Oh what a glorious month is June! Ours brimmed with celebrations: my sister-in-law’s high school graduation, our 7th wedding anniversary, Frugal Hound’s 6th birthday, and at 19 weeks pregnant today, we’re almost halfway to Babywoods’ arrival!
Naturally, we celebrated each event with our customary frugal aplomb. For the graduation, we found super cheap airfare, took our own food on the plane, didn’t check any bags, and used credit card rewards points to buy a graduation gift free of charge to us.
Frugal Hound received a $2 pterodactyl to mark her advancing age and we took some photos of the Babywoods bump (I’ve learned that it’s a thing to hire a photographer to document your bump, which, uh, needless to say we won’t be doing… ).
We Ate At A Restaurant!
We toasted our anniversary by using a gift card to a local restaurant–you’ll see the cost below of what we paid beyond the gift card amount and for tip. Even when using a gift card, we think it’s important to tip the server on the full value of the meal. Anything less would just be rude.
This is actually the first time we’ve eaten out since Mr. Frugalwoods’ 31st birthday last August. It’s astounding how much money we save by not eating out, and it’s also rather astounding how much we don’t miss it. Cutting out restaurant meals was an easy way for us to ramp up our savings–eating at home is always a better deal (unless you go wild at the grocery store, which we don’t recommend).
We’re so content with our routine of eating all meals at home that it’s not a hardship for us at all. Plus, when we do go out, it’s a huge treat! I love the immense pleasure we get from our rare outings–makes it feel like a truly special occasion and not just another Saturday night.
Since we don’t give gifts or cards for our anniversary (for reasons enumerated here), enjoying a meal out is a delightful way to celebrate. We’d much rather have an experience together than buy some trinkets we don’t need and that would only serve to clutter up our abode.
A Note On Our Spending
Despite our luxuries of travel and dining out this month, our spending in June was extraordinarily low–we clocked in at $793.90 in non-mortgage expenses, which is awesome in our frugal book. We aim for circa $1,000 in expenses each month, and thus, being on the low side this month will help even out pricier months. We’ve found that over the course of a year, as long as we hew to our frugal regime, our spending tends to balance itself out.
You’ll also note that we buy household goods at three different locales: Amazon, Costco, and The Dollar Store. This is due to our price comparison research (which entails me writing down prices/keeping receipts). It pays to know where you’ll actually get the best deal on, say, deodorant.
The air conditioning remained off for the entirety of June (can I get a woot!!!!) which gave us yet another blissful month without the expense of climate control. It’s amazing what you can accomplish with some open windows, a screened Stormzilla, and a tolerance for varying temperatures.
What Do You Do About Mega Expenses?
I’ve received a number of questions lately on how we handle substantial, one-time expenses and the answer is that we simply pay them in full on the month that they hit. We don’t smooth or spread out payments and we carry absolutely no debt over than our mortgage*. Our frugality enables us to do this–we have enough saved up that we can pay cash for any major expense that comes our way.
This is a liberating, and privileged, aspect of the freedom that comes from living a life of extreme frugality. Since we live way below our means and only spend on what we need, and truly want, we have plenty leftover for emergencies, surprises, and planned large purchases.
For example, we know that one day, our car (the venerable 19-year-old Frugalwoods-mobile) will inevitably bite the dust. And so, you’ll see an expense for the entire cost of a used car that month–we’ll just write a check and pay in full for our “new to us” car.
I realize that the standard American way is to assume debt for hefty, new purchases and take out leases on everything from cars to furniture to television sets, but that’s not how we roll. And while we could afford to pay cash for a brand new car, we don’t consider that a wise allocation of our resources. Even in a purchase that significant, we’ll buy below our means and reap the savings that the used market proffers.
*we’re not accelerating paying down our mortgage because we have a super low interest rate (3.8%) and we’re confident our money will yield a greater return through our investments.
Personal Capital: It’s How We Organize Our Expen$e$
Mr. Frugalwoods and I 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 analysis for you fine people.
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.
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. 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 $4.40 this month). 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 (not counting maxing out our 401Ks).
Why do we save so much and spend so little? It’s all in service of our goal to reach financial independence by age 33 and move to a homestead in the woods.
Interested in how we keep costs so low? Check out How We Save 65% Annually. If you’re up for some hardcore frugal adventuring, take my Uber Frugal Month Challenge, and, see how we did one year later in How A Year Of Extreme Frugality Changed Us. If you’re curious about the common expenses missing from the below, our August 2014 Expense report has the answers (or feel free to ask in the comments).
We don’t budget and instead live on frugal autopilot. This technique saves us the time and hassle of building a budget (we’re some 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.
Alright you frugal money voyeurs, feast your eyes on every dollar we spent in the month of June:
|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.|
|Groceries||$336.59||Well within our normal range of $300-$350/month for the two of us.|
|Household goods from Costco||$77.39||Household supplies (including such thrilling things as dog food, toothpaste, toilet paper, vitamins, and more). This total does not include any human food.|
|Electric||$75.88||It’s electric! Boogie woogie woogie. You’re welcome for getting that stuck in your head :).|
|Gasoline for Frugalwoods-mobile||$66.17||Two tanks of gas for the ol’ minivan.|
|Internet||$56.95||Savvy readers will note that this is lower than in prior months. That’s because Mr. FW finally prevailed in his attempts to get the company to lower our bill. Hooray!|
|Cabs||$50.36||A luxury to be sure–we took an Uber (using a few credits we had) to, and a cab from, the airport for our visit to Mr. FW’s family. Far cheaper than parking our car at the airport, but more expensive and much more convenient than taking the bus (which we’ve done many times). It’s a 15 minute cab ride and a 1.5 hour bus/subway/walking sojourn to the airport, so we decided to pay for our time in this instance.|
|Gas Bill||$26.74||You can tell we turned the heat off in late April. This reflects our gas bill for May–a whopping $48.11 less than the prior month!|
|One restaurant meal for our anniversary||$22.94||This is the remainder we paid beyond our gift card for our 7th anniversary dinner out. Not too shabby!|
|Household goods from Amazon||$22.66||All the items that are cheaper from Amazon than Costco: electric toothbrush head replacements, flea/tick preventative medicine for Frugal Hound, and my fancy face sunscreen.|
|Household goods from The Dollar Store||$13.92||All the items that are cheaper from the Dollar Store than from Amazon or Costco: 8 greeting cards, deodorant, and face wash.|
|Home Depot||$11.63||A few home improvement supplies|
|Renewal of domain name||$10.87||The cost of renewing one of our domain names.|
|Postage stamps||$9.80||One book of forever stamps. Despite the expense, I love mailing cards and letters to friends and family :).|
|Back-up and CDN for Frugalwoods.com||$7.60||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.|
|CVS Pharmacy||$4.40||Some sort of pharmacy-related expense I imagine.|