There’s never a perfect time to start living frugally. There’ll never be an ideal month or optimal moment to decide you’re ready for frugality. Waiting until that ephemeral, non-existent ‘perfect’ time is a good way to ensure you’ll never actually kick-off a frugality regime. Why am I saying this at the beginning of my monthly expense report? Because Mr. Frugalwoods and I spent kind of a lot of money last month during our Uber Frugal Month Challenge.
We didn’t intentionally spend on foolish things–it’s not like we bought a jet ski or went out for drinks–it just turned out that January 2017 was a tad expensive. And that’s just fine. The principle of frugal living isn’t to craft an idealized month of spending wherein nothing goes wrong (our car battery died), no large bills come due (we paid our annual VT home insurance bill as well as our twice yearly car insurance bill for both vehicles), and no acts of nature/weather occur (we had to order a $65 load of gravel for our ice-rink of a driveway).
The mythical month of no surprise expenses doesn’t exist. Mr. Frugalwoods and I have enjoyed some supremely cheap months wherein none of those things occurred and our spending was low, low, low. But then there are plenty of other months where all of that stuff (and more) occurs. That, my friends, is simply how life rolls.
And herein is the genius of frugality: by controlling our spending on the millions of things within our power, the unexpected expenses are handled with ease. Frugality means we’re not living paycheck-to-paycheck, we’re not in debt, and a car battery dying is not a cause for existential concern. Frugality is the liberation, the freedom, and the deliverance from this type of worry. It’s also continuous. As I discussed the other day, frugality is not deferred spending. Successful frugality is not one month of deprivation followed by phantasmagorical spending sprees. It’s measured, judicious utilization of financial resources over the long-term.
Don’t be afraid to start your own extreme frugality journey now. It doesn’t matter if you’re going on vacation or buying a home or having a baby. These are the elements of life. And life doesn’t ever get simple in that sense–there are always unpredictable, unforeseen, messy, and possibly expensive events. Embracing frugality isn’t predicated upon a perfect month splayed out before you. In fact, I’d say frugality does best in times of turmoil because it reduces the number of things you have to worry about–there’s less to buy, less to shop for, less to stress over, fewer decisions to make, and more money to make it all possible.
Personal Capital: How We Organize Our Expen$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 the 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. No excuses.
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. If you’re not tracking your expenses in an organized fashion, give Personal Capital a try. 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.
Credits Cards: How We Buy Everything
Mr. Frugalwoods and I purchase everything we possibly can with credit cards for several reasons:
- It’s easier to track expenses. No guesswork over where that random $20 bill went; it all shows up in our monthly expense report from Personal Capital. This prompts me to spend less money because I KNOW I’m going to see every expense in detail at the end of each month.
- We get rewards. Who doesn’t like rewards? Credit card rewards are a simple way to get something for nothing. Through the cards we use, Mr. FW and I get cash back as well as hotel and airline points just for buying things we were going to buy anyway.
- We build our credit. Since Mr. FW and I don’t carry any debt other than our mortgages, having several credit cards open for many years (which are fully paid off every month) has greatly helped our credit scores.
If you’re interested in opening a credit card, I highly recommend using this site to search for a card that’ll best fit your needs. And if you’re interested in travel rewards cards specifically, check out this list curated by my friend Brad from Travel Miles 101. I respect Brad’s work in the travel rewards space and I trust his advice on which cards will reap the best benefits.
Huge caveat to credit card usage: you MUST pay your credit card bills in full every single month, with no exceptions. If you’re concerned about your ability to do this, or think that using credit cards might prompt you to spend more money, then credit cards are not for you–stick with using a debit card and/or cash. But if you have no problem paying that bill in full every month? I recommend you credit card away, my friend!
How To Read A Frugalwoods Expense Report
Want to know how we manage the rest of our monies? Look no further than Our Low Cost, No Fuss, DIY Money Management System. We also own a rental property in MA, which I discuss here. Why do we save so much and spend so little? It’s all in service of our goal to reach financial independence and move to a homestead in the woods (which happened in May!!).
For us, embracing frugality is a joyful, longterm choice. We prefer a simple life to one filled with consumerism and we spend only on the things that matter most to us. Our approach isn’t one of miserly deprivation; to the contrary, we live a luxuriously frugal existence.
Interested in how we keep costs so low? Up for some hardcore frugal adventuring? Sign-up to take my Uber Frugal Month Challenge, which is the method Mr. FW and I employ to sculpt our frugal lifestyle. Over 10,000 people have already taken the Challenge (and saved thousands of dollars) and you can sign-up at any time. You’ll start with Day 1 so you won’t miss a frugal thing. P.S. It’s free!
But Mrs. Frugalwoods, Don’t You Pay For X, Y, Or Even Z????
Wondering about common expenses that you don’t see listed below? Our August 2015 expense report has the answers you seek! Plus, as I explained here, we pay bills in full the month we receive them–that’s why you won’t see monthly payments for things like car insurance or property taxes. If you’re curious about how we handle charitable contributions, check out How We Make Meaningful And Tax Efficient Charitable Donations.
Alright you frugal money voyeurs, feast your eyes on every dollar we spent in January:
|VT home insurance for 1 year||$601.00||This is for a full year of insurance on our VT home|
|Six months of auto insurance for both cars||$314.60||This covers six months’ worth of insurance for both our Prius and Subaru. We don’t have comprehensive insurance; but we do have $1M in liability coverage through Geico.|
|New battery for the Subaru||$130.99||The Subaru’s battery died and Mr. FW replaced it|
|Plowing & sanding of the driveway ($65 each)||$130.00|| Thanks to a strange bout of rain and freezing temperatures, our quarter-mile long, hilly, gravel driveway turned into an ice luge. We had a load of gravel and sand put down on top of the ice.
Also, Mr. FW was out of town during a snowstorm so I had to hire a neighbor to plow the driveway for us (unfortunately, I can’t operate the tractor with Babywoods strapped to me…. ).
|Household supplies and prescription medicine||$139.03||All non-food household and farm supplies, including such thrilling things as toilet paper, soap, dog food, and dental floss.|
|Gasoline for the cars||$77.44|
|Trail Crampons and multivitamins (from Amazon)||$68.76||After several unfortunate slips and falls on the ice during his outdoor chores, we decided to get this pair of crampons for Mr. FW (they’re little spikes that attach to the bottom of your boots to dig into ice).
I price checked vitamins at three different stores and Amazon was the cheapest!
|Beer||$53.80||Mr. FW drove past the legendary Alchemist brewery on his way to the maple sugaring conference, so he stocked up on some excellent beer.|
|VT Maple Sugar Makers Association Conference||$50.00||Mr. FW attended a day-long conference on maple sugaring.|
|Apple Pruning Workshop||$20.00||Mr. FW signed up for a workshop on how to prune apple trees.|
|Local Groupon for a restaurant||$20.00||We’ve decided to go out to eat once a month and there was a Groupon for one of our favorite local restaurants, so we pounced.|
|Cell phone through Boom Mobile||$19.99||We FINALLY found an inexpensive cell phone provider (Boom Mobile) that actually gets service at our house. We’ve been without cell service for months (we have a landline, fear not), so I’m thrilled that Boom seems to be working well for us.
It took extensive trial and error on Mr. FW’s part (of signing up for, and then canceling, various different cheap providers) to find one that works out here in the country. Woohoo!