Creating a Habit of Frugal Living

Posted on June 20, 2008 by Jason (Frugal Dad) at 6:00 am

The following is a guest post from Miranda Marquit. Miranda edits information about debt consolidation for DestroyDebt.com.

There is a lot written about the benefits of frugal living, and even tips on how to save money and live frugally. But one of the things I had trouble with as I began to live more frugally was getting started. Just ending the bad habits wasn’t good enough — and it was overwhelming to go “cold turkey.” Here are some things that helped me start living frugally:

Know the difference between needs and wants.

This is one of the most important aspects of living frugally. My husband and I tracked our spending for two months, just to see where all the money was going. Then we analyzed our spending habits. Were we buying things we didn’t need? Of course we were! We also discovered that some of our “needs” — things like the most expensive juice or eating out twice a week — weren’t really needs at all.

One way we learned to distinguish between needs and wants was to have a “waiting period.” Could we do without it for the waiting period? If we bought it, how long did we think we would actually need the item? If it turns out that we can get by easily without the item, we don’t buy it.

Pay for wants with money you already have in hand.

Life without a few wants would be a little grim. A few well-chosen, unnecessary, pleasures can make life more enjoyable. But when one lives frugally, one doesn’t spend a lot of money on extravagant wants. And one certainly doesn’t pay for wants with borrowed money. Part of our journey to get started living frugally was to institute a rule that all wants had to be paid for with ready cash — and only after our needs (and this includes setting aside money for an emergency fund and for retirement) had been taken care of. This meant that when we wanted a new video game system, we had to save up our ready cash for a couple of months.

Another thing that can help is to have an “allowance.” If you can count on regular income, and if you have enough extra after your needs, you can give yourself an allowance. But once that money is gone, you have to realize that it is gone. My husband and I have an “allowance” for an annual summer art fair with vendors from all over the country. We take cash, and leave the cards at home. Once our “allowance” is gone, it is gone. This helps us carefully consider our purchases, so that we only get what we really like, rather than coming home with a bunch of “stuff” that does little more than clutter the house.

Use a list

Every week before we do the shopping, my husband and I go through the house and make a list of things that we need. When we go to the store, we buy only what is on the list. If we have some “want money” available, we can use that for things not on the list. Shopping with a list can help you cut down on impulse buys. Another thing that helps? Look at the items in your cart before heading to the check-out line. Did some unplanned wants find their way into the cart?

Replace more expensive habits with less expensive habits

One of the best ways to develop new habits is to replace the old ones with better. Think of the expensive things that you do, and replace them with less expensive options. Instead of eating out, plan a special dinner that you make at home. Buy slightly more expensive ingredients, or ingredients for a more exotic meal than you normally eat. It makes the dinner special, but doesn’t cost near as much as eating out. My son loves “movie night” at home more than going to a theater. We make popcorn and sit on a blanket in the living room. It’s a little bit different, and doesn’t cost near what going to the theater does.

There are many less expensive activities that have the bonus of creating quality time with the family. Walks, bike rides, camping, trips to the park, sledding and other activities are inexpensive and promote family togetherness. Also, look for free and inexpensive activities locally.

Frugal living is a lifestyle. It can be hard to get started, but if you take the time to plan your moves and take a hard look at your needs and wants, you can change your habits so that you are living in a way that not only saves you money, but also provides you life satisfaction as a family.

Get daily updates for free by RSS feed or email delivery. Sign up today and also receive my free eBook, The 7-Day Turnaround!

Student Loan Debt For Charity

Posted on June 19, 2008 by Jason (Frugal Dad) at 6:00 am

Student loan debt in America is becoming an ever increasing crisis. The average student leaves college with over $45,000 in debt and in 2007 students borrowed $18.5 billion, up 6% from 2005-2006. This growing trend is causing many young Americans to question if college is worth the investment all together. Also, many graduates can not afford to pursue social, teaching, and civil jobs after college because their incomes are just too low to pay off the large loan debts needed to graduate. Charity for Debt is a new non profit, which hopes to help with this alarming trend by decreasing student loan debt in America through a unique process.

Charity for Debt connects students who have large student loan debt with sponsoring donors who will pay down their debt at $20 per hour in exchange for time spent volunteering at a local charity the donor chooses. Sponsored students work an average of 5 hours per week, earning $100 per week, paid directly to the student’s loan company. Donors usually give $1,000 to sponsor a student for 40 hours of volunteer time and are typically individuals or small businesses. Students compose weekly journals describing their activities, positive outcomes, and takes photos of their experiences. This content is then captured on the student’s online volunteer portfolio where sponsoring donors can easily see and comment on the results of their donated dollars. The student gets their debt paid off for helping a great cause and the donor can help the student and the charity at the same time, doubling the good will of the donated gift!

The Charity for Debt founders (Jonathon and Brandon) are two young, IT oriented individuals with entrepreneurial backgrounds who hope to positively change the world with their model and business expertise. They have already been contacted by a NBC Today Show reporter about a potential news story once a pilot program has been started. Jonathon and Brandon are currently trying to raise $10,000 to begin two pilot programs in Washington, DC and Dallas, TX. They have raised $6,000 so far. This unique approach to helping the student debt crisis, supplying reliable volunteers to charities, and creating transparency for its donors could bring them the success they deserve.

The preceding content was a guest post by Jonathon Lunardi, co-founder of Charity for Debt. Jonathon and I shared a few thoughts via Twitter, and then email, on the student loan industry and his mission at Charity for Debt. I asked him for some information I could pass along to my readers, because this is such a fascinating concept.

To view more about this model and become involved by donating, signing up as a volunteer, or partnering as a charity/non profit, please visit CharityForDebt.org.

Sneaking Candy Into Movie Theaters: Frugal Or Cheap?

Posted on June 18, 2008 by Jason (Frugal Dad) at 6:00 am

142

Is sneaking in candy to a movie theater being frugal or being cheap (and dishonest)?

I posed that question to the Wise Bread forums a couple weeks ago and received some interesting responses. It seems a majority of people there think the practice is acceptable, as long as there aren’t signs posted specifically forbidding the practice.

I’m interested to get your feedback as well, and I’ll share a few of my thoughts on the subject.

Here’s a copy of my original Wise Bread post:

My wife and I went somewhere last weekend we had not been in a long, long time – a movie theater! I hit the boxed-candy-for-a-dollar section at a nearby Target and picked up a couple boxes of our favorites to “sneak in” the theater. My wife said I was a cheapskate.

Normally, I would thank her for the compliment, but this time her comment had me thinking. Is sneaking in candy to a theater being cheap, or being frugal? I don’t normally think of myself as being cheap, but in this case maybe she’s right. But $3.00 for a box of M&Ms?!

After giving this scenario some thought I’ve come to the conclusion that sneaking candy into the movies is cheap, and possibly dishonest. After all, concessions seem to be where most theaters make their money (along with a percentage from ticket sales). While bringing in your own candy may appear to be a smart frugal move, and it is admittedly much cheaper than buying from the concessions stand, the smarter move would be to simply skip the candy altogether. And if I just had to satisfy a sweet tooth I should suck it up and buy a box of $3.00 M&Ms from the theater.

Some of you are probably shaking your heads wondering how the “Frugal Dad” could come to such a conclusion. Well, maybe it is the eternal capitalist in me that sees that a business has the right to sell refreshments and request outside refreshments not be brought in. After all, if I don’t like that policy I can stay home and wait for the DVD from Netflix.

I also think this folds into my way of thinking – live frugal, but stop to smell the roses. In the grand scheme of things, a box or two of movie candy or a large tub of popcorn is really not going to make or break us. As long as we budget for the expense, and pay cash, there isn’t any reason why I can’t treat the family to a few splurges every now and then.

If you do decide to take in your own candy and snacks it helps if you have an oversized handbag or purse available.

Ask the readers: So what’s your take on this issue, moviegoers?

Oil Company “Windfall Profits” – The New Political Catch-Phrase

Posted on June 17, 2008 by Jason (Frugal Dad) at 1:00 pm

“The best time to plant a tree was twenty years ago. The second best time is now.” Chinese Proverb

I won’t pretend to be happy about paying higher prices at the gas pump. I know there are many families that are really struggling and many industries, such as shipping and travel, that are being particularly hard hit. Politicians are using the opportunity to invent new catch-phrases that insult our understanding of basic economics in the name of getting votes.

Taxing “Big Oil” is a Big Mistake

I’ll attempt to keep this post mostly apolitical, but I can’t make any promises. One of the two remaining contenders for president recently said, “I’ll make oil companies like Exxon pay a tax on their windfall profits, and we’ll use the money to help families pay for their skyrocketing energy costs and other bills.” Oh really? That sounds an awful lot like socialism to me. After all, it was Karl Marx himself who said, “From each according to his ability, to each according to his need.”

Besides, taxing oil companies to reduce profits only hurts the very constituency politicians claim to be protecting. 98% of these companies are owned by shareholders. The large majority of those shareholders are mutual fund investors belonging to the middle class (or institutional investors managing retirement wealth for that same class). If we begin taxing an oil company’s “windfall profits,” causing a decline in shareholder value, aren’t we simply cutting our noses off to spite our faces?

So What is the Answer?

The answer is buried beneath us in places like ANWR, the Gulf of Mexico and the Midwest. The answer is domestic drilling. It is the fastest way to increase supply and reduce our demand for foreign oil. Many of the same politicians who today demand an answer to our energy crisis are the very ones who for years blocked attempts to increase domestic drilling. Environmental concerns are real, but efforts have been made to improve drilling technology to lessen the effects on the environment.

Is It Enough?

No matter what we do as a country, world-wide demand for oil continues to skyrocket. It is this world-wide demand that is driving up the international price of oil. Places like China and India are consuming far greater amounts of oil, per capita* (see comments for correction), than the United States. So even after considerably reducing our consumption of oil domestically, we still may not see any easing in pricing as other countries continue to increase consumption.

*I’m including a banner below that links to the website, AmericanSolutions.com, which is sponsoring a grass roots effort to collect 1 million signatures to present to Congress demanding something be done to “further exploration of proven energy reserves to reduce our dependence on foreign energy sources from unstable countries.” At the time of this writing some 843,000 citizens have already signed their name.

photo by giblee

A Letter from Twenty Years into the Future

Posted on June 17, 2008 by Jason (Frugal Dad) at 6:00 am

One of the nice things about maintaining a blog is that it creates sort of an online journal to track the major milestones in your life. I imagine in the coming months and years that I will share many goals with readers, and you will share a few with me. Hopefully, we’ll celebrate together the accomplishment of a few of those goals and reflect on how far we’ve come. So here is a post from my future self, twenty years down the road. Technologies will likely change many times along the way, so this might be a good one to print off and slip in a keepsake folder.

Dear Frugal Dad:

The year is 2028 and here you are, 50 years-old, a little wiser, a little wealthier, but certainly not any better looking. You’ve made some progress along the way, and hit a few bumps in the road on your journey (thank goodness for that emergency fund, huh?). Back in 2008 you identified a few areas of your life you would like to change, so let’s see how you did.

I’m So Glad You Became Debt Free

Next to marrying your soul mate and having kids, this might be the best thing you ever did! You’ve been living credit card and student loan debt free since about 2009, and you finally paid that mortgage off early in 2018 (it took a little longer than you planned). So for the last nine years you have been living a totally debt free lifestyle. Fun, isn’t it? Just the other day you sat down to pay bills. Let’s see, there was the cable bill, the wind-farm cooperative bill (I think you guys used to call this the “power” bill), cell phone payment, and insurance. Am I forgetting one? No, that’s it. Budget in a little for food and fun and you are living well under 50% of your $220,000 earnings (don’t get too excited, remember those years of inflation after 2009 – whew, rough times).

If You Bought that House, I’d Still Be Broke

Remember back in 2013 when you were thinking about upgrading the family to the all-brick two story around the corner with the pool, finished basement and huge corner lot? I know it was a sweet deal, but good thing you didn’t follow through. The next year you lost your job when robots took over the software industry (who knew?), but between the emergency fund and that little blog you started up a few years earlier you were fine until you landed on your feet a few months later.

Thank You for Leaving the Stressful Job

It wasn’t easy changing gears after the software industry debacle, and you really jumped from the frying pan into the fire joining that square foot gardening kit startup company that promised to solve world hunger for only $149.95 a box. I know they offered a sweet deal, but you didn’t really think that would take off, did you? Thankfully, you recognized the worldwide sales calls and time spent away from the wife and kids wasn’t worth a six-figure salary. After your resignation you made a smart move writing about the whole process and inking your second book deal. After that interview on the Larry King show (yes, the man is still alive, and still hosts a show!) things really took off.

Good Thing You Started Working Out Again

I know you put this down as a stretch goal, but we ought to mention it here. You said you wanted to lose 50 pounds and get in better shape. Well, you finally did it, but not until you gave up Coca Cola and those late-night scavenger hunts for Little Debbie snack cakes. In fact, you lost closer to 60 pounds, and now you are in the best shape of your life. You don’t have a problem keeping up with your grandkid’s soccer team.

This summer you and the family will retreat to that cabin you bought in the Smoky Mountains. If it weren’t for the kids and grandkids you would probably just move there. After all, now that you are financially independent it doesn’t really matter where you live. What a far cry this lifestyle is from the one back in 2008!

Not much else to report from 2028. Oh, there is one more thing. Your team finally won the national championship playoffs five years after they got rid of the BCS. I know you aren’t a gambling man, so I feel comfortable telling you this news without fear of you blowing your life savings on such a safe bet (hint, hint). See you in twenty years.