has been eye opening. I no longer think about what I can buy with money, but rather how much of it I can save and invest for my retirement. I think about what my money can do for me.

What is savings rate anyway? Basically, its how much you save divided by how much you earn. The bigger this number is, the better. The average savings rate hovers between 5% and 8%.

This is truly a massive increase. You should check out Mr. Money Mustache’s article for an explanation on why this is so important. As a TLDR, I cut my retirement timeline from 35 years all the way down to 12 years, as long as I keep up the hard work. If you are looking for a way to save more and retire sooner, you should really try out the Zero Day Challenge.

Psychological and Emotional Improvements

For a lot of Americans (including myself), spending money is an addiction. And it’s so easy, too. All you need to do is take out your credit card and swipe. Okay, technically you need to insert your card into the chip reader, wait 20 seconds, then take your card back. But you get the idea.

Anyway, spending money makes you feel good. Really good. It is honestly a problem that people have trouble dealing with. In 2016, I was very stressed out. I was on a large government project that was ending. Would we win another project that had work to do? Would I get that raise/promotion that I deserved? All of that stress translated into spending a ton of money. It made me feel… better.

For 2016, I calculated my non-rent/car spending at $3,500 per month. $3,500 per month! That is ridiculous. I was spending more than $100 per day, every day, for an entire year. And that didn’t even include rent or my car payment. This is just food, entertainment, and miscellaneous. I realized that I constantly turned to spending money to make myself happier, and it was costing me my future.

After doing the Zero Day Challenge for a year, this behavior is mostly gone. In the beginning, it was tough. I really wanted to buy this or that. But over time, those urges went away. I decided to venture outside of my apartment more. I actually went into Washington, D.C. (and met some really cool PF bloggers in the process!). I started working out more, learned how to cope with my problems, and improved my financial situation.

This is the end goal of the Zero Day Challenge. If you are able to save money, then that’s great. But if you are able to be happy and not feel trapped spending money to feel happy, that is the best thing that can happen. Money is great, but happiness is the most important thing you have.

The Path Forward

This year has been an experience. I never dreamed that I would be able to radically change my behavior and save this much money. My goal is to bring this success to you. I want to help you learn to more effectively save money. When I first started blogging, I thought that if I did well enough, I might make some money. That is no longer my goal.

I want to help you achieve your financial dreams. If I can help you save money with the Zero Day Challenge, that’s great. If I can help you save money using other techniques, that makes me happy too. I’m shifting the overall focus of my blog. It will now almost exclusively detail new and innovative ways to save money, and what you can do with that saved money.

If you want to embark on this journey with me, feel free to follow Zero Day Finance, and even subscribe to my mailing list. When you subscribe to my list, you will get my personal thoughts, plus all of my spreadsheets that I’ve used to help improve my finances.

I’ll end this post with a gif of Apollo from Battlestar Galactica celebrating a victory. Battlestar Galactica is my favorite TV show, and it’s where I get my “good hunting” signature from. Let’s all save some money in 2018.

Good Hunting,
David

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10 Responses

  1. zeejaythorne says:

    That is such an impressive change! Nearly 60% savings’ rate! Huzzah!!!

  2. Very impressive! Congrats on such a huge savings rate and such a huge change in your spending habits. I went through a similar thing in my last year of medical training when I discovered MMM. I was blown away by the idea that you don’t have to wait until you’re 65 to retire and that you can save a high percentage of your earnings. Once I started tracking my spending, I was appalled by all the mindless and wasteful spending that I was doing. As an attending physician, I am spending less than I did as a trainee, and I don’t miss anything that I used to spend money on. If anything, I appreciate the things I buy much more than I did before, as there is simply less of it.

    • David says:

      Thank you Solitary Diner!

      Glad to hear that you were able to get rid of the waste. I was shocked when I looked at my 2016 spending. I was naive enough to think I was doing a great job spending, but that was so far from the truth. Now I’ve (mostly) broken my spending addiction. I love buying things for others, but very rarely do it for myself. Good luck in 2018!

  3. That’s incredible!

    Quick question – do you count bills that come out of your account automatically as spending, or would those be zero days too?

    • David says:

      Thank you Tami!

      So that’s a great question. Everyone who has tried out the Zero Day Challenge does it a little differently. The most important thing is that you are consistent. For me, I track all spending that hits my credit card. The majority of my bills are paid for with my credit card (excluding rent and car payment). So small recurring expenses like Netflix, Audible, etc are are all tracked and decrease my total zero days.

      If you want to do something different, that works too.

  4. That graph is beautiful. Look at all those zero days! 🙂

    Seriously though, this was a great read. Tracking zero days is a great way to make personal finance more fun!

    • David says:

      Thank you! I also haven’t forgotten about you, I’m planning a post about Tracking Happiness at some point this year. I’ve been pretty light blogging, recently.

  5. justin says:

    Impressive post!, it’s a new year and I’ll definitely try this too. 🙂 actually I did a similar thing. I wrote housekeeping book last year and it helped me reduce my spending.

    • David says:

      Thanks for the comment! I may not have enjoyed the day-to-day process of tracking my spending, but I’m really excited about the results!

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