Can a hip Chicago 20-something spend only $100 a week? That’s $50 for food and $50 for fun on the weekends? We’re about to find out.
Nicole DiVito is imposing the strict budget limits voluntarily as part of “No-spend November.” She’s slamming her purse shut, limiting herself to $400 for the month.
If you think all young people are dumb about money, prepare to have your expectations challenged. In fact, many young people are, rightly, scared about money.
DiVito, 27, who works in public relations, says she’s spent the first five years of her career struggling, and hasn’t been able to save any money for the future. She wants to change that.
“Why am I doing this? The short answer is to substantially save while still paying down my credit cards,” she said. “Although I don’t have a history of overspending, I definitely overspent in 2013. By August 1st, I was up to $4,000 in credit card debt, and I knew something had to change.”
DiVito brings home about $3,500 every month. She’s hardly got a lavish life — she lives in the northern suburb of Wicker Park with two roommates, which keeps her rent at a manageable $766 monthly. But other bills add up: cell phone ($140) car payment ($235) utilities ($100) and mass transit ($80) eat up a big chunk of her earnings.
To get her debt under control, she started making $1,100 monthly payments toward her credit card debt since August. That’s had an immediate positive impact on her financial picture — she’s already getting new credit card offers and increased credit limits — but she’s spending more than two-thirds of her income on bills, before food.
“I also haven’t saved much since landing my first job in 2008 because, as many do in my field, you start at a very low salary and work your way up,” she said. Her first job paid $32,000, giving her no chance to save. “Now that I make more, in addition to paying off my credit cards, I’m trying to make up for lost savings by saving a lot.”
By instituting no-spend November, she’ll be able to put away $680. Then, when December rolls around and she’s finished paying off her credit card debt, she plans to save the $1,100 she was using to pay off the cards.
“By adding the $400 ‘no spend’ rule to the mix, I can potentially add $600 per month to that total for monthly savings of about $1700 a month,” she said. “In a year, if I kept this up, the no spend’ rule would give me $20,400. … I don’t realistically expect to pull this off every month. Maybe every other month instead for $16,800 a year.”
It’s an ambitious goal for a clearly ambitious young woman. And it’s not going to be easy. For starters, her friends are going to have to buy in. She’ll have to turn some of those Tuesday afternoon happy hours into movie nights at home with a cheap bottle of wine, for example. Still, she thinks many of her friends are equally as worried about money — so not only will they help, they might even sign up for no-spend November.
“I think the biggest challenge will just be sticking to it and not caving for a new outfit or something for the apartment,” she said. “Many of my friends are in the same boat or worse as far as credit cards go, and many others have school loans to pay off. I have friends with $40-50k in school loans. It’s really tough. So yes, I think my friends will understand, and I hope some of them join me.”
We’ll check back with Divito later in the month to see how she’s doing.