The $5 Bill Project

A couple of years ago I listened to an interview on NPR (you know, the one that many of you call "the liberal media") about money saving tips.  These tips were little things that you could do on a daily basis and surprise yourself with how much money you had saved.  I'm not one to stop at every Starbuck's I pass (although I never turn down a gift card) and when I need retail therapy I try to hit the $1 store with a $10 limit just to see what I can get.

One of the snippets that intrigued me the most was a woman in NYC who decided that she would quit spending $5 bills.  She had quit using credit and debit cards and gave herself a weekly cash allowance that was spit out of the ATM in $20 bills.  Granted, she was in NYC, so the allowance was more than a normal Midwesterner should spend in a month, let alone a week; but still, I admire her discipline.

So, every time she made a purchase, she would hand the cashier a $20 bill.  If she received a fiver back, it went into a separate compartment to be deposited later.  This savvy girl even opened a separate savings account (with no fees) to track her $5 bill stash.

Picture it:  NYC, 2008.  Three dollar latte - hand over a $20.  There's no way to get change for that without getting a 5 back (unless you get a fistful of 1's).  That's $5 to stash.  Eleven dollar lunch (it is NYC, remember) - hand over a $20.  Another 5.  Stop at the store on the way home for a gallon of milk - hand over a $20.  Another 5.  That's $15 in three transactions.

This scenario happened for this woman on a near daily basis.  She didn't ever cook at home, stopped at Starbuck's at least once a day, ate lunch out every day.  Just pretty lazy.  I digress.

Imagine this played out for you once a week with three $20 bills.  That's $15 a week or $780 a year.  Remember, you've been putting this money in a separate savings account so you're earning interest on your savings.  Our savvy saver from NPR managed to save over $2000 the first year.

So, I've been doing this little experiment myself for almost two years now.  I have to tell you, nothing irritates me more than stopping for a Diet Pepsi ($1.38 at Speedway), handing the clerk a $20 and getting three fives, three ones, and 62 cents of "jingle change" back - that means, essentially, that I just bought a $16.38 Diet Pepsi!  I digress again.

Last year I decided I would deposit my $5 bills every two weeks, then transfer it to a separate ShareBuilder account.  I even got a $25 bonus for opening a new account!  There's one quarter to go to complete two years and, so far, there's over $2000 in that account.  $1700 of it is from $5 bills and the rest is dividends and an increase in market value of the holdings.

I think that's pretty impressive!