Ramit Sethi, author of "I Will Teach You to Be Rich," launched a challenge to help people save $1,000 in a week, accompanied with a wealth of tips on his blog to help people achieve their savings goals. We sifted through Sethi's advice and chose our favorites.
If you aren't up for an intense week, use these tips over the course of a month to similar effect:
1. Create a 'no spending' day once a week.
Choose one day each week and challenge yourself to not spend a single dollar.
"Technically, even if you don't open your wallet, you're still spending money on things like rent, car insurance, and subscriptions," writes Sethi. "You just didn't count them. But that's even more of a reason to create a 'no spending' day on the money in your wallet: because you can actively control it."
The key to this tip is putting it in your calendar so it becomes a consistent system.
Estimated savings: $5 to $75
2. Optimize your cellphone bill.
"Many of us (including me) pick a cell phone plan, then never check to see if it's the right one for us based on our usage," writes Sethi. "Because the average cell phone bill is about $50, that's $600 per year of money you can optimize."
When buying a new phone, Sethi likes to pay a little bit more upfront by choosing the unlimited-data and text-messaging plan. He then sets a three-month check-in on his calendar, and analyzes his spending patterns after a few months to see where he can cut back. You can use this method for any usage-based services, he says.
Estimated savings: $20 to $600
3. Postpone a single large purchase until next month.
"It's very simple," writes Sethi. "New lawn mower — wait. New TV — wait. New dishwasher — wait. You can set a calendar reminder to check on it in 30 days. A couple of things will probably happen when you do this: First, prices will probably drop. Second, chances are you'll realize you didn't really need it."
Estimated savings: $50 to $3,000
4. Go cash-only.
Research shows that people spend significantly more when using credit cards instead of cash. So if you're looking to curb your spending, try going with all cash.
The cash-only diet is as simple as it sounds: You ditch the plastic, determine how much money to withdraw for a certain amount of time, and buy things only with the cash you allocated for yourself. When it runs out, you're out of funds until your next scheduled withdrawal.
"Rather than blindly using your credit card and deferring whether it's worth it or not until your bill comes — by that time, it's too late — using cash forces you to make that decision when you pay," writes Sethi. "You withdraw a limited amount and watch it dwindle. It's very primal: Since we're more motivated by loss than by gain, each dollar you physically spend will cause you pain: the good kind of pain."
Estimated savings: $50 to $300
5. Buy generic for the stuff you don't care about.
"You have to prioritize because you can't have the best of everything," explains Sethi. "Buy brand-name for the stuff you care about, and cut costs mercilessly on commodities you don't care about by buying generic."
Areas you may be able to save money on include toiletries, food, certain clothes, and pet supplies. What is important to you? And what are you willing to sacrifice? Establish what you want to prioritize and what you can de-prioritize.
Estimated savings: $50 to $500
6. Implement the à la carte method to save money on subscriptions.
This technique takes advantage of psychology to cut our costs.
"Cancel all the discretionary subscriptions you can: your magazines, TiVo, cable — even your gym," Sethi explains in "I Will Teach You to Be Rich." "Then, buy what you need à la carte. Instead of paying for a ton of channels you never watch on cable, buy only the episodes you watch for $1.99 each off iTunes. Buy a day pass for the gym each time you go."
It works for three reasons, Sethi writes: You're likely overpaying already; you're forced to be conscious about your spending; and you value what you pay for. If you're having trouble deciding what to cancel and what to keep, this four-step chart will help you make the decision.
Estimated savings: $10 to $100
7. Forget going to a bar.
Ask people over for dinner.Even if you do this only one or two times a month, this is one of the most cost-effective decisions you can make, says Sethi. After factoring in all of the moving parts of going out to socialize — gas, drinks, food, tips, tax, and miscellaneous things such as valet or lending money — one night can easily add up to $50 or more.
Try hosting a potluck, dinner party, or simply ordering pizza a few times a month instead of hanging out with friends at a restaurant or bar. Crock-Pot meals cost about $2 a person, while the average takeout dinner or restaurant meal costs upwards of $50 for a family of four.
Estimated savings: $50 to $200
8. Sell one thing on eBay.
If you're already doing a good job of saving, the next step is to make money.
This tip serves two main purposes, says Sethi: "To symbolize to yourself that you can sacrifice by selling something, and to symbolize that you can make more money than your standard income. Once you do that, there are many other ways to generate income."
It doesn't matter what or how many things you sell. The point is not even to make much money (that's a bonus). "The point is the symbolism of cleaning your life and generating even a small amount more money than you normally earn," he writes.
Estimated savings: $40 to $100
9. Buy something new only when you're replacing something old.
By establishing a rule that you can buy only to replace something you already have, you're creating what Sethi calls an "active barrier."
"Before buying anything, think 'how many of those do I need?' and, 'how many do I already have?' Then think again if you really need a new one," he advises. "The psychology of having to open up your closet, decide what to give away, and get it to the nearest charity (or garbage can) is enough to stop many of us from buying something new."
Estimated savings: $10 to however much you would have bought otherwise
10. Use the free rewards from your credit card, car insurance, and workplace.
"Think about the places you belong to as a member: your credit card, auto insurance, Costco, or your job. Each of these offers perks that most people ignore," Sethi explains. "By simply being a member, you get perks that can add up to thousands of dollars each year."
To use this tip effectively, figure out exactly what your memberships offer. For example, some car insurance offers discounts on major retailers, and credit cards often offer travel insurance and car-rental discounts. If anything stands out, set a calendar reminder for when it will apply. Another good rule of thumb is to always check for perks before you make any big purchases.
To maximize credit-card rewards specifically, check out the single best credit card for earning rewards, strategies for getting the most from your rewards, and how one woman made nearly $500 from credit cards with minimal effort.
To ensure you're taking full advantage of work benefits, read about ones you may be overlooking that could save you tremendously.
Estimated savings: $100 to $2,000
11. Earn more money using a skill you already have.
"Most Americans only think about cutting costs, resulting in frugality websites that frantically try to out-do each other with the most inane and meaningless tips of all," writes Sethi. "We forget about the lever of earning more money, which is the most powerful of all."
How is this a tip to save? These "bonus" earnings go directly into savings.
Try negotiating your salary at work, starting a second job, or freelancing for something you're very good at.
Estimated savings: $100 to $1,000
12. Use psychological barriers to prevent yourself from spending money.
If you find yourself eating out too much, stuff your fridge with perishables that you have to eat before they go bad. If you spend too much on shopping, unsubscribe from magazines or email lists that make it easier to make purchases.
"The simple fact is, if things are automatic, you will do them," writes Sethi. "Don't just look for where you're spending today. That's surface-level. Look deeper to see what's causing you to spend, and if you decide you don't want to continue, then eliminate those causes."
Read up on mind tricks that will help you save more and spend less.
Estimated savings: $10 to $200
13. Create savings goals.
Whether you like it or not, big purchases are going to surface: a car, graduate school, a home, or new laptop. They can be overwhelming when you're trying to keep up with the everyday expenses and save for retirement at the same time, but with savings goals, you can chip away at them.
Choose two to three major purchases that you plan to make in the next couple of years and each month, direct a specific amount of money into sub-savings accounts. The amount will depend on your upcoming purchases and time horizon. Treat this money like a fixed cost, meaning you must set it aside every month like you would do for rent or utilities. This keeps you from skimping on savings and "saves" you whatever amount you decide to set aside.
Pro tip: Set up automatic transfers from your checking account to your sub-savings accounts so you never even see this money and learn to live without it.
Estimated savings: $10 to however much you set aside for savings goals
14. Cut cable.
The average American household pays $64 a month for cable, the International Business Times reports, which comes out to $768 a year. That's a large sum to pay for a service that people often don't take full advantage of.
One such alternative, Netflix, costs only $8 a month and provides more than enough entertainment to satisfy most families. A year of Netflix would cost you about $100, meaning you'd save over $650 in cable costs.
Check out more cable replacements if you're tired of excessive channels and outrageous bills. If you decide you can't live without your cable, another option is to call up your provider and negotiate a lower price — it's easier than you may think.
Estimated savings: up to $650