The Rewards of Being Frugal (Carole)

My girls and I have spent nearly a year sharing our fun (and sometimes clever) frugal ideas with all of you in this blog, and maybe it seems that all we care about is saving money.  Not true!  In fact, the main reason we use coupons, pay off debt, look for the best deal or do without, is so that when we REALLY want to spend money on something important or fun -- we can!  All without fear or regret -- or using a credit card.

For instance, last Saturday was my husband's birthday.  At our house, birthdays are a big deal.  For the first 20+ years of our marriage, a "big deal" meant breakfast in bed, a few brightly wrapped presents, Grannie's homemade cherry chocolate cake, and crepe paper streamers and balloons hung from the kitchen light.  But now that the house is paid off and most of our children are raised, we have really beefed up our celebrations!  For the past 5 years, David and I have flown to Los Angeles, rented a snappy convertible, stayed at the super-ritzy Ritz-Carlton, and spent one delightful evening eating filet mignon and watching world-class magic at The Magic Castle in Hollywood.  For my husband who has loved magic since he was a teenager, this is a dream come true!  In fact, after our first trip, he said, "We could do this trip every year for my birthday for the rest of my life and I would be happy."  And maybe we just will.


This trip is not cheap, as you might have guessed (although, we do fly free with our Rapid Rewards points from Southwest Airlines, and I pre-pay our hotel room which saves us $30/night, and Merrick's darling husband gets us the family discount on our rental car through his job), but even with those deals, this trip costs quite a few pretty little pennies.  But because we watch all of our pennies during the rest of the year, we can take this wonderful trip every October and never think twice.

What would be the point of scrimping and saving, just to end up like Ebenezer Scrooge with piles of money, but no happiness?  That's not the goal at all.  One of our beloved religious leaders,  Russell M. Nelson, once said, "Money is a library card to experience."  We remind ourselves of this often.  You only live once.  Don't squander your precious and hard-earned resources so that you can never have the experiences or things that will have made your life worth living.

This is the whole purpose of being frugal.  This is the whole idea behind this blog:  Be that Frugal Wife, so you can have that Wealthy Life.  Whatever that might mean to you.

What Would You Do With a Windfall? (Carole)

Many years ago I had a good friend.  She and I lived in the same small town and had children who were just the same ages.  We became exercise partners and often spent entire days at each other's apartments while our children played.  After a year or so, we were both on the verge of buying our first homes.  I was aware that before she was married she had been involved in two accidents and had received two different insurance settlements adding up to a whopping $50,000!  In my mind, they had it made, since we were scrimping and saving to get our own down payment together.

But one day she mentioned that they were going to have to borrow most of their down payment from her parents.  She was unbelievably embarrassed to do so, because now her parents would know that she and her husband had blown the entire amount!   I don't know how they spent all that money.  I do recall they had a ski boat and an old truck to pull it with and their kids had a lot of cool toys, but beyond that I couldn't see where it had all gone.

I've often thought of my friend during these past 25 years.  What COULD they have done with that much money that would have been smart?  In reality, the possibilities were endless, but here are three super frugal choices.

1.  Bury it in their backyard or put it in a safety deposit box.  In 5 years they would still have had their $50,000.

2.  Put it in the bank.  In the mid 1980's an average money market account earned 7.71% (these were the high interest Jimmy Carter years -- great if you had money to invest, horrible if you needed to borrow it) and at the end of five years they would have had over $73,000.

3.  Buy a house.  In the 1980's, $50,000 would have been a hefty down payment on a starter home.

What would you do if you suddenly found yourself with a large amount of money right now?

Your New Part-Time Job (Carole)

Are you getting bogged down with trying to save money on EVERYTHING??  Does it sometimes feel like a THANKLESS job?

If your answer was "yes" to either of those questions, here's an idea for you.  Try thinking of your frugal ways as a very small, part-time job.  Keep a tally sheet on the fridge, or in your smart phone of your savings.  I don't think it's worth your time to track every single penny you earn, but the general numbers of your penny pinching is nice to know.

There are a couple of methods for tracking your savings.

1.  You can go back into your own financial records a few months (or years) and see how much you USED to spend on certain items like food, eating out, gasoline, car payments, rent, and clothing.  List these numbers on your chart and see how far below them you are keeping your current spending during the month.

2.  Or you can look up on-line to see how much the average American family that is the same size as yours spends in these same categories (i.e.  average monthly food budget for a family of 4 in the the US is $600).  Track your spending compared to these averages and see how much you can save.

Any money you've saved is your "earnings" on this new part-time job you've started.   Being able to see total dollars saved in a month is a big boost to your confidence that you are making a difference for you family and your commitment to keep it up!

When you think of yourself saving a couple of hundred dollars (or more) on all your combined purchases in a month, suddenly taking the time to clip coupons or drive to Sam's Club or wash your own car begins to look like a good use of our time.  Most of the ways we save money don't really take that much time, but they do take some and that time is definitely worth the money!

Turns out Ben Franklin was right, "A penny saved is a penny earned."

I'd love to hear any numbers you'd like to share!  We're all in this together. . .

May I mention also, what TERRIFIC ideas our readers share in the comments!  If you don't read that part of the blog, you should!  We've got the smartest group of readers out there.  You inspire me every day!

Careful on Any Income (Carole)

When I was 5 years old my grandfather gave me 3 silver dollars.  I carefully put them in a little pink coin purse for safe-keeping.  I was SO proud of these and had absolutely no intention of ever spending them.   I kept them perfectly safe for about 2 weeks (you can see this coming, can't you). . . then lost them (and the pink purse) somewhere deep in the bowels of the Sears' Bargain Basement.   I must have set the purse down while trying on some shoes and, of course, forgot all about it and walked away.  When I realized that I no longer had the purse in my hand, it was too late.  Someone else had decided that they really wanted my pink purse and silver dollars too, and they were lost forever.

It's been more than 40 years since that dark day, but I still remember and regret being so forgetful and foolish!  Maybe you have a similar story from your youth.  Or possibly you squandered a decent sum of money on something foolish that brings you sorrow even today.  Yes?

Well, never fear.  There are those out in the world that make just about any money mistake you've ever made seem paltry by comparison.  As you can guess, most of these famous/infamous folks, in the following list, lost all of their money and had to file bankruptcy, due to mis-management of their huge fortunes.  The most common themes in these bankruptcies are:  drugs, iffy investments, and uncontrolled spending.

Donald Trump
Dorothy Hamill
MC Hammer
Gary Coleman
Toni Braxton
Burt Reynolds
Mickey Rooney
Sheryl Swoopes
Kim Basinger
LaToya Jackson
Zsa Zsa Gabor
Mick Fleetwood
Walt Disney
Leif Garrett
Willie Nelson
Ted Nugent
Larry King
Mike Tyson
Isaac Hayes
Tammy Wynette
Wayne Newton
Don Johnson
Margot Kidder
Meatloaf
Many, many big lottery winners

The take-home message here seems to be that you have to be careful with your money, no matter how many millions you've got.  Seems pretty obvious, but maybe not.

Saving for Both Short and Long Term Goals (Carole)

Melanie, a faithful FWWL reader, asked about saving for both Long Term and Short Term goals at the same time.  Haven't we all been there?  If you sit down and think of all the things you really should/want to save money for, it will probably be a mighty long list.  Where do you start?   Most people don't have the personal discipline to prioritize their wants and needs, so they just buy everything on credit the moment they want it and soon find themselves in deep financial trouble.

There is a better way and it works every time.

First -- Write your list.  Take a couple of days or weeks to work on it, as it often takes some time for all your past ideas to come to the surface.  Take this time to decide what you REALLY want and need.

Second -- Divide your list into both Long Term and Short Term financial goals.
Long Term Goals might include:
Emergency fund (3 - 6 months of take-home pay saved in cash -- this money is used to cover unexpected car repairs, household repairs, major medical expenses, and possible unemployment),
A down payment on a house,
A new car paid for with cash.
Some of these long term goals aren't that exciting, but they will bring stability and safety to your future financial life.  Definitely worth the effort.

Short Term Goals might include:
A new piece of furniture,
Re-carpeting a room,
A vacation.
Remember financial goals are about both wants AND needs.

Third -- Now comes the hard part.  Prioritize your Long Term Goals.  1, 2, 3. . .  Same with your Short Term Goals.

You will quickly see that you cannot possibly save toward all of these at the same time, unless you have a great deal of extra money sitting around.  My husband refers to this as trying to "ride your horse off in all directions at once."  (He's said this to me many times over the years).  If you try to spread your savings money too thinly, you will make very little progress on anything and will quickly get discouraged.

I suggest that you choose #1 from your Long Term list and #1 from your Short Term list and save for only those two.  Decide how much money each of these goals needs to bring them to fruition.  Then look to see how much money you can reasonably put toward each goal every month.  Make yourself a chart (I LOVE CHARTS!) with completion dates.  Tape the charts up somewhere you'll see them every day, so that you will keep these goals in the front of your mind.  Take it from someone who has saved for dozens and dozens of things over the years -- the first few months of saving pass very, very slowly.  But before you know it, it's been 6 months and your saved $ amounts begin to look pretty substantial.  Those big numbers are highly motivating to keep moving forward!  I've been saving up for a set of custom doors leading from my dining room to my kitchen for quite some time and just passed the $5,000 mark (these are expensive doors) and it feels GOOD.  I'm ordering them soon!

The Short Term Goal will probably max out within only a few months and you can go buy whatever fabulous thing it was you wanted to get -- with cash!  Celebrate not only by making your purchase, but also write across your chart in big red marker "SUCCESS!" and begin wallpapering your bathroom with these as you achieve each one OR fold up the chart and place it in your journal for future motivation.  Then move onto Short Term Goal #2.  You may find that some of your short term goals (possibly items #4 and below) begin to look a lot less interesting as time goes on.  You'll be glad you didn't impulsively buy these items on credit and now 18 months later you're still paying for things that aren't important to you anymore.  Delaying a purchase often causes your rational thinking to take control again or for you to  simply change your mind.  The VISA people hate that.

Your Long Term Goal may take you a few years to accomplish, but you'll get there too!  It may seem like a slow process at times, but there is absolutely no other way to achieve your long term financial goals.  This is where you see the value of keeping your monthly fixed expenses low.  The more expensive your daily life is, the harder it is to save for your future or any extra lovely things.

By following this technique you will join that rare breed of people who save money to protect their futures and pay cash when they buy something substantial!  Let me be the first to say it, "YOU are amazing!"

A Peek at the Promised Land (Carole)

A few weeks ago, Tara commented that she didn't see the point in being frugal, frugal, frugal just so she could be a millionaire when she and her husband are 80!  What is the fun in that??  Maybe some of you have had the same thoughts as you've thought about coupon-ing, garage sale-ing, eating at home. . .   Hopefully, I can give you a glimpse at where this whole Frugal Life thing is really headed.

If you have credit card debt, car loans and/or student loans, most people (when you finally get very serious about it) can pay all of it off within 3 years.  We have never carried credit card debt, but we've had a few car loans and we had over $60,000 in student loans back in the 1980's -- so about $130,000 in today's money.   We paid minimum payments for a number of years, and then we got religion.  We paid off our car in about 8 months and our student loans in about 2 years.  So we paid off all our consumer debt in right around that 3 year mark.  We weren't making tons of money and we had 3 children.  We were extremely average.  You could probably pay things off faster than we did.

Our next step was paying off our house.  We knew a couple of families our own age (early 30's) who had paid off their houses.  We were AMAZED.  Could we do that too??  How long would something like that take?  We owed about $160,000 on our house at the time.  As a little family we confronted this monumental financial goal with everything we had.  We printed out an amortization schedule (numerous pages of small type -- very scary), and taped it ALL to the back of the door where the bills were paid in our house.  Every month when we paid our regular house payment, we also added as much extra $$ as we could scrape out of our home budget and sent that along to the mortgage company too -- that extra money goes straight to the principle.   We often gathered our 3 girls into the room while we marked off  the payment amount with a highlighter pen and circled all the skipped interest payments that NEVER HAS TO BE PAID-- EVER!!  Did we starve through this time?  Live on nothing?  Never leave the house?  No, we actually took a few pretty decent vacations along the way and fed and clothed everyone.  Probably saw a few movies too.  But we stuck to our house payback schedule.  We threw everything we could at this debt and in 3+ years we received our title, free and clear, in the mail.  That is a moment never to be forgotten.

We paid that house off in 1996.  In 2003 I wanted a bigger house (we had more children, the older ones were larger, and we wanted to live in a better school district).  We found the house we wanted and went back into a $100,000 mortgage (we were able to pay for MOST of the house with cold, hard cash from the sale of our first house -- that felt very, very nice).  We paid off this new mortgage in about 2 years.  I thought I would mention here that both times we got down to the last $30,000 on our mortgage, extra money just started appearing.  I can't even explain it.  It's like the Lord knows you are serious about taking care of your family and your finances, so He blesses you beyond anything you've ever seen.  The last $30,000 was paid off about 5 months earlier than scheduled -- both times.  When you get to that point, let me know if this happens to you too!

So, when you've paid off all of your debt -- in under 5 years probably -- how does life look?  It is an amazing place to be.  Think of the amount of money you bring home every month in your paycheck.  Now think of how much it would cost you to live with no major bills.  No credit card payments, no car loans, no student loans, no house payment.  Can you even wrap your mind around that?

You still have to buy food, electricity, gasoline, car insurance, clothes, property taxes.  That's about it.  Hmm.  How much would that add up to in a month?  Not very much.  All the rest of your take home pay is YOURS.  Wow.

What will you do with it?

Saving is a big thing.  Putting as much money as you can into tax-free or tax-deferred programs is very smart.

Beyond that, you can spend it on anything you want.  You could buy a new car with cash  -- every few months!  You could buy a brand new boat in cash, also in just a few months.  You could redecorate your entire house.  Put in a backyard pool.  You can be generous beyond anything you can imagine.  Travel to Europe, Asia, Africa -- every few months.  All for cash.

You will finally be free.  All the hard work you (or your spouse) puts in to bring home money, will finally benefit YOU.  All in about 5 years.

Enjoy.

Why Live Frugally Now? Reason #7 (Janssen)

I am happy to live frugally so that when I do spend money, I can do so without feeling guilty. I most certainly do not want my frugal life to mean I don't do anything fun or buy myself something that I really want. I want it to mean that when there is something I want to do or buy, I can afford it because I haven't piddled away all my money on meaningless expenses.

Next month, I have a week off of school for spring break. To take advantage of that time off, Bart and I will be going to Mexico for a week. Is travel a luxury? Of course it is. If we had absolutely no extra money at all, would we travel? No. I would rather eat than go on vacation.

But we do have some extra money. We could have spent it on eating out more often or having cable or a bigger apartment or a nicer car or a better wardrobe or any of a thousand possible things. But we certainly couldn't afford to do all those things. Instead, we prioritize what matters to us (in this case, a last big vacation before our baby is born later this summer), and budget our money so that we can afford to do those things.

Before Christmas, we bought our plane tickets to Mexico. Last month, we paid the entirety of our rental car and hotel (which includes food) costs for the trip. We know we can afford to take this vacation. We've already paid for 99% of the trip (I'm assuming we'll have a few incidental costs while we're there).

We won't have to come home and worry that we won't be able to pay the credit card bill. I don't have to worry that maybe we can't really afford this trip or that we'll have to eat raman noodles for a month afterwards.

For me, that is frugality paying off in a very tangible way. I can enjoy the things I really want to in life because I'm living frugally enough in other areas to do so.

Think how much more pleasant Christmas would be if you didn't have to stress about the credit card bill that was going to show up in January. Think how much more enjoyable your new car would be if you didn't have to feel guilty about the financial burden it was every time you turned over the engine.

Being frugal means you can afford to do the things that matter to you, whether that's owning a boat or taking nice vacations or living in a better neighborhood or sending your children to private school or having 4355 channels or having an iPhone. It means you don't have to stress and worry that you shouldn't be spending the money there or that you'll have to pay in other major, uncomfortable ways to make that happen. It means you can enjoy it when you do spend money, because you aren't spending money in every category, even categories that bring you little satisfaction.

And since I don't like guilt or stress (and certainly not a combination of the two), that's a pretty good reason to live frugally in my book.

Why Live Frugally Now? Reason #6 (Janssen)

Living frugally helps me identify what I view as worth spending money on.

Most people just simply do not make enough money to spend money on everything they could possibly want. Even multi-millionaires can't buy everything they see - there are just too many products with too high of costs to be able to do so. Living frugally helps you decide where you can, without great pain, cut back. As you assign money to different categories in your budget, you can see what categories you might be able to tighten up or erase altogether.

For us, eating out is something that doesn't bring us a tremendous amount of satisfaction - I like to cook, Bart doesn't mind doing the dishes, and the cost of eating out is not worth the experience on a regular basis.

Other things, that some people might be absolutely happy to spend little or no money on, are more of a priority for me. I am not willing to sleep on a mattress on the floor or keep my clothing in a laundry basket. Having decent looking, functional furniture is important to me, enough so that I'm willing to prioritize my money in that category. Some of you might pick a weekly dinner out a thousand times before a piece of furniture. Some of you might be willing to keep both of those categories incredibly low in order to spend money in a third category of your choice.


Sometimes, of course, there is some trial and error involved with identifying what you really value. A few years ago, Bart really wanted a new TV. There was a pretty good discount associated with his job for an LCD flat screen television and suddenly he really wanted to purchase it. Because we could afford it, we went ahead and bought it, replacing the basic TV Bart had received for free from his aunt and uncle when they no longer needed it.

We gave the old TV to some friends of ours and ended up watching many movies on it at their house. After a few viewings, Bart told me, "Our new TV really doesn't make any difference to me. I don't enjoy a movie any more on our TV than I do on our old TV." We both realized that, for us, the TV had not been something worth the money.

Living frugally - committing to watching where my money goes - helps me spend my money on things that really bring me satisfaction and also helps me avoid spending on things that mean little or nothing to me.

Why Live Frugally Now? Reason #5 (Janssen)

I am willing to live frugally now because I have learned to love the feeling of saving money.

This might sound silly to some of you - it's like saying "I have really learned to love taking out the trash." You might do it, sure. You might think you ought to do it. But to enjoy it? To look forward to it? That's just bizarre!

The rule in my house growing up was that we had to save at least 50% of the money we earned. Each of us children had a bank account and every few weeks, my parents would help us fill out deposit slips and we would take our money to the bank. By the time I went off to college, I had a pretty sizeable sum sitting there untouched.

The larger it grew, the less willing I was to spend it on something frivilous. I remember that my college boyfriend once asked me, "Why don't you BUY something with all that money?" It was pretty clear to me that he had no idea how much satisfaction you could get from saving money - far more than I might get from buying a car or some other high-priced item.

When Bart and I got married, he had not had much practice in saving money, but once we moved to Texas and were both working full-time, we were saving quite a lot of money each month. After six months or so, he said to me, "I never had any idea that saving could be even more satisfying than spending money. I get more pleasure from putting that money in the bank than I would from buying a TV projector or a fancy new bike."

If you don't live frugally enough to save at least some money, you'll never get to experience that rush that comes from saving. You'll miss the chance to see that saving can be its own reward.

Why Live Frugally Now? Reason #3 (Janssen)

I am willing to live frugally now so that my money can become an additional income earner. I think this one reason is the single most important way that your frugality can really pay off in a tangible and very major way.

If I spend every dime I make, the only money coming into my household is the money that comes via my paycheck. If, instead, I can resist spending $50 or $100 or whatever amount of money per month and put that money in a Roth IRA or in mutual funds, that money now becomes an additional income earner. (As my dad likes to joke, "I say to my money 'Get off the couch and go get a job!'"). That money can earn interest, day in and day out, while you exert no additional effort. Who doesn't like the idea of your money working for you?

And, of course, the earlier you can get your finances under control enough to have money to invest, the longer that money will work for you. Who wouldn't rather have your dollars working hard for 10 years instead of 5 or 30 years instead of 20?

I'm willing to guess most of us hate interest when it's us paying it (22% for a burger you paid for on your credit card, anyone?), but when interest is working in my favor, well, I love the fact that it doesn't take weekends or holidays off and that it never gets sick or needs a personal day.

If you can discipline yourself enough to live frugally today, you can reap the rewards of it for the rest of your life and in a really substantial way (we're talking hundreds of thousands, if not millions of dollars, that you did not have to earn yourself because your money, which you already earned, is now working for you).

It's worth asking yourself how much suffering $25 or $50 or $100 out of your monthly budget would cause you. Would it be worth it?

Why Live Frugally Now? Reason #2 (Janssen)

The second reason I think it is worth it to live frugally now is so I can stay out of debt.


Debt is a pervasive part of our society's way of living, but I am determined to avoid it. After all, if you take on debt to pay for an item, you have to pay interest for it. Since I can hardly stomach the idea of paying full price for an item, you can imagine how much I like paying full price AND interest on an item (hint: not even a little bit).

Having debt also means you are obligated to pay an additional monthly bill, which means less of your income is going to you and more of your income is going to pay for something that you bought months or years ago! You're paying for a meal that's long since been eaten or for a shirt that isn't new and thrilling anymore (and might already be stained or snagged or shrunk). Your expenses are going up instead of down and the money you could have spent on something else, something more worthwhile and longlasting, is now tied up in a monthly payment.

As several people mentioned in the comments here, it is very easy to get into debt (how many credit card offers do you get in the mail every month?), and very difficult to get out of. Swiping that card for a fun vacation or taking a line of store credit to pay for a new couch takes very little effort, but you'll end up paying far more than the ticket price of those items, and you'll be forced to pay on them for years afterwards.

And if you are living on the very edge of your means, instead of with some degree of frugality, debt may be your only option when your water heater explodes or when you have to pay for funeral expenses unexpectedly. And then you're paying interest for the most unpleasant things you can imagine, as if paying for them the first time wasn't bad enough.

I am more than willing to live frugally so that I don't pay extra money for items, vacations, or furniture, so that my income isn't all obligated to a credit card company (I want my income to be my money, not Visa's or Mastercard's or American Express'), and so that I don't have to spend huge amounts of effort trying to get back out from under that debt and own my own money again.

Why Live Frugally Now? Reason #1 (Janssen)

I worry about money. I imagine there are some people who absolutely do not worry about money at all, ever, no matter how little they're making or how deeply in debt they are, but I cannot imagine such a life. I need my financial life to be in order or I spend a lot of time worrying about it and feeling uneasy.

For me, the #1 reason to live frugally now is the peace of mind it brings. 

If you are not saving any money, if you're living on virtually every cent of your income, you are only one unexpected expense away from disaster. If your car suddenly dies or a child gets sick or you/your spouse gets laid off or your employer gives out pay cuts, or you suddenly owe taxes when you expected a tax return or your roof starts leaking, and you don't have money tucked away, you're in trouble.

If any of those things (or the millions of other things that can go wrong) happen and you have no way at all to pay for them, you're left to suffer the consequences.

When our house's air conditioner had to be completely replaced last summer (to the tune of several thousand dollars), it was unpleasant, of course; I could think of a hundred things I would have rather spent that money on (every last one of them more fun than an air conditioner). But, thankfully, it didn't break the bank for us. We had savings to pay for it in cash and not think about it again. We didn't have to sell our car. We didn't have to put it on our credit card at 100000% interest. We didn't have to live on ramen noodles for six months. We didn't have to ask either of our parents to loan us money. It was inconvenient, but it was not a tragedy, and it didn't put us in a tight situation.

Living within your means, enough that you can have an emergency fund, is the only thing that acts as a buffer between you and unexpected, unwanted financial tragedy. If you do not have savings or an emergency fund to pull you through those events, you'll have to take on debt to cover the expense.

And avoiding debt is the second biggest reason I am willing to live frugally now. Stay tuned!

Why Live Frugally Now? Part 1 (Janssen)

On Friday, when my mom wrote about living on less, someone commented, "My husband and I have a hard time understanding the benefit of suffering now to be wealthy when we are 80. What is the use? I need valid reasons."

I think this is a terrific question; after all, it is pretty difficult to be frugal for the sake of being frugal. There has to be a reason to make the effort and some potential payoff that makes the present lifestyle worth it.

I'm all with her; I don't want to wait until I'm 80 to be wealthy, either! I hope that within 15 years Bart and I can own a home outright, have all our vehicles paid for, have a fully-funded emergency fund, a very full 401(k), and plenty of savings.


And, just as importantly, I don't want to suffer now. Like many of you (dare I say most of you), suffering doesn't really appeal to me. Therefore, I want my frugal lifestyle to not come at the cost of any happiness in the present. I don't want to take no vacations for the next twenty years. I don't want to wear only clothing from Goodwill. I don't want to never go out to dinner. I don't want to live in a tent in my parents' backyard (and I'm fairly sure they don't want me there either).

So then, what is the use? I'll give several reasons, over the course of several posts, why I live frugally, why I think some sacrifice now is going to be worth it later, and how frugality doesn't have to equal suffering.