Early Retirement Extreme Forums

I am currently extreme-izing my daily habits by setting up a weekly schedule with daily tasks (extreme-izing both the goals and the tracking).

Early financial independence ranks high in my overall web of goals.
And as such, the monthly savings rate trailing twelve months is one of my personal KPIs I want to track more closely.

For different reasons I find it appealing to integrate goals into daily habits.
For simplicity, you could imagine I would like to be able to check off a box "done something to work towards a high savings rate today" daily.

However, as for a monthly recalculated savings rate (TTM), I am still on the hunt for good proxy indicator that is track-able on a daily basis.
So I would like the "done something to work towards a high savings rate today" to be more precise and SMARTer, although not necessarily religiously SMART.

Ideas I have had so far:
- comparing daily spending to average daily spending (for various reasons impracticable; for example for reasons of fluctuations like holiday spending, weekdays vs weekends etc.)
- doing something "extraordinary" I ususally don't do often (for example eating only home-made dishes, taking the bike instead of the car etc.)

I find the latter approach interesting, as I could build new habits from that, for example: If I suddenly bike five times a week, because I have a high savings rate on my mind, biking after a while doesn't count as "extraordinary" any more - but the more general goal of "high savings rate" got me started.

This would a) spark my creativity and b) if I can't think of much new, I would repeat previous activities that for me have counted towards my checkbox (and therefore turn it into a habit). On the flipside, it is less structured and less SMART than for example choosing one specific goal to begin with (for example, "reducing cost of transportation" instead of "done something to work towards a high savings rate today" and trying different ones every week/month if they don't work for me).

Days gone since last spending money. (Remove recurrent expenses like rent, electric bill, ... from the tally.)
Days gone without making an ATM withdrawal (presuming you always withdraw the same amount and you only pay cash. This is what I did.)

Interesting question. I have done similar exercises, but since I have almost always been some combination of self-employed or flexible-schedule-employed, the easiest way to improve my savings rate is to apply whip/carrot and somehow manage to make myself work more . If you calculate the hourly wage you are paying yourself for engaging in various frugal activities such as biking to work or cooking dinner from scratch, spending less can be equated to working more. So, you could track your frugal self-employment earnings on a daily basis from some sort of baseline. For instance, you wouldn't calculate how much money you are saving by not paying somebody else to soap you up in the shower. For changes such as taking shorter, colder showers, you could instead make calculation making use of somewhat schizophrenic notion that you are running a business to provide yourself as customer with a reasonable level of cleanliness and then estimate adjustment to unit cost of production on daily basis, and make corrections when you tally with actual monthly bills.

fips wrote: ↑

Fri Feb 09, 2018 2:54 pm

And as such, the monthly savings rate trailing twelve months is one of my personal KPIs I want to track more closely.

That is also one of my favourites: "monthly savings rate trailing twelve months"

Maybe you can implement the following daily habit:
Writing 3 (or up to 10) things/ideas/activities, etc... down, how you can stabilize your even increase your high savings rate.

This is old news if you've read the blog, but try to reduce the big recurring expenses rather than the small one offs. For example, moving so that your rent is 20% cheaper and you can bike to work will have a bigger impact than repairing your shoes so you don't have to buy new ones so soon. It's better to bake the solution into system rather than depending on innovation or will power.

@jacob: Unfortunately, that doesn't really apply to me, as I am not a big spender on "miscellaneous stuff" anyway. But that makes me realize that my problem lies in the bigger recurring expenses as Gilberto points out.

@7W: That approach sounds very ymoyl'esque. It would be nice to have a price for any activity - and I guess most of us put a price tag on many daily activities - but running the actual calcualtions sounds very elaborate.

@wolf/Gilberto: That's probably getting closer to what I need. Find ideas for cutting bigger expenses, prioritize and tackle them. That's similar to what I do already - finding solutions that tackle the bigger spending categories and have an overlap with my web of goals, for example eating out: Food is a comparably large expense every month and cooking instead of eating out complements my goal to nourish a healthy life style.

Maybe I can find more of such projects that address a bigger spending category and overlap with my web of goals and then make it a task to work on that everyday until it is accomplished (for example moving to a cheaper place) or turned into a habit (for example cooking my own food instead of eating out).

I suggest using time as the yardstick rather than money. One method:
1. Calculate moving annual total of your expenses y dollars
2. Divide y by 365.25 giving x dollars
3. Every time you think of spending some money, or doing something to save some money, divide the dollar amount by x to show how many days it is pushing back your FIER date, or bringing it forward

This includes some positive feedback in the sense that as you reduce your spending you reduce the denominator so that your next dollar saved has more leverage in terms of bringing you towards your goal more quickly.