Tag Archives: lessons learned

Life before our emergency fund

Every once in a while I’m struck by the difference between life now and life before we started living frugally. Back when we made more money than we do now, but we were always strapped for cash. Back when a car problem or unexpected bill could completely wipe us out and then some.

It hasn’t been easy to keep it up. Like any frugal family, we struggle constantly to avoid falling into old habits. The more we save, the more comfortable we become. We start to feel invincible. After all, with several thousand dollars in the bank, we can weather most unexpected expenses without stress. We start to feel the itch to spend more.

I have to remind myself that even though we may have more money in the bank than we’ve ever had, that money is what stands between us and disaster. The more money we’re able to save, the safer we become. Sure, we could pay our car insurance deductible with no problem. We could pay our entire health insurance deductible for the year without breaking a sweat if it was necessary. But what if I lost my job? What if I couldn’t work anymore? We have enough saved to make it a couple months, but the thought of emptying the savings account we’ve worked so hard to build is terrifying. Then what? When that money is gone, what do we do next?

More importantly, though, I never want to spend just because we can. Spending just because the money is there is how people with twice our income remain constantly broke. If we can keep saving, keep living frugally no matter how much we have in the bank or how much we make in a year, then we’ll always be one step ahead of ourselves. We’ll be capable of dealing with any financial disaster, and we’ll never be broke.

It’s amazing what an emergency fund can do for your peace of mind.

Unexpected benefits of our cash only budget

cashWhen we decided to live this summer on a cash budget, I was nervous. Not only did I know it would be a challenge, but I feared that we would feel deprived and miserable. Almost three weeks into the experiment, that’s not the case at all. In fact, there have been several unexpected benefits.

Weight loss

After almost 6 months of minimal success with dieting and exercising, I was pleasantly surprised this week to discover I’ve lost three pounds. This could be due to any number of recent lifestyle changes, including my limited bread and pasta consumption over the past 3 weeks. But I also suspect our new lifestyle has a lot to do with it. We’re choosing frugal, more active fun instead of pricier sedentary activities, and we’ve cut out restaurant meals. We didn’t eat out more than once a week before, but apparently that was enough to slow my weight loss down.

Camaraderie

Since my husband and I are facing this challenge as a team, it’s definitely bringing us closer together. It’s been fun discovering frugal alternatives to our more expensive date nights, and we’re working together to solve problems and overcome challenges.

We’ve been living frugally for almost two years, but this is extreme even for us. Spending the evening playing a board game instead of going out to dinner is a great way to reconnect, and it really feels like we’re breaking out of some of our old routines and enjoying a lot of new activities. Fun!

Less budget stress

One of the worst feelings is checking the budget Monday morning after a weekend of overspending. Since we paid off our credit card debt and increased our income a little, we started getting more and more complacent about our frugality. It happens.

This cash only experiment has helped us get back on track. Now when I look at the budget Monday morning, I know exactly what we spent Friday through Sunday. The weekends no longer derail us, because we only have so much in our pockets to spend.

If nothing else, living on cash only really has led to more mindful spending. It’s not necessarily because I put a premium on cash, but because when you only have so much in your pocket, you’re forced to avoid spending more than that. Knowing exactly where we stand at the end of the weekend is incredibly freeing.

Downsides

I miss the occasional lunch out at work. Last Friday the entire office left for lunch at my favorite inexpensive restaurant. Because of my diet and my budget, I ate my boring salad. That was the first and only time I felt a little deprived on cash only.

The biggest downside? Oh my goodness, I hate dealing with cash. I hate having change everywhere. I hate that I have to stop and get myself organized after the cashier hands me my change. I really hate that I have to fish around in my wallet for the correct amount when I pay for things. It seems to hold everything up, and it’s just such a hassle. Holding on to receipts and manually splitting transactions on Mint to track our spending is inconvenient and confusing at times. What do you do, though? It seems a small price to pay considering all the benefits so far.

Photo by nicmcphee

New to frugality? What to do first

Frugality is overwhelming in the beginning. I remember reading blogs from frugal veterans who made it sound easy, but I was terrified. Cutting groceries down to $35 a week, zero-based budgeting, coupon clipping, drug storing? It may have been easy for them, but I didn’t know where to begin.

Take a deep breath. Remind yourself that frugality is a major life change. It’s not going to happen overnight. The best way to get started is to jump in, and don’t try to change your life too drastically in the beginning. Frugality is a gradual change, one that you’ll hopefully be able to maintain long term. It’s okay to start with baby steps.

Here’s how to get started:

Figure out where your money is going.

Before you can cut expenses or create a budget, you need to know what you’re spending and where. Link your bank accounts to Mint.com, and spend normally for a couple weeks. This step was incredibly eye-opening for us in the beginning, and we immediately saw some areas where we could easily cut back.

Create a budget.

Next it’s time to face the dreaded b-word. Don’t be scared, though. Budgeting is actually empowering, especially in the beginning. Don’t try to deprive yourself or make drastic changes at first. Just create a zero-based budget to ensure that you’re not spending more than your income. I use Mint.com to set limits on our spending, and then I track it in real time. Every dollar has a purpose, and anything left over goes to savings or debt. You can always reduce your expenses later. The most important thing in the beginning is getting used to tracking and following your budget.

Open a savings account.

Even if you’re deep in debt and struggling to make ends meet, find a way to start saving something. You can always increase the amount later. What’s important now is establishing the habit. Even if all you can spare is $25 or $50 a month, open an ING savings account separate from your checking and start putting a little money away.

Learn to entertain yourself without spending money.

The first step to having fun without spending money is learning to love your library. If you don’t have a library card yet, go get one right now and start borrowing books and movies for free. Check out a cookbook first. If you’re like my husband and me, eating out is probably one of your favorite date night activities. Learn to have fun cooking for yourselves, and you’ll drastically cut your food budget.

Create menu plans & grocery lists.

When you first start cooking at home, it’s tempting to go overboard at the grocery store. You don’t have to cut your grocery spending to $35 a week to make the most of your shopping trips, though. Find a menu planning strategy that works for you, plan your meals with the grocery ads in front of you, and start buying meats and staples in bulk. You’ll cut your grocery expenses without affecting the quality of food you eat.

It’s okay if you makes some frugal mistakes in the beginning. Learn at your own pace. As you master these basic frugal habits, you’ll gradually find yourself learning new ways to save even more money. It’s an ongoing process for everyone, even the frugal masters.

As long as you’re committed to saving money and reducing debt little by little, your life will continue to improve. Remember, frugality is about improving your quality of life, not just cutting your expenses.

What made you decide to live frugally?

Every frugal family has a unique reason for choosing this lifestyle. For some people, it’s a job loss. For others, it’s the birth of a child or the desire to be a stay-at-home parent. For us, it was a gradual change, but I do still remember the day I made the conscious decision to live frugally.

When we arrived in North Carolina before my husband began graduate school, we had quite a bit of money in the bank (about $10,000 to be exact). We’d saved for a year knowing we would need a little padding until I could find a job.

In the beginning, I wouldn’t say we were frugal. We spent too much on groceries. We bought a lot of new things for our apartment. We adopted a puppy (which I absolutely don’t regret). Even though we were careful, we weren’t what I would call frugal yet.

We’d been living here for two months, and I had no leads for jobs despite sending a ton of resumes. I was beginning to worry that we were going through our savings too quickly. It’s scary to look at the bank account and see a lot of money going out with nothing coming back in.

Then I finally got a call for a job interview. I was thrilled. I even went out and bought new clothes for the interview. They called me in for a second interview. Then a third and a fourth. I met everyone in their small office. I thought I had the job in the bag. Our spending had gradually increased. I was so sure I’d be working full time soon.

They invited me back to meet with the president of the company for the second time. I was positive this was the hiring interview. It was such a relief.

The day before the meeting, they canceled. For some reason that I’ll never understand, they decided not to hire me at the last minute.

Devastated does not describe how I felt. I was completely crushed. After two months of sending resumes and six weeks of interviewing with this company, I thought this had been my shot. I thought this was the perfect opportunity. But it didn’t work out.

I was absolutely depressed for days. Then I started fretting about money. Our savings was running out. I had been counting on this job for six weeks, so we’d spent more than we should have leading up to the rejection.

I realized I would have to take a part-time job outside of my field until I could find something else. I also realized we were going to have to live on a lot less money than we’d hoped. Even with freelance writing jobs, it just wasn’t enough to cover the gaps.

If I couldn’t do anything to increase our income, we’d need to decrease our spending. At the very least, we’d be able to get by without increasing our debt or worrying about paying our bills.

Frugality empowered me to pick myself up, dust myself off, and get on with my life. I realized that I had more control over our financial destiny than I thought. For so long I thought the only answer for us to improve our financial situation was to make more money. When I realized that wasn’t the case, a huge weight was lifted off my shoulders.

We made under $20,000 that year. And yet we were still able to plan our wedding, pay off a chunk of credit card debt, and keep our heads above water. We didn’t start saving again until we paid off our credit card debt and I was hired full time, but I’m still proud of the progress we made on such a small income.

Even though our income has finally increased some, the lessons I learned in that year will stay with me forever.

What made you decide to live frugally?

How I planned an elegant wedding for under $5,000

Since Tony and I just celebrated our first anniversary, and my sister-in-law is in the process of planning her own wedding, I’ve been thinking about wedding planning a lot lately. Before I started planning my own wedding, I believed that it had to be all or nothing: either an all out, extravagant affair or a quick run to the court house followed by a backyard barbecue. That isn’t the case, though. If you prioritize and plan carefully, it’s possible to get everything you want out of your wedding on a very limited budget.

I never thought I was the type of girl who wanted a big fuss on my wedding day. Looking back, though, I’m so glad we had a traditional wedding. It really was the most special day of my life.

Last year I wrote a series of posts on how I planned my wedding on a budget. If you’re in the middle of planning a wedding for you or someone you love, I hope you’ll get some useful information from my experience.

Getting your priorities straight.

Make a plan and set a wedding budget.

Planning a beautiful wedding ceremony on a budget.

Hosting an elegant reception without spending a fortune.

Dressing your wedding on a dime.

Minimize your wedding flower budget.

Do it yourself wedding ideas to save money.

It’s okay to spend more on what’s important to you.

How to buy wedding bands online without getting ripped off.

Planning a budget honeymoon.

As I planned my wedding, I also found a lot of great tips from one of my favorite frugal bloggers, Kacie at Sense to Save. She recently rounded up all of her frugal wedding planning ideas and reposted them. Check it out for some more tips!

Honestly, though, my advice for planning the wedding of your dreams on a budget comes down to this: Set your priorities, use the bulk of your budget on what’s really important to you, and don’t spend money on something just because wedding etiquette rules say you should. It drives me crazy when I hear people paining over how much they’re spending on things they don’t really care about just because they don’t want to be “tacky.” The wedding industry makes millions of dollars a year off these so-called etiquette rules. It’s no wonder they keep them alive.

This is your wedding. It should be a celebration of you, your relationship, and the people who love you most. Saving money on your wedding is the same as saving money on anything else — you have to do what’s right for you, and you can’t worry about what people will think of you. The most important people in your lives won’t care a bit how you choose to celebrate your wedding, and they’ll never ever think you’re tacky for saving money. They’ll just be happy to be there with you no matter how you choose to celebrate.

Thoughts on our first cash-only weekend

We made it through our first cash-only weekend! It has been quite a challenge, but it’s actually been fun! Here are some highlights:

Successes

We didn’t use our debit cards once! The only money we spent was from the $90 we withdrew on Saturday.

We also didn’t go over budget! After buying groceries and seeing a matinee, we have $20 left. This is the exact amount we budgeted for household expenses. Because we didn’t need any household items this week, we’ll hang on to that $20 for a later week when we’ll inevitably need more than $20 for necessary household expenses.

The biggest victory is that I’m not dreading our bottom line. Most weekends, I cringe when I look at Mint the following week and see how much we spent. This week, I know exactly how much we spent, and I know we didn’t blow our budget. Yay!

Challenges

This afternoon, the weather was beautiful and I felt the urge to go out to lunch someplace with patio seating. Because we didn’t have cash for it in the budget, we didn’t go. It was tough, though.

Instead, we took a drive to the beach, walked the dog around a nearby lake, and got some work done. In the end, our choice was healthier for us physically and financially, so I’d say our cash-only budget is having positive effects beyond our bank accounts.

Setbacks

We technically didn’t follow our own rules. Because we were $9 under budget for groceries, we should have ended the weekend with $29 in pocket. Part of the deal was that we would hang on to extra cash if we went under budget for later weeks or something fun at the end of the summer. Instead of hanging on to it, we spent an extra $4 over our entertainment budget because the new Pixar movie “Up” wasn’t playing at the cheap theater. We also picked up a couple extra items at the grocery store for $3 total.

After a weekend of success (with our cash-only budget and with my diet), I was seriously craving ice cream. But I couldn’t bear to break the $20 bill that had survived the weekend. I had $1 in my pocket, plus we had change scattered around the house and in the car. We scrounged together $2.50 and headed to the grocery store to pick up some ice cream sandwiches.

While it was technically cheating, it was definitely the most fun we’ve had on a cash budget. Working hard to scrounge together the money for that ice cream made it that much sweeter, and knowing that we could only spend $2.50 limited our choices.

My unwillingness to part with that $20 bill already shows a change in how I’m viewing money, particulary cash. In the past, I would have viewed that as “extra money” already removed from our account. Now I view it as “household expenses” money that we’ll most likely need in a future week. I didn’t want to spend it, because I knew we would probably need it later to avoid using our debit cards.

If we had gone to the grocery store to pick up ice cream with our debit cards, we might have spent $4 on specialty ice cream instead of the store-brand ice cream sandwiches we chose. I hate to admit it, but when it’s only $4 coming from our bank account instead of breaking a whole $20 bill, I would have been much more likely to spend it. Those little purchases add up, though, which is the reason we’re trying this experiment.

Overall, I think our first weekend was a success! And so far we’re having fun. It’s certainly changing the way we view money. I’m looking forward to more challenges and successes for the next three months. Stay tuned!

Celebrating our first (frugal) year of marriage

married
He just pronounced us married!

One year ago, my husband and I were celebrating our wedding day. I can’t believe how quickly this year has flown!

I’m so proud of what we’ve accomplished in just a year. Our main goal was to begin our life together on the right financial track, and I’m confident that we’ve accomplished that goal and then some!

Here’s what we’ve accomplished in one short year:

It hasn’t been easy for my husband, but he has been incredibly supportive as we adapted to this new lifestyle. When we began living frugally, I was the one constantly reminding him of our goals. Now I love it when he’s the one reminding me. We’re a great team, and I’m excited about all that we’ll accomplish together in the future.

After an amazing year with an amazing partner, I’m looking forward to many frugal years to come!

The bottom line: Frugality is about quality of life, not money

For me, frugality isn’t just about money. It’s not just about a bottom line. It’s not just about asking myself, how much did I earn this month? How much did I save? How much is in the bank?

Goals are so important to frugality, but they can also make frugality a little counter-productive. When you spend so much time setting goals and scrimping and saving, it’s easy to lose sight of the real goal — happiness and peace of mind.

Yes, frugality is about saving money. But the true bottom line is quality of life. The whole reason I want to get out of debt, save money, avoid living paycheck-to-paycheck is because I want to live better. I don’t want to worry about money. That’s why it’s so ironic when frugality occasionally leads me to do just that — worry about money.

When I worry about money now, it’s so unnecessary. It’s not because I can’t pay my bills or buy groceries. It’s because I forgot a coupon at home and paid an extra 30 cents for groceries, or a slight setback prevented us from hitting our savings goal for the month. Those are the times when I have to stand back, look at how far we’ve come, and remind myself to relax.

I continue to be mindful of my spending and save as much as I can, but I draw the line when it crosses over from mindfulness to worry. I’m frugal because I don’t want to worry about the money issues that really matter, like making ends meet or covering emergencies. If I still worry about money after all of this hard work, then what’s the point?

If you sweat the small stuff when it comes to frugality, take a step back and ask yourself why you’re clipping coupons, budgeting, saving. No matter what your overall goals, chances are your motives are the same — you want a better life. But fretting about every last penny isn’t the life I envision when I think about my best possible life.

When you’re kicking yourself for leaving a coupon at home, worrying about how long it’s going to take you reach your final goals, just take a step back, breathe, and remember the real bottom line.

Ask yourself: Is this improving my quality of life? Many of my frugal habits do: menu planning, budgeting, saving. At the end of the day, those things make me calmer and happier.

But the ones that don’t — worrying, depriving myself, sacrificing my comfort or happiness for a little bit of money —  shouldn’t be a part of my lifestyle.

My laptop’s near death experience

macbook-coffee
Photo by renezeros

Weekend before last, I spent Sunday morning on the porch scheduling blog posts for the week. It was a lovely morning — until I headed back inside.

As I tried to wrangle my laptop with a nearly empty cup of coffee while opening the door, an accident caused a small amount of coffee to spill into the side of my computer. It shut down.

I panicked. My laptop is the second most expensive thing I own after my car, which is insured with a $500 deductible so technically my laptop would be more expensive to replace than my car.

But that wasn’t the scariest part. I hadn’t thought about it until that moment, but everything is on my laptop. Five years of photos, writing, and many important documents. I’ve half heartedly backed things up before using CDs, but those backups aren’t organized in any way. I don’t even know if I’d be able to find all of them.

We dismantled it to let any coffee that had dripped in dry, and I frantically searched on my husband’s computer for information on what it would cost to fix it. As you can imagine, liquid laptop accidents are fairly common, and if my computer was dead the likely culprit was a fried logic board (the Mac equivalent of a motherboard).

If this ever happens to you, you must immediately shut down your computer, remove all power sources, and do not try to turn it back on until you’re sure it’s completely dry. The longer you wait to turn it on, the better, but wait at least three days. If you try to turn it back on before it’s dry, it will fry.

The price tag for a new logic board is around $700 with labor. Yikes. We paid $900 for my computer when it was new over a year ago, and an updated version of my computer would cost about that now, so servicing it wouldn’t really make sense. I crossed my fingers and hoped that once it dried out it would be okay. If it wasn’t, I hoped we’d at least be able to salvage my hard drive.

I brought it into work, where the IT department dismantled it further to clean it out and make sure it was completely dry. They put it back together and it turned on. It appears to be working fine now.

There’s still a chance that it’s not okay, though. Many people who’ve experienced laptop spills were able to turn it on and use it for several days before it stopped working. I wanted to get my hard drive backed up immediately to salvage my files just in case my computer was on its death bed.

We invested $60 in a 160GB external hard drive. We both backed up all of our important documents — photos, files, and other information that we couldn’t replace.

As of right now, my computer is working for the most part. My CD drive isn’t ejecting properly, which may be because it was dismantled. At one point it went to sleep when I was in the middle of typing, which may mean it’s on its way out. :( We’ll see if it continues to work. If it doesn’t, at least I know all of my most important documents are safe.

Here’s what I learned from the experience:

  • Accidental damage insurance may be a worthwhile investment. I found a company called Safeware, and after a little research it seems like a trustworthy company (does anyone have personal experience to share?). They insure laptops and other electronics for everything that a warranty doesn’t cover (accidental damage, theft, spills, natural disasters, etc.) My renters insurance covers all of these things except for accidental damage due to drops or spills. The premium is about $75 a year for up to 3 years paid in full at time of purchase. We’re considering investing in it now, at least for my husband’s laptop, if it’s not too late. Paying $75 a year to protect a $1,000 investment doesn’t seem like a bad deal.
  • Insure your files and important information with a backup system — and use it. There’s no excuse for not backing up files frequently.
  • An ounce of prevention really is worth a pound of cure. Keep liquids away from valuable electronic equipment.

I’m really curious if anyone has any experience with Safeware or other electronics insurance companies. Please let me know!