Sean Cooper was unexpectedly thrust into the spotlight in 2015, when a video of him quite literally burning his mortgage, a ceremonious end to his three-year plan to pay it off, went viral.
Cooper, a money coach and personal finance journalist, sat down with Yahoo Finance Canada to share some advice on saving money for that big purchase – regardless of whether it’s a mortgage, a wedding or a major trip.
Make a S.M.A.R.T. plan
Start by setting yourself a goal and making it specific, says Cooper.
“Use the SMART acronym – specific, measurable, attainable, relevant, time-bound,” he says. “Figure out how much money you want to save for this goal whether it’s a wedding or a down payment for a house and then work your way backwards from that.”
Decide exactly how much money you need to save per month (or per paycheque or even per week, says Cooper). “That makes it seem a lot more achievable because if you think to yourself ‘I need to save $30,000 for a down payment on a house’ that’s pretty intimidating (as opposed to) $75 a week – it’s about breaking it down into smaller chunks.”
Don’t spread your budgeting efforts thin
Cooper says that while he championed budgeting in his book, his opinion has since changed a little.
“I think maybe it’s better to focus on just two or three categories where you’re most likely to overspend or spend most your money and then focus on those,” he says.
He points to variable expenses like clothing or restaurants or electronics. “Some people say you should have a budget and track everything to the penny but I think that’s just too much work for the average person – people are busy these days.”
One of the challenges of the cash-less society is convenience has a tendency to trump critical spending.
“You swipe your credit card so many times and don’t realize how much money you’re spending until you get your credit card statement,” he says pointing out that some people don’t even bother to read their credit card statements. “They just blindly pay the amount that’s owed (or) have automatic withdrawals from their bank account.”
He calls it spending and saving on autopilot and notes that while it’s convenient it also makes our money more abstract than it needs to be. But before you cut up the credit cards, Cooper suggests looking at how you use your smartphone or apps to pay for things and whether it’s eating more of your income than you think.
Cooper says he got a wake-up call of his own while promoting his book, Uber-ing from interview to interview.
“I was just punching things in my phone and it didn’t really mean anything,” he says, until he got the bill of course. “Your money can easily evaporate.”
If you find you’re using your apps to spend too much it may be worthwhile to log-off.
One of Cooper’s not-so-secret tricks he used to pay down his mortgage faster was moonlighting as a personal finance blogger in addition to his day job as a senior pension analyst.
“You don’t have to work 80 or 100 hours a week like I did,” says Cooper. But he points out that there are so many ways for people to generate extra income from a “side hustle” – especially earning some cash through the sharing economy.
“By earning money outside your full-time job you can pay down your mortgage sooner or reach your goal sooner,” he says. “You could become an Uber driver or you could rent out your place on Airbnb or I saw a (platform) where you could even open your own restaurant in your condo – see what else is out there, see what skills you have and leverage those skills (to) make extra money on the side.”