Tuesday, May 18, 2010

Living More On Less

You know the notion that "less is more?"  It's something I never used to think about.  I lived paycheck to paycheck and knew to stop spending money when my checking account reached $0.  My savings account never had more that $250 in it, I was swimming in credit card debt, I never even tried to set up a budget and I was always stressed out and upset over money.

I've come to realize that as we live on less money, I'm more happy with my life.  It's by no means happy all the time, but I've become proud of our accomplishments.  Our philosophy is to earn our freedom.  Our financial freedom.

D and I talked a lot about money before we got married.  He was a big help to me because he could see the big picture while I never gave a second thought to it.  While we were dating, I helped him shop for a house (before the housing meltdown).  With his salary, I thought he could afford a much bigger house than he wanted but he only wanted to spend X amount of dollars.  I thought he was being a little silly at limiting himself but it was very important to him that he be able to pay down the mortgage early.  My thinking at the time was, "Why bother, you have 30 years.  Live your life now."  D proposed to me on the morning that he closed on the house.  I was going with him as moral support and he surprised me before we left.  I was floored and delighted.  It was so surreal and wonderful that day to be closing on our house.

We continued to talk about money during our engagement.  The more he explained his philosophy on money, the more I saw the value in it.  I realized that we could live on less and be happy living with less stuff.  I had had a house fire a few years earlier and lost pretty much everything I owned.  It didn't kill me to live with less stuff.  In fact, I had to get creative and make do.  Looking back, I kind of enjoyed it.  When I wasn't focused on what I didn't have, I enjoyed what I did have that much more.

Eventually, I came around to the idea of living frugally.  The big bonus to this is that after we pay off our debt, we can accomplish our big goals with the monetary freedom that we've been earning this whole time.

Since D and I got married (on a $5K budget with honeymoon included) two years ago, we've:

  • completely paid off our credit card bills
  • bought a new car and paid it off in 8 months
  • made significant steps in paying down our mortgage
  • and are now tackling our combined student loans.  

We're saving the student loans for last because they have the lowest interest and the reflect the least negatively on our credit reports.  Our goal is to be completely debt free in 10 years.  We're on track to do it in about 7 but I tacked on 3 years just in case something happens (illness, job loss, triplets, etc).  With me not working for up to 5 of those years, we're living pretty lean.  That means we:

  • have a budget and stick to it - when money runs out, we stop spending (even if it's the 15th of the month)
  • put a lot into various savings (rainy day, long tern, 401(k), college account for kiddo)
  • apply any windfalls (bonuses and the like) to debt
  • don't buy new things like clothes or shoes unless they are absolutely necessary
  • rarely eat out and cook from scratch as much as we can
  • buy off brand as much as possible and buy in bulk with coupons
  • keep our thermostat at 79-80 during the summer and 67-70 during the winter
  • cancelled our cable and instead use Netflix (this alone saves nearly $500/year)
  • cancelled our land line and rely on our cell phones that have just basic plans with texting
  • put up a clothes line so we use less energy to dry clothes
  • use cloth diapers for our son (this savings in negligible because of the cost to launder the diapers)
  • make our own baby food
  • are learning to make things ourselves (him-woodworking, me-sewing/knitting, us both-home canning)
 We also have a fairly large summer vegetable garden. We haven't yet grown any fall/winter veggies.  But the garden is mostly just for the fun and experience.  The money we save on food costs is easily eaten up by the costs of getting this garden up and running in our very poor soil

It may seem like we are doing without a lot but it's not so much.  The hardest thing for me is not buying clothes and shoes whenever I feel like it. I don't really need any of those things but I just want them.  In reality, we're still comfortable in our lifestyle.  We only want for extras that we don't need (smart phone, new duds).  We have all that we need and more and once we got used to our lifestyle, we didn't miss the other stuff so much.

More often than not, it's fun to figure out how to make do with what you have.  For example, we really need blackout curtains for our office because the computers generate so much heat and that room gets full sun during the day.  It's boiling in there by mid-afternoon.  Buying the curtains would cost around $80.  We were plugging it in to next month's budget when I realized I had some old fabric in a box.  I dug around and found some tab top curtains panels in just the right color and some white insulated fabric.  Now, I just have to sew the lining into the curtains and it's done.  The only money we're spending is on the matching thread - less than $3.  To me, that's exciting - almost like a game. 

The entire purpose of this whole frugal business is that it allows us more freedom in the coming years (and we are BIG on freedom).  We'll actually be able to retire and do what we want.  If we want to sell the house, buy an RV and tour the state parks - we can!  If we want to move to New Zealand and ranch sheep - we can!  If we want to live out our days in a tropical paradise - we can!  

Some might ask why don't we just do that now?  We don't because it's not the right time for us.  We can't reliably pay off any debt that we may incur, we want our kids to have a stable environment near family, and the economy sucks.  Besides, I like what we're doing right now.  

Some people might think that we're acting poor but I prefer to think that we're acting rich.  Well, at least comfortable.  10 years from now.

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