Everyone talks about the Debt Snowball, a term invented (?) or at least popularized by Dave Ramsey of Get-Out-Of-Debt-with-Total-Money-Makeover fame. Many of the get-out-of-debt bloggers attribute their success to Ramsey's methods. Like most things involving numbers, the snowball can work in reverse: once you are out of debt, you can begin a savings snowball.
An amusing essay on the Savings Snowball is provided by Amy Dacyczyn in the first of her Tightwad Gazette tomes. I read her books from time to time not so much for inspiration as for comfort. I love the timeless principles of frugality. And I love that with frugality, you can start small.
Amy D. thinks so too. For her snowball essay, she contrasts two families: the profligate Smucksters and the frugal Albrights. Each family has $100 left at the end of the year. The Smucksters go out to dinner, buy a Nintendo, whatever. So they have nothing.
The Albrights put their money into savings or into purchases that yield future savings. First year: $50 to savings, $50 to cloth diapers. Then they start bulk purchasing grocery items on sale. And so on.
As they go, they are buying CDs, more fuel-efficient cars, sewing machine, chain saw, etc. Some of their savings are a little bogus, like using the sewing machine to make handcrafted items that you can sell for $900. Good luck with that idea! Still, the point is a good one.
At the end of year 5, the Smucksters remain at Square One, while the Albrights have amassed $11,000.
I know that everyone urges saving on the big stuff these days (or increasing your income), but I am a believer in the power of little choices. So I guess Amy D. remains my role model. Plus, she's a very good writer.
Amy would tell you to check her book out of the library, by the way. You can also check out Dave Ramsey (but watch out for his assumption that your investments will earn, on average, 12%/year).
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