What is a Frugal Lifestyle

What does frugal living mean to you?

Recently, we downsized to a smaller home and made other frugal lifestyle changes.  I like the The Dollar Stretcher statement, “Frugal is Using Money Thoughtfully”.  Spending money (or not) should be a well thought out decision, rather than merely a reaction or just picking the cheapest option.coins

First, the difference between being frugal versus cheap.  While attending University, I was broke and the cheapest options were the only way to keep food in my tummy and a roof over my head, in order to not incur massive student loan debt.  I lived in the least expensive (and terrible) neighborhood close to campus and made every sacrifice in comfort.   When you are broke, often the only choice is whatever is the lowest price option or do without when that is even too much money.  After graduation, my career took off and I left cheap behind!  To me, being frugal is all about priorities and choices, cheap is settling for what is left.  Like most people, my lifestyle was cheap due to my own decisions and priorities.  I could have lived in a beautiful apartment for the same price as my tuition!

Being frugal is searching for the best value option, while cheap is the sacrifice of quality and value.

IMG_1308 - CopyMy current frugal lifestyle is extravagant luxury compared to those years in school.  I eat very well, travel, buy nice cars, and can afford activities like scuba diving.  I still consider myself frugal, and consider how and why I spend money.  Paying off all (interest bearing) debt was a priority for me, and here is how I paid off all of my debt.  I do not owe creditors, and I certainly do not pay interest to borrow money.

  • I look at frequency of my spend (weekly habits really add up) and reoccurring expenses.  Monthly cable bill is a luxury that I do not need and more savings ideas here.
  • I do not clip coupons or worry about a few pennies here or there, the payoff is not worth my time.
  • I stock up on my regular items during a sale, and I buy non-perishable (toilet paper and consumables) items in bulk for cost savings.
  • I join rewards programs for grocery stores, food, clothing, hotel and travel, and “regular” purchases, even if only once a year.
  • Then I stay informed on perks and promotions from those loyalty programs to score my airline upgrades, free hotel stays, bulk sales, clothing discounts, and other money saving offers.
  • I compare prices.  When out shopping I will double check prices on Amazon and eBay compared to in store.  Sometimes Target really does have the best price, and I can take it home immediately!  Whatever the item, I buy with confidence that I got a good deal.

How I Paid Off My Debt with a Reverse Budget Strategy

We all have enough time and money for something.  We just may not have enough time and money for everything.  So, we prioritize.  I hear people talking about priorities, what is important to them, then I watch spending habits.  Often what people say is important is different than what their money is spent on.  To me, the best way to understand what is truly important is real spending habits – where someone allocates their time and money.Reverse Budget

I have followed a reverse budget for the last 15+ years.  Meaning that for my income I start allocating money at the top tier and work my way down the list.

  1. Taxes, retirement, and savings (regular savings, plus at least $1,000 emergency fund) are taken out first.
  2. Then I pay mortgage, utilities, car payment, insurance (home and auto), and health insurance (or may be included in paycheck deductions).
  3. Third is where minimal fuel and food expenses are allocated, no splurges, yet.
  4. Next are payments for any debt (Dave Ramsey’s Snowball strategy to eliminate debt is effective and easy to follow). This is debt not attached to a mortgage or primary vehicle, such as student loans, medical bills, credit card debt, and other non-secured loans.
  5. Finally, anything left over is for dinner out, books, movies/tv, electronics, clothes, travel, or whatever else you feel like.

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