Author Topic: Strategies for Frugality  (Read 1433 times)

SnackDog

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Strategies for Frugality
« on: January 11, 2018, 02:52:17 PM »
I have found over the years that certain strategies are useful in avoiding temptation and keeping the lid on spending.  I'll give two examples and you chime in with more.

1) Cash only.   Since college I have found it useful to withdraw a fixed amount of cash from the ATM machine every week and use it for day-to-day expenses.  When it is gone, it is gone. No more trips to the ATM until the next week and no use of credit cards for normal expenditures. I remember once in college going to the grocery story on a Monday night to buy food for the week with $11 cash. Lots of rice and beans that week.  Credit cards are to be used sparingly for large ticket items only, e.g. greater than $100. Online shopping is done 2-3 times per year only and with great forethought.  This cash strategy provides direct control of spending and using cash makes it visible.  It is also to easily adjust the weekly spending up, if times are good, or ratchet it down if times are lean. This can work with a non-working spouse as well - provide a strict weekly cash allowance.

2) Shovel spare money one way to investments. I look at my bank account a couple times per week and particularly on pay day.  When the paycheck hits my checking account, I move it the same day to savings. If I get a surprise (which can happen depending on how bills stack up), I can move money back from savings to checking to prevent overdraft.  Once savings hits a threshold, I do a transfer to Vanguard. Since I'm constantly trying to hit the threshold, there is downward pressure on spending or having to move cash from savings back to checking.  Once invested, I never sell and transfer back to cover expenses (I have only sold investments and transferred money back from after-tax accounts when purchasing homes). 

Let's hear your good ideas for keeping a lid on spending. Heaven knows there is plenty of temptation around us to spend like drunken sailors on crap we don't need.

londonstache

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Re: Strategies for Frugality
« Reply #1 on: January 12, 2018, 03:42:08 AM »
I've got a similar set of strategies SnackDog, just do it digitally.

I use an envelope-type iPhone app (there are several, one I use is GoodBudget) with a simple £300 allowance for the month. At the end I put anything over into savings, which is usually several hundred - this is on top of my regular savings contributions. Similar idea to yours.

In the UK we get paid once a month, so I do a similar money-shuffling move to you monthly. I have an instant access savings account that holds a buffer amount - when it tips over this I stick straight into Vanguard.

Other things that I've found helpful is to do some Excel graphs of my savings progress over the year and I also set 90 day 'stretch' goals for savings. If I hit these I treat myself to a small (think <$50) 'treat' for my discipline.

the_fixer

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Re: Strategies for Frugality
« Reply #2 on: January 12, 2018, 08:55:35 AM »
Making use of automatic contributions so the money is out of sight and out of mind.

I have 75% of my paycheck going directly into 401k and after tax accounts leaving me with almost a 0 dollar paycheck.

We also make use of the same with the wife’s paycheck but at a lower rate, slowly but surely we are trying to ramp it up.

If I have a large amount of easy to access cash it is harder to look critically at all of our spending and continue cutting back but when I look at the bank account and there is a small amount mentally it makes me think about my spending




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HipGnosis

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Re: Strategies for Frugality
« Reply #3 on: January 12, 2018, 12:56:40 PM »
For years, my strategy for saving money was wholeheartedly adopting the mindset: "I am broke".  I only bought what I needed, and spent a lot of time finding the best value (usually not just the cheapest) of what I needed.
Once I reached my first financial goal of $100K net worth, it got harder to do.  So I changed my mindset mantra to: "I'd rather invest money than spend it".

I pay for everything I can with credit cards.  It gives me a record of purchases - both in paper and online.  It reduces impromptu purchases.
I use multiple credit cards for multiple rewards.   I label the cards with what to buy with each (for the max rewards); gas, restaurants, groceries, dept. store, hardware, amazon...   This also makes it easy to find a charge later.


ozbeach

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Re: Strategies for Frugality
« Reply #4 on: January 12, 2018, 02:39:30 PM »
I use the pay-myself-first approach. Having worked out my budget, I arranged for only that amount to be transferred into my everyday transaction account. The rest of the pay cheque goes into a high-interest online-only account (that has penalties for withdrawals) or into my superannuation (401k).

The other thing I find that really helps is forecasting. I use a really old version of Quicken on the Mac, and it has a feature that shows you a graph of your account balances 1, 3, 6 and 12 months into the future. So, while I may feel rich because I have $1,000 in my account, one look at the graph shows me that in two months my house insurance is due and the balance will dip below zero if I start spending now.

galliver

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Re: Strategies for Frugality
« Reply #5 on: January 12, 2018, 06:32:14 PM »
I suppose paying yourself first and hiding part of your income (in the form of savings/investments) encourages frugality but I don't think I'd call it a strategy for frugality itself....here's how I'd approach the question. Disclaimer: some of these are things that work *when I do them* but sometimes I slip up. Almost like I'm human or something.

1) Going to stores as little as possible (mostly going to grocery stores and wherever toilet paper and toothpaste come from). They're designed to sell you stuff! Even if you don't buy it right there, it puts the thought in your head. Whether your temptation is clothes or electronics or hardware...don't go near it!
1b.) Avoid advertising (I've actually been terrible about this lately...and I've suffered more temptation than I needed!)
---> This worked well for me for *months* and then the holidays ruined it :(
1c.) (Mostly for...anyone who enjoys this) If you feel the urge to go clothes-shopping...do laundry instead. Makes you realize how much you have, and brings your faves back into the rotation...

2) Procrastinating on purchases. Ok, you've decided you need [thing] but maybe put off going and shopping for it for a week because you don't have time, you're tired, you need to cook/clean/read tonight, etc. Whatever excuse you'd use for an undesirable task.
--->This is kind of at odds with my realization that if I want to have clothes/things I genuinely like, I need to shop for them *before* I am desperate, when I tend to just grab the first thing that kind of maybe works for the purpose (e.g. finding pants that fit *awesome* vs pants that kinda fit).
---> However, having a period of "I want to buy X but I don't need it right NOW" gives you a chance to find it used...

3) If friends ask to hang out, invite them over (or suggest hiking, volleyball, etc) before they get a chance to suggest bar, movie, etc. (Kudos if you have non-spendy friends, but it's a problem for many).

4) Pack lunch in the evening so you don't have the excuse of being "in a rush" in the morning.
---> One of the strategies I suck at. But I know it helps when I use it!
4b) Keep "desk food". Also *use* it. A $3 shelf-stable microwaveable pasta entree is cheaper than takeout. And less attractive than leftovers. Beverages and snacks might reduce "coffee run" temptations if that's a problem.

5) Live in the smallest amount/quality of housing that will keep you sane. Particularly if you rent.  Particularly in a HCOLA. I feel like if you let yourself justify it, it can be so easy to blow a few hundred every month on this. (I do think it also applies to houses but I realize there's a lot more "telling the future" involved with buying a house, issue of resale value, etc.) Advantages: less cleaning, less space tempting stuff to accumulate, less heating/utilities used.

All I got for now.

AnnaGrowsAMustache

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Re: Strategies for Frugality
« Reply #6 on: January 12, 2018, 06:57:34 PM »
Agree with poster above about not going into stores! That's a huge factor for managing wants, for me, anyway. If I need something, it'll make itself known and I go into a store to get that.

SnackDog

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Re: Strategies for Frugality
« Reply #7 on: January 13, 2018, 02:19:48 AM »
That reminds me, another effective technique for avoiding shopping urges is to reside outside the US It has worked for us for years.  Why?

1) taxes and duties are huge so prices are much higher compared to the US for almost any country you can name
2) if not imported, quality tends to be low, especially clothes
3) why buy stuff you have to schlepp home?
4) no urge to buy stuff when home because a hassle to bring back to host country with typical immigration police and bag x-raying.

It does not even occur to us to enter a shop here for durable goods.

Flip side of this is to understand what local goods are great value, if any, and take advantage.  For example, here a beer on the beach is about a dollar, a month of my cholesterol medicine is fifty cents, and a great filet mignon dinner for two is about $20. Most people rave about how cheap domestic help is as well, but of course that doesn’t interest us.

Teachstache

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Re: Strategies for Frugality
« Reply #8 on: January 13, 2018, 05:04:10 AM »
I suppose paying yourself first and hiding part of your income (in the form of savings/investments) encourages frugality but I don't think I'd call it a strategy for frugality itself....here's how I'd approach the question. Disclaimer: some of these are things that work *when I do them* but sometimes I slip up. Almost like I'm human or something.

1) Going to stores as little as possible (mostly going to grocery stores and wherever toilet paper and toothpaste come from). They're designed to sell you stuff! Even if you don't buy it right there, it puts the thought in your head. Whether your temptation is clothes or electronics or hardware...don't go near it!
1b.) Avoid advertising (I've actually been terrible about this lately...and I've suffered more temptation than I needed!)
---> This worked well for me for *months* and then the holidays ruined it :(
1c.) (Mostly for...anyone who enjoys this) If you feel the urge to go clothes-shopping...do laundry instead. Makes you realize how much you have, and brings your faves back into the rotation...

2) Procrastinating on purchases. Ok, you've decided you need [thing] but maybe put off going and shopping for it for a week because you don't have time, you're tired, you need to cook/clean/read tonight, etc. Whatever excuse you'd use for an undesirable task.
--->This is kind of at odds with my realization that if I want to have clothes/things I genuinely like, I need to shop for them *before* I am desperate, when I tend to just grab the first thing that kind of maybe works for the purpose (e.g. finding pants that fit *awesome* vs pants that kinda fit).
---> However, having a period of "I want to buy X but I don't need it right NOW" gives you a chance to find it used...

3) If friends ask to hang out, invite them over (or suggest hiking, volleyball, etc) before they get a chance to suggest bar, movie, etc. (Kudos if you have non-spendy friends, but it's a problem for many).

4) Pack lunch in the evening so you don't have the excuse of being "in a rush" in the morning.
---> One of the strategies I suck at. But I know it helps when I use it!
4b) Keep "desk food". Also *use* it. A $3 shelf-stable microwaveable pasta entree is cheaper than takeout. And less attractive than leftovers. Beverages and snacks might reduce "coffee run" temptations if that's a problem.

5) Live in the smallest amount/quality of housing that will keep you sane. Particularly if you rent.  Particularly in a HCOLA. I feel like if you let yourself justify it, it can be so easy to blow a few hundred every month on this. (I do think it also applies to houses but I realize there's a lot more "telling the future" involved with buying a house, issue of resale value, etc.) Advantages: less cleaning, less space tempting stuff to accumulate, less heating/utilities used.

All I got for now.

Spouse and I go 3 places during Monday through Friday: work, home & daycare. Saturday, we go to the grocery store for our weekly shopping  with a list, then I take kid to the library (when it's cold) I the playground near our house (if it's above  freezing)I, and spouse gets an afternoon off to play video games at home. Sunday, we stay home & prep work lunches for the week, and spouse takes the kid out again to the library or playground while I do an afternoon of work prep & get Sunday dinner ready.

We have a schedule for spending money each week, too:

Monday morning, we pay daycare our $125/week for full-time care Monday through Friday, $65 per week for 3 days a week. We divide it up between full time and part time. This cost goes to zero per week for the 12 weeks of the year that I am off full time work (I'm a teacher, so it's typically mid May to early August).

Tuesday through Friday, we usually don't spend any money unless it's a medical emergency or an online bill payment that we've automated & set up on our credit card.

Saturday, we spend around $65-$100 at the grocery store, depending on what we need for meals. Library and playground are free.

Sunday, usually this is the day where we spend a total of $50 per month (divided up to roughly $12.50 per week on Sunday) on either gifts gathered or made throughout the year ($25 per month), or travel plans ($25 per month, almost always involving traveling to see family and involving tent camping in the summer). We pre-buy our gifts & purchase gift cards/online supplies for our travels.

The strategies that we use are automated/scheduled spending, automated bill payment, going to relatively few places & finding free or low cost alternatives for what we do enjoy (for spouse, it's video games that he's owned for 5 years with no recurring charges, for kid & me, it's books and movies from the library).

Roadrunner53

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Strategies for Frugality
« Reply #9 on: January 13, 2018, 05:23:40 AM »
I use my Costco Visa card for all purchases and a few bills too. At the end of the year I get a check which I can cash and save or spend either at Costco or spend the cash elsewhere. I always save the money. You could always set limits on what you will spend on the Visa card. I do a lot of on line shopping too. I also have Peapod deliver groceries now and then. It is pretty easy to be frugal on line rather than going to the grocery store where temptation lurks around every corner. This year I am getting a bonus check of $581. Unfortunately, some companies won't take Visa for payment and my Town Tax collector will accept the Visa but charges something like 2.5% to charge the payment. There is no benefit to it. Charge gas, car repairs, groceries, restaurants (rare event), purchases...you name it, it goes on the card!