Updated on 01.27.10

Big Winners, Little Winners

Trent Hamm

“Little things make the difference. Everyone is well prepared in the big things, but only the winners perfect the little things.”
– Bear Bryant

One big idea often put out there by personal finance writers is the concept that we have to take care of the big things first. If we just take care of the five biggest financial holes in our life, we’ll be fine, because those five big ones are doozies. Paying off a credit card, for example, can save us $200 a month. Renting a smaller apartment can save us $300 a month. Doing five things of that size will make a huge difference in our monthly expenses.

On paper, I completely agree with this idea. Without a doubt, if you’re able to shave $500 a month from your monthly spending due to two or three big acts, it likely will make a big difference in your financial bottom line.

At least, it will at first.

The big problem with the “five big steps” idea is that, once you’ve done those steps, you’re still the same person you were before. You haven’t established new spending patterns. You haven’t figured out new ways to live your day to day life.

You’re still living above your means, in other words. Those five big things didn’t change you. They just gave you more breathing room than you had before.

What do you think will happen when a person magically finds their credit card paid off after carrying a balance for years and years? Suddenly, they have the breathing room to “live” – and to them, living means living above and beyond their financial means.

Yes, living in a smaller home makes a big financial difference to your bottom line, but it’s just one isolated choice. You chose to move elsewhere. Aside from that, you’re living the same life you were before – a life beyond your means.

Trust me, I’ve been there. I know all about it.

On the other hand, the little things, done over and over, create a pattern in your life. Stopping and thinking about it every time you make any spending decision forces you to rethink your behaviors.

The choice to move is one large choice, made in isolation. Once it’s made, you move on.

The choice to make your own coffee instead of stopping at Starbucks is a small choice made every single day. Once it’s made, you essentially face the same choice again tomorrow morning.

Gaining the power to make that big choice is a success, but it’s a fleeting one. It doesn’t make you face your day to day choices. It doesn’t make you alter your spending behaviors.

Gaining the power over those small choices is the true success. It means you’ve taken control of your behaviors. It means that you’re able to see how the little things you do right now affect the big picture later on. It means that your happiness in life isn’t based on the next little burst of pleasure.

It means you’re a winner.

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  1. J says:

    I think you are oversimplifying the point of making those “big things”. You are darn right that if I shaved $1000 (5*200) or $1500 (5*300) out of my budget per month by doing five major things I’d “live” a bit. Assuming that’s post-tax dollars, that’s an equivalent of a $15-23K raise a year!

    Given the examples you mention, the couter-point of “how I got here and I don’t to do it again” is extremely obvious — pay off the credit card AND DON’T RUN IT UP AGAIN. Go to that smaller apartment and DON’T OVERSPEND ON HOUSING AGAIN. And so on and so forth. It’s also highly likely that you realize along the way that having cash on hand means security.

    There are small choices that I make in spending that are the things I love about life. Maybe that means I’m being conscious about my spending and have already internalized the message here. But let there be no doubt, if we could somehow net another $1K a month, we are calling the cleaning lady back ASAP.

  2. D says:

    Very interesting perspective.

    I used to alternate between moderate thrift and totally pointless spending in my early twenties. It took me almost five years to let go of the unnecessary costs, and focus on what is really important for me.

    Being fully aware of the choices I make is the first step, but it is the constant repetition that makes it come easy and natural. And repetition is only possible with the little things.

    Incidentally, I started reading your blog about 2 years ago. The way you chrystallise some of the ideas I had, but never fully wrapped my mind around is incredibly helpful. It made me stick around all that time. So I thought I’d drop in a “Thank you” now I have some time.

  3. Adam says:

    Um..I don’t think this article works for me. If you cut down 5 big expenses, you’ll be doing more for your problem of living above your means than by cutting 50 little expenses, and likely with less effort. I guess I don’t agree with the theory that you’re not changing your habits by cutting down the big things and you need to micromanage your “latte” spending to become frugal. Ugh. Pay yourself first, live on the rest. That’s my creedo.

  4. Larabara says:

    I brown bag my lunches every day now, where I used to go out with my co-workers before. I make my own laundry detergent, and hang my clothes to dry. I prepare my own meals at home; we hardly ever go out to eat. I repair my older clothes, and only buy new clothes when absolutely necessary (and from the clearance rack). I am currently learning to tailor clothes so that I can make the thrift store purchases fit better. I have come to enjoy these (and many other) money-saving habits as I see our savings go up. I think I will continue to do them even when the economy goes up. But as soon as I can afford it again, I’m calling the cleaning lady back, too–there’s only so much that can be done, and then I have to live a little!

  5. Maureen says:

    Paying off your credit card doesn’t usually happen magically unless you win the lottery or have some other windfall. It is usually a slow process of chipping away at it. It is that process that will change you.

    Cutting 5 bigger expenses does get you more ‘bang for your buck’. They are certainly worth it. To do otherwise would be ‘penny wise but pound foolish’.

  6. Debbie M says:

    Actually, it can happen magically if you use a big tax rebate, an inheritance, a bonus from your job, refinancing to pull out extra money or other windfall, even bankruptcy. And I agree, if you use one of these tools, which is not easily reproducible, then you are much more likely to fall back into debt than if you use tools that ARE reproducible.

    And although big changes like a smaller rent do continue, if you still have the mindset of not paying attention to what you’re charging, lifestyle inflation is more likely to eat away at your savings than if you have to change your mindset to make the change happen.

  7. Kalle says:

    Very well said. In ten years, you’ll be happy for making the effort to pay off your debt but you’ll be even happier for learning how to live without accumulating more debt. Habit changes take time!

  8. jgonzales says:

    While there is a value in paying down the big things, Trent’s point is that if you don’t take into account the little things, you’ll just end up back where you are.

    It’s best to do a combination of both. Start paying off one big debt and start cutting down on the little stuff. One will help get you in a better financial situation, while the other will teach you a good habits so that you don’t end up in the same place again.

  9. Jonathan says:

    Plus, it’s tough to sustain a personal finance blog if you don’t write a lot of posts about the “little things”. I’m just sayin’.

  10. Pam says:

    I had to smile. This brought back a cherished memory from my teenage years. My dad taught me the concept of: “Stop nickeling and diming yourself to death”! In other words, be conscious of where you throw down those dollars daily.

  11. I’m not sure there is a big and a small. It seems to me that people need to pay attention to all things. That said, if you can limit the big things, it goes a long way to helping with the small things. Although I agree that doing the small things habitulally is important, too.

  12. Jennifer Lissette says:

    Thank you for this. I really needed to hear it today. I went out with friends to a store that I couldn’t afford to buy my baby boy’s clothes from. I watched my friends shop and went home. Today, I hit up a big sale and paid 80% less for nearly identical items. But I had to do it alone.

    It was just something small, pajamas, but it felt like a win to me. Still, it’s hard to get people to appreciate what it means to pay $3 for a pair of footed pajamas instead of $15.

  13. Susan says:

    I think all of this is so important, big items or small, everything makes a difference. I’ve downsized to a smaller apartment, managed to get out from under a car payment by trading in my car and buying one that was VERY cheap without having anything repossessed. I hang my laundry on a line in my apartment. I rarely get a latte and drink very little alcohol. Actually, these changes have made my life simpler and surprisingly more enjoyable.

  14. Erika says:

    I like this article. You can take the same thought process and apply it to almost anything. For example, dieting. I can lose ten pounds by hardly eating and exercising a lot for a week. Ofcourse, the weight will come right back. But if I make a decision to drink water instead of soda for a year, I’ll lose those 10 pounds and keep them off because I’ve modified my behavior. Both methods might have their benefits. One week dieting for a reunion and one year modification for overall health.
    Financially, moving to a smaller apartment might help pay off a debt quicker. Brown bagging lunch makes sense for long-term frugality.

  15. Heather says:

    I think Trent makes an excellent point. It is our habits that define us. “Change your habits, change your destiny.”

  16. k.sol says:

    Erika – I like the dieting analogy. The people who keep weight off are the ones who choose a different way to live. I definitely agree with what Trent is saying here — it’s the spending mindlessly will land you back in trouble. If calling the cleaning lady back after you’ve cut other expenses is important to you, then make a considered decision to do so. Many, MANY people in the past decade tried to give themselves breathing room by taking out low-interest home equity loans to consolidate what was high-interest credit card debt. But the problem was, they hadn’t addressed the situations that got them into credit card debt, and all that happened was that they ran the cards back up AND had a home equity loan to pay. If you move to a smaller apartment and use it as an excuse to overspend because you’re saving so much money, you won’t save so much money.

  17. Kiwi Chick says:

    I agree with this post. It’s more about changing behaviours than paying things off. My ex-husband would run up big credit card bills, together we would pay them off and then the same thing would happen – over and over.

  18. LiveCheap says:

    I can’t tell you how many people will get big things right and get eaten alive by creep in the little things. Both matter. On the big things you can invest the time to optimize them but the little things start to add up and you wonder where your money went. At one point in time, I noticed that the cash that I had invested wasn’t going up. My income had gone up a lot but my savings outside retirement was just sitting at the same number. What I didn’t take into account was the Sushi dinners, good bottles of wine, and entertainment expenses that combined were as much as a mortgage.

    So I think that both of these are important. If you get a coup on something big, it’s fine to splurge a little, but make it a habit and you savings just went away. Easiest thing to do is just head to the ATM, take out cash, and that’s what you have to spend. Budgeting for dummies.

  19. getagrip says:

    IMHO the little things become more and more important when you have family. It’s easy not to account for the ten dollars at McDonalds for a quick meal on the way to soccer, the twenty dollar gift for the third birthday party that month, or the trumpet repair right before the spring concert. I’ve rarely made mistakes with the big purchases. I research, I compare, I wait for what I want, but the nickel and diming are the thousand pinpricks creating the slow bleed that leaves you financially anemic.

  20. Little House says:

    You just kiboshed my Starbucks! I love my Starbucks, I even have it categorized in my monthly budget. It even comes up on my Quickbooks pie chart as it’s own sliver. I completely understand that the little things add up, but I just can’t give up my one and only indulgence. I really don’t spend any other money on myself, for instance I only go clothes shopping maybe once or twice a year, and will stretch my hair cuts out over a 6 month period. So, I think I can keep my Starbucks! :)

  21. Crystal says:

    We keep our eyes on the big things, but we’re trying to change the little stuff some more too. Saving $300 a year on car insurance is great, but saving $5 on every dinner makes an impact too! For that, we’ve started eating at home in the evenings instead of grabbing fast food. We’ve also started using Angel Food Ministries…so far, so good!

  22. Ken says:

    If practiced regularly, the little things can make a diffference. I pack my lunch everyday because it’s one way I can help my wife stay at home with our son. I also am the king of leftovers. I do these because it preserves our money month in and month out. It’s important to remember why you do these little things. Each person has to choose what works for them.

  23. Jamethiel says:

    I think what you’re talking about with breaking the little habits is breaking the connection between “I bought this” and “I feel good.” It’s what gets a lot of us into debt in the first place! (I call it the rat-brain, after the famous neurological experiments that showed that rats will ignore basic needs to stimulate the pleasure centres in their neuro-cortexes.) Yes, doing the big things will change your cash flow patterns a fair bit, but you need to change the way you think about money. If your means of having fun are affecting your progress towards future goals negatively, then you need to look at either your goals or your fun-having.

    For me, once I’ve paid off my credit card debt (roll on August!), I’m going to be doing my budget the same way. It’s just that now the money is going to go into saving for a house rather than paying off my credit card.

    I wanted to thank you, by the way. It’s the first time I’ve commented, but this blog (and a few others) have helped change the way I think about money. I’ll have cleared $3500 credit card debt in a year, and in 6 years time, I will own a house. Now my idea of fun is to research financial products to work out which one is best for me!

  24. Paul says:

    I also have to disagree with the premise of the article. Personal finance isn’t about a lifestyle choice, and saying that it is is one of the biggest turn-offs to people potentially trying to get their finances in order. So long as you’re earning more than you spend, and so long as your spending on the necessities, everything else is at-will, and that is the point of frugality. It doesn’t mean you have to get religion or become a happier person or stop feeding your vices; it means you pay for your vices and let them become virtues.

  25. Jules says:

    Although I get the whole “little things add up” premise, the mentality that every nickel of you save can impact your future does have the effect of creating tunnel-vision-anxiety. I mean, to live your life wondering whether it’s worth spending an extra 70 cents for a more comfortable toilet paper just doesn’t seem worthwhile.

  26. jgonzales says:

    @Paul (15)

    I don’t agree. I think it has to be a lifestyle change for most people or they will never get out of the hole they are in. Most people I know are in debt and much of it is because they aren’t willing to make a change.

    I like the diet analogy from earlier. You can lose the weight temporarily (and people do it constantly) but until you make over your whole life, you will end up putting that weight back on. It’s the same thing with finances. You can get out of debt temporarily, but if you don’t change the lifestyle that got you into debt, you will be back there pretty soon.

    From what I’ve seen of people, it comes down to 2 major reasons on why they need to overhaul their lives:

    1. They don’t know what’s important to them or what really makes them happy, so they throw money and/or time at this and that hoping it will fulfill them. This where my family was before we had our own financial Armageddon. We spent our money either trying out the newest thing for fulfillment or spending money into giving us convenience to help with the time we didn’t have since we spent so much of it out trying to find what fulfilled us. Once we finally got to rock bottom, we had to make lifestyle changes. Big ones and small ones. Almost 3 years later I can tell you that we do have a lifestyle change. We learned, without money, what was truly important to us and we now focus on that.

    2. The people who feel the need to keep up to date. These are the people who have a Starbucks every morning, have to buy the latest clothes, need to have the newest gadget, the house in the right neighborhood, and the “in” vehicle of the moment. While none of those things are bad in & of themselves, or even together, most of these people can’t afford all of it but cutting back is simply not an option for them. This runs the gamut of people I know. I know a family that 3 years ago had what many would look at as the perfect life. Honestly, they appeared to be the most put together family with all the right stuff. Today, their home went into foreclosure and the family is split and miserable. It was all because of the fact that they kept spending and spending to keep the lifestyle they felt they deserved. Another family I know is currently like this. They have 2 very young children and neither parent works. Dad lost his job over a year ago and Mom hasn’t worked since before they got married 3 years ago. He’s finishing college and she did in December. They are literally living off the loans he gets and the government. They struggle all the time and worry about how they will survive, but Mom refuses to get a job because she wants to be home with her children (both under age 2) and Dad has stopped looking until he finishes his degree. They also won’t give up their weekly date night at a nice restaurant or they trips to Starbucks or having to buy the newest cd or their cable (because how can you live without BBC America???). It’s so hard watching them crash and burn because they feel the need to keep up when they don’t have the income to do it.

    These people need to change their lives for good, not just enough to pay down the debt. The people in category 1 need to stop spending money at everything and start analyzing what’s truly important in their lives. The people in category 2 need to realize that you don’t have to have everything to be truly happy.

    It’s late and I’m not sure if that makes tons of sense or if it just comes off as rambling, but I do know this: You can’t put a band aid on a bleeding artery and hope that fixes it. You need surgery to correct the problem. Paying down debt without changing the little things is a band aid when what these people really need is surgery to correct the issues in their lives that cost them to spend so much in the first place.

  27. triLcat says:

    There’s nothing wrong with that cup of starbucks. There’s a problem when that cup of starbucks doesn’t hit your financial radar.

  28. Tammie says:

    It’s the accumulative effect of all spending reductions that makes an overall difference. For 12 years, I raised two teenage boys on little income, now I have a good income but the habits I learned during that frugal time are at work everyday. In 2005, when my husband was diagnosed with cancer and our income dropped by 1/2 overnight, we survived because of the little choices and my past frugal existance. We managed to get through 15 months of 1/2 of the income and did not lose the house and paid off all of the medical bills except for $3000 to the hospital. I have shopped at thrift stores for clothing for years, made menus for our meals (just figure the cost of one meal out sometime!. Just as pennies make dollars, small things make a big difference.

  29. Steven says:

    In my opinion, it’s the little things that get people into a bad situation and it’s the big things that make it go from bad to worse. Even if you fix the big things, you’re still in a hole.

    The important thing is to take back control of your life, and not be a slave to your debt. To do that, you must minimize spending, not to the point where you’re miserable, but you need to cut back. Mortgage/rent, cable/satellite, cell phone, and other large bills are a great place to start because you can save a lot with little effort, and it would be passive savings from then on.

    The next step is to evaluate your spending and find where you can practice active saving. This is where you break your bad habits and form good ones so that you can start your debt snowball (a la Dave Ramsey) or just start paying off your debt period.

    For many people, the little things here and there add up, and weigh people down. You need to break those bad habits to start getting rid of the debt. The more money you (think you) have, the more you spend. I mean, saving $300 on rent/mortgage is great, but if you blow it on shots going out every night…

  30. The way that I see it is that most “big” decisions require research and forethought, most “little” decisions only require a change in habit.

    If you decide to make your own coffee, that is just a change in habit. The day after you make the change, you are only deciding whether or not to maintain that change in habit. Once it becomes your new habit, to me, there is no more thought involved.

  31. J says:

    I guess I just can’t stand the implication that I’m a loser since I find that I like a lot of the small things in life. So much of “being frugal” seems to come down to see who can deal with the scratchiest hairshirt that people lose sight of the real reason they tried to save money in the first place: to concentrate on making their lives better with the resources they have at their disposal. It’s the exact same mindset as the spender: everything becomes about money.

  32. Geoff Hart says:

    The way I see this, and the way I deal with it in my own life, it’s a typical triage situation, just like in medicine:
    1. Some things will kill you (metaphorically speaking) if you don’t deal with them immediately. These are the “big things” in the article. Obviously these must become priority #1 if you want to survive to deal with anything else.
    2. Other things must be dealt with soon if you hope to survive in the long term, but they can wait until you’ve dealt with the big things.
    3. Everything else can wait. That doesn’t mean you should simply ignore these things, just that they’re not what you should be working on first.

    Of course, life is more complex than a simple metaphor. Sometimes you find yourselves in a place where the big things are simply too big to deal with, and trying to implement triage too strictly would prevent you from doing anything at all. Then you need to tackle one or two little things and succeed so you build enough confidence and energy to deal with larger issues.

  33. J says:

    I guess I just can’t stand the implication that I’m a loser since I find that I like a lot of the small things in life. So much of “being frugal” seems to come down to see who can deal with the scratchiest hairshirt that people lose sight of the real reason they tried to save money in the first place: to concentrate on making their lives better with the resources they have at their disposal. Life becomes a never ending series of cost/benefit analyses, along with justifications for any purchase. Buying something on impulse or having a cup of coffee while out makes you “bad”, and you start putting yourself down. And that’s just not living.

  34. MP says:

    It amazes me how many people feel that watching their spending is an either/or decision. Either you watch every penny and are miserable misers, or you spend on the little things that make life fun. I have found that it is possible to be mindful of every bit of money spent and still have fun. It’s necessary to step back every once in a while and evaluate the big and little costs involved in life. It makes sense to decide whether a purchase is something that really makes your day, or if it has become a habit. Is that fast food stop that you make three times a week with your kids really adding to your fun, or would it make sense to introduce a new habit of going to the park with snacks brought from home. Our lives are full of little things that can add up to bigger things. Don’t let them get away from you in your pursuit of financial freedom.

  35. cindy says:

    #12 getagrip-“but the nickel and diming are the thousand pinpricks creating the slow bleed that leaves you financially anemic.” I don’t know if you came up with this metaphor, but if you did, you should consider a career in writing if you haven’t already.

  36. I completely agree. Also, for those who have never really screwed up their finances too badly, but suddenly want to overhaul their approach to money anyway (such as those who need to save for something really big, or pay off their mortgage ahead of schedule), there really aren’t that many Big Things to change. The countless little things are the way to go. And as you say, it does change a person’s habits of both action and thought. And that’s the most powerful change there is, I think.

  37. getagrip says:

    @J I know how you feel. Because there is always a less expensive alternative to almost anything you do, and people are always sharing on sites such as this, there is always the not so subtle implication that you, personnally, are wasting your money if you aren’t squeezing the last drop of green out of it via their recommendations. I think that’s where you always have to step back and remember, its all advice, it’s all worth considering based on your current and future plans, but you don’t have to do any of it.

  38. Steven says:

    Hey everybody,

    I was one of those people who destroyed himself financialy on small things. About 5 years ago, I lived in a medium sized apartment, with one roommate, for 675 a month in Boston. I worked about for almost 2 years, at about 60-70 hours a month and blew it all on coffee, food, junk… I took one vacation (best money I’ve ever spent) but that was it. I wasn’t in debt, but I had nothing to show for it.

    I then moved to another apartment to “save money” I lived with 6 people for 375 a month. Guess what? I sank into debt running up two credits cards and even owed my parents well over $1000.00, I stopped paying bills. It was awful. I had blown it. Wow… I thought I was going to save money.

    I moved again. Took a nicer apartment that improved my quality of life (675 a month with one awesome roommate) and I started taking care of my finaces. Since moving a little over a year ago, I have payed off $9500.00 in debt. Pretty awesome. All of it was because I started to take care of the small stuff and developed a pattern. I changed my habits. It worked great.

  39. Stephanie says:

    Great post and very thought provoking !! I think it is right on the money and makes complete sense. Little habits over a lifetime can make such a differance in having money versus not.
    we have a few little habits we need to work on, mainly fast food convience and a love of garage sales, going to, not having , lol, and we are going to really make those our focus now. Thanks for giving us a tip that make a huge differance !! Simple but so often overlooked in the big scheme of things !!

  40. Jennifer says:

    I hear you, but nobody’s calling you a loser for liking the little things. It’s just that there are people who make a decent income who always give into the little things and never have enough money at the end of the month and then whine about it. And they don’t understand that always giving into temptation might be what’s getting them into trouble.

    There’s nothing wrong with a coffee out each day, if that’s your treat. Or lunch out once a week, if that’s your thing. Movie night, sports events, theatre, DVD’s, books, games. All good things, in moderation. But if it’s lunch out 3x a week, and take-out coffee twice a day, and dinner and a movie ever week and oh, hey, that’s a new colour of iPod I don’t have, well then that’s a problem. Not if you can afford it, but most people can’t.

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