Why Be Frugal?

DSC_0687This might seem an odd question from the Frugal Goddess, but it is worth asking. Being frugal means more effort and often deferred gratification. There has to be a pay-off or nobody would do it willingly.

There are really three groups of frugalistas. The forcibly frugal are too poor don’t have a choice. This group  grew much larger in the USA during the crash of 2008 and is still growing. Sadly, the rest of the world has always had a large population in this group. For the forcibly frugal, there is no need to ask why. How is the question. How to feed a family, how to obtain shelter, how to survive.

The middle class frugalista understands the concept of deferred gratification. There are many, even in this over-heated consumer environment, that are willing to do the work to achieve a dream. This group understands the relationship between prudence and success. To be middle class is an exercise in compromise. A person with a moderate income can make choices, and satisfy some desires, but not all. For this group, a consistent frugal lifestyle means home-ownership, college for the kids, and the opportunity to do a few really amazing things like travel to the world. If this type were to go on impulse, all the surplus would be frittered away on trips to the mall, and they would have the debt-load of the average American family. For these frugalistas, frugality really does make their dreams come true.

But it does something more as well. It creates a deep sense of peace. It is well known that money problems are one of the biggest sources of stress in our culture. And that money fights are one of the biggest causes of divorce. Frugal people avoid all of that. And if the parents are frugal it sets a very good example for the whole family.

Though it may seem that we are through, there is actually one more type. The members of the voluntary simplicity movement tend to be very well off. Maybe even rich enough that waste is a mere inconvenience, not a life-threatening disaster. But this group is interested in a green life-style, and in a sustainable solution to the “human” problem. This involves avoiding waste and conscious values-based spending. That is the very definition of frugality. This group has a very different problem from the first two groups. The first group has no problem staying frugal, it is staying alive that concerns them. The second group may have temptations, but a commitment to a greater reward will keep them on track. But, for the voluntary frugalista, it is commitment to an idea of what is right that drives the frugal lifestyle. For them, the answer to the question “why be frugal” is an intellectual one. But, even so, there are rewards other than virtue. The voluntary frugalista gets the benefit of self-knowledge and clarity. This translates to more time doing the things that are truly rewarding, and less time spinning in circles.

Whatever your current financial situation, a frugal lifestyle is worth it.

How Much is Enough? Six Tips for Knowing when to Stop

If You Don't Know what you Want You'll Never Have Enough

The question “how much is enough?” is at the very heart of a frugal life richly lived. It is the backbone of frugal abundance. We live in a culture that resists the concept of enough. For the inhabitants of the “developed world”, the answer we must give is that no amount is enough. The economy we have created depends on MORE, and just enough is considered an ill.

But sensible people trying to live a good and pleasant life know that this is hog wash. Too much clutter in our material possessions or our time leads to a frenzied life where we don’t fully use or enjoy the things we have. So what is the cure? Try these six simple tips to get back to a state of happy balance:

  1. Before you bring in ANYTHING new, look at what you already have and ask yourself what the purpose is. Do you already have something that will accomplish whatever it is you are trying to do? For example, if you want to make crepes, do you really need to buy a special pan? Or would the cast iron pan you have work just as well. This also applies to time—before you add something to your schedule STOP and ask yourself why.
  2. Do you know the real cost of the things you want to acquire? Don’t forget to add in the cost of maintenance, repair, and auxiliary doo dads that you will need to make it work. When it comes to your time, remember to include travel and preparation time. These are things you need to know before committing yourself. If you don’t think it through you may bite off more than you can chew and end up with TOO MUCH.
  3. Where are you going to put the new thing? If it doesn’t fit in your house it won’t fit in your life. The same goes for new activities. When are you going to do the new activity, including prep, practice, and travel if applicable? Things without places create clutter and eventually misery.
  4. How does the new thing fit into your value system? If you don’t know, don’t buy it till you find out. You only have so much time, money, and physical space. If you let in a bunch of stuff that does not serve your value system, it just becomes a distraction. It also drives out the things that are in harmony with your values, and therefore robs your life of meaning to one extent or another. For example, if your values include bonding with your loved ones with a real sit down dinner, adding a lot of early evening activities is actually a form of clutter and will soon become TOO MUCH.
  5. Have a plan for buying things and committing your time. If you put the big pieces in first, such as travel or buying a house then the smaller decisions become easier. If you know that forgoing a new outfit will get you closer to a trip you want to take it removes some of the sting of saying no to yourself. This also works when dealing with family members. If you all agree that going camping is important it will help when you have to nix the new sneakers. Well, maybe not every time, but it will certainly help.
  6. Now apply these guidelines to what you already have. Do you need to purge anything? Cancel anything? Get rid of any time commitments, memberships, or subscriptions? Does all that you have serve you and your values? Be honest, and then start making a pile for charity. And don’t be too quick to fill up the spaces that get opened up. Open space and breathing room are essential to a happy life and a sign that you have just the right amount.

Try these six tips to create a life that is the right size for you. Not all of them will be easy, but the results will be worth it.

For more on this topic check out these links:

http://www.thefrugalgoddess.com/2010/09/23/frugality-in-a-consumption-crazed-society/

http://www.thefrugalgoddess.com/2010/08/30/false-economy/

http://www.thefrugalgoddess.com/2010/11/01/time-and-money/

Happy Holidays and a Big Roll Out of Frugal Fun in the New Year!!

Happy Holidays from the Frugal Goddess

My regular readers may have noticed that I haven’t been posting lately. This is because I have been working on some great new material which I will be rolling out starting with the new year. I have been talking about the concepts and tactics of a frugal life with folks from all over the place, getting an idea of what would be most useful now. There are still many who associate frugality with lack. I will continue to work on eliminating that myth.

As I look about the world at the close of 2011 I see so many people struggling with the economic side of their lives. The struggle continues despite the occasional uptick in the market or spurts of prosperity. The Frugal Goddess writes to the forcibly frugal who may be facing even more dire circumstances in the coming year. She writes to the increasingly small and increasingly squeezed middle class, and to boomers hoping to be able to enjoy their golden years. She even writes to the voluntarily frugal—those people of means who are drawn spiritually to a live of sustainability, simplicity, and justice.

The philosophy of frugal abundance is based on the idea that prosperity is based on more than just money alone. We must each look into our own hearts to determine what is most important and then go about crafting a life based on our deepest values. Material wealth may be a part of that mix, but for most of us it is not at the center.

The entire system of frugal abundance is based on knowing and understanding your resources on every level, and then maximizing every resource available. It is also about understanding the flow of energy through your life so that nothing is wasted. We start with the outcome in mind and then figure out how to get there using every resource available. These resources are not limited to money but also include our connections to others, our own talents, and numerous ways we have of interacting with the world.

So, dear reader, I wish you a loving and peaceful end to 2011. And I hope you will stop by often in 2012 as the Frugal Goddess continues to help you connect your values to your wallet. And if there is a subject you really want to see get tackled please make a comment or email me and let me know. Blessings to you all!

Making a Budget? Let Your Value System be Your Guide!

 

Reflect in Silence Before Deciding

What do personal value systems have to do with a frugal life? Everything! Your value system is the key to what you should spend money and time on, and where you can skimp without lowering your quality of life. When you make a budget, list your needs before your wants. Basic needs include shelter, food, potable water and water for hygiene, a bathroom, a way to do laundry, a small amount of clothing (enough to be cover your body and stay warm in cold weather), some kind of phone/internet connection, some form of transportation, education for the children, medical care, and some kind of entertainment.

Take your total income at this moment and assign a figure to each need. You may not have anything left when you are done adding, or worse yet, you may not even have all your basic needs met. This is true for many in this economy. If this is true for you, don’t despair. That won’t help. Try instead to get the uncovered needs met in some way that doesn’t involve money. Try barter or the gift economy.

But, if you are one of the lucky people with a surplus, you also have a potential spending problem. Unless you are very wealthy (and perhaps even then) you can’t buy everything on your list of wants at the same time. The process of values clarification will act as a beacon for your spending priorities. In the meantime, put the surplus away. You need to think and plan before you spend.

Many values clarification systems rely on a list of possible values and then ask you to pick the top three or five or maybe even ten. This is worthwhile to a point, but to practice values- based frugality you need to go deeper, and then you need to be very precise. The precision is a tool to help you translate a value, which is an idea, quality, or feeling, into a spending decision. When you spend you have to spend on a specific item, service, or experience.

Here is how it works—you discover that beauty is a quality you value deeply. Does that translate into buying a painting for your wall, or a trip to a beautiful place, or to getting your hair and nails done? What does beauty actually mean to you?

Or if you say you value the arts, which ones? Do you mean music, theater, or graphic arts? What is it that attracts you? Because you can’t buy “the arts”, but you can buy tickets to a concert or download some new tunes. Or, when you dive deep, you may find that it is actually creativity that you value. In that case, what medium do you want to use? That will guide you in your spending. As long as you don’t know what you really want, don’t make any big spending decisions.

Once you have done all the homework and know what you truly value you can start shopping. A frugal shopper always tries to get the best value for their money, but this does not mean buying the cheapest thing. It means buying the best tool for the job at the best available price. For example, if you have creativity as a high value and your medium is photography, it makes sense to buy a good camera even if it seems “expensive”. When you are spending in alignment with your personal values system, expense is a relative term. This is principle is not carte blanche permission to dump the whole budgeting process. If the photographer in the example buys an expensive camera and lenses, they may have to dial down the clothes expense or some other area that is not so important to them. That is why self-knowledge is so important to frugality.

One of the most common questions I am asked is about whether it is “OK” to go to out for coffee every day. The coffee habit is one often fixed upon by financial pundits as a budget buster. To discover the answer for yourself, look at your values. And then ask yourself WHY you are buying your coffee out. Do you buy a fancy expensive concoction to go and drink it while speeding down the freeway barely tasting it? Then it is likely a big waste. Make your own and use a commuter cup. But, if you are meeting you two best friends once a week and enjoying every sip, go ahead and get the jumbo chocalata supreme. It’s actually about friendship and connection. And that is a perfectly valid expense.

Here is some links for  books about values clarification:

http://www.amazon.com/Search-Values-Strategies-Finding-Matters/dp/0446394378/ref=sr_1_9?s=books&ie=UTF8&qid=1316714970&sr=1-9

http://www.amazon.com/What-Matters-Most-Living-Values/dp/0684872579/ref=pd_sim_b3

Remember to try your library first, unless owning a lot of books is a high value for you!

Basic Frugal Tools-The Three Kinds of Spending

The Experiences of a Lifetime

Discretionary Spending

Once your basic needs are attended to, if you still have any money you can begin to buy the things you want. Many people jump the gun on this process, skipping to the wants without first securing the needs. This is something a frugalista will avoid doing. Using two economic principles and one psychological principle will help sort out your discretionary spending.

Limited Resources and Opportunity Cost

The principle of limited resources should be self-evident. Even the GDP of the world is a finite number. We live in a closed system. I don’t need to belabor this point—your bank statement tells the tale. Opportunity cost means that for every choice we make, given our limited resources, we must forgo some other choice.  If we buy an apple for a dollar, we can’t spend the same dollar on an orange. The opportunity cost of the apple was giving up the orange.  The principle applies to time as well. If I spend the day at the museum I can’t spend the same day working on a project. The opportunity cost of the museum is the time not spent on the project.

When we decide what to do with our free time or our discretionary income, we have to rely on our value system. As with every other choice you make in your life, nothing but self-knowledge and taking the time to reflect on your own values can really help. But knowing what the real choice is can make it easier.

The Three Types of Spending

Your three choices are to spend on products, to spend on services, or to spend on experiences. In our hyper consumption culture there are literally thousands of choices in all three categories vying for our dollars. There are no right or wrong answers, but there are choices that will give you a deeper connection to your community, or add to the meaning in your life. That is where values come in. If I had extra money, and I was thinking of buying a new couch (a product)getting some help on my landscaping (a service) or taking a trip to the Grand Canyon (an experience), I would choose the trip. Even if I was sitting on the floor. Even if my yard was a jungle.

That is not to say that buying thing or services is always wrong. It is just easier to get them other ways. I could get a couch on Freecycle.com and I could trade for the landscaping. But even if I use all my frugal wiles getting to the Grand Canyon and enjoying it is going to require a cash outlay.

Every so often, if we are lucky enough to have any “extra” money, we may just really want a NEW pair of shoes, or a manicure, or whatever. And there are things it makes sense to purchase in both the products and services categories. A computer for instance, in products. If you can find a used one that you trust not to be a complete lemon, great. Otherwise, just buy a new one. Or, when it comes to services, someone to do solve your electrical system woes if you don’t have a barter partner who is an electrician. Doing it yourself is dangerous and probably inefficient. Letting it go could cause you to lose a whole freezer full of food. So, just pick up the phone already.

These hypothetical situations are meant to illustrate how complex our spending choices can be. Running your own finances is like driving a car, with the same requirement that we pay close attention and react quickly to changing conditions. But, if you have the choice, why not throw a party with that extra three hundred dollars, and let the old TV go for a little while longer. It is all about creating wonderful memories. Very few services and almost no products can really claim to do that.

Frugality 101-How do I Know What to Buy?

How do I Decide What to Buy?

There are many people that want or need to be frugal, but when faced with actual buying decisions they become overwhelmed and either do nothing or end up with the wrong thing. It would be nice if there were an easy formula, but there is not, and there can’t be. There are just too many variables. Luckily, however, there are systems that can be used to make the process simpler. The basic frugal equation is to satisfy a need or want by obtaining the highest acceptable quality for the least loss of resources.

The first question is whether this is a need or a want that you are seeking to fill. If it is a want, the process is as follows: Ask yourself what it is exactly that you are trying to achieve. If you think you want to go to Europe, for example, is it a desire for more excitement, or intellectual curiosity, or because you have friends there that you would like to see? How strong is the desire? And can it be satisfied any other way?

If the desire is strong and there is no substitute than you have identified one of your big dreams. That is a very good thing. It doesn’t guarantee success, but at least your compass is working. But, you might discover that it is not Europe per se that you crave, but the culture that exists there, at least in your imagination. This desire might be filled by a trip to a museum. Whenever you get the urge to shop, try this exercise. You may be very surprised at the results.

There are items that are in a gray area. You might “need” something for your work, but it doesn’t rise to the level of a true need as defined below. I had this problem recently with equipment I use as a writer. My computer is acting up, but I had no camera except the one on my phone. I didn’t need either item in the sense that my life couldn’t go forward without them. But, to do my job I did need both items. In the end I bought the camera, but am still using the errant computer. The reasoning is that I had nothing that fulfilled the function of a camera at the level required, while the computer still did what it was intended to do even if it is old and slow.

Once you understand what the true want is, and have decided to fulfill it, the next step is to apply the frugal equation of value for outlay. First-is there a non-monetary way to get what you want? Trade or gift economy? Can you get it used? If not, what is the likely best price available? I ended up buying a new camera at a deep discount. The price difference between the new entry level Nikon and a much fancier used one was not that great, and I didn’t feel I needed all the extra horsepower. I valued the warranty more. Sometimes the new thing is the best buy. But, nine times out of ten it will be the used item that is the best. The one thing that can’t be glossed over is the work. If you don’t dig around and ask questions you end up making an impulsive buying decision, and those are rarely frugal. Luckily, because this is a want and not a need, time is on your side.

Strangely, the fulfillment of needs is actually more complicated. There are only a few actual needs. The survival needs are clean air, potable water, a sanitary facility to get rid of wastes, food, some sort of body covering against the weather, shelter from sun, wind and water, and some kind of field medicine and first aid. But in our society, I must also include transportation, communication, clothing that is acceptable to the situation, and actual medical care.

The first question is whether these needs require a shopping solution or can be met in other ways. Can you trade, or do it yourself? Food, for example, is an easily DIY, easily barterable commodity, especially if you have a garden or livestock. Clothing can be made, traded, or obtained on the gift economy in a clothing exchange.

But, some things really do have to be purchased. Communication in our times relies on either phone or email, both of which involve interfacing with large companies. The answer to this problem will likely require a great deal of research. It is not often that I recommend pure price buying, but this is one of them. All phone companies are difficult to deal with, often sell less than optimal products and services, and charge outrageous fees. The same can be said, to a lesser extent, for internet service providers. And, as large communications companies continue to merge, this will only get worse. The only thing to do is be very careful, understand the true costs, and try not to get roped into long contracts. If you have been diligent in connecting yourself to a local community you may be able to by-pass all this and get by with a land-line at the lowest level of service use the library and yahoo mail for internet service. Or, better yet, go back to snail mail and personal visits. If you can do that you have come a very long way to reclaiming a gracious life.

As for transportation, I have already covered the possibilities in another post. Suffice it to say that you are blessed if you live in an area that is walkable and has good public transportation.

The other things on the list of true needs are more problematic, particularly the medical care. Even if you have the actual cash to make a health insurance payment there is no guarantee that the company will honor the contract after they have taken your money. I have written about this before. Healthy habits, a little knowledge of herbal and alternative medicines, and perhaps some barter are the main lines of defense. If you need some kind of regular prescription medicine things get much trickier. As long as no political solution to this problem is reached it is a street fight out there. There are clinics, but if you are truly at survival level you may not be able to eat and get your meds. I would recommend going to the soup kitchen and food bank, but spending the cash on the clinic.

It may seem odd that needs are more difficult than wants to analyze, but it makes sense, really. If you have a want that can’t be satisfied, it may bruise your ego. If you have an unfulfilled basic need, your life may be on the line.

Frugal Travel-Vacations for the Rest of Us

Wonderful Sights Await You

Though many types of travel can hardly be called frugal, there are ways to enjoy the rich experiences engendered by seeing the world and still not break the bank. This post will not include information on air travel, though that could be a future post. For now, I will concentrate on seeing the United States as cost efficiently as possible.

For transportation there are several possibilities. If you own a passable vehicle, why not crunch the numbers and see how things look. Just take the number of miles for your round trip, divide by your average miles per gallon, and multiply by current fuel costs per gallon. If it seems reasonable, and you like driving, this may be all the figuring you need. You might want to post for a rider on the craigslist ride share board.

But there are other ways to get around that might work better. The Greyhound bus line has a pass, called a discovery pass that can be bought in two week, one month, and two month increments, and allows unlimited travel on their lines and the lines of their affiliates in the USA and Canada. Or, check out that same rideshare board on craigslist as a rider. You may be surprised at what you find. Just be sure to check out the driver with the same care you would a Match.com date.

For lodging there are several cheap options. If you have a friend at your destination, see if you can stay for a little while. Some people really enjoy occasional company. Just be sure to buy your host dinner, and respect the cleanliness and order of their space. But, if you don’t know a soul at your destination try couchsurfing.com, a web based organization to bring hosts and travelers together. There are thousands of couch surfers from hundreds of countries around the world. The website includes several safety features including identity verification, reviews of both hosts and guests, and vouching. There are also local groups and interest based groups on the site, and events for travelers and local alike to attend. Because this is a cultural exchange and not a hotel it is important to take the feeling of your host into account. It is also nice to do something for the host, such as cooking dinner or bringing a bottle of wine.

If you are not ready to couch surf, try the local hostel. No longer just for students and elders, now anyone can enjoy rates of $20 to $35 a night, more for a private room. It is a good idea to get a guide book to the hostels with up to date reviews, including cleanliness and noise levels.

The next biggest expense for a traveler is food. Try packing a selection of cut veggies, fruit, and trail mix for the road. Peanut butter and jelly and string cheese are also good choices. That way you will eat more lightly and healthily while on the road. Once at your destination, why not just shop as usual and cook with your old or new friends, except for those one or two special meals? The availability of a kitchen may vary if you are staying at hostels. In that case, keep snacking or seek out inexpensive local venues. And don’t forget to take your vitamins. Travel may be broadening, but it is also stressful.

Finally, I would suggest bringing a simple water filtration system. Bottled water has problems with carcinogens in the plastic, to say nothing of the waste issue. And now reports have come out about the safety in many municipal water systems. It is wise to bring your own filter and stay hydrated.

So if you are hearing the call of the road, start planning, and may you enjoy a wonderful adventure and not go broke doing it. Here are some useful links:

http://www.couchsurfing.com Here is the couch surfing site, a really fun place

http://www.craigslist.org Look up the Rideshare for your city

http://www.amazon.com/Hostels-U-S-7th-Comprehensive-Opinionated/dp/076274779X/ref=sr_1_1?s=books&ie=UTF8&qid=1294243890&sr=1-1 If you plan to use hostels buy this book

http://www.hiusa.org The international hostel site for the United States

 

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