Frugality Q4

Ben Franklin’s 13 Virtues: Week 5, Q4

Frugality: “Make no expense but to do good to others or yourself; waste nothing.

Personal notes:

  • Only purchase necessary items;
  • Be cognizant of cost;
  • Give special attention to Christmas presents.

We did a lot this year to cut costs. I mean a lot. And I’d like to think Bens13 helped bring it into focus. The biggest item we cut was rent. We cut it by almost 50 percent! No joke – it was a major downsize – and the benefits weren’t just financial, there was a big decrease in anxiety (anxiety is still here, but more manageable). I still make mistakes though – I’m a sucker for the kids and good food – but, as my wife says, “We have to live,” and we are indeed living. If you want to know what we did, here are a few steps we took, but the biggest lesson we learned was the lesson to live smaller.

First, I made a pretty substantial spreadsheet with all our expenses. This is brutal — unless you love excel (nerd) — If you don’t love excel, it takes time to make, and you may want to research programs like Mint that’ll track expenses for you. Why was it important? To be honest, at first I thought it a waste, but then at year end I was appalled by some of our totals. They were jaw-dropping. If you’re a Starbucks junkie, make Starbucks a line item, and then imagine the Caribbean vacation you could have taken with that three grand. We grind our coffee at home now.

Tracking our expenses manually was more painful, but it forced me to focus on trends and outflows. For us, the most substantial costs were our fixed costs. Yes, we cut cable and saved money in other places — 20% Amazon Subscribe & Save, Verizon family plan, etcetera — but the big money was fixed: rent, car, student loans and a few others. If you can cut one of those, it makes a big impact. For us, it was our rent but we targeted additional fixed costs. Without going through all the specifics: we paid down credit card debt; paid off the balance each month; found a card with good cash rewards (we use Amex Blue 6% back for groceries, pays for the card and then some); and got interest on student loans below 4%. We used SOFI.

We rent because it’s favorable for us to do so (check out this handy NYTimes calculator to find out what’s best for you). The problem was our first apartment. It was super nice but too big for what we needed. As a result, we were needlessly throwing away money while funding our jackass landlord’s vacations. Downsizing was necessary but tough. Moves are demanding and expensive, but it’s already paid for itself. Most importantly, it taught us we don’t really need what we thought we did. We are far happier in this smaller space then when our kids had a playroom, a backyard, and plenty of space they didn’t use. They didn’t want any of that, we did, they just wanted us.

Aside from rent and credit cards, the other fixed costs were tough to trim. We need our car (a modest Mazda), childcare and insurance. Medical and dental trips seem to (always) pop-up. One-time miscellaneous costs are actually every month. And little feet don’t stop growing. We also found it helpful to increase our cash reserve/savings by automating as much as possible. We automated to the point we’re almost stressed by the monthly budget. But the pain is worthwhile (we were able to save a lot in a short period) and it forced us to be hyper vigilant about the small stuff.

It’s fair to say we don’t have everything under control — I think that’s impossible — but we’re on the right path and have successfully saved this year. The one thing I would emphasize above all else is to live smaller. We thought we deserved certain rewards, we felt we earned a bigger space, we made a lot of excuses. We convinced ourselves because we wanted (not needed) the big and fancy. Now that our space is smaller, the girls are happier, our bills are manageable and our savings increased, we realize how much better smaller could be.

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Next Week

Ben Franklin’s 13 Virtues: Week 6, Q4

Industry: “Lose no time, be always employed in something useful; cutoff unnecessary actions.

Personal notes:

  • Fully engage with what you’re doing;
  • Immerse yourself;
  • Shut off distractions;
  • Find fulfillment.

Super tough to do as the Holidays bear down on us, but essentially necessary to survive. Good luck getting through these next few days. May Industry be your guide.