Frugal Living

In the past couple years, my mindset regarding money and finances has changed dramatically. It used to be that I bought almost anything I wanted and I had the bills to prove it! I got my first credit card when I was 18, and I remember working in the mall and spending almost my entire paycheck on clothes. Then I headed off to college and charged away. I didn’t work while in school until my junior year, so I’d built up some pretty heavy duty balances by that point. Then off to grad school (more debt and more student loans!). When all was said and done, I graduated school with about $80,000 in student loans and around $13,000 in credit card bills. Yikes!! I also had a car payment of $265 a month (around $14,000 total). When those student loan repayments kicked in, money was very, very tight. I remember charging groceries and frequently going up to the limit on my credit cards – wham! Overlimit fee! I had no wiggle room in my budget and in fact, I didn’t even have enough money coming in every month to pay all my bills. I relied on doing supplemental work (that I hated!) to make ends meet. It was a horrible feeling and I vowed to never feel that way again.

I started reading everything I could get my hands on about finances, budgets and saving money. I discovered the Women in Red Message Boards and have learned so much valuable information from the posters there. I watched Big Spender and the Suze Orman Show. Three years later, I’m nowhere near to being out of debt, but I have a much better handle on everything and have firm goals set. My student loans haven’t really gone down at all because I’ve been focusing my attention on paying off credit cards and my car. I’m now down to about $3000 on a credit card (at 2.9 %) and my car has just about the same to go (also at 2.9 %). I’m expecting an inheritance check that will wipe out about 75% of the remaining credit card balance and then I plan to throw every extra penny I have towards that. Then the goal is to make extra payments towards my car and pay that off early. Then, student loans – watch out!

With that in mind, here are some of my tips/ideas for frugal living:
· Emergency funds and savings are crucial! Without having a cushion in the bank, I’d have to charge auto repairs, unexpected bills, etc. to my credit cards and pay back with interest. I keep $1000 in an emergency fund and $500 for short term expenses that pop up.
· It’s also so important to save for the future – whatever your goals may be. If you never save any money, you’ll always be in the same position you are in now.
· Before I buy something, I try to consider whether or not I really need it and can use it – or is this something that’s just going to take up space and get dusty? In a year, am I going to love this item as much as I do now? Can I make do with something else I already have? I sometimes look around and realize just how much “stuff” I have. There are a lot of things I definitely don’t need. Separating needs from wants has gone a long way towards saving me money. The same mindset goes for replacing things that have broken. My DVD player broke a couple months ago and I held off buying a new one until I had earned enough reward points on my credit card to get it for free.
· I charge all my gas and auto repairs to my Discover card. I also pay certain monthly bills with my card to get even more rewards. *Note – this only works if you pay off the credit card in full every month! They give me back 5% for anything gas/auto related and 2% for everything else. This really adds up for me and I’ve used the rewards to get gift certificates to CVS, Target and Applebees. And when you get a bonus on certain gift cards – CVS $40 gift card becomes $45.
· No more mindless spending! I work hard for my money and I definitely don’t want to spend it on things I don’t want, don’t need or worse, don’t like. Try writing down every penny you spend in a day/week and see where your money really goes.
· The flipside of this is smart spending, aka hounding – my favorite pastime! It used to be that I’d run out of something, run out to a store and buy it at full price because I “needed” it. Now I have a stockpile of paper towels, shampoo, conditioner, lotion, soap, toothbrushes, toothpaste, mouthwash, makeup, vitamins, razors, shaving cream, cat food, soda, pasta, crackers, chips, etc. When I need something, I “shop” in my stockpile instead of running to the store. This saves time, gas and money, since when I bought the item – I either: got a great price, paid nothing or maybe even made a profit.
· Look for discounts everywhere! Use restaurant coupons, see movies in the afternoon when they’re cheaper, look for promotions, etc. I can’t stand to pay full price if I don’t have to.
· Take a hard look at your monthly budget. Can you cut down cable services you don’t watch? Phone services you don’t use? Downgrade to a slower but still great internet speed? I think it’s easy to get into the mindset that phone/cable/internet monthly bills are fixed and can’t be changed. Are you paying for services you no longer use? Cut, cut, cut! And then transfer the extra money to debt repayment or savings.