A spending freeze is simply a commitment you make to not spend money on anything that isn’t necessary. You would still pay your bills and make sure your family is fed and taken care of, but no other spending is allowed. Taking this challenge can reset the way you think about money.
Licensed Insolvency Trustee, Mary-Ann Marriott speaks from personal experience, setting up her own personal spending freeze. She talks about the pros and cons and how being aware of your spending habits can help you reevaluate what is important.
Mary-Ann also covers:
- Using the spending freeze as a learning tool
- Identifying needs from wants and shedding light on spending habits
- The benefits of practicing delayed gratification
- Fun ways to make the freeze affective
- Choosing a realistic time frame
If you are having financial difficulties and need advice about budgeting or how to get out of debt, a Licensed Insolvency Trustee should be your first call. They are licensed and regulated by the Canadian government and adhere to strict ethical guidelines.
Read the Transcript
Wayne Kay 00:04
Welcome to the Debt Matters podcast, where we help Canadians find solutions to their debt with Licensed Insolvency Trustees from across Canada.
I’m Wayne Kay and in today’s show, we’re going to be talking about a spending freeze to help with your debt problem. What is a spending freeze? We’ve heard this used by corporations but how about for your personal life?
What are the pros and cons of a spending freeze and what can you actually spend money on during this time? And how do we make this super effective?
To find out more, my guest today, Mary Ann Marriott from Allan Marshall & Associates Licensed Insolvency Trustee with offices in Alberta, New Brunswick, Nova Scotia, Prince Edward Island, and of course, in British Columbia as well. Mary Ann, thanks for being here.
Mary Ann Marriot 00:52
It’s my pleasure. Thanks for having me, Wayne.
Wayne Kay 00:54
Well, looking forward to learning about spending freezes. This is typically a corporate phrase that I’m used to hearing.
Mary Ann Marriot 01:04
I’ve actually never thought about that in a corporate sense. I’m used to hearing it in a personal sense, so that’s interesting.
Wayne Kay 01:11
Well, I think they both work as long as we get to spend money again. So when you hear there’s going to be a spending freeze, it kind of shocks people. But I guess that’s the whole point of this is to shock people. What is a spending freeze?
Mary Ann Marriot 01:25
Yes, you’re right. And now that you say that, it’s like, yes, I hear that in government, and it is a bit of a cause for concern. From a personal perspective, a spending freeze really is essentially what it sounds like. You’re just going to freeze your spending to a degree doesn’t mean you don’t spend anything.
So it’s a personal challenge that you make with yourself to stop spending on things that you don’t need. Essentially you pick a timeframe, let’s say a month, and you have a spending freeze on anything outside of what is considered to be a need. And I actually did this for myself in January.
Wayne Kay 02:04
Oh, I love that. I love when you actually do that before you preach. That’s a great thing.
Mary Ann Marriot 02:12
Yes.
Wayne Kay 02:12
And what did you learn?
Mary Ann Marriot 02:15
Well, a whole bunch of things. First of all, I forgot that I did it and I went and purchased something at the beginning of the month. So I’ll talk a little bit about that and what happens if you fail at your attempts.
But I think the biggest thing that I learned is my habits. It really brought to light in today’s world how easily and quickly we spend a lot of money on stuff that really aren’t essential.
Wayne Kay 02:44
Yes, absolutely. But in the moment, do we think that they’re essential or we just think that well, it’s just the way it is, the money. I’ve got my little card, I can easily go and pick up whatever.
Mary Ann Marriot 02:54
Yes, I think it’s a little bit of both because even though we don’t think something is essential, we still need it in that moment for something. And so I did find that it really made me step back and look at the way I spend money and the thought process around that spending.
Wayne Kay 03:13
So when you went through this – pros and cons, what are they?
Mary Ann Marriot 03:19
One of the biggest pros is it helps you to stop using credit now. Not altogether, but generally speaking. When we spend money, if we don’t have the cash flow to support it, then we’re going to our credit.
I feel like it’s a little vacation for your credit when you do this. You’re given a little break from all that use that we put on them, the credit cards. But I think mostly it helps you to evaluate what’s important, like I said, and notice your habits.
And so there’s this huge awareness that comes as a result of doing it, which hopefully is something that you’ll take with you in the future months that will also help you curb some of that more impulse spending. And then the final pro that I would say is you save money, or at the very least you don’t spend additional money that you don’t have.
Then it depends on what you do with the money. So the purpose of this is, talking about spending freeze – and helping with debt problems. Certainly if you can spend less money on things that aren’t essential, it’s going to either, one, free up some money that you can use to pay down debt, or two, it’s going to stop you from using the credit as much and continuing to incur debt. So those are some of the pros.
The cons, it’s just no fun. Let’s just start with that. You do go without and it really forces you to practice delayed gratification, which I’m definitely a fan of. In fact, what I found is that I would put things in my card, and this is something I’ve talked about in different podcasts or blog posts or whatever I’ve done. Where you practice delayed gratification and you put things in your cart and then you go back and decide if you’re going to buy them. Well, in this case, January was a no spending month and so I wasn’t buying it in January. So that all went into my cart.
And then I looked at it after the freeze and I did find that there were things that I’m like, no, don’t need that. And the biggest con is, of course, it can leave you feeling deprived. And so you’re not going to do a year spending freeze. Let’s just set that requirement right out of the gate. Start with something small.
So that might be a week for someone. It might be a couple of weeks, a month, a couple of months, but you’re probably not going to go really much further than that because it can get frustrating.
Wayne Kay 05:55
But I think some ways that you can do this to make it more fun would be to have other couples do it with you.
Mary Ann Marriot 06:03
Yes, absolutely. Engaging your family, having a buddy system, even for those so inclined.
If you’re on social media, you could make a game of it, and you could set up a Facebook group where you could do something on Instagram, or you could do a bunch of TikTok posts. So you could kind of make it and that’s part of keeping you accountable as well. So I think you’re right. You could have some fun with it that way.
Wayne Kay 06:30
And I think that’s the easiest way to actually stay on track whenever you kind of put it out there on social media that you’re doing something and who else wants to do it and maybe make it as if somebody falls off? Well, they have to buy you something or clean your house, wash your car, something. You have to have something to keep you going.
Mary Ann Marriot 06:50
But you had me hooked at the buy you something, but then the cleaning your car or the house, I might have to go that route.
Wayne Kay 06:57
Sounds like a good idea, doesn’t it? But it does make a difference.
And so many people, like as you’re talking about this, I know that people are listening, going, that’s a great idea. We spend, we spend, we spend. And all of a sudden, you’re right. You put it up in your shopping cart and then you go look at it and go, did I really need to buy that?
Mary Ann Marriot 07:17
Yes.
Wayne Kay 07:18
Okay, so that’s really good. I love that. And the spending freeze comes to an end. So you figure out what, a month?
Mary Ann Marriot 07:28
Yes, depending – you would pick your own timeline. But for me, I thought a month was a good time. It’s not just a week. It is a month. And there were some challenges, like just the simplest things, like trying to think, of course, now in real time, what might be the things that I here’s an example. I didn’t really like the mascara I was using, and so I would normally just go on Amazon and buy new mascara, but I was in a spending freeze.
So it’s like, you know what? Suck it up, princess, and use the mascara that you have. So those were the kind of fun conversations I had with myself throughout the month.
Wayne Kay 08:04
Right, so how did you pick what you could spend money on?
Mary Ann Marriot 08:09
Yes, and that’s a tough one because it really is up to you, and it causes you to look at what you consider to be essentials, the needs versus wants. And there’s a very thin line between the two.
So another example is my salt lamp. The bulb went, so I needed bulbs. Now, you could say that’s a need because the bulb went and you’re replacing it, but it’s not a light that I need for anything. And so I delayed buying the replacement bulbs until the spending freeze was over.
As an example, get into groceries. I mean, food is a need but maybe potato chips aren’t or smoked gouda cheese might not be. So that’s what I mean by it really causes you to look deeply at what you’re spending and what is essential and what’s not. And it really kind of shakes up your paradigm shift in terms of how you spend your money.
Wayne Kay 09:09
I would think at the end of this, there would be some revelations, and I’ve done it as well, where I’ve just tracked everything for one month and then kind of did the spending freeze the next month? And it kind of puts everything back into perspective of how you’re going to spend money.
Mary Ann Marriot 09:30
Yes, absolutely. Because it’s that big awareness aspect where you become really aware of what you’re spending money on, what’s important to you and what’s not.
Wayne Kay 09:41
Have you ever talked to somebody and they told you about doing this and how did they deal with it? Did they get through it for the whole month?
Let’s say maybe it’s a client and you said, here’s what we’re going to do. We’re going to have a month of no spending, and how do they feel at the end of it?
Mary Ann Marriot 09:57
I haven’t specifically, personally walked someone through it or had a friend do it. It’s been more like a blog post that I follow that someone’s done it and posted about it. I think that what happens often is people do it, but they do it because they don’t make the conscious effort to do it.
They just stop spending because they can’t, and then they go right into feeling deprived. So I think that’s the big difference between I can’t spend I’m not and going into that spiral versus, you know what, I’m just going to go for a month and only spend on necessities and see what I can learn. It’s a different energy in terms of how you approach it.
Wayne Kay 10:37
Right. And for myself, what’s weird is when I never had money, then I would use credit to make myself feel better. But as I started to build up a little bit of savings, maybe finally got to $100, and then I wanted to be $125. And as it grows, I want to spend less money or I want to save money to buy it so I don’t have to use the bit that’s saved.
Mary Ann Marriot 11:06
Yes, absolutely. You know what? Completely, that’s the psychological aspect of saving is that once we do start to save and once we do see the money there, we want more of it, we want to add to it.
And that’s the other piece to this is if you can, what you want to do is redirect that money and put it into savings so you could go as far as I was going to buy those light bulbs, and they were going to be $15.99. And so instead, I’m going to transfer $16 into my savings account and watch it grow.
And I think that’s a really cool way to see the tangible results and see it building. And then you’ve got this little pot of money that you have to decide where that’s going. And that’s a whole different process than deciding to swipe a credit card.
Wayne Kay 11:49
But isn’t it great to have that finally? I think that’s just the most exciting part. And then you can start to see that grow. So when you’ve gone through this, what are some help here on helping us to make this freezing spending freeze effective?
Mary Ann Marriot 12:06
Yes, so I think one is getting ready for it. You’re just like you’re not doing it out of frustration. I’m frustrated and I have too much debt and I’m just going to go on a spending freeze. Because now you’re going in angry, I think coming at it from a place of curiosity and wonder and treating it a bit like a game. I wonder if I can do this and I wonder what things I’ll spend and won’t spend on and I wonder how much I might be able to save. What if I put that money away?
It’s just a whole different energy and involving someone, like you said. So having a buddy system or a family member or posting it on social media so that you’re interacting with other people around it. I think it is a great way to get into the headspace and make it effective because again, you are or you’re only accountable to yourself. If you do it yourself, no one’s going to know. So if you bring somebody else in.
And then the third piece would be to set a goal to see how much money you can save.I think it would be great to have a separate account that you don’t use for anything else. And every time you decide not to buy something that’s not a necessity, transfer the money. Now, I know some people are thinking, what if I don’t have enough money for that and I’m scraping to get by. The money hasn’t gone anywhere. You can go get it.
So just transfer it over there and then if you need it for milk and eggs, take it for milk and eggs. But you still get a sense of where that money is, you wouldn’t have had it where it would have gone and that you do now have it.
Wayne Kay 13:31
Right. That’s very great information because oftentimes when our kids were little, paycheque to paycheque was a dream. It was paycheque to five days or three days before paycheque – is what we had to deal with. And yet we still had to pull that money out for the RESP.
My wife made sure we did that, even though I was complaining a lot, saying, we really need that. And she said, no, we have to go there. And then all these years later, we made it through and I’m so grateful that we did have that money set aside. Whereas if we just left it into our regular checking account where everything was going in and going out that would have been spent by me on something silly.
Mary Ann Marriot 14:16
Yes, absolutely. That is such a great example, Wayne. I love that because that’s exactly what we do. We just spend what we have. And so when you take it out of there, you just adjust. You just do. I don’t know how to explain it other than you really just do.
Wayne Kay 14:32
Yes, well, you brought it up. But I think the important thing, and I wish I had known this more when we were living that way, is that it’s going to get better. This is not the way life is going to be forever, that it’s going to be hard financially. And then it’s funny, as I’ve talked to more and more people, they’ve all been in the same boat.
It’s expensive having children and just things happen in life and you still have to be able to save some money and get through. And it’s very tight. But we’re all in the same boat in a way.
Mary Ann Marriot 15:09
Yes, absolutely.
Wayne Kay 15:10
So what happens if you go through this? And as you mentioned earlier on, you said, oops, you screwed up once.
Mary Ann Marriot 15:18
Yes. So I don’t think really, you can fail with this because I think you’re going to learn something. And the first thing I learned is that it’s not a habit. So I’m going to go on autopilot.
And I had wanted this thing, and I just bought it without thinking. And I’m like, oh, okay, that’s how easy it is. I put myself in a no spending freeze and immediately spent on a luxury item. So you just keep going. You don’t give up.
And part of doing that is figuring out why it didn’t work in that case, because I just went on autopilot. And so you go, okay, that doesn’t work. What am I going to do differently? And then you start playing with different ideas. So for some people, it might be not making a grocery list.
And it’s like, okay, I ended up impulse spending because I didn’t plan my groceries or plan my week or plan my meals. So if I do that, it’s going to be easier to stick more to my needs versus wants. Or I repurposed clothing, more stuff I hadn’t worn for years because I wasn’t buying something new. Those are just some kind of random examples, but basically you’re going to learn something throughout the process, and you’re going to take that with you as you move forward. So here’s something that I did because I like treating things a bit like a game.
I do a lot of shopping on Amazon, and so I started looking at, okay, if I want something extra, I’m going to earn the extra money to get it. And that could be through selling something I no longer need. It could be by getting points on my PC card, for example. Occasionally I get Amazon gift cards for various things. And so I’ll use the Amazon one.
For example, I put something in my card. I want it. And then I thought, I’m going to wait until I get another free gift card code, and then when I have enough, I’m going to purchase it. And it was only a small thing, so I was able to do that within about two to three weeks. And I thought, oh, that was fun.
I didn’t spend any of my own money. I got what I wanted and I got it for free. So it just got me creatively thinking about ways that I can do that and save more money.
Wayne Kay 17:23
I love it. Even though you could go buy it.
I just did that with guitar. I’m a guitar player, and I had two guitar pedals that I don’t use, and there’s another new one that I thought, well, I should buy one of these, and I could have gone and bought it, but instead I’m not buying it until I sell these other two. Sold one and another one, somebody’s going to pick up the other one. So my new pedal is going to cost me $5.
Mary Ann Marriot 17:46
Awesome.
Wayne Kay 17:47
I love it. Same deal. What aren’t you using? What can you get rid of? How can you help to move you forward?
So I love the games. I love what you’re doing. I like this idea of the spending freeze, and then we’re running out of time. But quickly, let’s do a recap of the spending freeze. How do you go back into the spending without going over the top?
Mary Ann Marriot 18:10
Yes, I think what I’d like to offer is that you take everything you learned, and really what I would put in there is delayed gratification practice. Delayed gratification. So now it doesn’t mean that you can’t spend money on things you want, but you’re not going to do it impulsively. Oh, this ad popped up, so I bought this thing that popped up in front of me. That’s a really good deal because you know what the ads say, like, it’s limited time. You have to get it now.
That’s what I started doing after that. Anything I saw that I wanted, I put it in a cart and I thought I’ll go back and check it out. And I haven’t. There’s so much less that I’m spending money on because I’ve been doing that and not impulse spending in the moment.
Wayne Kay 18:52
Terrific. This has been fantastic. I am so happy to have you on the show. We always give us great ideas, and I like your homework as well. So, Mary Ann, thank you very much for your time today.
Mary Ann Marriot 19:03
Absolutely, my pleasure. Thanks for having me on. Wayne.
Wayne Kay 19:06
Well, my guest today, Mary Ann Marriott. To learn more or to schedule that free consultation with Allan Marshall & Associates Licensed Insolvency Trustee, go to the website wecanhelp.ca. And that’s it for today’s Debt Matters podcast.
Now, make sure you subscribe wherever you get your favorite podcast from and of course, for more information, you can always check out debtmatters.ca. Thanks for listening.
About Mary-Ann Marriott
Mary-Ann Marriott has been working in the insolvency field for over 25 years. She received her Chartered Insolvency & Restructuring Professional designation in 2005 and her Licensed Insolvency Trustee license in 2014.
Mary-Ann is passionate about helping people become financially literate. She feels honoured to be able to help individuals discover solutions to overwhelming situations and find peace-of-mind in their lives.