A Classically Frugal Month
January was a superbly cheap month for us, which is what we anticipated given our weeklong trip out to California to visit my family. Any month with non-mortgage spending below $1,000 ($989.05 this month), is ideal for us. It balances out slightly pricier months (ahem, looking at you, December 2014). We’ve found that just under $1,000/month is pretty consistently the lowest spend we’re able to comfortably achieve.
It’s All About The Goals
Our desire to spend meagre amounts of money every month stems from a three-fold goal:
- We want to continue saving 71%+ of our incomes every month from now until we retire early to our future homestead (slated to occur circa fall 2017).
- By lowering our expenses, we’ve created a lifestyle of ingrained, second-nature frugality whereby we’re completely content, fulfilled, and happy with our level of spending.
- Living on frugal autopilot will serve us well once we’re on the homestead. By permanently reducing how much money we require, we won’t need a lot of money to enjoy life post-traditional employment.
Everything We Buy Enables Greater Frugality
- A Dremel to use in filing Frugal Hound’s claws. This saves us a great deal of money over the cost of taking her to the doggie groomers. Our frugal philosophy involves insourcing everything we possibly can and hound care is one of those things that most people outsource, to great detriment to their bank account. If you can do it yourself, why waste money paying someone else? We’ve realized we do a better job anyway and, in the case of hound care, it’s far less traumatic for Frugal Hound than going to a stranger.
- A 20lb C02 canister for our hacked Sodastream (if you want to hack your own, see Mr. FW’s how-to post). As outlined in that initial post, our hacked system saves us upwards of $450/year over the cost of standard C02 canisters. Yes, of course it would be cheaper to just drink tap water, but seltzer is one of our luxuries. We don’t drink soda or juice and we never eat out, so seltzer is a must.
- We spent $380 repairing our 19-year-old Honda Odyssey (Frugalwoods-mobile for those of you who are new readers). Why would we do such a thing? Well, it’s a good car that’s still in fine condition. We believe firmly in the ethos of repairing and reusing things until they’re absolutely worn out. Whether it’s our hand towel (which is currently sporting several large holes) or our car, we won’t replace it until absolutely necessary. There’s just no reason to.
What We Didn’t Spend Money On
- A haircut for me. Mr. Frugalwoods expertly cut my hair himself on Saturday and it looks great. How-to post forthcoming!
- Entertainment. Per usual, we maintained our $0 entertainment budget.
- Restaurants, bars, coffee shops, take-out. There’s one exception this month as I took my sister and two nieces out for coffee (for the adults) and pastries (for the girls) while we were out in California. I’m all for spending on meaningful experiences and this was a perfect example. We played the Princess Matching Game (I lost; my 6-year-old niece beat us all) and had a great time.
- Snow removal service. Mr. FW is the sole manager, operator, and employee of the Frugalwoods snow and ice removal team for our house. Many folks in the Northeast pay handsomely for someone else to manage their snow.
Personal Capital: It’s How We Organize Our Expenses
We use Personal Capital to aggregate and consolidate our transactions from across all of our accounts. We then drop them into a spreadsheet to provide our below blog-ready analysis.
Personal Capital (which is free to use) is a great way for us to systematize our financial overviews since it links all of our accounts together and provides a comprehensive picture of our net worth. Always good to have everything in the same place!
Tracking expenses is, in my opinion, the best way to get a handle on your finances. You absolutely, positively cannot make informed decisions about your money if you don’t know how you’re spending it. Sounds harsh, but without a holistic picture of how much you spend every month, there’s no way to set savings, debt repayment, or investment goals. It’s a frugal must, folks. Here’s a more detailed explanation of how I use Personal Capital for my expense tracking.
Where’s Your Money?
One of the easiest ways to optimize your money is to use a high-interest savings account. A high-interest savings account gives you money for nothing. With these accounts, interest works in YOUR favor (as opposed to the interest rates on debt, which work against you). Having money in a no (or low) interest savings account is a waste of resources–your money is just sitting there doing nothing. Don’t let your money be lazy! Make it work for you! And now, enjoy some explanatory math:
Let’s say you have $5,000 in a savings account that earns 0% interest. In a year’s time, your $5,000 will still be… $5,000.
Let’s say you instead put that $5,000 into an American Express Personal Savings account that–as of this writing–earns 1.70% in interest. In one year, your $5,000 will have increased to $5,085.67. That means you earned $85.67 just by having your money in a high-interest account.
And you didn’t have to do anything! I’m a big fan of earning money while doing nothing. I mean, is anybody not a fan of that? Apparently so, because anyone who uses a low (or no) interest savings account is NOT making money while doing nothing. Don’t be that person. Be the person who earns money while you sleep. Rack up the interest and prosper. More about high-interest savings accounts, as well as the ones I recommend, is here: The Best High Interest Rate Online Savings Accounts.
How To Read A Frugalwoods Expense Report
From top to bottom. I jest, you could read it bottom to top if you so desire, I’m not going to stop you. As regular readers know, we itemize every single dollar we spend (which is why there’s a line item for $0.40). I do this because it’s the most honest articulation of how we allocate our resources and managed to save 71% of our take-home pay in 2014 (after maxing out our 401Ks).
Interested in learning how we keep costs so low? Check out How We Save 65% Annually and, if you’re up for some hardcore frugal adventuring, take my Uber Frugal Month Challenge. If you’re curious about some of the common expenses that are missing from the below, our August 2014 Expense report has the answers (or feel free to ask in the comments below).
We don’t budget and instead live on frugal autopilot. This technique saves us the time and hassle of building a budget (we’re lazy frugal weirdos). The caveat here is that many people find budgeting incredibly helpful and I in no way malign the budgeting process. If you operate more successfully with a budget, then budget away my friends.
And now, for your money voyeur delight, here’s every single dollar we spent in January 2015:
|Mortgage & Escrow for Taxes & Insurance||$2,741.01||Yep, it’s high. But, we live in a very high COL city (Cambridge, MA) and this house will be our cash-flowin’ rental after we decamp to our rural homestead.|
|Car repair||$380.00||Poor old Frugalwoods-mobile required a a brand new exhaust system from the catalytic converter back (muffler, flex pipe, mounting brackets–the works). Even though she’s a 19-year-old Honda Odyssey, it was worth it.|
|Groceries||$135.86||Super low this month thanks to our trip out to California. Since we were there for a full week, we bought fewer groceries here on the home front. We also skipped Costco this month.|
|Gas Bill||$116.70||You can tell we have our heat on! This is why we’re so committed to keeping our heat set at 58 at night and 62 during the day. Even at those low temps, we still pay through the nose. Merely a fact of life in this frigid New England clime.|
|Electric Bill||$85.51||It’s electric!|
|Seltzer canister (home improvement)||$69.06||We needed a new 20lb C02 canister for our hacked Sodastream system. We’re pleased to see that the canister lasted 6 months, which is right on track with our initial estimates.|
|Internet||$66.95||I shake my fist at this every month since there’s nothing we can do to lower it. There’s only 1 internet provider in Cambridge and we’ve unsuccessfully tried to negotiate a lower bill. Since we don’t have cable or a landline, unsurprisingly the company is totally uninterested in cutting us a deal.|
|Gasoline for Frugalwoods-mobile||$52.15||Standard gasoline costs.|
|Dremel (pet grooming)||$25.49||We bought an electric Dremel (a high-speed rotary tool) for filing Frugal Hound’s claws. Our previous Dremel was battery-operated and it ceased to hold a charge. So far, so good and we’re reaping vast savings over the cost of taking her to a groomer.|
|Annual Parking Pass||$25.00||Our annual City of Cambridge resident parking pass. Since we don’t have a garage or driveway, this is a necessary expense.|
|Prescription Medication||$15.00||One prescription medication.|
|Coffee Shop!||$11.00||I took my sister and nieces out for coffee and pastries while we were in CA. A rare expense for us, but I’m fine with spending on family time.|
|Wetsuit||$5.00||Mr. FW bought a wetsuit at a thrift store in CA, which he plans to make into bar mitts for his bike handlebar. Helpful commenters on his Ultimate Winter Bike Commuter’s Guide suggested he do this to keep his hands warm. Thank you, Frugalwoods readers!|
|Blog back-up||$0.93||Gotta keep the ol’ Frugalwoods.com backed up! We’re lucky that Mr. FW is a software engineer and can manage our website himself, which keeps our blog-related expenses extremely low.|
|4 Corelle Plates||$0.40||4 Corelle plates from a thrift store in CA. Seeing as these retail for $5 each new, this was an awesome used find!|