Tag Archives: frugal

Frugal Hacks I Avoid

Photo Credit, David Niblack, Imagebase.net

Frugality has been ingrained in my head (immigrant parents). When I told my co-workers that I wasn’t getting an extravagant gift for my wife for Christmas, I could see the pity in their eyes for my poor wife. Of course, they don’t realize that my wife can sometimes be the more frugal one (link) in the relationship! I still hold onto my frugal card but there are some frugal hacks that others encourage which I just can’t be bothered with. Maybe it’s because I’ve grown soft now that my income has grown, but there are some things I value more than a small savings.

Costco/Wholesale Clubs

My wife and I have been members of BJ’s wholesale club because they often send free membership invitations for 60 days. Once, I was also roped into joining for a year with co-workers, sharing the membership costs. Even with the free and discounted membership, I just do not like wholesale clubs. The main reason is that I hate lines. Every time we’ve gone to BJ’s or Costco, the lines stretch beyond what my eyes can see. We went one time on a random Thursday evening and there was a lot people there! Another reason I don’t see a need to shop there is that we have a small apartment (link) and while we have a growing family, the two little ones don’t eat that much. This might change as they become teenaged boys. I don’t want to shop in bulk as there is no space to put all that stuff. Plus, we have a bad tendency to let things go bad because we don’t use it. Finally, I don’t find the prices all that compelling. Prices are okay but not worth my sanity.
***After writing this post, but before publishing, my wife had a deal through her credit card to get a free Costco membership for a year. As it was free, I relented and agreed to sign up. Last Sunday morning, we attempted to get their early in the morning when it opened at 10:00. We got there at 10:20 and it was already a madhouse. I know it’s the weekend before Thanksgiving but it was as if it was Black Friday.***

DIY

Sure, doing it yourself saves some money and there are some things I’ll try. But that are also plenty of things I’ll pass on. Yes, I know YouTube is available to explain how to do just about anything, but for me, some things are just best left up to the pros. And sometimes, I’m just too lazy. There, I said it! I will pay for the convenience of having someone else do it for me. I know some frugal people out there who cut their own hair or their spouse’s hair. Nope, not me. I don’t want to take the chance screwing up my wife’s hair cut. And I’m not sure I want to have a horrible hair cut either. I mean, it only costs about $8 to $10 plus a tip. Oil Change? Even if I had a garage, which I don’t, I’d rather not crawl under my car to change the oil when I can get it done in a half an hour for like $30. And for DIY, fixing things around the house, I’ll admit I’m not that handy.

Stocking up

See above. Sure if toilet paper is on sale and it’s a great deal, maybe I’ll buy a few packages. However, I know people who have their basements are garages stocked up with stuff. I guess they have more space so it’s worth it for them. But even then, it might be dangerous for us because like I mentioned above…we often forget what we have.

Couponing

If there is a coupon staring right in my face and it is a product I use, I will cut it out. But I’m not going to great lengths searching out coupons. (I will do a search online for a coupon whenever I buy something online though). Generally coupons for products are for name brand items and I often buy generic. Another thing is that coupons are often for products that I don’t really want or need. Having a coupon might actually encourage me to buy something that I might not have bought otherwise.

No Air Conditioning/heat

Growing up, the only air conditioner in the house was in my parent’s master bedroom. When it got really hot and humid, it would be turned on in the evenings when we went to sleep. Our family of four would be consolidated into the room, with 2 mattresses on the floor for the kids, so that we could enjoy this luxury. During the daytime, my mom suggested that I go to the library to enjoy the air conditioning free of charge. Actually, that was a pretty good idea. I got free AC and I got to read! Nowadays, I turn on the air conditioning pretty often in the summertime, although it’s usually set at 75 to 77 degrees. I hate being hot and am very unproductive in the heat. I’ll gladly pay the higher electric bill for the comfort and increased productivity.

What frugal hacks do you avoid taking part in?

Sports, Booze, and Guns

There are some things in American Culture that we are unwilling to give up no matter the costs. Even the frugal crowd amongst us seem to have a difficult giving up certain expenses. The big three I’ve noticed are sports, alcohol and guns.

credit: freedigitalphotos.net by arkorn

Sports

When it comes cutting expenses, many people start with cutting the cord because of the high cost of cable. However, many refuse to cut the cord because they can’t give up sports. Awhile back, I read about a caller to the Dave Ramsey show who had no emergency fund yet wanted “permission” to spend $1500 on football tickets. Dave said, “it’s a game; you don’t put that ahead of your family’s financial foundation!” I have a co-worker whose beloved baseball team made it to the playoffs and he shelled out a few hundred dollars for tickets as well as team paraphernalia. He often complained about money being tight but magically came up with money for these expenses.

I’m in a Facebook group with members pursuing FIRE, who often post about frugal hacks, yet when a member posted about attending a playoff game out-of-state to support his team, many agreed that experiences are worth the costs. Obviously, we each individually have different value system and I’m not saying that this expense is ridiculous, but it does go to show how much we LOVE our sports.

I used to be a sports fanatic so I can understand the love that fans have for their teams. When I was a kid, I would listen to the Knicks basketball game on the radio because I didn’t have cable. I would read the box scores or my favorite sports teams. No, actually I read all the box scores and could probably recite every player from every team. I didn’t have any money to spend on sports at the time, and now that I do, the costs of watching and attending games is just not worth it to me. Also, with age, I’ve found other things that are higher on my priority list.

Check out this blog post on Freedom is Groovy: 10 Reasons Not to Invest Time and Money into Professional Sports. (While Mr. Groovy says professional sports, I would include collegiate sports in there as well. The NCAA in my opinion is a corrupt organization and I just can’t support them. Plus, my alma mater isn’t all that great anyway so it makes not following college sports easy!)

Booze

Ah yes, booze…our culture seems to revolve around alcohol. I’m sure you’re saying that you don’t really drink all that much. You’re only a social drinker right? What do you do after a long stressful day…relax with a glass of wine. After work…let’s go to happy hour. Go to a sporting event…tailgate and drink hours before the game and then continue drinking during the game, and probably afterwards as well. Wedding…it better be open bar right? Watching a game at home…grab a cold beer from the fridge. Going to a kid’s birthday party…there better be alcohol because how else can I deal with screaming kids for 2 hours?! Watching the political debate on T.V…let’s drink every time a candidate says “fake news!” Going to a barbecue…let’s play ping pong, no I mean beer pong! Talking about personal finance on a podcast…”what are you drinking?” It’s January! Let’s do a Dry January Challenge since apparently we drink too much and it’s difficult to go without drinking, even for one month!

In a recent Twitter thread, I read how one person was faced with an hour wait at a liquor store prior to the holidays, but said that it was well worth the wait because how can you possibly survive dealing with family without alcohol! Wow, if you despise certain family members so much, I’m not sure getting drunk at a holiday get together will help. It’s also odd when I read some personal finance bloggers chastise others for spending on frivolous or materialistic items but will give a pass to alcohol, as if it were a necessity. Others will acknowledge that it’s a luxury item, but one that brings them joy so they will not and cannot give it up. Once again, nothing wrong with spending on an item that brings you joy. Just showing the powerful grasp that alcohol has on some of us.

No, I’m not a teetotaling Puritan who never drinks and is against others drinking. Sure, I’ll have a drink when I’m hanging out with a bunch of friends. It loosens you up, you laugh more and feel like you’re having more fun. Just as with sports, I indulged in alcohol much more in my younger days. My priorities have changed. Honestly, I never really liked the taste of alcohol. I liked it more so for how it made me feel and act. I generally drank when I went out to a bar or club. No, I don’t want a drink at a kids birthday party. I’m not sure how much alcohol one needs to dull the noise of screaming kids running around, but I’d prefer to be sober at that event. Also, call me crazy, but I actually get some enjoyment seeing my kid have a blast even though I might prefer some other form of entertainment.

David Cain who blogs at Raptitude had two great post relating to alcohol and him quitting it for a few months. He wrote a post, Goodbye Booze, For Now and what he learned from not drinking for four months. Raptitude is a great blog and David is an excellent writer, so he probably expresses thoughts about this topic clearer than me.

Guns

The personal finance reader demographic might not include a lot of gun owners. Well honestly, I don’t really know so I’m just assuming. However, it’s undeniable that guns are an item which many in this country LOVE and cannot live without. They will argue that they need guns for protection or for hunting. I’m not talking about the person with a hunting rifle or the person with a handgun at home for protection. I’m mainly talking about those who like to play G.I Joe, wearing military fatigues and buy assault rifles. I don’t want to get into a political debate so I’m not going to go much further. However, I can’t help but point out that many who point to the second amendment seem to think it’s a Biblical commandment instead. Also, it’s an amendment which means it can be changed and is not set it stone. There was an amendment prohibiting alcohol at one point…we got rid of that one. No surprise! One final point, the first part of the second amendment actually says “A well regulated Militia, being necessary to the security of a free State,” but many people don’t recite that part when they assert that the U.S Constitution prohibits any limitation on their gun ownership. Also, there are limitations on other rights which are included in the Bill of Rights. Oh, sorry, that was two final points!

Jeff Jeffries, an Australian comedian has a hilarious comedy routine which tears into the gun culture in the United States and is both funny and makes great points. Check it out. (Note: Jeffries uses explicit language).

As many of us who have gotten out of the consumption hamster wheel, we feel freed from spending mindlessly while others who continue on that hamster wheel wonder why we live such a life of deprivation. We should always be questioning whether a product or service is truly something you value rather than accepting that that’s what everybody does or that you’ve always done it.

What things could you never give up?

New York Times: 7 Essential Money Questions Sure to Start a Conversation

Jonathan, the blogger from My Money Blog posted an article from the New York Times entitled 7 Essential Money Questions Sure to Start a Conversation and answered the questions on his blog. Ron Lieber, who wrote that New York Times article said that he found these seven queries tended “to stop people cold and get them to open up about whatever money they have and the emotions that wrap themselves around their personal finances.” I found the questions intriguing and wanted to answer them myself.

What lessons about money did you learn from your parents?

Lieber uses this question to determine if there is self-imposed guilt and whether your parents were role models. Some of the questions within that question he asks are:

Are you determined to maintain a certain social class or climb a rung up the ladder because you’ll feel less successful in your parents’ eyes if you don’t?

Are you unhappy in a white-collar career because your parents worked so hard to send you to college and you can’t bring yourself to quit?

If your children don’t go to a school as good as yours was, do you worry that you’re failing them somehow?

What specifically did your parents teach you that has helped? And how, in their silence about some aspects of money, could they have failed you?

As a child of immigrant parents, I do feel like I need to climb a rung up the ladder because I had so many more advantages. Like many immigrant parents, they sacrifice so that their children could have a better life. So, yes, there is pressure to advance to a higher social class. I went to a state university so I wouldn’t feel that I’m failing my child if they went to a school which wasn’t as “good as” mine, whatever that means. I don’t think the prestige of the school necessarily matters. As for what my parents taught me about money: frugality, saving, and investing. Growing up, my parents were always frugal with their money and those values were ingrained in my head. My parents opened up a savings account for me and encouraged me to put some of my birthday and Christmas money into it. Luckily, I was a good little saver even as a youngster. I would look at the passbook, see the balance increase and the interest accumulate (back in the day when interest rates were much higher) and get excited about saving. My father also opened a mutual fund for me and that’s how I got interested in investing in the stock market. It didn’t hurt that this was in the 90’s and the stock market returns were excellent. I would learn some tough lessons when the tech bubble burst.

What does the word “money” conjure up for you?

Lieber said that one financial planner told him a client answered, “food.” The client’s mother was an alcoholic and their food stamps would run out before the month was over. This client did not spend money even though she could afford it.

Growing up, my parents were always frugal. I thought I was deprived because we didn’t have cable television or cool sneakers like the other kids. So when I was younger, the word “money” meant the ability to buy things. Fortunately, I was still frugal, but I always thought that once I have saved enough money or made a certain income, I could splurge. I would have a luxury vehicle, nice house, and take exotic vacations. Nowadays, money to me means freedom. I want to buy Time with my money I want to buy my freedom from having to work for money. That is much more important to me.

How many children would you like to have when you retire?

The article says that one financial planner encouraged parents “to more carefully consider their future selves, the ones who will want to improve the odds of being surrounded by grandchildren — and having adult children who may be able to help in their old age.”

This is a bit of an odd question compared to the others. I wouldn’t expect my adult children to help me out financially in my old age, but yes, it would be nice to have them around. I’d also love to be surrounded by grandchildren. Currently, we have a 3 year old and a newborn, so that’s two. Will we go for number three?? I don’t know. We’ll have to think about that in the future. It’s a little hard to make a rational life-changing decision when you’re still sleep deprived!

How do you think your children feel about that?

Lieber says that a financial planner told him that she asks her clients this question, “knowing full well that parental anxiety has almost certainly rubbed off on the children as well,” and that by invoking “the little people, she finds, often gets adults to be more honest and vulnerable.”

I will take the question to mean, how will my children feel about our spending habits. My kids are still young but I think this will be a tough struggle. It is tough when you live in such a materialistic world where everyone wants to keep up with the Joneses. How do I explain to my kids why they don’t have the latest video games and the flashiest clothes? How do I teach them to value money and to not be materialistic?

Tell me about your financial situation when you first met.

Lieber says that this question is used by a financial planner when he senses tension between a couple relating to financial issues.

When I first met my wife, I was going to law school part-time in the evenings and working full-time during the day at a government job. I was already contributing to my retirement accounts, though I wish I had contributed more. I lived below my means and had some savings, but was in the midst of accumulating a lot of student loan debt. My wife had graduated college and started working for about a year. Neither of us made a lot of money and were both relatively frugal. I guess that’s one reason we hit it off. Just like we do now, we lived below our means.

What are the most important things in your life?

How would you live your life differently if you were completely secure financially? What would you change if you knew you only had five to 10 years left to live? And what would you regret if you knew you would die tomorrow?

“[I]f you get to the why and what motivates someone, everything else just fills in from there,” says Kevin Reardon, a financial planner. That means using the answer and working backward to set financial goals around these matters of great importance.

Family and friends are most important to me. I’m not sure how the writer defines “completely secure financially.” If he means financially independent, then I’d probably stop working, spend more time with family and friends, travel, volunteer, and hopefully find my passion! I would regret the time I didn’t spend with my close ones and the time I didn’t spend pursuing my interests. I would regret being too fearful to take the leap and do things outside of my comfort zone.

What does the prospect of retirement look like to you?

Rick Kahler, another financial planner said, “Retirement means doing what I want, when I want, with whom I want. Once we figure that out, a successful retirement is just a matter of filling in the activity calendar and inviting others along.”

I’m with Rick! I would love the freedom to do what I want, when I want, with whom I want!

What are your answers to some of these questions? Any questions in particular that you found intriguing?

Successfully Launch Into Adulthood

A few of my co-workers have mentioned that they are postponing their retirements so they can “help out” their adult children or soon to be adult children. I think it’s great when a parent can lend a helping hand to their children as they transition to being an adult, although teaching them financial skills is often better than just giving them a handout. I also have no problems with a child living at home with their parents as they settle into adulthood, as long as they use that time to improve their financial circumstances by saving and investing their money. But by taking care of every aspect of a child’s financial life, he or she will never learn these important life skills. Here are a few things that one needs to learn financially as they become adults:

Credit Cards

Many people entering adulthood already have credit card debt along with student loan debt. You may think that this is the norm, and it may well be, but don’t treat it as such. Treat it as an emergency! Having high interest credit card debt will set you back financially. If you have credit card debt which was not accrued paying for life essentials like food and shelter or getting to and from work, immediately cease spending on non-essentials until you have paid off that debt. Contrary to what some may say, credit cards are not inherently evil. A credit card is only a tool. If you pay your balance off every month and having a card does not tempt you to spend more than you usually would, it can be a great tool. (If you cannot handle the responsibility of a credit card then I’d definitely recommend using a debit card/cash only) Many smart users of credit cards earn lots of points which can be redeemed for travel or cash.

Credit Score

Another important aspect of having a credit card and using it responsibly is that it builds your credit score. Why is a great credit score important? You want to buy a house? You get the best interest rates with a high credit score. Same goes for financing a car. You have student loan debt like many this generation do? You better have an excellent credit score if you want to refinance your student loan to a lower rate. You will only qualify for credit cards with the best bonuses if you have a high credit score. Many employers will also check a prospective employee’s credit score.

Budget or Anti-Budget

So you’re an adult now and you’ve got bills to pay. You’ve got to make sure that you have enough money to cover your expenses. If your expenses exceed your income, then you’ve got a problem. Making a budget probably isn’t much fun and many people scoff at it. However, with many online budgeting sites, like Personal Capitaland Mint, it makes budgeting easy to do. No need to break out your excel sheets and list out all your expenses. I will be honest though, I don’t really budget, but instead I have an “anti-budget,” which is a term coined by Paula Pant who blogs at Afford Anything. I list out my expenses and figure out how much I should be able to save. I make sure I save that amount each month and don’t stress about my spending. Whether you decide to budget or use an “anti-budget” will be determined by your personality.

Live below your means

I remember many of my friends who graduated from college and immediately went on a spending spree. If you have a full-time steady job, you probably have more discretionary income than at any point in your life and it’s tempting to inflate your lifestyle. However, it’s in your best interest to continue living like a college student. Buying a new car, expensive outfits or even buying a house does not make you an adult! Like I said above, if your expenses exceed your income, you’ve got a problem. You’re young and saving for the future may be the furthest thing from your mind, but this is the best time to start saving and investing. The magic of compounding works if you give it time, which is why it is important to start early.

Investing

I was talking to a friend, who is in her 30’s about investing, and she said that her mom handles that for her! And, no, her mother is not an investment advisor. Maybe you don’t have an interest in investing, but it’s in your best interest to learn about it. No one will care more about your money than you do, plus it is something that is important for your future financial health, so you might as well learn about it now. How do you expect to save enough to retire if you don’t have a basic understanding of investing? Living below your means and saving is important, but it is not enough! You want to make your money work for you. Stuffing it underneath your mattress won’t earn you anything. Neither will putting all of it in a savings account earning less than 1%. Spend a few hours learning about investing by reading the Bogleheads website or JL Collins’ stock investing series.

Quick Tip: When it comes to paying bills and investing/saving, make it automatic. It makes life easier. When it comes to bills, you won’t worry about late payments. As to investing and saving, it’s a great way to pay yourself first so you avoid the temptation of spending it. It is also a great way to get into the habit of saving and investing. However, make sure to review your statements to make sure everything is correct.

Cooking

Wait, I thought we were only talking about finances? Cooking is an important life skill, and it can also save you a lot of money. Cooking your own food at home is not only more affordable, but it is healthier. Cooking is not rocket science, if I can do it, pretty much anyone can too.

Learn skills

Just because you’re out of college, doesn’t mean you should stop learning. Learning life skills is important, but so is learning skills that will help you advance in your career. Learning new skills is very convenient as you can do it online using Coursera or Udemy. For certain courses, you may be able to receive a certification as well.

Side Hustle

You’re already working a full-time job, who wants another job? Maybe you want to earn some extra cash to build up your savings or pay off debt. Employees are expendable these days so it’s a good idea to have another source of income. Also, having a side hustle might feed your entrepreneurial spirit or passion and possibly replace your full-time income. Having a side job is a lot more flexible nowadays and often will not require you to take a job with set hours. Here’s a list from The College Investor of 50 ways to make a side income. You can also check out a few more ideas from David Carlson who runs the blog Young Adult Money as well as his book Hustle Away Debt: Eliminate Your Debt by Making More Money.

What other financial skills should young adults learn as they transition into adulthood?

In Defense of the Latte Factor

The first personal finance book I read after graduating college was The Automatic Millionaire by David Bach. It was an eye-opening book and I loved the idea that you could “automatically” become a millionaire by paying yourself first and investing in a diverse portfolio of low-cost index funds. Another concept that was popularized by Bach and his book was the Latte Factor. He recounted a story of how he used to frivolously spend money on a latte everyday and that if he had saved that money instead and invested it, he would have a fortune. Check out the latte factor calculator and see how much money investing small savings can amount to.

Lately, I have seen a lot of criticism of the latte factor. Some argue about Bach’s math and how he calculates the amount you would amass by cutting out the daily latte. “Oh a latte doesn’t cost $5!” “The rate of return he used is too high!” And many argue that they don’t want to cut out their daily latte, that it wouldn’t make much difference, and that they’d be better off focusing on big expenses, not a $5 daily latte expense. One personal finance guru, who I respect, even said that he’d love to “catch” those who tout the latte factor at a Starbucks. I can just picture him seeing Bach or another latte factor supporter at the Starbucks holding a Venti Iced Vanilla Latte and yell, “I caught you red-handed! I knew you’d break down and buy a latte you HYPOCRITE!”

Critics of the Latte Factor seem to be taking the latte factor too literally. Nobody says that you can’t indulge in a latte once in a while. The latte factor is more of a metaphor to demonstrate that if we spend money on little expenses constantly, they add up. On the other hand, if we saved that money and invested it, the magic of compounding over years will give you a nice pile of cash. Many of the critics also argue that we should focus our energies on bigger expenses like housing and transportation, which are a much bigger proportion of our monthly expenses rather than waste time bothering with a $5 indulgence. While I agree that we should make sure that those expenses are reasonable, how often do you really have to spend energy on them. How often do you buy or rent a house? How often do you purchase a new car? Making sure you don’t buy more house than you need or a car that you can’t afford is important but it doesn’t mean you won’t have energy to focus on smaller expenses. You can do both!

The Latte Factor concept is more of a mindset where you are more conscious and intentional with your spending rather than buying latte, going out for lunch, getting a drink after work because, “hey it’s only a couple bucks, it’s okay” mindset. It’s not about deprivation and sacrifice. It’s about conscious and intentional spending. If you change your mindset and try brown bagging your lunch a few times or brewing your own coffee at home rather than buying it outside, you might find that this alternative option works just fine. It doesn’t mean that you are required to ONLY drink home-brewed coffee and that if you step into a Starbucks, you should be called a fraud by a personal finance blogger.

Small savings do really add up, but they won’t if you just leave it in your checking account. Most likely the money in your checking account will start to burn a hole in your pocket and there will be temptation to spend the money you saved by foregoing small expenses. Additionally, that money is not earning much if any interest. You need to invest it So start tracking your expenses and make a budget, which may include money for indulgences like lattes. Find what small indulgences that you can reduce or get rid of and make sure to have the excess money automatically sent to your investment accounts. I recommend using Personal Capital (affiliate link) to help with tracking your expenses and net worth.

Does cutting small expenses really make a difference? What small indulgence have you reduced or eliminated?

Living Rich Cheaply

Have your cake and eat it too.