A person who lives in wretched circumstances in order to save and hoard money.
Synonyms: skinflint, tightwad, pinchpenny.
At a restaurant a frugal person skips the expensive cocktail or appetizer. A cheap person stiffs the waitress on her tip.
A frugal person buys quality running shoes on sale. A cheap person buys cheap knock-offs and ruins their feet.
I readily admit that I struggle with this. I am hyper-anxious to save every dollar I possibly can. Mainly for security (emergency fund) and funding our retirement accounts (financial freedom).
But there is a fine line between frugal and cheap. Lots of times in the past I would slide down the slippery slope from frugality into cheapdom. Instead of spending an extra $20 on a name brand ceiling fan that will be around longer than I will, I’d instead buy a Walmart one and have to replace it again in 5 years.
Last month our dryer went to appliance heaven. I resisted the urge to buy the cheapest model I could find. So I went on Home Depot, Lowes and Sears websites and read the reviews of name brand dryers in my price range. I picked the one that had the best reviews in that price range. I didn’t get a no-name dryer and I didn’t get a “top of the line” one with 42 different heat settings (what is the difference between Fluff, Fluffier and Extra Fluffy?). The one we purchased has large drum capacity (can hold enough jeans to to start a Grease revival) and only 3 heat settings…High, Delicate and No Hear. But that meets our needs. We do 30-35 loads of wash a week and a lot of that goes into the dryer. Some gets hung on the clothesline during good weather, but not all. And on bad weather days the dryer is running a lot. All we need in a dryer is for it the Dry and Run Strong.
Let’s face it. Unless you are a trust-fund baby or a Kardashian, most of us are going to have to work for an extended period of time. While it might be fun to have a large trust fund and not having to work, being a Kardashian is just gross and nasty. So for the rest of us that have to work. How do you go about it and not let it suck your soul dry?
Work has become a four-letter word. People love to complain about, yet for most of us, we will be working for half of our life (or longer). And those working years are our prime years.
Here is listicle of advice for my kids on surviving and thriving at work.
Plan now or you will be working FOREVER. Work early – Work often. Save early – Save often.
Working forever is fine if it’s what you want. But wouldn’t you rather have the flexibility to work or not work?
When you start a new job, bust your butt the first day at work. Make that good first impression on the boss and coworkers. This applies to a teen working at McDonalds as well as to an adult working in an office.
Find one or more things you love to do. Things you would do for free every day for the rest of your life.
Figure out how to make money doing those things and do them. Even if it’s not much money at first and you have to do them part time.
If you don’t find a way to make money while you sleep, you will work until you die – Warren Bufffett
Working for The Man is ok. Working for yourself is far superior.
You don’t have to have a high salary to get wealthy. But it helps.
Have MULTIPLE revenue streams. Examples: W2 job, consulting, rental income, eBay sales, cut grass, start a business, dividends, blogging, create YouTube content, Uber etc.
Breastfeed if at all possible. I mean if you’re a dude you can’t, but if you are women you should be equipped to give it a whirl and see if it works for you.
Breast milk = FREE
Formula for a year = $1,200-$1,500 (more if you use the fancy-pants stuff) depending out which formula you use*
* this doesn’t include the cost of bottles and nipples. Nor does it factor in the health benefits (for baby and mom) and the time savings of breastfeeding.
Breast-fed children are more resistant to disease and infection early in life than formula-fed children
Breast-fed children are less likely to contract a number of diseases later in life, including juvenile diabetes, multiple sclerosis, heart disease, and cancer before the age of 15
Mothers who breastfeed are less likely to develop osteoporosis later in life, are able to lose weight gained during pregnancy more easily and have a lower risk of breast, uterine and ovarian cancer
12 of our kids got the boob-jucie (#13 was a foster baby) for the 1st year of their lives. I figure we saved between $14,400-$18,000 over the past 23 years, probably towards the lower end of that range since we would have bought store-brand formula…in bulk…when on sale…cause we are cheap that way.
Like training for a marathon, the actual race (the end result) is the fun part, getting there is tough and takes baby steps. You might start out running 2 miles the first time and work your way up to running more. At first the 2 miles will seem like it’s gonna kill you, it’s not. After a few years 2 miles will seem like nothing and your weekly long run could be 20 miles. When you were just starting out the 2 miles was tiring and you felt like quitting. You never thought you’d get to the point where you could run 20 miles. But if you keep at you will get there.
It’s the same thing when dealing with money. You might think that skipping going out to lunch and saving $10 isn’t going to help. But do that every day and over time magic happens.
What would happen if you stopped going out to lunch daily or gave up the cigarettes or stopped drinking? Besides the obvious health benefits, the financial ones are awesome.
Let’s look at some numbers:
By discontinuing eating out during the work week and investing the money: after 10 years you’d have $36,000 and after 40 years you’d have $698,000. I’m assuming $10 a day, 5 days a week and an 8% return in a no-load stock index fund.
Give up that 6-pack of daily beer: after 10 years you’d have $38,000 and after 40 years you’d have $735,000. I’m assuming $7 a day, 365 days a year and an 8% return in a no-load stock index fund.
Quit that 2 pack a day smoke habit: after 10 years you’d have $65,000 and after 40 years you’d have $1,255,000. I’m assuming $12 a day, 365 days a year and an 8% return in a no-load stock index fund.
So give up the smokes or beer or eating out. Or whatever your equivalent is. Find something that you waste $10-$12 a day on and stop doing it. But don’t just waste the money you save on something else, invest it. Stick it in a no-load stock index fund and watch it grow over time at an 8-10% annual rate.
Heck if you do all 3 and quit all 3, you will be rolling in the dough in the future.
Keeping it Simple Stupid. My brain likes simple things; like watching ALF reruns and eating ice-cream right out of the container. I don’t need to add any complexity to my busy life. Being able to set my investment choices and ignore them is a great thing.
I use no-load stock index funds for a decent portion of my Roth 401k and Roth IRA’s. Plus a few select individual stocks.
Advantages of Index Funds:
The yearly costs are dirt cheap compared to managed funds.
Very few managed funds beat indexed funds.
They simplify your life. Setup a few funds and just check on them once or twice a year to re-balance your asset allocation.
They stop you from chasing returns. And buying and selling at the wrong times.
Index funds are tax-efficient. If you do own stocks in taxable accounts index funds will prevent you from giving Uncle Obama more money than you have to.
All the major investment companies offer them; Fidelity, Vangaurd, Schwab etc…
You can use just 3 funds and create a portfolio that you can pretty much ignore. Here is an example for informational purposes only.
A Total US Stock Market Index Fund
A Total International Stock Index Fund
A Total Bond Market Fund
So, a basic “three-fund portfolio” might consist of 60% Total Stock Market Index, 20% Total International Stock Index, and 20% Total Bond Market fund.
If your company 401k doesn’t offer index funds, talk to your HR department about getting some added.
Every 6 months I re-balance my portfolio to make sure I am still investing the way I want. Using the word “portfolio” makes it sound like I have lots of money to invest, I don’t, but I like using the word anyways.
Important-the above is how I do things. Everyone’s situation is different. Please do your own research and decide what is best for you.
Yes it has come to that, I am making our laundry detergent. After mocking others, hippies mostly, I started making detergent myself. We spend a fair amount each year on detergent and we don’t even use the pricier brands like Tide.
Further down below is a recipe and a link to the site I got it from. This is a concentrated version; she also has a version that requires less of each ingredient. I used a 96 ounce jug to make this and each load of laundry uses 2 ounces of the liquid (HE machine, use more if you have a top-loader). So I am getting 48 loads per jug. Each jug costs me less than $2 to make. Around 5 cents per load. I haven’t bothered to figure out the exact amount. But it’s a lot cheaper than store-bought and only takes a few minutes to make. Oh and the stuff works. On the website is a non-concentrated version that is even cheaper to make.
How to make it:
Put the following into a jug, I used an old 96 ounce detergent jug. You could probably use up to a gallon jug.
1/2 cup of Borax
1/2 cup of Arm and Hammer Super Washing Soda
1/2 cup of Dawn Dishwashing Liquid – the blue grease fighting kind
Then add 4 cups of boiling water and shake the jug (stay focused people) to dissolve. Top off the jug with water. Shake the jug between uses to make sure it stays well mixed. That’s it, simple.
Take care of your things and your things will take care of you…especially the big things: house and cars.
Do most of the regular scheduled car maintenance. Talk to a mechanic you trust (not the dealer) about what needs to be done and when.
Wash and wax the cars. Besides looking nice, it keeps the rust away
Change the filter in your AC/Furnace at least every 3 months, check the owner’s manual for specifics. I change ours at the change of the seasons.
Paint the outside of your house as needed. Peeling paint is more than just an eyesore. It allows the weather in and causes rot. I know, I just had a bunch of trim on the outside of our house replaced and there was some underlying damage. So even more work had to be done which meant more $$$.
What am I leaving off? Bikes? Tools? Appliances? Yup keep those in good working order. What else?