Chapter 8. Frugality as Framework

Benjamin Franklin once said, “Watch the pennies and the dollars will take care of themselves.”¹ That quote is often used as a call to arms to pinch pennies, but simply whipping out the scissors to clip coupons misses much of the point of what Franklin was saying. His argument is, quite simply, to be mindful of how you spend your money. If you’re alert enough to be mindful of your small expenditures, keeping track of your large ones comes easily and naturally.

¹ Benjamin Franklin, “Poor Richard’s Almanac.”

The Difference Between Frugal and Cheap

In Lifestyle of the Tight and Frugal: Theory and Measurement, John Lastovica defines frugality as the practice of acquiring goods and services in a restrained manner and resourcefully using already owned economic goods and services to achieve a longer-term goal.² In other words, whenever frugal people spend money, they are conscious of the fact that their resources (time, money, mental energy, physical energy, and so forth) are limited, and they’d prefer to invest those resources in something in line with their core values.

² John L. Lastovicka, Lance A. Bettencourt, Renee Shaw Hughner, Ronald J. Kuntze, “Lifestyle of the Tight and Frugal: Theory and Measurement,” The Journal of Consumer Research, Vol. 26, No. 1. (June 1999), pp. 85–98.

So, what differentiates that from a cheap person? Cheap people focus on nothing but retaining money for themselves, regardless of what their personal values might be. Frugal people, on the other hand, are happy to spend money on something in line with their personal values, but outside of those values, they seek to minimize their use of time, money, and energy.

A great example of this is in the purchase of a car. A cheap person will go for the car with the lowest sticker price, period. A frugal person will figure out what they want out of a car and how much they value it, and then do a bit of research to find the best “bang for the buck” for that set of values.

Frugality as a Framework for Freedom

Many people associate frugality with sacrifice: You have to give things up. They hear stories about having to give up lattes or giving up eating out or giving up nights on the town, and it sounds incredibly tedious.

A more appropriate view is that frugality is an exchange: You’re trading the things you don’t value for things that you do value.

It all comes back to your core values. You have a handful of things that you personally value. Spending money on those things is completely normal and healthy—it reaffirms the things you care most about.

Outside of this exist many things that we might care about a small amount, and other things we don’t care about at all. These are the areas where it’s fine to deeply cut spending.

It’s easier to see this with an example. You’re part of a small circle of friends that you value very much—those friendships are one of the core values in your life. Those friends go out to dinner together all the time. You don’t particularly value the dinner, but you do value the friendships.

Many people would just shrug it off and keep going out with friends, spending money on something that they don’t really value to maintain something they do value.

A frugal person will find a new solution: Why not learn how to cook at home and invite them over for dinner? This might inspire others to host additional dinners or convince some of them to come over with ingredients and help you prepare other dinners. You still get the value of dining with friends (with perhaps the additional value of cooking with friends) without the constant cost of dining out.

If you can then redirect that saved money into another aspect of your life that you value—say, perhaps, saving for a down payment—your life as a whole improves. You don’t sacrifice anything that you truly value while also improving an additional area that you value.

John Warfield, a quality control chemist from Des Moines, IA, puts it well: “I take the long view. Is there anything I really need today, be it extra excitement, gizmos, food, drugs, sex, rock and roll, or so on? I’m not afraid to spend an extra buck to try a new restaurant or a few hundred to jump out of a plane. But I don’t need to do those things every day or every week. The financial security of tomorrow is more important to me than a large high-definition television.”³

³ Personal interview.

Instead of spending money on relatively frivolous things now, he steps back and looks at his core values—and he values security. A short-term rush might be fun once in a while, but financial security brings real lasting value to his life, enabling him to make powerful choices later on.

The rest of this chapter is filled with suggestions for trimming your spending. As you read them, keep your core values in mind and don’t follow the suggestions that damage those core values. Instead, focus on the ones that don’t interfere with your key values at all and recognize that the money you save by trying these things will actually improve those key values.

What’s Essential?

Whenever I give a talk about my experiences and personal finance philosophy, I usually show a slide that depicts nothing more than a bucket of soapy-looking liquid. This usually elicits a raised eyebrow or two from the crowd, and several more eyebrows shoot up when I tell them that this bucket contains homemade laundry soap.

You see, I make my own laundry soap out of borax, washing soda, a bar of soap, and water—all available at your local grocery store. A single bucket takes me about ten minutes to make and has enough soap for fifty loads of laundry. Here’s the kicker—I save about eighteen cents per load as compared to the brand of laundry detergent I previously used.

That adds up over time. In a household of four, we do an average of a load and a half of laundry a day. Over a full year, my laundry detergent choice saves us $100.

The laundry detergent is not what’s important here. The important idea is simple—just go through your life, determine the things that are important and the things that aren’t, and find every way you can to cut back on the things that aren’t important.

To me, laundry soap isn’t important. As long as my clothes are clean, I don’t care what kind of soap I throw in there. So, I cut back as sharply as I could. I tried a homemade recipe that pledged to be the cheapest option—and I found that it did the job up to my standards. That’s what I use now.

When you start applying this litmus test to everything in your life, you begin to find lots of areas to cut back. You start trying generic products. You start trying to make things yourself. You trim out expensive nonessentials.

Here are three examples from my own life:

1. I used to drink three or four sodas a day. It was expensive, plus it wasn’t exactly good for my health. Since I mostly just drank them whenever I was thirsty, I started substituting bottled water for the sodas, with no real drawbacks. This saved a bit, but the real savings came into effect when I just got a handful of sturdy water bottles and started cleaning and refilling them myself. The upkeep cost of four sodas a day basically went away.
2. Clothes aren’t an important issue in my life—as long as they fit well and aren’t terribly worn, I’m happy with them. I used to just replace clothes by shopping at a big and tall men’s store, but I substituted that choice by starting my shopping trip at a few local thrift stores. I would often find barely-worn shirts that fit me well for just a tiny fraction of the price. Sure, I might not have a choice of patterns or prints, but such issues really aren’t essential in my life.
3. I’ve been an avid reader since I was a child, and I carried this wonderful hobby with me into adulthood. Because I read (and still read) two or three books a week, I would often head to the bookstore twice a week and pick out a new title or two each time I visited—and that really added up. What I began to realize, though, is that what I truly enjoyed wasn’t buying books, but reading them. So, I began to use my local library, and today I purchase only the occasional book, supplementing them with a well-worn library card. After all, my passion is reading, not buying.

Graham Miller, an independent advisor from Glasgow, Scotland, points to another area of concern. “Clutter and accumulating things is self perpetuating and leads to unhappiness. I was asked to declutter a room in my house and see how I felt,” Graham says. “Before I got this advice, I had a house full of clutter (DVDs, video games, books) and very little money in the bank. I had a lot of things, but I was ultimately unfulfilled and unsatisfied. I would buy something to add to the clutter for the initial rush. This wore off, often within hours, and I would be back at square one. Needless to say, I spent a huge amount of money.”⁴ The accumulation of things in itself can lead to unhappiness—a point I’ll touch on again later in the book.

⁴ Personal interview.

Take the time to look at everything you spend money on in your life. Ask yourself if that spending is essential to your life—or even truly important. If it is important, leave it alone. If it’s not, cut it sharply—find every way you can to trim every cent from your spending. Eventually, you find that you actually have enough money to cover everything important to you and have money to pay down your debts or to save for the future. The only things you’ve given up are the things that aren’t essential to you.

The Peak-End Rule and Life Experiences

In his book Objective Happiness, Daniel Kahneman describes the peak-end rule, which states that we judge our past experiences based on our strongest emotional response (the peak, which can be positive or negative) and on how it finishes (again, either positive or negative).⁵

⁵ Kahneman, D. (1999). “Objective Happiness.” In Kahneman, D., Diener, E., and Schwarz, N. (eds.). Well-Being: The Foundations of Hedonic Psychology. New York: Russel Sage, pp. 3–25.

It’s easy to see this at work. Imagine your last family vacation. What do you remember? Your first thoughts will be either a positive or negative overall feeling, along with a specific memory or two (the peak experiences of the trip). Most of the rest of the vacation will be fuzzy and disordered.

If you keep the peak-end rule in mind when you plan major events or trips, it’s easy to plan to maximize the positive memories and minimize the cost. Figure out the two or three big things you want to see or do on the trip (the peak experiences); then minimize the cost of the other elements (the fuzzy parts you won’t remember). Stay in an inexpensive hotel—or even camp out in a tent. Prepare your own simple meals instead of eating out all the time. Focus primarily on events and attractions that are free, excepting the small number of things you really want to enjoy.

You’ll still get the peak memorable experiences, but you drastically reduce your expenses, enabling you to focus on other goals with your dollars.

Overvaluing Routine Experiences

During my early professional years, I made a daily habit out of stopping at a local coffee shop. I’d pick up a bagel, a newspaper, and a cup of overly sweet coffee and retreat to a back table, where I’d browse through the pages, sip my sweet beverage, and nibble away at my breakfast.

I started doing it because I really enjoyed going to coffee shops when I was in college and going to this one felt a bit nostalgic. I’d remember long evenings playing checkers with my friends, arguing about some frivolous point or another, and generally avoiding the studying that needed to be done.

After a while, the morning cup and bagel became so routine that I didn’t believe I could possibly live without it. I needed it.

When our finances hit rock bottom, I took a hard look at the money I was spending, and I couldn’t help but notice that $7 was disappearing, day in and day out, at that coffee shop. $35 a week, $140 a month.... $1,680 a year is a lot of money.

So I challenged myself to cut back to just a day or two a week, expecting that it would be very difficult. What I found, though, is that the change was surprisingly easy—the hard part, if there was one, was breaking the caffeine addiction. Before long, I was stopping at the coffee shop once a month at the most.

What changed? For one, I realized I was overvaluing my routine. Humans are creatures of routine—yes, even for those of us who seem to thrive on spontaneity. Most of our days are filled with many of the same activities as other days—a similar amount of sleep, a similar meal pattern, and other such actions. This routine is fairly comforting—it makes us feel in charge of our lives. Thus, we often overvalue that routine in our heads, since it makes us feel normal about what goes on in a day.

In truth, a daily routine is surprisingly malleable. Most of the time, it only takes a single month of daily repetition to establish a new routine as a normal behavior. By simply pledging to use a different morning routine every day for a month, the desire to go to the coffee shop each morning slipped away quite easily.

Another major factor that made this routine easy to shed is that I realized that the part of the coffee shop I valued was nostalgic. I enjoyed that fleeting sense that I was still in touch with the earlier experiences that I valued so much. In truth, though, that experience lived on inside of me and with the relationships with people in my life. By putting time into re-establishing those relationships and simply enjoying my memories, I found the real value of those coffee shop visits without throwing down $7 a day.

A third factor is that, by visiting the coffee shop each day, the visits no longer seemed special and enjoyable. Instead, they seemed ordinary. Visits to that coffee shop were no longer a treat—they were just part of my morning routine, carried on without much conscious thought or pleasure.

Today, I visit a coffee shop perhaps once every two or three months. Those visits are quite enjoyable, as I’m able to enjoy the specialness of the moment. It feels like a real treat instead of just another tired routine. Yet, in the mornings when I used to stop at the coffee shop, I no longer feel the need. I have the great memories of my younger years and strong relationships with the people I care about from those days. Instead, I have a new morning routine, one that keeps my wallet in my pocket and my future clearly in mind.

What routines do you hold to without question? Do you have daily money leaks in your life that seem almost unchangeable? Step back for a moment and ask yourself why you’re spending this money each day. Are you getting personal value each day out of this routine? Or are you merely running on nostalgia and dreams? Is there perhaps a better routine you could utilize—like working on relationships with others instead of spending money?

If you genuinely find value in a routine, by all means, keep that routine. Some routines do make our lives better. However, I’ve found that the things that we often consider to be beyond question are often the things that are hurting us the most and are the very things that we truly benefit from changing.

Frugality and Food

One constant regular drain on our wallet comes in the form of food. We are constantly bombarded with food options: dining out, fast food, convenient boxed meals, and so on. With this wide variety of choices—and with many of them being really convenient—it’s not surprising that we often overspend on our food options.

One important thing to remember when it comes to food choices and saving money is that unhealthy foods have a big long-term cost that you don’t see on the sticker price. The food on the dollar menu at your local fast food restaurant might seem like a bargain right now, but if you factor in the long-term health costs of regularly eating such food, it’s not. Unhealthy food adversely affects your health, reduces your energy level (which affects your career and your personal activity choices), adversely affects your appearance (also affecting your career and your interpersonal relationships), and, often, doesn’t save you money at all.

In terms of balancing food flavor, quality, personal health, and cost, I find the simple advice of food writer Michael Pollan to be a very useful rule of thumb. In his pro-eating manifesto, In Defense of Food, Pollan encourages people to “Eat food. Not too much. Mostly plants.”⁶ In that, he encourages people to stick to raw ingredients—the ones found in the produce section and the meat counter of your store—have slightly smaller portions, and to increase their vegetable intake. Each of these choices not only reduces the long-term health cost of food, but often decreases the immediate sticker price of food as well.

⁶ In Defense of Food, Michael Pollan. Cover. ISBN: 978-1-59420-145-5.

Here are ten steps toward reducing the overall cost of food in your life without reducing the taste of it:

1. Learn to cook for yourself. Many people—my sister-in-law, Vicky, included—argue that cooking meals from scratch is too challenging and takes too much time when compared to other convenient food options. In truth, most food options you prepare yourself are actually surprisingly fast—often faster than the time one spends waiting at a restaurant. In terms of skill, yes, it does take some time to learn how to cook properly. The best way to learn, though, is not to start off tackling coq au vin or something else that’s difficult and time consuming. Start with scrambled eggs or chili—dishes that are very simple to prepare in their basic form. Pick up a cookbook that teaches technique along with the recipes—Mark Bittman’s How to Cook Everything and Irma Rombauer’s Joy of Cooking are two great options for this. With even a little practice, you’ll find that making a meal for yourself at home isn’t all that time-consuming—and, quite often, the flavors are such that you’ll never want to return to convenience foods.
2. Prepare a meal plan and a grocery list each week. At our home, Saturday morning usually finds one of us making a list of the meals we intend to eat over the next week, digging through the cupboards to make sure we have all the ingredients, and then making a list of those items we don’t have. This simple process takes about twenty minutes and usually results in a surprisingly short grocery list. At the grocery store, we earn those twenty minutes back by shopping for much less time—instead of wandering from aisle to aisle trying to decide what to get, we just follow that short list. The money we save by avoiding tons of impulse buys is substantial and, in the end, it doesn’t take us any extra time.
3. Use a simple price list strategy to figure out which store to shop at. One common technique for minimizing grocery costs is the price list. First popularized by Amy Dacyczyn in her Tightwad Gazette newsletter, a price list is merely a listing of the cost of most of your commonly-purchased items at several different stores. So, for example, you might have a gallon of milk in your price book—next to it, you’d find the price of that gallon at several different stores. This way, you could use that price book to plan which store (or stores) to shop at for groceries that week, minimizing your cost.
   

   Today, with stores constantly shifting food prices and the selection seemingly changing on a daily basis, a price book doesn’t work as well. Instead, I’ve substituted what I call a “price list”—a much simpler method of doing the same thing.

   For a few weeks out of each year, I’ll shop at several different local grocery stores. At each store, I’ll get the price of the 25 items I buy most frequently—bread, milk, eggs, lettuce, and so on. I just do this as part of my weekly shopping trip. After visiting several stores, I go home and add up the cost of the 25 items from each store, giving myself a total cost of buying all those items from each of the local stores. Whichever store has the cheapest total wins my business for the next year or so.

   This simple method helps me to always dig out what the least-expensive store in the area is. Because I update the list annually, I can also keep track of changes in pricing policies of different stores and also identify whether or not a new store is worth shopping at. Doing this once a year saves me about $15 a week in groceries, according to my figures.

4. Use the weekly fliers. Many grocery store chains distribute fliers in local newspapers and on their websites describing the special deals the store is offering this week. Use these fliers to your advantage. Each week, as you begin to plan your meals, download the flier from your store of choice and use the discounted fresh items—meats and vegetables—as the core of the meals you plan for the week. This way, your grocery list will naturally be full of the items already on sale that week.
5. Prepare meals in advance and freeze them. For many busy families—my own included—preparing a meal from scratch every single night is difficult. Evenings are often scheduled to the gills, leaving only a short window of opportunity to get a meal on the table. Our solution is simple. On the nights when we have plenty of time to prepare a meal, we partially prepare a second or third or fourth copy of that meal, bringing it to the point that it’s ready to be tossed in the oven. Then, we freeze that prepared meal (or group of meals). If an evening is going to be busy, we get the meal out the night before to allow it to thaw; then we put it in the oven as soon as we get home. Presto—a homemade meal made of inexpensive ingredients ready to go as quickly as we need it.
6. Prepare convenience foods in advance and freeze them. The flip side of this idea for me happens in the morning when I’ve got an appointment to make. I’m rushing around, trying to get out the door, but I also know how important it is to get a good breakfast inside of me. In the past, I would compromise and stop for some fast food, but that would really add up over time. So I began to apply the same principles as the advance meal preparation and made myself an enormous batch of breakfast burritos in advance. Filled with beans, eggs, and salsa, they’re quite tasty—and easy to prepare, too. All I do is grab a frozen one, wrap a paper towel around it, defrost it for two minutes, cook it for another two minutes, and go! One can do the same thing with lunch burritos, sandwiches, and other similar convenience foods. It’s convenient, as healthy as you want to make it, and really inexpensive.
7. Chain meals together. During the summer, our grill gets a lot of use. I’m constantly grilling vegetables, chicken breasts, steaks, and other such items. Yet, if you took a look at our grill, you’d probably be shocked at the amount of food on it. Whenever I cook anything that could be used as a major ingredient in another dish, I make sure to cook plenty of it. This serves two big advantages. First, it allows us to buy that major ingredient in bulk, thus saving us money. Second, having that key ingredient already cooked and ready to go saves us time in preparing a homemade meal later. So, for example, I might take advantage of a “buy two, get one free” deal on chicken breasts at our preferred grocery store and then cook them all at once, saving the cooked breasts for other dishes (like chicken soup or chicken stew or a salad).
8. Don’t fear leftovers. Every second or third night, we have a “leftover” night at our home. Our dinner just consists of whatever remains from the dishes served the previous few nights, plus a new side dish or two if it seems necessary. Why do this? Food left uneaten is money thrown away. Besides, it’s incredibly easy to add new flavor to leftovers. Just spice it up a bit with fresh ground pepper, salt, or Italian herbs and spices. Another avenue is to simply reconstitute it into a new meal—take a leftover hamburger, break it into small pieces, add some Italian seasoning and some tomato sauce, and you have an incredibly easy meaty pasta sauce.
9. Select recipes full of inexpensive staple ingredients. Beans and rice are two of my favorite foods. They serve as the backbone for almost any type of cuisine, can be flavored in infinite ways, and are incredibly inexpensive. Focus on making recipes that utilize beans, rice, vegetables in season in your area, and any vegetables you can easily grow. Using such inexpensive ingredients as the backbone of your meal makes the entire meal incredibly inexpensive while still being delicious.
10. Break the soda addiction. One final food suggestion: if you find yourself drinking soda daily (or more frequently), break the addiction. Train yourself to replace your sodas with water you bottle yourself. If you want more flavor, add a splash of lemon juice or whatever fruit juice you prefer to the water. Not only will this directly eliminate the surprisingly significant daily cost of soda (it can easily add up to $1,000 a year), but it’s one of the easiest things people can do to get their weight under control and their health in a better place.

Trimming Your Utility Bills

Another area where we all spend money—and where it’s often easy to trim a lot of spending without affecting our quality of life one whit—is with our utility bills. Energy, communication, and cable bills add up to a significant amount of money each month.

Install a programmable thermostat. A programmable thermostat is a simple device that allows you to schedule rises and falls in the temperature of your home. For example, if you have a programmable thermostat, you can have the air conditioning turn off automatically from ten at night to five in the morning each day (when you’re asleep), as well as from nine in the morning to five in the evening each weekday (when you’re at work). The end result is that your air conditioner runs less, significantly reducing your summer energy bill, and the same effect occurs during the winter with your furnace.

Air seal your home. Heat constantly leaks into your home (during the summer) and out of your home (during the winter), costing you on your energy bill. Air sealing your home simply means that you locate the worst air leaks in your home—meaning the places where the most heat is lost or gained—and block those leaks using caulking and weatherstripping. This can be done in a weekend afternoon or two and can reduce your heating and cooling bills by as much as 20%.

Improve your insulation. A well-insulated home can drastically reduce energy costs in both the winter and summer seasons. Many homes are under-insulated, as recommended insulation guidelines have gone up significantly over the past twenty years. Add into that situation the fact that many homes are under-insulated when constructed and you have a perfect recipe for energy loss in your home. Consider a do-it-yourself home energy audit to find out your current insulation levels and determine whether an upgrade might save you significantly on your energy bills.

Look into pay-as-you-go phones or Internet telephony. For many phone users, standard plans are simply overkill for their usage. For a domestic phone line, look into an Internet-based telephone solution like Skype, which offers unlimited long distance calling, a number of your own, and voicemail for $2.99 a month (plus the initial cost of an inexpensive phone). If your cell phone use is limited, look into pay-as-you-go phones, many of which offer all the basic services you need without a required monthly bill.

Eliminate your cable bill entirely. The Internet provides an abundance of free access to television programming, and for a very small fee, services such as Netflix offer on-demand, commercial-free access to television programming and films. If you’re looking for an idle entertainment fix, you can get all you’ll ever need through the broadband Internet connection you probably already have.

Housing and Transportation

More than half of the annual income of the typical American family is spent on housing and transportation—51.7%, in fact.⁷ With housing and transportation filling such a large role in our financial life, it’s easy to see how a few clever choices in this area can make an enormous difference in our bottom line.

⁷ The average American family spends 34.1% of their income on housing and 17.6% on transportation, according to Consumer Expenditures (U.S. Department of Labor, U.S. Bureau of Labor Statistics, April 2009).

Rent. Unless you (a) plan to live in the area you’re at for more than five years, (b) have more than 20% of your down payment saved, (c) relish the idea of investing a hundred hours of year in home maintenance, and (d) prefer to handle your own plumbing and electrical problems instead of calling a landlord, renting is almost always a better financial and personal deal for, well, everyone.

What about home equity? During the first few years of a home mortgage, more than 80% of your mortgage payment goes directly toward paying the interest on that mortgage. Add into that the financial and time costs of maintaining a home versus maintaining an apartment and, in most cases, renting really is the better option.

This, of course, assumes that you’ll do something responsible with the money you save by renting. For renting to truly be a financial boon, you have to be saving or investing a substantial amount each month, either toward a home down payment or some other equally important financial goal (like seed money for a small business).

If you’ve already made up your mind to buy for other reasons, rely on the lessons of the past decade. If the housing bubble of the late 2000s taught us anything at all, it’s that no one wins when you borrow more money than you can afford. Avoid the pitfall that caused so many people to be evicted from their homes—rent until you have 20% of the total cost of the home in the bank and your credit is strong enough to get a low fixed rate mortgage with payments below 28% of your household income.

Live small—even downsize. The best home to live in is one where you actually have a real use for every room in the house—unused space is incredibly expensive to buy and maintain. Instead of buying a house that exceeds your needs, focus on finding one that meets your needs. If you have rooms in your house that go unused for weeks, you might want to consider downsizing into a home that offers all the livable space you actually use and smaller payments to boot.

Rent out spare space in your home. Another option, if downsizing doesn’t work in your area, is to rent out the unused space in your home. Convert your basement into an apartment and rent it to a quiet college student, a recent college graduate with a fresh new job, or a married couple that’s new to town. This directly increases your income and likely increases the resale value of your home.

Buy cars solely for reliability and fuel efficiency. When you boil it down to the core, a car’s purpose is to get you from point A to point B as inexpensively and efficiently as possible. Comfort? Cars cannot match the comfort of home, so you often end up paying a huge premium to sit in slightly less miserable conditions for an hour or two a day. Instead, focus on bang for the buck—what will get you where you need to go with the least amount of money spent? Generally, used cars offer far more bang for the buck than new cars.

Use public transportation. Another option—if it’s available to you—is to simply get rid of your car and its associated expenses and use public transportation. Public transportation passes in most large cities are incredible bargains—they get you where you need to go throughout the city without the hassle and cost of owning a car and paying for parking. If you live in the suburbs, look into commuting by train into the city if you need to, or at the very least, look into forming a car pool.

Maintain what you have. Careful maintenance of your home and automobile can greatly extend the life of each and also reduce the amount of costly repairs that are required. Follow the maintenance schedule in your car’s manual to the letter—if you’re buying a used car and can’t certify what needs to be done, get a trusted mechanic to evaluate what maintenance should be done. With your home, develop a home maintenance checklist and follow it carefully each month—such checklists are easy to find on the Internet.

Get Clever with Your Entertainment

Entertainment is the trickiest part of a family’s budget. Some entertainment spending is great—it can be the source of quite a lot of personal and social enjoyment. However, entertainment spending is often misdirected into buying things instead of having experiences.

Discover the library. If you’re into reading, watching films, or listening to music, the library is an incredible free warehouse to fill your entertainment needs. Many public libraries have extensive DVD and CD archives, as well as an enormous collection of books, often including bestsellers. Many libraries now have an online reservation system, making it easy for you to reserve exactly what you want from the convenience of home. In some rural areas, the library will even deliver materials to you via the postal service. The question you should ask yourself is this: Do I enjoy reading or do I enjoy spending money on books? Do I enjoy watching films or do I enjoy spending money on DVDs? The answer will often point you straight to the library.

Have a “media swap.” Invite some friends over and allow them to simply borrow a large portion of your DVD or CD or book collection. A few weeks later, have them reciprocate, allowing you to borrow a large portion of their collection. This gives both of you an enormous source of free entertainment—and often, because it’s entertainment picked by your friends, it will already match your tastes quite well.

Get to know the community calendar. Most cities have a thriving free cultural life, with concerts, festivals, and other events going on regularly throughout the year. Locate your community’s event calendar and see if any events are of interest to you; similarly, check the event calendar of nearby towns and cities as well.

Join a club. This ties directly into developing a sense of community, but clubs and organizations also fulfill a role for socializing and entertainment at a very low cost. Look at options in your community that match your interests—book clubs run by the local library, gaming clubs, volunteer and service groups, a church, and so on.

The Five Fundamental Rules of Frugality

I regularly give talks to various groups on personal finance and my own experiences with debt recovery and talk with people about their own debt recovery journeys. At these events, I always find that people equate frugality with some form of misery—they either see it as being cheap or see it as putting themselves through misery. I argue that it’s neither—that instead it’s joyful and life-affirming. I boil down the entire discussion on frugality to five simple rules. If you keep these five rules in mind when you evaluate your spending, you’ll always find happiness and freedom, both now and in the future:

1. Don’t give up the things you love. Yes, it’s always worthwhile to give any lifestyle change a trial run—don’t just assume you can’t live without something until you give it a shot. However, if you find that a money-saving choice really is making you miserable, don’t be miserable. Bring that element back into your life. If you are constantly making choices that genuinely bring you down, you’re going to hate what you’re doing and, eventually, you’re going to rebound in a very financially painful way.
2. Find inexpensive ways to enjoy the things important to you. We’re all passionate about certain things, and for some of us, those passions often translate very easily into spending money and buying things. Strive to dig into what your passion really is and ask yourself if that passion really is met by pulling out your wallet. For example, if you’re as passionate about reading as I am, you know how tempting a bookstore can be. But ask yourself this: Are you passionate about reading and enjoying books, or are you a book hoarder who likes to overstuff his or her shelves? If it’s the reading you’re passionate about, find less-expensive ways to fuel the hobby. One great way to start is at your local library.
3. Cut back hard on the things that matter less. If you’re not entirely defined by the clothes you wear, give thrift shops a shot. If your self-identity isn’t ruled by the brand of window washer you use, try using vinegar out of a spray bottle. If preparing gourmet meals that take all afternoon isn’t at the center of your emotional life, stick with just a few high-quality kitchen implements and forget the rest. If something’s not a central value in your life, don’t invest even a dime more into it than you possibly can. Seek stuff that works well for the lowest possible cost and move on with life.
4. Never go shopping without knowing exactly what you want. If you ever walk into a store without a plan, it’s highly likely you’re going to walk out the door with something you didn’t intend to buy—which means it’s something you didn’t need. That something you didn’t need sacrifices part of your future, because it’s money that’s not going toward paying off your debt or building your dream home or freeing you up to have the career of your dreams. Every time you enter a store, know exactly why you’re there and, if it’s not to buy a specific item, don’t walk out with an item. Sure, you might find something you like there, but if you do....
5. Use the thirty-day rule for any unplanned purchase. If you find something you’d really like to have and you’re trying to talk yourself into it, stop for a second. Jot down what that item is on a piece of paper, and then leave the store. Give yourself thirty days to think about that item. See if you can’t find it for a lower price elsewhere. Ask yourself if you honestly need or even really want this item. At the end of the thirty days, if you still truly want the item, pull the trigger on it using the best deal you’ve found. That way, even if you do decide you need this impulse buy, you’re not spending as much as you would have to begin with.