How We Save 65% Annually

Mr. Frugalwoods and I realize we might seem a bit odd to those of you new to the philosophy of Early Retirement Extreme and Mustachianism or just starting out on your frugal finance journey. Curious how we live day to day? For starters, we’re not total weirdos, I promise! Though we are kinda weird because the way in which we structure our lives is certainly not mainstream.

HowWeSaveCover

Mr. & Mrs. FW gussied up

Mr. & Mrs. FW gussied up. See? We’re totally clean.

If you saw us walking down the street with Frugal Hound, you wouldn’t know we’re frugal weirdos. We’re clean, we’re well groomed, Frugal Hound has a real leash (not braided tree branches) and our clothes are pretty stylish, thanks to the excellent thrifting opportunities in our ‘hood. We don’t grow food in our basement (yet), live in a hovel (anymore), or knit our own toilet paper (uh, never), and we enjoy a lovely life in the middle of Cambridge, MA–a charming urban locale. 

So, how do we save a whopping 65%* annually when the average savings rate for Americans is just 4.3% (source: The Federal Reserve)? 

* This is cash saved after taxes, after both maxing out our 401Ks. In other words, we calculate our savings percentage by the following equation: monthly after-tax savings / take-home pay. We both work full-time and we combine all of our finances into joint money market and investment accounts. We hold separate 401K retirement vehicles through our respective employers.

Here’s How:

1) We don’t have any debt other than our mortgage.

Thus, we don’t pay any loan payments or interest. If you do have debt, pay it down. If you don’t, save! But that’s another post for another time.

2) We spend very little on entertainment.

I get free yoga! Namaste!

I get free yoga! Namaste!

We don’t have cable. Or Netflix. We do have a Roku (a one-time expense of $50), which provides us with great content to peruse.

We don’t go to museums, concerts, bands, movies, the theatre, the ballet, the symphony, or the circus. If it has a ticket price, we don’t go. Period. Instead, we take advantage of the free opportunities in our city. There are plenty! Plus, our public library offers free passes to local museums that residents can borrow for specific dates. We’ve gone to countless interesting (and totally random) things we’d never think to attend but, hey they were free!

For the most part we entertain ourselves with free hobbies like hiking, singing, yoga, woodworking, home improvement projects, reading, writing (HEY! I’m writing right now!), cooking, and dressing Frugal Hound up (she loves it).

Frugal Hound shows off her fascinator

Coffee date at home!

Coffee date at home!

3) We take our breakfast, lunch, coffee, seltzer, and snacks to work.

Every. Single. Day.

4) We rarely eat at restaurants or go to coffee shops or bars.

And when I say rarely, I mean approximately twice per year.

5) We shop Costco and Amazon.com for household supplies.

Buying in bulk is cheaper! We’re not tied to brands or specific products–we buy whatever’s on sale. Trust me, folks, you do not need to use the same shampoo every month.

Salad with frozen Costco Salmon for dinner. YUM

Salad with Costco salmon for dinner. YUM

6) We thoughtfully prepare each week’s grocery list and plan our meals in advance.

We’re frugal but healthy on this front. We could shave off a few more bucks if we didn’t buy so many fruits and vegetables, but health is a priority for us, so this is an instance where we’re happy to pay a little more. We spend on things that bring value to our lives.

We mostly cook from scratch and don’t eat much meat, dairy, or packaged foods as they’re pricier. And, precious little food goes to waste in the Frugalwoods kitchen.

7) We don’t have a new car, so we don’t have a car payment.

The one car that we share, Frugalwoods-mobile!, is 19 years old. We don’t care–she runs just fine and we don’t owe a dime on her.

Mr. FW or Visigoth Raider?

Mr. FW and one of his bikes. I admit we’re on the hipster side.

8) We ride bikes, walk, or take public transit whenever possible.

Yes, even in the Boston winters.

9) Almost everything we buy is used.

Clothes, furniture, you name it, someone else probably owned it before us. Except for underwear–I told you, we’re not gross! Our mattress is new, but our guest bed is used. Thrift stores, garage sales, and Craigslist are all essential sources. Plus, we take stuff off the side of the road. Judge not!

10) NO impulse buying! I’m serious about this you guys, none!

Our SodaStream: not an impulse buy

Our hacked Sodastream: not an impulse buy

Mr. Frugalwoods and I discuss and consider every purchase we make. We ask each other: do we really need this? Do we own something similar that could substitute? Could we borrow it from a friend? What is the price new vs. used?

And, again, do we really need this? Will buying it bring us immense joy or is it a necessity that would be unsafe or unwise to do without (like a carbon monoxide detector)? Will purchasing it now stave off a future more costly expense? Most importantly, is it something that will enable greater frugality? Here are the 10 shockingly expensive things we DO own.

11) We don’t pay people to do stuff for us.

We consider ourselves to be radical insourcers. We clean our own house. We wash our own car. Mr. Frugalwoods cooks all of our meals (much tasty, very yums). He also does our taxes. And all of our financial planning and investing. I do all of our laundry (rare is the dry cleaners for us). We make, repair, sew, and otherwise reuse everything we can (hey baby, let me stitch that hole in your jeans for ya). We do all of our own home improvements and repairs. We walk and entertain our own dog (no dog walkers, no doggy day care). We write our own jokes. Bet you thought we had a professional!

 Frugal Hound getting toweled off after a bath. She’s so embarrassed that I posted this.

Frugal Hound getting toweled off after a bath. She’s so embarrassed that I posted this.

12) We do all of our grooming at home.

I cut Mr. Frugalwoods’ hair. He has a buzz cut, which makes my job easy. Ok, I did accidentally shave a bald patch the first time I did it, but my technique has improved greatly. And, Mr. FW cuts my hair too–he’s quite the pro!

I do my own eyebrows, manicures, and pedicures (on the rare occasions that I crave painted nails). Mr. FW would like to point out that he does his own eyebrows, manicures, and pedicures too.

I’ve eliminated wearing most makeup, which saves a shockingly large amount of dough. And time too! My daily routine is: sunscreen, mascara, and lip gloss. We bathe Frugal Hound, clip her nails, brush her teeth, clean her ears, and groom her ourselves. Hey, she’s our girl and we love her. Even if she does mysteriously get funky dirt (is it dirt?!?) in her ears.

13) We keep our utility bills looooooowww.

Air conditioning doesn’t get turned on until it’s too hot to sleep at night (usually circa July) and is turned back off as soon as late August brings cooler weather. We follow these 11 frugal hacks to avoid turning our heat on until absolutely mandatory. And, once we do turn the heat on, it’s set at a frugal 62 during the day when we’re home, and 58 at night and when we’re away.

To save water, Mr. Frugalwoods installed a low-flow showerhead for us. I do as few loads of laundry every week as possible and, I line dry most of our clothes. I do run the dryer about once a week to tumble our sheets, towels, and socks.

Mr. & Mrs. FW on the summit of Mt. Cardigan

Mr. & Mrs. FW on the summit of Mt. Cardigan

Something you probably noticed in this list is all of the “we.” A critical element of a frugal lifestyle, if you live with another person, is being on the same page. Mr. Frugalwoods and I never argue about money or fight over expenses. We throw down over other stuff, but are 100% in agreement over how to use and save our assets. If you’re interested, check out this post I wrote about our marriage: Behind the Scenes of a Happy Frugal Marriage.

Getting to a place where you and your partner/spouse share the same financial destination and goal is key. Knowing what you want as a family for the long-term is the first step to deciding how to spend your money together. For us, it’s liberating to not worry about money or fret over how much we’re spending. Free yourself and frugal it up!

Want to ramp up your own savings rate? Try taking our Uber Frugal Month Challenge and let us know what you think! If you’re interested in how we manage our money after we save it, check out How We Manage Our Household Finances.

7/27/14 update: As I share in our About page, Mr. FW and I have always been frugal by nature and lived well below our means. Without really breaking a sweat, we were saving 65% annually, which is what this post discusses. However, when we made the decision in early 2014 to accelerate our timeline to financial independence and solidified 2017 as our early retirement year, we were able to increase our savings rate to 82%. We’ll have to wait and see how 2014 shakes out on the whole, but I’m cautiously optimistic that we’ll be able to hover near a 70-75% rate of savings. Wish us luck!

1/9/15 update: The results of our 2014 spending are in and we’re delighted! Check out the full story in Well Hot Damn, Frugality Works! Our 2014 Savings Rate Revealed.

5/26/15 update: Wondering how our year-plus of extreme frugality is treating us? Look no farther than How A Year Of Extreme Frugality Changed Us.

We’re always looking for new ways to up the frugal ante, so please, share your ideas! How much do you save and what are your tips?

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63 Responses

  1. Sam says:

    Very impressive! I like the discipline that you guys demonstrate.

    I wish someone could cut my hair well!

  2. Steve says:

    I echo Sam, super impressive! It gives me motivation to try to leave our “goldilocks zone” of ~50% net take home pay savings rate slightly higher!

  3. Jen says:

    Just stumbled across your blog and I love it! I’m wondering if you also pay for life insurance or long term disability? Our various policies eat up a lot of our income. It’s amazing how much money is spent trying to manage worse-case scenarios : (

    • Mrs. Frugalwoods says:

      Thank you so much for stopping by! Glad to have you here! To answer your question, Mr. FW and I both have limited long-term disability and life insurance through our employers (which we don’t pay for). We’ll probably buy more life insurance once we have kiddos. Our current net worth allows us to, in effect, self-insure (to a certain extent).

  4. Amy says:

    Just discovered your blog and I’ve really enjoyed it! I love your sense of humor and dedication to frugality. I’ve got a long way to go to hit my savings goals, getting out of debt and adjusting to a more frugal lifestyle, but your blog will continue to encourage me. Thank you!

    • Mrs. Frugalwoods says:

      Thank you so much for the kind words! And, I’m so glad you’re here! Good luck on your journey and feel free to ask us any questions 🙂

  5. Very impressive savings rate. I like the breakdown of all the things you do to save. Thanks for sharing.

  6. Pichirino says:

    Impressive saving rate goals.
    Love that your blog goes through finance with swag, kind of like Mr.Money mustache’s blog in a refreshing way.

    Though with such a high savings rate goal who would you identify more with,MMM or jacob from ERE?

    • Mrs. Frugalwoods says:

      Thank you so much! That’s some high praise, wow! I’m flattered 🙂

      Good question–both Jacob & MMM are inspirational to us in different ways. They both have awesome stories and have done incredible things. We also really love the MMM Forums since they provide a wealth of knowledge from a bunch of fabulous frugal folks.

  7. John L says:

    I’m really enjoying reading your blog and appreciate the transparency… and your doggie is awesome. 🙂 Are there any posts on dealing with social situations that require money? Say something like: “Hey girl, we’re going out for drinks after work. You should come!”. I’ve been pretty frugal in the last 20 years, but always feel pressured during social events and meet ups. How do you both deal and handle these types of events in your lives.

    • Mr. Frugalwoods says:

      Hey thanks! Frugal Hound really is the star of the blog, we’re just supporting characters 🙂

      Social situations can be tough. I think there’s an element of moderation that is key. It’s fine to sometimes go out after work… but only have one drink. It’s fun and totally OK to go out to eat with friends… but it’s also totally fun and OK to invite them over to a potluck.

      While you can’t do much about your current friend, it’s also been really eye opening for us to make some new frugal friends. People who are on the same wavelength are just so much fun to hang out with. Plus they tend to be great cooks, so the potlucks turn out tastier! 😉

  8. K says:

    Have been reading your blog the past several weeks and love it so far. I have to agree 100% with your point about not wearing makeup saving tons of cash, as well as home grooming. I usually trim my hair myself and only wear makeup on special occasions. It probably saves me $15- $20 a month!

    • Mrs. Frugalwoods says:

      Nicely done, K! I’m all about the frugal (and fast) beauty routine. I used to spend a lot longer on hair/makeup/nails and I’m loving the natural, easy look. Plus, it’s darn cheap! Thanks so much for stopping by and sharing.

  9. I have this issue trying to explain my savings rate to friends. Early retirement talk is still kind of taboo, but I am hoping eventually I will win over some converts. I probably end up talking more about using reward points for traveling more than I do discussing budgeting, saving, etc.

    How do you manage to work full time, run you own blog, and post so often on other blogs? It is exhausting!

    • Mrs. Frugalwoods says:

      Hahah, it can be exhausting for sure, but it’s a lot of fun. I love connecting with fellow frugal folks and learning from them. It’s such an awesome and vibrant online community.

      In terms of how we balance it all–we get up early every day to do a few hours of blogging before going to work. And, we don’t watch much TV, which gives us more free time in the evenings :). Thanks for stopping by!

  10. Stephanie Walker says:

    I just found your site and love it already! We save manly by living in a small one bedroom shotgun duplex, which we happen to love. It really helps to live in a small space because I am not tempted to buy things I don’t need, because I don’t have a place to store it. I also save a lot of money by getting my haircut at the high school I work at (which has a cosmetology program). It costs me $5 and I always end up happier than I was when I paid $68 to have it cut by a professional this past summer. We also have a large food budget, but I am very mindful about waste.

    I am sure you take your dog to the vet, but when our dog had that “funky dirt” in her ears, it was a yeast infection. I used a medicine purchased off Amazon, because our floppy eared lab seems to be prone to yeast infections.

    • Mrs. Frugalwoods says:

      Thank you so much for stopping by and saying hi! I appreciate your kind words :). Good call on living in a smaller space–certainly an awesome way to cut down on stuff and utilities bills!

      Thanks for the heads up on the dog yeast infection–that’s good to know. We take Frugal Hound to the vet annually and at her last check-up in September, the doctor said the dirt/wax in her ears is normal (though a bit yuck, in my opinion). Oh well, I just clean ’em on out for her :).

    • Connie Mar says:

      Dogs (and cats) who are prone to yeast infections in their ears often have food allergies. You can do elimination diets if you don’t want to have the vet do the tests. Also, avoiding dry kibble and feeding wet food can help. Raw is best, then homemade, then quality canned. While costing more up front, feeding our pets good food will save money in the long run.

  11. Mary says:

    I found your website today and think I am aiming for what you have accomplished. We are nearing retirement and want to do with less now to save more. We too have greyhounds (3) and really enjoyed the pictures of frugal hound. Not sure how you got her in some of those costumes!

    • Mrs. Frugalwoods says:

      I’m so glad you found us! Thank you so much for saying hi! That’s fantastic that you’re close to retirement–congrats. Love that you have 3 greys! Frugal Hound is just pretty easy going with the costumes. She knows it’ll be quick and that she’ll get a ton of treats, so, she’s a good sport (for the most part 🙂 ).

  12. Mary says:

    Do you recommend any publications/books to help start with the paring down/frugal process? I know most is the mindset, but we have always tried to live with necessities. That makes it hard, for me , to know what next to work on.

    • Mrs. Frugalwoods says:

      Hi Mary! Thank you so much for stopping by! There are quite a few other blogs that I recommend–Mr. Money Mustache, JCollinsNH, and 1500 Days to Freedom among them. Also, the Money Mustache Forums are a wonderful resource–they’re filled with folks working towards financial independence in some sense or another and the advice and conversations are usually spot on. The book Your Money Or Your Life is another popular resource. I hope that this might be helpful to you on your frugal journey 🙂

  13. Shannon says:

    Way to go Mr. and Mrs. FW! I don’t think you’re weird at all (from what I’m reading).

    So I did my savings rate of ‘monthly after-tax savings / take-home pay’ and it was looooow, like an average of 11% savings (this is 2014 only). At first I was surprised, but then I realized our take-home pay is considerably lowered due to many pre tax accounts we’re contributing too. This makes our take home pay enough to cover monthly expenses and a little for buffering (which lead to a rather large buffer in the checking, so we probably need to bump up the contribs). So 37.8% of gross is saved, and with our employers gift of two 401a accounts (they put in 14+% of each of our salaries), that’s the equivalent of 52% of our income being saved. We’re going to do some spending analysis to see what things we can eliminate for 2015.

    • Mrs. Frugalwoods says:

      Sounds like you’re on the right track! Way to go with calculating savings and tracking your spending–that’s absolutely the best place to start. Thanks so much for reading!

  14. Gretchen says:

    So, I feel like this is a stupid question, but I’m going to ask it anyway…..We’re great about line drying clothes during the summer out in the yard. However, during the winter, when we need to bring clothes into our basement and dry them inside, how do you keep them from getting super stiff when they dry? That’s one hurdle I haven’t been able to conquer!

    • Shannon says:

      I lined dried everything for about 10 years in my basement. Even sheets in the basement in the middle of a Utah winter (I did have to get them on the clothesline before 10am or I did not have any sheets that night). I never purchased a dryer at my old house. The trick to keeping things soft for me was to catch the wash cycle when it was on its last rinse and add a liquid fabric softener. Downy balls were a product that you put in at the beginning so you didn’t have to listen for the rinse cycle (I never tired them though). Then be very meticulous when you hang stuff, sometimes readjusting it to avoid that “line” from the dowl rod. I don’t feel anything was too rough. It certainly wasn’t like wrapping a cardboard box around you though! Maybe towels were not fluffy goodness, but after using them once out of the shower they were back to regular towels.

      • Mrs. Frugalwoods says:

        We line dry things in our basement year-round as well and it seems to work just fine. I think I might just be accustomed to slightly stiff clothes at this point, because I honestly don’t even notice it 🙂

        • SB says:

          Adding about 1 cup of vinegar to your wash will keep your clothes soft and (for the socks and underwear in the dryer) static free……it’s amazingly frugal and no chemicals!

  15. MsFrugalista says:

    Great job on the impressive savings rate! Quick question: when calculating the savings rate do you include the principal component of your mortgage as savings or expense?

    • Mr. Frugalwoods says:

      We don’t count mortgage principal as part of our savings rate. Mostly because I don’t bother to check on a monthly basis how much principal we paid off 🙂 In our year end review I do take a look, but mostly just for fun.

  16. Zambian Lady says:

    No impulse buying for me either, though I do give myself a small amount every long once in a while to buy whatever I want This is usually so that I do not start feeling as if I am depriving myself of some wants (not needs). However, the interesting thing is that I rarely end up buying anything at all because while at the shops, I realize that I do not need another handbag, pair of shoes, etc. It works for me.

    • Mrs. Frugalwoods says:

      Totally agree! When I have a gift card to a store, it takes me years to use it because there’s nothing I need! I can’t shop for the sake of shopping and I really don’t enjoy getting stuff that’s just going to clutter up my home. Sounds like you have a great approach to it too!

  17. brookst says:

    I just sold my home and moved to an apartment. A lot of people think my downsizing is also downgrading but I disagree. I sold an old war-time house with drafts and small rooms to move into a brand new, energy efficient. open concept apartment. My costs are lower, I was able to almost clear up all my debt and now have a nice nest egg. In a few years we will probably buy a house but by then we will have money set aside and be able to get the house we really want. Moving to an apartment forced me to purge and I feel a huge weight off my shoulders. Selling my house was the best decision, for me and my family, at this point in our lives.

    • Mrs. Frugalwoods says:

      Sounds like you made a great move. What a wonderful feeling it must be to feel so free now! We lived in an older house in Washington, DC and the drafts and idiosyncrasies started to drive us up the wall. I love the beautiful architectural details of older homes, but actually living in them can be a real pain. Congrats on purging unneeded stuff too–that’s awesome!

  18. Frugally Couponer says:

    Wow, super impressive!! very motivational too!! A couple things I do to save big, (with kids) buy powdered milk, mix it following directions, then mix it half and half with regular store milk. kids still don’t know I do that!! Milk is sooo expensive these days, this definitely stretches it! use only milk made from powder for any cooking/recipes. Also, have 2 chocolate labs. best thing to clean the “dirt/ gook out of the ears” mix vinegar half and half with rubbing alcohol. It s “swimmer’s ear” recipe, so it gets the water out of the ears cuz when the alcohol evaporates it takes any moisture with it, and it cleans them too. Just douse a cloth with the solution and rub in their ears till clean! They come to love it. Have a blessed day!

  19. Frugally Couponer says:

    oops posted my swimmers ear recipe incorrectly: it’s half water half rubbing alcohol for cleaning ears. I do use vinegar mixed half and half with water to do all cleaning, it’s antimicrobial, good for cleaning counters, bathrooms, windows, stove, basically anything in the house. also if you add a bit of dish soap to it, it’s the recipe for roundup to kill your weeds. good luck!

  20. William says:

    Hi mrs frugalwoods, thank you for your blog. I was wondering what you would do if you were me, to lower what i spend on food. Currently im single, live in NYC and rent a bedroom with no access to the kitchen to cook. I spend $3.50 on an egg white bagel for breakfast, $9 on a chipotle burrito for lunch, and $7 for a rice beans and chicken dinner. I work in the field and dont like to nuke my food. How would you reduce my food expense without feeling hungry or starving? : )

    • SB says:

      Negotiate kitchen access…….even at a bit of a cost it will be less expensive than $20 per day to eat and it would be healthier….plus your variety would increase ten fold!

  21. DaybyDay says:

    Question on a rather old post. When you calculate saving rate, do you also include “Sinking Funds” (things you save up for but know are going to be depleted) or only items that go into “long term” investments and money market accounts? We save monthly based on prior full year spending average for that category, but it’s saving ahead for a specific spending area. For instance, we think we will need a new furnace in the next 2-3 years, so we are saving monthly for that specific item…we also have a monthly saving for kids school events & activities (music lessons, field trips, etc) … we base the monthly amount based on the last year spend total averaged.. but it gets depleted only as those items come up. Would love to hear how you manage this type of saving!

  22. TinaM says:

    What do you have for health insurance? Or plan to have for health insurance when you plan to retire or are self-employed?

  23. d grant says:

    Doesn’t the following actually cost money though? – hiking, woodworking, home improvement projects, reading, writing, cooking. Do you mean after the initial outlay?

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