Tag Archives: lessons learned

Maybe I was being a little too frugal

photo by hlakhani

I think I went a little overboard with my frugality. I know, it’s hard to believe that’s possible, but hear me out.

Last week, I made the decision to join a gym. For the record, I went with the 12-month commitment at $20 a month. Because we were already paying for the membership, I didn’t want to put any extra money toward my exercise budget. Even though I was primarily jogging, I didn’t want to spend money on new sneakers. So I pulled out the old pair I’ve had for 9 years.

My feet were killing me after every work out. At first I chocked it up to being out of shape. You’re supposed to be sore at first, right?

It was particularly painful Thursday night, though. I found myself limping on my way home. When I finally took off my shoes — excuse me for being too graphic — I found that my ratty old sneakers had drawn blood. Ouch.

When Tony saw what had happened, he was angry with me. “I thought frugality was about making smart choices with your money, not depriving yourself to the point of physical pain.”

He’s right. The frugal choice would have been to shop around and find a good deal on a good pair of running shoes. I shouldn’t be spending hundreds of dollars on sneakers, but I also shouldn’t be working out with old shoes that tear up my feet and threaten damage to my knees and other joints because they don’t offer proper support.

Last night, Tony and I went to several shoe stores. We found a reasonably priced pair of running shoes on clearance for $40 and used some of the Christmas money that I was going to put toward my gym membership to pay for them.

I was concerned about investing too much in working out because I was afraid of not sticking to it. Tony made a good point, though. Even if I don’t stick to it, a good pair of sneakers is a good investment. Most importantly, it’s an investment we can afford right now.

Reflecting on my first frugal year

Today is the last day of my first full year of frugality. I’ve only been blogging for about half of it, but we’ve spent all 12 months of 2008 cutting costs, saving, and pay down debt.

I’ve learned much more than I can confine to this post (you’ll have to head into my archives for some of the highlights). But here’s the big stuff I’ve learned in the past 12 months.

Budgets aren’t limiting — they’re freeing.

Before I started budgeting, I felt guilty about every extra penny I spent and stressed that I wouldn’t be able to cover the necessities. Now I know exactly what I can afford to spend, and I know what I need to leave for the necessities and savings. A little money goes a lot further when you budget.

We need much less money to live comfortably than I thought.

Before we moved here, our combined income was almost twice what it is now. But we always felt broke because we were blowing our money on restaurants and unnecessary purchases. I couldn’t imagine living on our current income then.

With a little discipline, though, we’re able to live a richer life on half the money. We still do all of the same things we used to enjoy (like movies, eating out, and books), we just enjoy them less frequently or find frugal ways to enjoy them for little or no money. Now we have money leftover for savings and debt repayment.

We actually “need” very few things.

Our ideas of needs and wants were severely out of whack before we started living frugally. Now we know that we don’t need two cars; we don’t need to own a house; we don’t need new clothes every other month. All we really need is each other, healthy food on the table, and a warm place to sleep. Once we recognized the difference between needs and wants, we were able to set priorities so we could still enjoy some of our wants without interfering with our long term goals.

Realizing how little we actually need also gives me great peace, especially in this economy. By eliminating extra wants, we could cut our monthly spending in half in the event of a financial emergency.

Stress free finances are the greatest luxury of all.

There was a time when I thought skipping weekly meals out and entertainment spending would mean getting less enjoyment out of life. Boy, was I wrong. I enjoy life so much more now that we’ve cut those things out, because I no longer feel stressed and scared about my finances.

It’s been a fantastic year, and I’m anxiously looking ahead to next year’s challenges and successes. I hope to learn even more!

Merry Christmas!


Photo by sideshow blues

I hope you’re all enjoying a safe and happy holiday. Now is the perfect time to take a step back and think about all the people and things that are truly important in your life.

Here’s what I’m thankful for this holiday season:

  • Seven months of marriage to my wonderful husband, who will be with me every step of the way for the rest of our lives. He’s been incredibly supportive and willing to hop on board the frugal train from the beginning. I’m so thankful for our shared goals and his willingness to make sacrifices to help us reach them.
  • My parents, my sisters, their husbands, and my healthy nieces and nephews. I don’t see them as much as I’d like, but I’m thankful for their well being and their presence in my life.
  • My new in-laws who accepted me completely as part of their family long before it was ever official and have provided us with endless support and love.
  • A job that I enjoy (most days) where I’m learning a million new things every day.
  • An unexpected career in a field I didn’t know existed before I was hired at my job, but that I’m so excited to be a part of now.
  • A steady paycheck that allows me to pay all of my bills on time, put food on the table, and save for the future.
  • Frugality and budgeting. Without it, I would still be financially lost and overwhelmed with no goals and no plan.
  • The people who read my blog. This blog has been such a huge part of our financial journey so far. I truly love blogging, and I’m thankful to the people who take the time to read it. Without you, I’d be talking to myself. :)
  • The coming year and its endless possibilities.

I hope you’re all taking the time to count your blessings this holiday season. Merry Christmas!

Focus on the memories — not the money


photo by kspeterson

Last year at this time, our financial situation was pretty bleak. I was working two jobs — a part time retail job and a temporary office job that paid well but only lasted until the end of February. Though we had some extra money coming in, we were saving aggressively because we didn’t know how long our savings would have to last.

We were also away from family. I couldn’t take time off work and we couldn’t afford to travel, so we stayed here, 800-miles from our families.

At the beginning of the season, I was dreading Christmas. I imagined us alone in our apartment with no family, no gifts, no decorations and only sadness.

We looked at our budget and decided we could afford to spend $100 on Christmas. In the past, we had gone overboard on gift shopping for each other. I had come to associate Christmas with fancy gifts and extravagant meals. I couldn’t imagine recreating Christmas with so little money to spend.

We were surprised, though. Finding practical frugal gifts was a fun challenge. I aggressively shopped sales to find little things to put under the tree. I used creativity to come up with ideas. I reassessed our priorities and shopped only for things that I knew Tony wanted and would use.

We had fun putting up our old decorations and fashioning new homemade ones.

Christmas Day we dined on cheap Chinese food and caught a half-priced matinee at the movies.

Instead of focusing on how little we had, we made the most of every dollar and every moment.

Remember: Gifts don’t last, but memories do.

The most important lesson we learned last year was that gifts really don’t make or break Christmas. Shopping is fun if you can afford it, but the best part of last Christmas is the memory.

Twenty years from now we won’t have any of the gifts that we gave to each other. No matter how much you spend on it, stuff doesn’t last forever. After 24 Christmases I can only remember a handful of gifts. Many of them didn’t even last a year. What I remember is the time spent with family and the traditions that cost very little or nothing at all.

Keep that in mind if you’re struggling this year. Even if there’s no room in your budget for gifts, focus on the memories.

Make this Christmas a happy memory. Cherish the good moments and remember that the bad won’t last forever. Remind yourself that “stuff” is fleeting.

If you focus on the negative, then all you’ll remember is the sadness. Instead, focus on the memories you want to keep forever.

If you told me last October that our $100 Christmas would be the best we ever had, I wouldn’t have believed you. A year later, I know that I’ll always cherish the memory of last Christmas not in spite of our struggles but because of them.

How much do your kids know about your finances?

Tony and I don’t have children yet, but we will someday. As we sort out our finances and plan for our future, one thing that we’ve discussed is how much we’ll tell our kids about our personal finances.

My parents were always pretty open with my sisters and me about their finances. It could be scary to know as much as I did at times, especially when I was too young to fully understand.

Looking back, I appreciate their openness. It allowed me to learn from their mistakes. If they had kept those things from me, I would have missed some valuable learning experiences. I want to be the kind of parent who teaches my kids from my own mistakes.

Tony’s parents chose a different tactic to teach him about finance. They weren’t as open about their personal financial issues, but they did work hard to teach him general lessons about money management and finance. Tony opened a savings account at a very young age, and even had some experience with loans early on. If he wanted something he couldn’t afford, his parents loaned him the money and allowed him to pay it back with his weekly allowance.

I didn’t get a lot of practical experience with money management skills until I moved out. My parents were very generous when times were good, but we didn’t receive a weekly allowance. When we needed money or wanted something, we simply asked for it. If they could give it to us, they did; if not, we went without (though that was rare).

The current economy has made me think a lot about this topic. How open should you be with kids about personal finance?

I think I’d like to use both tactics. I want to combine age-appropriate openness with practical money management lessons like the ones Tony’s parents taught him.

For instance, I wouldn’t sit my 5-year-old down and say, “Daddy lost his job, so we might be homeless in 8 months when our savings runs out.” But I would explain to him the changes we’d be facing, such as fewer outings and extra purchases.

As my kids get older, I want them to know more — especially when it comes to our own mistakes. If poor investment decisions lead to a loss, I would want my teenage children to understand what we had done wrong and learn from it. I certainly plan to explain to them my own mistakes with student loans and credit cards so they can benefit from the lessons I learned after college.

My point is that I don’t plan to keep our finances a secret from our children. I want them know and understand as much as they can about how much it costs to maintain a house, feed a family, and save wisely. I want them to know how much we make — and spend — in a year.

On the other hand, I acknowledge that the lessons they learn best will come from personal experience. That’s why I’d like to allow my children the opportunity to make their own financial decisions from as early an age as possible. We’ll give them an age-appropriate allowance and let them decide how to use it. When their own money is gone, I won’t give them more unless they plan to pay it back. My hope is that this will better prepare them for budgeting and money management when they’re on their own.

What works for you? Do you believe in full disclosure or do you prefer to stick with a general education?

Save now for car maintenance & repairs

Photo by jeffwilcox

Tony and I share a single car. It’s only about two years old, and we bought it brand new. Because we have just one, and we plan to drive it for at least 10 years if we can, it’s particularly important that we take good care of it.

This month is going to be a big one for car expenses. Not only do we owe $90 for our yearly county auto tax, but we’re also taking a 2,000-mile road trip to see family for the holidays. To prepare for the trip, we’re getting the oil changed a little early and having our fluids and tires checked to make sure everything is in top shape.

The grand total will be about $140. A year ago I would have been stressed to have such a large expense added on to our Christmas shopping spending and travel expenses. Not this month, though.

Last summer, we began saving $25 a month in a special car savings account. We have about $135 in the account now, so we only have to spend $5 out of our regular budget to pay our taxes and keep our car running smoothly for the trip.

Because it’s a relatively new car and it’s still under warranty, $25 a month is enough for us to pay for routine maintenance. However, as the car gets older, we’ll need to save more. Once the warranty is up, we want to have a good chunk of change saved to cover more expensive maintenance as well as repairs.

Yes, a car problem would certainly fall under the realm of acceptable uses for our emergency fund. But if we can anticipate regular maintenance and scheduled repairs (such as new tires, brakes, and other incidentals), we won’t have to dip into our emergency fund.

I don’t even miss $25 a month since it’s deducted at the beginning of each month, but having that money there when we needed it has made our holiday season a lot less stressful.

We keep a similar account for “dog maintenance.” (Ha.) This pays for yearly vet appointments, shots, and flea and heartworm prevention medicines. We only pay for this stuff once a year, but deducting money from our budget each month is so much easier than coming up with the money in one lump sum every year.

Other uses for these types of advance planning savings accounts include haircuts, birthday/Christmas gifts, out of pocket medical expenses (if your insurance provider doesn’t offer a tax-free HSA), and any other yearly expenses.

If you’d like to start a savings account for your own regular yearly expenses, here’s my advice:

  • Use ING Direct (email me for a referral link if you haven’t opened an account yet, and you’ll get a $25 bonus if your first deposit is $250 or more.) ING makes it extremely simple to maintain separate accounts, and you’ll earn a decent interest rate (right now 2.75%).
  • Figure out how much you need to save each month to cover the total amount you’ll need for the year. For example, we get our oil changed about 2-3 times a year. If we were saving for oil changes only, we’d need about $90 a year, or $7.50 a month. Because we also save for taxes and we’re trying to build a surplus to carry over to next year, we save $25 a month.
  • If you’re worried about working it into your budget, start small. Gradually increase the amount by small increments until you’re saving enough to cover your expenses.
  • Don’t touch the money! It helps me to consider that money already spent, as if oil changes are a monthly expense instead of only every few months. That $25 a month has already been “spent” on car expenses, so it’s off limits. Then when it’s time to spend it, I just move it over from savings to my checking account.

Christmas presents, not status symbols

Over the weekend, Tony and I were picking up a gift card as a Christmas gift for his grandparents. A month ago when we worked out our Christmas budget, we agreed upon an amount that we could afford. But as we stood in line I found myself second guessing our decision. “Do you think this is enough?” I asked him.

This isn’t the first time this has happened. I ask myself that question almost every time I buy a gift. “Is this enough?”

That’s a pretty silly question, though, isn’t it? Enough for what? After all, anybody who would receive a gift only to think it isn’t good enough really doesn’t deserve the gift at all.

Of course I wasn’t worried that Tony’s grandparents would feel that way. They’re probably not expecting anything from us at all, and they’ll be thrilled that we thought of them. So where does this doubt come from?

The more I thought about it, the more I realized that this doubt is more about me than it is about them. I enjoy giving gifts to the people I love because it makes them happy, but the desire to give more than I can afford comes from the same place as the desire to buy fancier things than I can afford.

It’s a tough thing to admit, but in the past I’ve used gift-giving as a status symbol. I’ve charged up credit cards and spent money I didn’t have on gifts. I’m sure the people who love me would be horrified if they knew that buying them gifts was putting me at financial risk. I certainly wouldn’t want anyone to risk their financial security to buy something for me.

I told myself that I was being generous. I wasn’t being generous, though. It was quite the opposite. Buying those fancy gifts made me feel good about giving them. Sure, it made the person who received the gift happy, but that’s not the real reason I was doing it. The people I love would be just as happy with a thoughtful gift that I could afford to give, whether it be something small, homemade, or even baked. The truth is, I liked the way it made me feel to give fancy gifts.

The past couple years have taught me valuable lessons about spending that I’ve learned to apply to gift-giving. Spend only what you can afford, and give only what you can give.

I’m still tempted to break my gift budget, but I have to remind myself that the people who love me would much rather I didn’t risk getting myself into trouble. After all, the safety and financial security of the people I love is much more important to me than receiving Christmas gifts. When I’m tempted to overspend, I remind myself that the people who love me want the same security and safety for me much more than they want presents.

The holiday season is a great time to make the people I love feel special. Spending more than I can afford just isn’t the way to do it.

Why pay more for lean ground beef?

Tony and I don’t eat a lot of red meat. Occasionally we’ll grill a nice lean steak, but we eat more chicken than beef. It’s mostly because when we do buy ground beef, we like to buy very lean beef, usually about 90-94% lean. Have you seen the prices for lean beef? It rarely falls below $4 a pound. We’d just as soon cook with chicken, which is healthier and only $2 a pound.

This week, Tony had a craving for Shepherd’s pie. We were picking up our Thanksgiving turkey and some steaks on sale. We needed beef for the pie, but I wanted to save some money. I decided for this week that the extra 10% fat in the $2 a pound ground beef wouldn’t kill me.

I was shocked at how much extra fat cooked out in the pan. We’ve been cooking with lean beef for so long that I’ve gotten used to seeing very little fat in the pan.

We cooked all of the fat out, drained it completely, and patted it down with paper towels to remove the excess fat. And you know what? It was basically the same. Obviously, I can’t say for sure that it was just as lean as the 90%, but it sure seemed like it once it was drained well.

I know, this one seems like a no-brainer, but it’s a revelation for me. I’ll never pay $4 a pound for ground beef again. That works for me!

Would you buy it if it wasn’t on sale?

Photo by theogeo

clearance saleThis time last year I was working in retail in a clothing store. I wasn’t making much money, but one of the “perks” of my job was an employee discount.

I bought a lot of clothing during this time. Not only did I take advantage of my 20% discount, but I scouted the sales and clearance racks. I never paid full price for anything. I thought I was getting a great deal. In all honesty, I really was. I usually paid about 20% of the original price.

As I look back, though, I’m reminded of the strange psychological effect of sale prices. Sale prices can turn a ho-hum item into something you must have.

Since I worked in the store every single day, I was in a unique position. Instead of stumbling on these great deals, I was aware of my changing perspective as the prices dropped. Many of the items I bought off the clearance racks, I didn’t even notice at full price. Though I stocked them, rehung them in the fitting room, and straightened the shelves after closing each night, I barely noticed them at all. But as soon as they hit the clearance shelf, I suddenly had to have them.

Looking back, I realize I wasn’t really shopping for clothes; I was shopping for bargains. It wasn’t that I really wanted the items I bought for such a great discount. I just loved the rush of knowing how much money I had “saved” compared to the original price.

Shopping for bargains is dangerous, though. If you’re not careful, you’ll go broke saving money.

Don’t get me wrong, there were items that I coveted from the day they came into the store. A beautiful cashmere sweater that originally retailed for $60 comes to mind. I absolutely wasn’t going to pay full price for it, but I kept a close eye on our inventory, hoping my size would be there when the sweater finally hit the clearance rack. It was, and I paid $8 for that sweater at the very tail end of the winter season in March.

For the most part, though, it wasn’t the price that deterred me from noticing full price items. It was that I just didn’t particularly like or want them. But as soon as the price dropped and it was a “deal,” my mindset changed completely.

Sale prices can be blinding. As the holidays approach and prices start to drop, it can be tempting to buy buy buy. I’ve said it before, though — if you don’t need the item, you’re paying too much (even if it is on sale).

Next time you’re tempted by a sale price, take a hard look at the original price. Ignore the sale price for just a moment. Try to ask yourself, “Would I want this if it was $60 instead of $10?” Regardless of whether you can afford to pay full price, would you even want it if it wasn’t on sale?

I absolutely wanted that cashmere sweater even at full price — I just couldn’t afford to pay full price. When I finally bought it for the clearance price, it was incredibly rewarding. It’s still my favorite sweater of all time. I can’t say the same for 90% of the clearance items I bought during my time working in retail.