Every August, the tax gender neutral person cometh. We paid our annual property tax bill in full last month, which accounts for $8,634.29 of our August spending. This covers our 66 acre property, including the house and barn. And I have to say, while it’s a lot of money, it’s money I’m happy to spend because property taxes fund crucial public services such as schools. Vermont has high taxes, a fact many folks pointed out when Mr. Frugalwoods and I decided to make it our permanent home. But we moved here with full knowledge of this fact and also full knowledge of how Vermont utilizes these taxes. We’re thrilled to be in a fabulous public school district and a vibrant little town in a great little state that funds things that are priorities for me and my family.
I don’t mind paying taxes so that I (and my neighbors) can reap the benefits of a good school system that offers–for example–free preschool for all children ages three and older (which is where Kidwoods is right now!!!). I don’t mind paying taxes so that I (and my neighbors) can enjoy well-maintained roads and pristine Vermont landscapes. It’s all part of being in a community and so it’s a check I gladly write every year.
Last year, a number of readers asked why I choose to pay big bills (such as our property taxes) in full, as opposed to spreading payments out (in the case of our property tax, there’s an option to pay half now and half in the spring). You all asked: why not keep that other half invested and earning interest? Honestly, it’s easier for me to pay it all at once. Additionally, I wouldn’t invest that dollar amount because I don’t invest anything I know I’m going to need in the near future. Since the nature of the stock market is to rise and fall, I keep enough cash liquid (in a savings account) to cover payments such as our property tax. Plus, I figure its easier for my town to receive the full amount all at once and deploy the money to municipal services that need it.
Groceries, Oh My Groceries
August finished out our summer guest season with a fabulous finale: my sister and her three kids came to stay for a week and a half. And we had SO. MUCH. FUN. The girls loved hanging out with their cousins and my sister and I stayed up way too late for way too many nights having conversations that were way too wonderful. I’m so thankful they came all the way from California to visit and I’m now in total awe of anyone who has: a) five children; b) tweens and/or teens.
My oldest nephew and niece are firmly in the tween category and–holy cow–can they eat. I thought my girls ate a lot, but these two blew us away. People with lots of kids and/or teens, I honestly do not know how you keep enough food in your house. We were feeding them to good effect as they turned around and helped split wood, stack wood, pick berries, collect apples, and…. watch the little ones! I really hope we can make this an annual tradition as I’d love for the cousins to build close relationships. Next year I will buy more food. Promise.
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. I 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 debt other than our mortgages, having several credit cards open for many years (that are fully paid off every month) has helped our credit scores. By the way, it’s a dirty myth that carrying a balance on your credit card helps your credit score–IT DOES NOT. Paying your cards off IN FULL every month and keeping them open for many years does help your score.
For more on our credit card strategy, check out The Frugalwoods Guide to a Simple, Yet Rewarding, Credit Card Experience.
If you want a simple cash back credit card, I think the Fidelity Rewards Visa (which is the card that I have) and the Chase Freedom Unlimited are good options. Both of these cards have no annual fee and offer cash back on purchases.
While I like the Fidelity card, it does require you to have a Fidelity account. If you’re not already banking with Fidelity, the Chase Freedom Unlimited might be a better choice since it doesn’t require a specific bank account. Plus, it has no annual fee and offers a great cash back percentage. Another thing I like about the Chase card is that they’re currently offering double cash back. You receive 3% cash back on all purchases in your first year up to $20,000. After that, the card delivers an unlimited 1.5% cash back on all purchases. Pretty good deal, I’d say!
The best way to find a credit card that’ll work for you is to search for it yourself. Fortunately, there’s a website, CardRatings.com, with a search function that aggregates information about tons of different credit cards.
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.
If you have no problem paying that bill in full every month? I recommend you credit card away, my friend! (note: these credit card links are affiliate links)
Cash Back Earned This Month: $33.28
The silver lining to all this spending is our cash back credit card. We earn 2% cash back on every purchase made with our Fidelity Rewards Visa and this month, we spent $1,663.98 on that card, which netted us $33.28. Not a lot of money, perhaps, but it’s money we earned for buying stuff we were going to buy anyway!
This is why I love credit card rewards–they’re the simplest way to earn something for nothing. I will note that if we instead had the Chase Freedom Unlimited card, we could’ve earned 3% cash back, which would be $49.92.
Personal Capital: How We Organize Our Expen$e$
Mr. Frugalwoods and I use Personal Capital to 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 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, you might consider trying Personal Capital (note: these Personal Capital links are affiliate links). 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
Want to know how we manage the rest of our money? Check out Our Low Cost, No Fuss, DIY Money Management System. We also own a rental property in Cambridge, MA, which I discuss here. Why do we allocate our money like we do? It’s all in service of our goal to reach financial independence and move to a homestead in the woods (which happened in May 2016).
For us, embracing prudent financial management and 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 in which we maximize efficiency.
Why do I share our expenses? To give you a sense of how we spend our money in a values-based manner. Your spending will differ from ours and there’s no “one right way” to spend and no “perfect” budget (perfection does not exist!).
We’re not the most frugal people on earth (far from it) and we’re not spendthrifts either.
We fall somewhere in between and I hope that by being transparent about our spending, you might gain some insights into your own spending and be inspired to take proactive control of your money.
If you’re wondering where to start with managing your money, or if you’d like to save more money every month, you might consider taking my free, 31-day Uber Frugal Month Challenge. If you’re interested in the other things I love, check out Frugalwoods Recommends.
A Note On Rural Life
Since we live on 66 acres in rural Vermont, our utilities and expenses are slightly different from traditional urban and suburban dwellings.
We don’t pay for water, sewer, trash, or heating/cooling because we have a well, a septic system, our town doesn’t provide trash pick-up (we take it to a transfer station once a week in bags we purchase from our town), we heat our home with wood we harvest ourselves from our land, and we don’t have central air conditioning (we use window units during the hottest parts of the summer). We also have solar panels, which account for our low electricity bill.
For more on our rural lifestyle, check out my series This Month On The Homestead as well as City vs. Country: Which Is Cheaper? The Ultimate Cost Of Living Showdown.
But Mrs. Frugalwoods, Don’t You Pay For X, Y, Or Even Z????
Wondering about common expenses you don’t see listed below?
- 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 tax. These expenses show up as the full annual amount in the month we pay them.
- We don’t have any debt (other than our mortgages) and we paid cash for our cars.
- Our health insurance is paid for by Mr. FW’s employer (who he works for from home).
- Here’s how we make charitable contributions: How We Donate To Charities Like Billionaires and also How We Make Meaningful And Tax Efficient Charitable Donations.
If you’re wondering about anything else, feel free to ask me in the comments section! P.S. my new clothes will appear in next month’s expense report.
Alright you frugal money voyeurs, feast your eyes on every dollar we spent in August:
|The total annual amount for our 66 acre Vermont property, which includes our house and barn
|Higher on account of hosting. We had five kids under one roof and they put it away!
|Thrilling stuff. Floss, laundry detergent, medications, toilet paper… need I go on?
|Beer, wine, liquor
|We got a 20% coupon from the liquor store and decided to stock up in order to take full advantage. A lot of this will be used for: taking to parties, as gifts, for hosting, and on the holidays! Cheers.
|Doctor visit co-pays
|Our customary kid-free dinner out per month, courtesy of our fabulous adopted grandma neighbor who stays with the girls after we put them to bed.
|Love our fiber internet!
|Gasoline for cars
|Bulk spice order
|We stocked up on bulk spices from Penzey’s, which works out to be cheaper than buying them from the grocery store or BJ’s
|Service for two cell phones
|This is so cheap because we use an MVNO called Ting (affiliate link). MVNOs resell wireless service at discounted rates (but it’s the same service). They’re basically the TJ Maxx of cell phone service.
If you’re not using an MVNO, check out this post to see if you can make the switch. The savings are tremendous.
|Mailing packages and buying stamps
|Registration for Vermont Woodlands Event
Mr. FW is going on a tour and discussion of the VT tree farm of the year to bring back tips and ideas for our “not the tree farm of the year” farm.
|We buy beef from our neighbor. It’s local, grass-fed, organic, free range, and SO DELICIOUS.
|We have solar (which I detail here) and this is our monthly base price for remaining grid tied.
|Minus property tax bill: