Zwan asked how a person with a modest-paying job could grow wealthy. In response, several of the forum's marquee members stressed the importance of living frugally. This is a key point that hasn't received much discussion in these forums, so I thought I'd start a list of specific strategies for living frugally while still living well. Stonevill and others suggest defining "without hardship." I mean (roughly), not feeling like you have to make a noticable sacrifice for small savings, or a significant sacrifice for big savings. tooshy offers another good definition, "not giving up the intended purpose or pleasure of an activity."
Please add your own suggestions, or offer constructive comments on other's suggestions. Please do NOT post ways to take advantage of generous friends, unknowing neighbors, or lenient/dim merchants. This includes items like pirating signals, bandwidth, etc., along with returning items that a person has used in order to gain free "rent" of them.
Also, please keep the focus on the ways to be frugal without giving up stuff that makes life worth living. So, a post about "not eating out," while frugal, would be off-topic, UNLESS you have an argument for why there are good substitutes that bring similar satisfaction for less money.
Thanks for your patience with these "ground rules!"
Along with my own ideas, I will try to summarize the most widely applicable and best received ideas at the top of this thread. Please don't take it personally if I missed yours.
-Getting rid of unused items. I've had to learn this the hard way! Clearly, using garage sales, classifies, online selling forums, etc. raise useful cash. Less obvious is how much we lose in depreciation on many items (especially computer stuff and electronics), as well as the amount of money and time that must be spent storing everything. Donating to charity avoids the effort of sales, while resulting in tax savings if you itemize deductions (Thanks Boilerfan, thegretchen and HalfHitch.)
-Give public resources a chance. While they vary in quality, many public libraries, parks, pools, paths, etc. offer a great deal of satisfaction, while costing little or nothing.
-Share meals out, and omit boring fixins'. My spouse loves to eat out, but like many women, she rarely finishes what's on her plate. We've taken to often splitting one entree, which is just enough for two of us (I eat about 2/3 after she's taken what she wants.) We waste no food, and cut the bill almost in half right there. (I say almost because we still tip as if we ordered two entrees--it's not the staff's fault we're trying to be frugal!)
We also tend to order "the main attraction"--an entree we've wanted, a great dessert, etc...but also generally omit $2-$4 Cokes, domestic beers, etc--things we can get all the time at home for almost nothing.
And sometimes lunches out (which often run until 4pm) offer a way to eat cheaper than dinner (thanks Spjegues.) If it's the main meal of the day, it's better for your body to eat it earlier anyway, rather than go to sleep full.
Even though we eat out maybe 10-15 times a month, including many decent places, we save probably $200 a month eating this way.
-Look for opportunities to "go in" with others more generally. Janna offered the great idea to do this with double prints on developed film. Rental cars or trucks for transport, vacation homes, entertainment like kid's clowns or trampoline rentals, etc. offer other examples of this.
-Watch for opportunities to negotiate on price or service. As TJ2002 suggests, just about everything can be negotiable. Whether it's worth the effort or potential discomfort in a given circumstance is another issue, but it rarely hurts to ask.
-Downgrade to Basic Cable I like and fully subscribe to SN's basic cable idea, as suggested in Zwan's thread. In Spokane, expanded basic is $34, while basic is just $11 a month (with either getting you a $10 break monthly on cable internet access.) I keep basic cable (which can be split several ways--I have connections to Replay TV, a VCR, a computer, etc), and am able to use the savings to get a new Columbia House DVD club membership every 2-3 months (8-9 DVDs.) Not only do I love everything about DVDs, but they can be easily sold for more than they were purchased for, or traded for other titles.
-Consider the used market. Not just cards, but used furniture, durable goods, electronics, and clothing can often be had as good as new for a fraction of the cost. Consignment shops are an excellent resource here (thanks sandyausi,) and even dumpster diving works for some (thanks brokestudent).
-Split a membership to a quality wholesale club. Costco, the highest rated wholesale club in the nation, has a couple of outlets here in town. A basic membership is $45, but my father and I share a $100 annual executive club membership due to the money-saving extras (including GCs amounting to 2% of one's annual spending, meaning on that alone we'd break even once we spent $2750 in a year.) Up to 2 can share memberships: normally they want it in the same household, but they let dad and I split it. Their quality and selection are exceptional, and include many of the same products available in high-priced grocery, office-supply, and furniture stores. Together, our two families spend probably $4-5K a year there, and get very nice stuff worth much more than that. Since we live close, we will often take turns buying for each other, too, requiring the 5-mile trip only half as frequently.
-Use ATMs strategically for cash. If you have an online bank that rebates fees, like FirstIB.com or bofi.com, OR if you use your credit union's ATM, you should be able to enjoy the speed and convenience of ATM cash withdrawals without ever having to pay for it. Moreover, fewer, larger withdrawals will save money too. ATMs charge the same fees whether you take out $20 or $300, so unless all your withdrawals are free, limiting them (ideally to the number of reimbursed ones) is an easy way to save money. Thanks switch.
-Only buy the lowest octane gasoline recommended for your car's engine Thanks Alcibiades. Higher octane gas offers NO improvement over lower octane, unless your car needs it--and it runs 7-35 cents more per gallon. I just this year discovered that my wife had been paying up for "premium" gas, supposing (reasonably enough) that it might be good for the car, when it made no difference.
-Comparison shopping for large or recurring items. Items like insurance (thanks Yeldarb) are significant expenses that can can vary a great deal by provider. An annual check might be boring, but needn't take a great deal of time and could save significant money.
-Learn about, watch, and take care of your credit rating. With each passing year, credit ratings play a greater and greater role in determining what kind of lifestyle can be afforded at a given cost. This is obvious and well known in areas like home loans, but also true for insurance rates, credit card and other rewards programs, and even job and rental applications.
-Experiment with brand substitution. Sometimes, generic or off-brand products aren't a substitute without hardship (i.e. notably lower product quality.) However, they are surprisingly similar a high percentage of the time, and can save big money, especially spread out over many months.
-Selective use of coupons and rebates. These promotions can save a person a great deal. The key here is (a) not to buy items that wouldn't be purchased but for the perception that one's getting "a deal," and making sure that the benefits are worth the costs. For instance, I've greatly cut down on the number of coupons I cut personally, because I discovered that I was only redeeming about 1 in 10 before the expiration date. I also don't bother with most rebates below $10-$20--the effort and time to cut the UPC, fill out the forms, make copies, and track increasingly unreliable rebate houses isn't worth the effort and time. (Then again, I'm surely less organized and efficient than many of you in matters like this.)
-Selective stockpiling It's easy to make the mistake of buying too much in order to save a modest amount per unit bought, wasting space and money. But some products are especially well-suited to stockpiling because they are non-perishable and sometimes sold at great discounts. For us, that includes items like cereal (often 1/2 the regular price, and if kept sealed it generally stays fresh for a year or more) and soda.
-Frugal phone use. Competition has made frugal phone options more plentiful than ever, even as the phone has become a more Crucial tool in all our professional and personal lives. SN mentioned using pre-paid long-distance cards rather than paying for a plan--a great idea. We primarily use onesuite.com for similar reasons. But the possibilities are endless here. My latest favorite is a little-publicized service called "busy call forwarding," which most local phone services offer for less than $1 a month (not a typo.) Rather than paying $7-10 for voicemail, you can forward calls to free online voicemail, or to voicemail on a second line. Other suggestions involve leveraging one cellular plan's cheap long distance, using vonage.com if you make or receive many calls to an outside area code, or buying a flat-fee long-distance plan. Onevoice (1.800.659.1400) offers 3.9 cent calls with no dialing codes. For fax, try efax.com's free service, or callwave.com's faxwave (thanks Maxmojo.) The possibilities are endless.
-Making your money work for you. Many withhold more than they need to from Uncle Sam every year, giving the government an interest-free loan. Better to pay off debt or invest that moeny during the interim. Similarly, avoiding impound/escrow accounts is a FREE option with home mortgages--and it means that YOU are able to use that money in the interim. (Thanks Yeldarb.)
Taking care not to pay non-promotional credit-card interest is another huge strategy here. By stretching just enough to pay the full balance--or by buying fewer items in the first place through the "pause and think" methods suggested by our posters below--a buyer can save substantial costs on interest alone.
-Minimize overhead for side-businesses and other activities. My spouse is a self-employed lawyer and soon-to-be broker who resisted the peer pressure of her colleagues and set up a very tasteful office here at home, rather than leasing out space somewhere else. The rest of her business overhead is similarly modest. With a good broadband connection, some frugal phone planning (see above), and the judicious use of bartering (for instance, borrowing a firm's conference room on an as-needed basis in exchange for a referral fee or a little backup on a case), essentially all of her earnings go straight to the bottom line.
-Vehicle shop with value in mind. Unless cars are a hobby and you're fairly savvy about obtaining and reselling them (like SIS is), they will be one of the biggest money drains in your family budget. While there are obvious ways to save a small fortune here (share one reliable car when practical, buy an older used car and take care of it, etc.) one does NOT have to forgo luxury to be frugal here. For instance, check with an insurer about different rates for cars of a similar class BEFORE buying. Also, if you want a nice car, consider buying a used luxury DOMESTIC car, which has often depreciated much faster than it's foreign siblings and can be had for a song (often with cheaper replacement parts too.)
-Think counter-culturally.Advertisers are paid big money to convince us that we want or need something we didn't previously want or need, and to spend resources on it. The ubiquity of ads suggests that their efforts have been wildly successful.
What are your suggestions, or refinements on mine or others'? Thanks for taking the time to share your thoughts with the forum!
