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How do I live a frugal lifestyle? I'd like to live on less but it doesn't seem easy. How can I get started? I want to get out of debt and not have to work until I'm dead.

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    Goto to Cooking.SO with budget-cooking label and in Bicycles.SO it is called frugal. I don't know but there does not seem to be no concensus on this topic, most people like to obfuscate their question about stinginess with low-cost and related things. But keep asking! – user1770 Mar 24 '11 at 22:52
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    Cut all of your credit cards. – lamwaiman1988 Sep 1 '11 at 1:58
  • Agree with cooking. If you eat out a lot (even if its junk food), cooking at home will save money -- and make you healthier. "Cut all of your credit cards." Disagree on cutting up credit cards. If you don't have self control, then maybe dice up your credit cards, but it's possible to use credit cards and stay disciplined at the same time. (And you can get some benefits, such as cash back, airlines miles, plus it helps smooth out your cash-flow, enabling you to function with less money in checking and more money in higher-return assets.) – Mark E. Haase Oct 8 '11 at 2:13

17 Answers 17

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My father imparted this advice to me when I was a teenager, and it hasn't failed me yet.

> Pay yourself first

What this means is that the first "bill" you pay should always be your savings. Preferably in a way that automatically comes out of your paycheck or account without requiring you to take an active step to make it happen.

I save a ton of money, but I am no more disciplined than anyone else. I just realized that over the years of progressing in my career that I gradually got higher and higher salaries, yet never had a substantial increase in the money I had leftover in my bank at the end of the month despite the fact that I make about 8x the money I used to live reasonably comfortably on.

Therein is the point, we spend whatever money we see, so you almost have to hide it from yourself. First, participate to the fullest in your company's 401k if they offer it. After a while you will adjust naturally to the net take home pay and won't miss the savings you are accumulating. Absent that, or in addition to that, set up a separate bank or investment account and arrange an automatic transfer from your checking account every month. Then set up automatic investing in CD's or some other less-liquid-than-cash investment so you it is just enough hassle to get at the money that you won't do it on a whim.

It sounds too simple, but it works.

  • Additionally, you don't have to go all in right away with sending your money to savings. Pick a reasonable amount to start. Then every time you get a raise take a percentage and add that to your savings. For example, you get a 3% raise, increase your savings by 1% and you still get a 2% spending raise, but you'll also be sending an extra 1% to savings that you'll never miss because you never saw it to begin with. After several years your savings will grow pretty high and it is mostly painless because you never had the money to spend anyways. – Dunk Aug 30 '11 at 20:52
  • I actually like to pay myself last. My employer lets me split up my direct deposit, so I have deposits set up for my checking accounts that go to my budgeted spending. The balance goes to savings. This way, if I ever get a bonus or a raise it automatically goes into my savings account, and I never see it. – Adam Jaskiewicz Sep 2 '11 at 12:43
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Since you ask.... How do I do it?

My frugality doesn't come from budgeting or even half so much from keeping money away from myself (though mostly-one-way retirement accounts help). It's a matter of world-view. Spending and shopping for things you don't need is a vice. Limit your indulgence in it.

I've also made wasteful purchases in my life. When I find myself considering buying something that I don't really need, I ask myself whether it will end up like... like the stupid eyeglass cleaner gadget from the Sharper Image that I used twice. Or the Bluetooth earpiece that spent 98% of its time lost and .02% of its time in my ear. Or the little Sony VAIO laptop which was great on the train, but probably cost 8 times as much as an EeePC and didn't do way too much more. (In my defense on that one, it was just before netbooks were really taking off... but I still felt bad about it the next year).

I've also got two savings goals. The first is responsible and very big (financial stability: a year's expenses plus money for a down payment on a house. a California house. in a good neighborhood.) The second is personal and just medium-big (a large musical instrument). I've decided not to spend money on the second until I'm financially stable and I have enough money to take care of the first... so that makes me more willing to scrimp and save to pursue the first than I would be otherwise.

Advice for others? Ask yourself: Why are you buying that thing? You can survive without it, can't you? You didn't need it a week ago, did you? Does the old one have holes in it or something? Or will you at least use it regularly, for years? Why aren't you buying the cheaper kind? Or buying it used?

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    Good answer... a while back I really wanted an iPad... I already have a great smartphone, a desktop PC, a really nice laptop, and a smaller work laptop, but somehow I still wanted an iPad. So I forced myself to earn the iPad by cutting corners (like biking to work to save on gas money). By the time I had cut enough corners to justify the purchase, I realized I just don't really need it. – Mike Piche Apr 22 '11 at 4:05
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    You didn't need it a week ago? is a great question. I also really like will I be glad I bought/did this a year from now? which helps avoid a lot of gadget-type things. – poolie Apr 22 '11 at 23:24
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As others have said, doing a monthly budget is a great idea. I tried the tracking expenses method for years and it got me nowhere, I think for these reasons:

  1. Tracking expenses post-spending is actually, kind of hard. I think it takes more time than doing a monthly budget.
  2. If you spend a lot (or at least what I would now consider a lot) in a given category, you start to see that as the "normal" amount to spend for that (thinking something like "We'll, I'm only spending $50 / month on coffee, as I always have")
  3. If I started spending less in one category, other categories seemed to magically encroach on that savings

If budgeting isn't your cup of tea, try the "pay yourself first" method. Here, as soon as you get a paycheck take some substantial portion immediately and use it to pay down debt, or put it in savings (if you have no debt). Doing this will force you to spend less money on impulse items, and force you to really watch your spending. If you take this option, be absolutely sure you don't have any open credit accounts, or you'll just use them to make up the difference when you find yourself broke in the middle of the month.

The overall key here is to get yourself into a long term mind set. Always ask yourself things like "Am I going to care that I didn't have this in 10 years? 5 years? 2 months? 2 days even? And ask yourself things like "Would I perfer this now, or this later plus being 100% debt free, and not having to worry if I have a steady paycheck".

I think what finally kicked my butt and made me realize I needed a long term mind set was reading The Millionaire Next Door by Tom Stanley. It made me realize that the rich get rich by constantly thinking in the long term, and therefore being more frugal, not by "leveraging" debt on real estate or something like 90% of the other books out there tell you.

  • This is all good advice... I'd like to add a couple of tricks I used to get myself more used to a frugal lifestyle: – Mike Piche Apr 22 '11 at 0:53
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There are a lot of great suggestions here on how to get and keep your finances in shape. But I have to say, I disagree with some on the starting point. The first step to living frugal is to convince yourself that it is worth it. That it is the way to go and the way you want to manage your finances. As @DrFredEdison and @fennec stated, the reason we frugal people don't spend wildly is because of what we believe. So I would suggest buying a book or video/audio series from someone like Dave Ramsey who will encourage and motivate you to spend wisely and show you practical ways to get started.

With that said I do agree with a lot of the practical suggestions that have been given here.

  • Take full advantage of automatic direct deposits into investment accounts.
  • Before buying ask yourself if you really need it.
  • Try to avoid impulse buys. Set a dollar limit ($20, $50, whatever is appropriate for you) ... if you don't intend to purchase a particular item when you leave your home and if it is over your dollar limit then don't buy it until you have had a chance to sleep on it for a while.
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    Good point on avoiding impulse buys... Nowadays when I want something I can easily afford, I put it on my Amazon gift list. I can still get some of the stuff I want but don't need and I'm easy to shop for on the holidays. :) – Mike Piche Apr 22 '11 at 4:09
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Gail Vaz-Oxlade from the television show Til Debt Do Us Part has a great interactive budget worksheet that helps you set up a "jar" or envelope system for each month based on your income and fixed expenses. We have used this successfully in the past. What we found most useful was, as others have said, writing everything down, keeping receipts, and thus being accountable and aware of our spending.

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Agree wholeheartedly with the first point - keep track! It's like losing weight, the first step is to be aware of what you are doing. It also helps to have a goal (e.g. pay for a trip to Australia, have X in my savings account), and then with each purchase ask 'what will I do with this when I go to Australia' or 'how does this help towards goal x?'

Thrift stores and the like require some time searching but can be good value.

If you think you need something, watch for sales too.

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Keep track of everything you buy. Write it down and be accountable. Try not to buy anything on credit cards, if the money is not in your account now then you can't afford it. Ask yourself whether what you're buying is a "need" or a "want". If you find that you are buying things because you are bored and you like shopping then try taking up a (cheap) hobby that fills that void and is something you enjoy doing.

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Get on a written budget at the BEGINNING of the month. If you dont write down where your money goes BEFORE you spend it, you have no way of keeping track of it. I couldn't do a thing until I got on a written budget but now that I am, I've paid off $10,000 in 7 months.

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There's plenty of advice out there about how to set up a budget or track your expenses or "pay yourself first". This is all great advice but sometimes the hardest part is just getting in the right frugal mindset. Here's a couple tricks on how I did it.

Put yourself through a "budget fire drill" If you've never set a budget for yourself, you don't necessarily need to do that here... just live as though you had lost your job and savings through some imaginary catastrophe and live on the bare minimum for at least a month. Treat every dollar as though you only had a few left. Clip coupons, stop dining out, eat rice and beans, bike or car pool to work... whatever means possible to cut costs. If you're really into it, you can cancel your cable/Netflix/wine of the month bills and see how much you really miss them. This exercise will get you used to resisting impulse buys and train you to live through an actual financial disaster. There's also a bit of a game element here in that you can shoot for a "high score"... the difference between the monthly expenditures for your fire drill and the previous month.

Understand the power of compound interest. Sit down with Excel and run some numbers for how your net worth will change long term if you saved more and paid down debt sooner. It will give you some realistic sense of the power of compound interest in terms that relate to your specific situation. Start simple... pick your top 10 recent non-essential purchases and calculate how much that would be worth if you had invested that money in the stock market earning 8% over the next thirty years. Then visualize your present self sneaking up to your future self and stealing that much money right out of your own wallet. When I did that, it really resonated with me and made me think about how every dollar I spent on something non-essential was a kick to the crotch of poor old future me.

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As others have said getting on a written budget before each month starts is the most important part. Also, I'm a big fan of cash budgets as well. They aren't for everyone and they take a little getting used to, but once you get used to them you'll never want to go back.

In a cash budget you take whatever you have budgeted for the month for each category and withdraw the amount needed from the bank. These go into an envelope for each category, i.e. food, clothes, entertainment, etc. If a 3 weeks into the month you run out of money in that envelope you are done spending money in that category. For example, if it's the food envelope and you run out it's time for you to start eating leftovers and whatever you've got in the pantry.

You lose out on advantages like points gained on credit cards and whatnot but statistically people that spend cash spend much less overall and you get some enforced self control that you otherwise might not have.

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I agree with the first poster- the first step is to measure your spending and put it down into raw numbers. Once you have the raw numbers, you will feel a natural inclination to improve on those numbers.

Set yourself a daily target for cash / incidental expenses. It doesnt have to be a crazy target - just something you can achieve easily. Mark a 'tick' mark next to every day on the calendar that you meet that target (or spend less than the target). Gradually the momentum from the past few 'ticks' will automatically compel you to want to tick off the next day. At the end of each week, lower the target a little.

You'll find that when you start measuring your expenditure, you become more aware of how you might be wasting money. All too often we just go out and buy stuff we don't need without really thinking about it.

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I would highly recommend the Dave Ramsey book "The Total Money Makeover". I read it about 5 years ago and my financial situation has slowly but steadily been improving ever since.

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Track your expenses. Find out where your money is going, and target areas where you can reduce expenses. Some examples:

I was spending a lot on food, buying too much packaged food, and eating out too much. So I started cooking from scratch more and eating out less. Now, even though I buy expensive organic produce, imported cheese, and grass-fed beef, I'm spending half of what I used to spend on food. It could be better. I could cut back on meat and eat out even less. I'm working on it.

I was buying a ton of books and random impulsive crap off of Amazon. So I no longer let myself buy things right away. I put stuff on my wish list if I want it, and every couple of months I go on there and buy myself a couple of things off my wishlist. I usually end up realizing that some of the stuff on there isn't something I want that badly after all, so I just delete it from my wishlist.

I replaced my 11-year-old Jeep SUV with an 11-year-old Saturn sedan that gets twice the gas mileage. That saves me almost $200/month in gasoline costs alone.

I had cable internet through Comcast, even though I don't have a TV. So I went from a $70/month cable bill to a $35/month DSL bill, which cut my internet costs in half.

I have an iPhone and my bill for that is $85/month. That's insane, with how little I talk on the phone and send text messages. Once it goes out of contract, I plan to replace it with a cheap phone, possibly a pre-paid. That should cut my phone expenses in half, or even less. I'll keep my iPhone, and just use it when wifi is available (which is almost everywhere these days).

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For many folks these days, not having a credit card is just not practical. Personally, I do quite a bit of shopping online for things not available locally. Cash is not an option in these cases and I don't want to give out my debit card number. So, a strategy is this: use a credit card for a purchase. Then immediately, or within a couple days, pay the credit card with that amount. Sounds simple but it takes a little effort to do it. This strategy gives you the convenience of a credit card and decreases the interest enormously.

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    I'm the same way, except I pay my balance at the end of the month. It's a nice way to smooth out cash-flow. I recently had to spent quite a bit of money that I hadn't budgeted, and by putting it on my Amex it gave me time to move money around to fund it. (I do keep a rainy day fund, but I try to avoid depleting it if at all possible.) – Mark E. Haase Oct 8 '11 at 2:19
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For the most part, saving money usually depends upon having a budget and being able to stick to it.

The toughest part of budgeting is usually setting it up (how much do I need for X) and sticking to it each month. In regards to sticking to it, there is software that you can use that helps figure out how much you are spending and how much you have left in a given category and they all pretty much do the same thing: track your spending and how much you have left in the category. If you are good with spreadsheets you might prefer that route (cost: free) but software that you can buy usually has value in that it can also generate reports that help you spot trends that you might not see in the spreadsheet.

Sticking to a budget can be tough and a lot of what people have said already is good advice, but one thing that helps for me is having "play money" that can be used for whatever I want. In general this should be a fairly nominal amount ($20 or $40 a week) but it is enough that if you see a new book you want or what to go out for lunch one day you can do it without impacting the overall budget in some way. Likewise, having bigger savings goals can also be useful in that if times get tough it is easier to stop putting $100 a month to the side for a vacation than it is to cut back your grocery budget.

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Lots of good answers here about budgeting and other ideas. Here's a couple more:

Think about offense and defense. Offense is how much money you make. Are you making enough to survive on? Is there a way you could bring in more income? Defense is what you do with your money. Do you have expensive habits? Do you have problems with impulse spending? Do you live in an expensive area with a high cost-of-living? Think about some of these areas and pick one to attack first.

If it is the defense side that is causing you problems (you did mention trying to live on less), consider reading Your Money or Your Life by Joe Dominguez and Vicki Robin. There's a really good summary of it on the authors' site. The basic idea of the mechanical part of the book is that you figure out how much you're truly making per hour, and then evaluate your expenses based on how many hours of your "life energy" you are using for that expense. Then you evaluate whether you think that's a fair trade or not. There's a lot more to it than that, but it's an interesting way to get a different perspective on your spending habits, and may be enough to entice you to change those habits.

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Use software that calculates your net worth and track it over time. I track my personal finances in Mint, and I love checking my net worth every week. It's turned into a kind of competition with myself...

It's like keeping track of how fast you run a 5k, or how many pounds of weight you've lost. It helps you determine if you are making progress, and if you, it's positive reinforcement that you are doing the right things.

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