Frugal me! Frugal me!

There is an old teacher joke that goes like this: The English teacher asked the kids to use their vocabulary words to write a story. Little Johnny looks up the word Frugal and sees that at least one of the definitions is To Save. So Little Johnny writes:

There was once a beautiful princess imprisoned in a tower. She yells from the tower, ‘Frugal me! Frugal me!”

A handsome Knight was riding by. He ran in and frugaled her and they lived happily ever after.

In these times of economic uncertainty it is time to consider being frugaled.

I am interviewing for jobs about 3 or 4 times each week, but I have no job right now. I don’t think I am making a lot of mistakes with my resume, or my interview performance. I feel that if there is one opening (and 20 applicants) that 6 or 8 of the applicants may be perfect for the job, yet the hiring team can only pick one. But having no job is stressing me. I haven’t worked for months because of a bad car crash that has required me to care for my wife who was injured so badly she could not get on without constant care until just recently.

No money is coming in, we have just a little left from the sell of our house, and being frugal is something important to me right now.

So what must I do to slow my spending and hold on until I do find a job?

When You Get Paid – Pay yourself first

This has to come first because of the way it is worded, and I know how crazy it sounds, but I really believe it is true. Always, always, always pay yourself before you pay anyone else. The first bill you pay must be yourself.

Whenever I have said this to poor hurting families I get one of two reactions.

Reaction 1

I can’t pay my bills now. If I pay myself first I won’t be able to pay my bills and we’ll go under.

Paying yourself first does not mean to pay yourself so much that you shortchange your debts. It would be great if you could save 10% of your salary for a rainy day, and put money into a retirement fund of some sort, and perhaps have some diversified investments, but if you are in deep debt an aggressive saving program will be impossible. Nevertheless, you can still pay yourself something. If you can’t save $100, can you pay yourself $10? If $10 is going to hurt, then how about $1, or 10¢? If you look closely you will find that all of us waste money, and at least a tiny amount of money usually wasted could have been saved, and if it could have been saved it ought to be saved.

Reaction 2

You’re suppose to pay God first.

If you are a person of faith, especially the Christian faith, then you may have this idea that God demands a tithe (10% of your income) and to not give that to God is to commit a sin, and to risk your immortal soul. If that is what you believe there is nothing I can or should do about it, however, there is a scripture I feel you should consider:

But if any provide not for his own, and specially for those of his own house, he hath denied the faith, and is worse than an infidel. ~1 Timothy 5:9

There are a lot of scriptures that seem to conflict. The Old Testament commands the faithful to avoid work on the Sabbath, but in other places we read that if an ox falls into a ditch on the Sabbath you are commanded to get the animal out of the hole. You aren’t to work except if the animals will be in pain by not being milked you should milk them. Jesus himself said, that the Sabbath was made for man, and man was not made for the Sabbath. The message is clear: some scriptures must be followed within the parameters of the Big Picture. You may believe that God wants you to support Him with your heart, your time, and your treasure, but God also wants you to take care of your family, and neglecting your family in favor of God makes you worse than a nonbeliever.

Be aware of your spending

No habit can be changed without awareness, and living beyond one’s means is an American habit. How do you become aware of your spending patterns? By writing down what you spend. Keep track of what you spend for one month. Save every receipt, and carry a notebook with you at all times. If you buy a cup of coffee at a drive through, write it in the notebook. If you put a dime in a gum machine, you write down, Piece of gum 10¢

Increased awareness and education could be a great help toward improving spending and saving habits and increasing participation and contribution levels to retirement plans. ~Ron Lewis

The truth is that we waste a lot of our hard earned money on a daily basis. If we were aware of the waste, we might not spend it. If we didn’t spend it, we would have more money to save, or pay on debts, or to buy essentials.

Consider the following common waste:

Coffee:

The National Coffee Association, says that the average price for brewed coffee is $1.38. Using simple math (or in my case a calculator) if there are 260 weekdays in a year, and if you buy one cup of coffee on the way to work, you have just spent , so buying one coffee every weekday morning costs almost $360 per year.

Smokes:

At my local mini-mart the guy in line in front of me bought a package of cigarettes and paid $4.54. If you smoke one pack of cigarettes a day, and there are 365 days in a year, that means you are spending $1,657 a year.

Beer:

Let’s say you drink just two beer a day (and lots of people are drinking a lot more beer than that) then you are spending a lot of money. If these two beers are purchased at a bar you are probably spending about $4 per beer, maybe more. If you stop off with the guys at the local bar and grill, and drink two beers after work and there are 260 work days in the year that would mean you would be spending $1,040 per year. If you prefer mixed drinks, you can figure twice that ($2,080 per year) for two distilled spirits based mixed drinks a day at the local bar.

Buy a six pack and bring it home, and limit yourself to two beers per day then if the entire 6-pack cost $6.00 (about $1 per beer) and you drink two beers for say 300 days out of a 365 day year you will have spent: $600. That's not chicken feed, that is cash..

Bottled water:

A 20 ounce bottle of water costs about $1. Drink one a day and you just spent $365 for the year. per year. It costs the environment plenty, too.

Unused Memberships:

Perhaps the worst example in lots of our lives is the fee we pay to be members of a gym. It is common for a gym membership to cost somewhere between $35 and $40. which could mean you are paying $480 per year. If you are a member of a gym and don’t go to the gym, this is wasted money. When you remember that you can go outside and walk, or job for free, this is a perfect example of wasted money.

Just start writing down what you spend on vending machines, eating out for work week lunches, manicures, car washes, a daily newspaper, books, extra Shoes, etc. and you will soon discover that we tend to nickel and dime ourselves into poverty. You can waste this money without noticing it when you have good pay coming in, but in hard times, you can’t afford to waste money.

Reduce debt

Until recently I owed $17,000 for credit card debt and one of those cards was at 26% interest. The median amount of credit card debt carried by Americans is $6,600. If their interest rate were set at 13.44% and if they make only the minimum payment due, it will take those 21 years (250 months) to pay this off. While I still advocate that you pay yourself first, I also advocate for paying off credit cards as soon as possible. The majority of your disposable income (meaning the money left over after paying your essentials) must go to paying down credit card debt. Consumer credit card debt is in 2008, about $744.2 billion. The level of credit card debt has gone up $17.4 billion in just one year.

It is imperative that we make consumers more aware of the long-term effects of their financial decisions, particularly in managing their credit card debt, so that they can avoid financial pitfalls that may lead to bankruptcy. ~Daniel Akaka

Learn the difference between NEED and WANT

Wants are not needs, but they often feel like needs. If you want to survive the hard times, and work toward getting out of debt, you need to know the difference between what you need and what you want. We need food, clothing, and shelter. We don’t need so many clothes that we can go a whole season and never where the same garments twice. We need food, but eating steak is not a need. There are cheaper forms of protein. I have a friend who’s daughter asked for $300 to get her through until payday. He was happy to do that, until, as she was leaving his daughter told her mom that she was behind on her payments to her personal trainer. A personal trainer is not a need. Designer moisturizers, unlimited bandwidth, and tickets to the Superbowl are wants not needs. The truth is that we don’t need a fraction of the stuff we spend our money on.

Now I am not saying you have to live a miserable deprived existence. Maybe you do need to live a Spartan existence , if times so bad for you that you are facing homelessness, but for most of us we are just having hard times, and we need to get our income, debts, and spending under control. You can drink water, never drink another cola or beer for the rest of your life, and your life will not be in jeopardy, but maybe you like a soda-pop once in a while. I am not saying you can’t ever have a pop, or go to the movies, or get an extra pair of shoes. I am saying be aware of what you spend, and make informed choices about how you use your money. I am saying set up a pattern in your life of saving money, and getting out of debt.

Money is better than poverty, if only for financial reasons. ~Woody Allen