braisler

A few comments and posts in my Best Financial Tip thread have prompted me to start a thread on frugal living. Some of the posts there focused on the idea of spending less in order to save more. I have long been an advocate of frugal living, and I thought this might be a good forum to share ideas on how to spend less, live well, and save money in the process. I sometimes feel like I am surrounded by people who are living a lifestyle that is the opposite of my own. The drive to acquire goods, have a bigger house, take lavish vacation, get the latest toys is so omnipresent in our society that many people jump head first into debt buying things that their income simply will not support.

My family was fairly poor while I was growing up. We always had enough to eat. My mom made sure of that. But after my parents were divorced, things were very tight. Child support was $750/month and the mortgage on our house was over $500. I really don't know how she did it, but with that as our only steady income, she fed and clothed two young boys, paid all of the utility bills, and still managed to travel with us and educate us in the culture and history of this country. I relate this story only to provide some background on how I grew up living frugally. My experiences growing up have shaped the way that I live today. I have more income now, but I still spend carefully and conservatively and my frugal lifestyle serves me well.

Surely there are other members of this community with similar experiences and values. Let's share some ideas with each other. I am the first to recognize that there are different levels of frugality. Tips for saving money on your next cruise vacation might meet with disbelief from someone who is trying scrape together enough change to by ramen noodles. But I think we can all benefit from ideas from all walks of life. Save enough money on your groceries by using double coupons and you might soon have enough money accrued to take that vacation you've been dreaming of.

Lastly, I would ask contributors to this thread to provide some background or insight as to why their idea has worked for them, or how they apply it to their life. Don't just say, "Pack your lunch instead of buying it at work." Provide some interest by adding that this has saved you X$ a month. Money that you now put towards retirement savings, or whatever.

I think that I probably have more tips on frugal living than I could ever remember to write down in one place. I imagine that I will stop by from time to time to add something that came to mind. I'll start here with a couple of the big ones for me.

Learn the art of delayed gratification! No, not any sexual technique, but rather a financial technique of some importance. Most consumers today see something that they want and they buy it right now, putting large balances on their credit cards. You should strive to save towards long-term goals. Say you want a newer car. Figure out what it is going to cost you, and start saving a certain amount toward that goal each month. Rather than making payments on a loan, you are earning interest on your savings until you can afford the item outright. If you find that you are having a hard time saving enough each month to get to your goal, then you have learned the lesson that you are not financially ready for that new purchase. It is much better to find out that you can't save the $400/month towards a newer car, than to find out that your new car has been repossessed because you couldn't afford the $400/month payment on the loan. This also gives you enormous power over your personal financial life. You have the added luxury of shopping around for the best deal for the car as you approach your goal, instead of shopping around for the best loan rate once you have decided you have to buy that car right now.

Own where you live! I don't think that there is any financial goal as important as this. But it is also can be important part of living frugally if you buy a house appropriate for your current finances. In most real-estate markets in this country, buying is less expensive than renting. Even when you factor in maintenance and cost of capital to purchase, buying is still a better deal. There are also federal programs to help you buy your first house so you don't have to come up with as big of a down payment. One big mistake that many home buyers make is to aim too high when buying their home. They think that they should buy "up" anticipating future needs for a family, or home office, or whatever. Consider that most people sell their home and move every 6 years. Planning for lil' Johnny's needs as a teenager when he hasn't been born yet can get you into more of a house than you really need right now. The frugal aspect of home ownership is that it puts you in control of the housing portion of your monthly budget. If you have a fixed rate loan, your monthly mortgage payment will stay the same (taxes will change it some year to year, but you get the idea). Apartment dwellers often experience increases in their monthly rent of 3-10% per year. Cut the landlord out of the equation and you gain more control over your budget.

I'll quit for now with those two. Feel free to post your best frugal tips or ask questions if you like.