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Frugal Living – Is It Too Time Consuming?

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Is Frugal Living Too Time Consuming?

When people ask me about getting out of debt, they often ask “Doesn’t frugal living take quite a bit more time than not living frugally?” Of course, doing work yourself does mean you spend more time doing certain things, but frugal living also means that you will spend a lot less time and money working to pay someone else to do it. Many people work more hours to pay someone else to do a job than it would take them to do it themselves. Of course, if you make a million dollars a year and have no manual dexterity, this article is not for you.

Here are some practical frugal living examples based on my own experience with a family of 4. Because your household income is probably not the same as mine, some things that make sense for me will not make sense for you. I suggest that you read my examples and consider your actual costs.

Example #1: Buying clothes- One great way to save money on clothes is to go to garage sales. This seems very time consuming to many people, but it really isn’t. In the summer, I usually spend 3-4 hours every 2 weeks (May – September) going to garage sales. That may seem like a lot, but if you compare that to how much time the average person spends shopping at the mall, it really isn’t any longer.

Example #2: Meals- Frugal living can really save you money and stress when it comes to meals. I usually average an hour and a half each day preparing and cleaning up from meals. Compare that to going out to eat: It takes the typical person 20 minutes to drive to the restaurant and 20 minutes to return home. That is 40 minutes. Then you spend 15-20 minutes ordering and waiting for your order. You are now up to one hour. If you plan an hour for eating, you are up to two hours total. Don’t forget the 2-3 hours you had to work to pay for it! This assumes an income of $30,000 per year and a $40 family meal.

If you go to fast food restaurants instead, you could cut your time down to 40-50 minutes and 1-2 hours working to pay for it.

If you stay home and cook, it will cost you 15-30 minutes preparing the meal and less than $5 paying for it. I’m not saying that you should never eat out but, that if you do it regularly, it will cost you a lot more (in time and money). Is it really worth it?

Example #3: Buying a car- If you buy a new car with $500 a month payments for 5 years, you pay $30,000. Let’s say you earn $30,000 per year at your job. If you assume 25% income tax, you must earn $40,000 to pay for your $30,000 car. This means that you have to work 1 year and 4 months for no other reason but to pay for that car. Is it really worth working over one year just to pay for a new car? If you decided to buy a $7500 car instead, you could afford to take a vacation from work for a year. Haven’t you been saying you need more free time? (If you didn’t get that, get out your calculator and do the math. This is important.)

Always consider the hidden costs, too. Would you feel more inclined to buy a security system for that $30,000 car? How much will that cost? Are the parts more expensive for the $30,000 car when it breaks down? Trust me, your new car will still break down almost as much as a used car. Ask my brother…

Be very careful when you start saying things like “Doesn’t frugal living take too much time?” or “I can’t seem to find time to be with my husband or children” or “I don’t know where to start saving.” Often, those are excuses that you have created to ease your guilt. If you think about it and do the math, living simply will give you more free time. If you’d rather not, you can always keep spending money and wishing you had more family time. It’s your choice! But take heart- if you have read this far then you get and A+ for taking the first step and trying!

      -Tawra

For more easy and practical frugal living tips to help you save money and get out of debt, check out Dig out Of Debt and learn more about how to keep more of your money.

 

photo by: Robbert van der Steeg

Where Do We Begin To Catch Up On Debt?

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Leslie from Rhode Island asks:

Where do we begin to catch up on debt when we are behind three months on every day living such as mortgage, car payments, and utilities and IRS payments?

 

Jill: It is hard to give specific answers to your question without knowing more details about all of your finances. Here are some general suggestions about a couple of things that you mentioned. Some of these ideas may seem drastic, but if you are three months behind on everything including the IRS then you need to take a very honest and serious look at your spending habits.

In order to catch up on past due bills, you not only have to live within your income, you have to live below your income. It may be painful, but you have to figure out how to live below your income at least long enough to pay the past due bills and then to keep current on all of your bills.

If you can’t keep up with your mortgage, then no matter how much you love your home you may have to sell it for something less expensive. The same goes for your cars. You could try to get by with one car. That may not be as impossible as it sounds. My son and his wife both work and often only have one car. She found she could switch to evening hours at her job for a while until they could get another car. One spouse may have to take the other to work for a while. This may not be convenient, but declaring bankruptcy isn’t really handy either. Besides, if you declared bankruptcy and still spent more than your income, you’d end up with the same problem all over again. You could also sell you cars and get less expensive/used cars with smaller payments.

Cut back on utilities as much as possible. There have been times where I couldn’t run my air conditioner or I just used it when it became unbearable. Notice that I said unbearable, not uncomfortable. There’s a difference. Stop watering your yard. If your lawn dies, it dies. What would you rather have? Bills that are paid, no financial stress and a dead yard or lots of debt and stress and a nice green yard? I know it seems like there is no way out but it really is doable. Remember, you can’t spend more then you earn. Start thinking about each item you buy. Is that item really a need or just a want? Most Americans have a difficult time telling the difference between needs and wants. Do you really NEED it or do you just WANT it?

Cell phones are still a biggy. I was talking to a woman who was frantically trying to keep the creditors at bay. She said I just don’t have another place to cut back. I said what about your cell phone. Boy the look of horror on her face. We all insist we need a cell phone and they are nice especially in an emergency but that isn’t the reason most of us have them. We have Smart Phones because they are a fun toy for us to play with and to use to interact on social media. You can get an inexpensive little phone that doesn’t have all the bells and whistles to use for an emergency.Here’s a new concept for some to try – visit with your neighbor or friend eyeball to eyeball instead of texting all the time. Much cheaper then paying for an expensive phone. I know, I can’t believe I even suggested such a thing but hey if your are really serious about saving you will do it.

If you often wonder where all of your money goes or if you need a more frugal mindset, check out Dig out Of Debt and learn more about how to keep more of your money.

 

Should We Declare Bankruptcy?

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Is Bankruptcy Our Only Way Out?

A reader writes:

My husband was a lawyer for 4 years before going to seminary and becoming a minister. Now with living on his severely reduced salary as a pastor the student loans seem like they will never be paid back. Is going bankrupt our only way out? (We still owe over $250k.)

 

Tawra: I know this must be difficult for you. This is a touchy subject for some but it’s a question I get a lot. No, going bankrupt is not the only way out.

Bankruptcy is intended to help people who end up financially strapped because of reasons beyond their control, like catastrophic medical expenses or the death of a spouse. Bankruptcy can be a good thing for emergencies, but I don’t think it is ethical to claim it for “poor planning”. I understand that it may feel like this situation is beyond your control, but it is actually the result of choices that your husband made. Even if he made those choices before marrying you, if you married him knowing about his debt, you accepted that responsibility with him.

I believe that when you take out loans, that you should not be able to claim bankruptcy on them. (In fact, you can’t get out of student loans through bankruptcy, so if they’re student loans, you have no alternative but to pay them.) You signed the note saying you would pay back the loan. The banks, credit card companies or other creditors are not responsible if you decide to change careers. If you claim bankruptcy for expenses you no longer choose to honor, it is really lying (because he promised to pay it back) and stealing (because if he stayed in law, he would have been able to repay it, rather than to make the credit card companies and their customers responsible for his decision to change his mind).

What can you do? That is a lot of money to owe and I can understand how overwhelming it must be, but it is your responsibility to pay it back. There are several options in your case:

Your husband could go back to being a lawyer, earning lawyer’s pay and and spending only a pastors expenses for several years, paying the balance to debt until it’s paid off. This is probably the fastest and easiest way to pay it off. If your husband is serious about preaching, he could practice law and preach part time until the debt is paid.

Your husband could work part time as a lawyer and part time as a pastor.

He could continue as a full time pastor and get a part time job on the side.

You could get a job. If your kids are small and still at home then you would need to get a job during your husband’s off hours so you don’t have to pay day care.

Do any on the side jobs you can. Can he mow lawns? Can you do ironing or child care?

It will take a long time to pay it off but you can do it. I do think that if your husband is a pastor then he needs to pay off the debt because he is the leader of a church and it is his responsibility to set a good example to his congregation. Ministers are not perfect, but God does require a higher standard from them. I believe that if God has called your husband into the ministry, God will make a way for you to pay off the debt without having to declare bankruptcy.

      -Tawra

 

photo by: squeakymarmot

Tawra’s Debt Reduction Story, Part 2

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Tawra’s Debt Reduction Story, Part 2 – "The Rest of the Story"
(written in 2005)

Most people know our story about paying off $20,000 in 5 years on an average $22,000 annual income. If you haven’t read it, read it here.

Since then we have had more debt and paid it off/are still paying it off. Here is the rest of our story: When we lived in Idaho, Mike ended up working a job 100 miles from home. Because his new job was so far from home, we decided to sell our house intending to move closer to his job. We had the house on the market for 3 1/2 years while living in Idaho (from September 1996-January 2000). Mike got laid off from his job in October 1999. In December 1999, despite the layoff, we paid off our debt, the last of the original $20,000 .

Mike looked for a job until April 2000. He couldn’t find one in the area and we couldn’t sell our house. We finally decided to leave the Pacific Northwest and move to Manhattan, Kansas to be closer to my brother. He and his family lived 2 ½ hours away in Wichita and needed help remodeling their home. We had to leave the house in Idaho vacant and hope that it would sell eventually. (Mom was still living in Idaho and she was also trying to sell her house to move back to the Midwest.) Until it sold we had to pay $400 a month for the house, even though we didn’t live in it.

The rental market was not good in the small Idaho town and renting the house would not have come close to paying the mortgage and expenses. We paid for our moving expenses from Idaho which came to $2,500 and included deposits for our rental house in Kansas and other related expenses.

At that time, we had two kids, one and two years old. For a while, we were stuck with two house payments: $400 per month for our house in Idaho and $500 monthly rent in Kansas. Mike worked a job making $9.00 an hour so, of the $1500 we earned each month, almost three quarters went to making house payments. We had $600 left for everything else.

Mike’s county government job didn’t have health insurance benefits. We did get some WIC for 9 months and put the kids on state medical for a few months but we didn’t get any other assistance. Our house finally sold in 2000. We sold it for $12,000 less than we paid for it because we realized that it would probably cost less to take the loss at that time than to keep paying the mortgage and getting further into debt. We had to write a check to the buyers for $8,000. To say it made us sick to our stomachs is an understatement!

When mom sold her house, she lost $25,000, so our loss wasn’t as bad as it could have been. We survived for a year on $1500 a month and then $1700 a month until Mike got a better paying job in April 2001 at a TV station in Wichita, Kansas. He was getting $28,000 per year then. We were praying very hard that we would be able to find a house to buy so we wouldn’t have to rent again.

The two rental houses that we had from April 2000-April 2001 were horrid, but with two house payments, we could not afford better. It was so incredibly stressful living in houses that the landlords didn’t want to maintain. Our family was also very sick much of that time. Not long before moving out of the first rental, we discovered mold growing around a pool of water in the crawl space under the house. In the second house, a six inch baseboard fell off the living room wall one day and the back side was covered edge to edge with black mold. God was so good. When Mike got his job in Wichita, we found a 1600 square foot two bedroom house in Wichita that had been recently remodeled. It was even the exact colors that I wanted on the outside!! It’s funny because God really does give us the desires of our hearts!

We didn’t have a down payment and we had $10,500 in debt so we had no clue how we were going to buy it. We soon found out that there was a new program that helped people get home loans for 0% down and roll closing costs into the loan, so we bought the house. We were so excited to have our own place again! Our moving expenses from Manhattan to Wichita were $1,000.

Over the next two years, we had several other large expenses that we couldn’t afford. Mike’s job was not working out well and he was frustrated that he wasn’t earning as much money as we needed. He wasn’t sure he wanted to stay in the video business anymore because the financial outlook for video producers in Kansas wasn’t great. He opted for career counseling which cost us $1,200. Our washing machine and refrigerator both died shortly after we bought the house. Total cost $1,000. Both of the cars needed major repair work in one year, which cost $2,500 more than we had.

When baby #3 was coming along, we bought another house with more bedrooms for about the same price. Almost immediately, the refrigerator died in it, costing us $900.00. We got all that paid off ($17,000) in August of 2003 and again had no debt except out mortgage.

Then in December 2003, one of our cars needed a repair that would have cost more than buying another car. We bought a used Taurus station wagon on Ebay for $6,000, financing it on a credit card at zero percent interest. After our 3rd child was born in 2003, we incurred major medical bills because he had food allergies that went undiagnosed for a year. We spent $3,000 while we were trying to figure out what was wrong with him. We also had to pay cash for all our prescriptions (Thank the Good Lord for Canadian drugs 😉 because our insurance didn’t have prescription coverage.We were paying about $300 a month cash for prescriptions. If it wasn’t for Canadian pharmacies, we would have had to pay over $800 for the drugs here!

We are currently working on getting the car and medical expenses paid off. We concluded that our problem hasn’t been overspending; it has been lack of income. There is a point where you can’t "cut back" any more and you just have to make more money. Our family has been "under – resourced” as one of our readers put it. We are working on that part so that we can include unexpected costs in the budget. So here is a summary of the rest of the story: $17,000 paid off between 2000-2003 $8,000-Loss on house sold in Idaho $1,200- Mike career counseling $2,500- Moving expenses to Manhattan, KS $1,000- More moving expenses to Wichita, KS $1,900- Washing machine and two refrigerators $2,500- Car Repairs We paid off this $17,000 on an average $28,000 income from 2000 to 2003. Gross Income 2000-2003

  • 2000-$16,000
  • 2001-$26,000
  • 2002-$38,000
  • 2003-$34,000

           ——————-

Average 2000-2003 annual income: $28,500

 

We didn’t pay off the debt as fast the second time for several reasons: Our medical expenses did go up around $500-$1500 depending on the year. We also had the baby on special formula that cost over $200 a month for one year, because of his food allergies. When we moved from Idaho to Kansas our:
Utilities went from $75 to $200 – up $1500 a year

House payment went from $625 per month in Idaho to $800-$900 per month in Kansas – up $2100-$3300 a year, both because of a stronger house market in Kansas and because our family was larger in Kansas Food went from $125 to $250 – up $1500 a year We also have purchased more convenience items than during the first big debt payoff because I have been sicker than usual for the last several years. We didn’t buy a lot of convenience stuff, but we did buy more $5 dinner take out from the grocery store and a few things for the house to “make life easier”. These costs did not add to the debt, but they did make the debt payoff take longer than before.

Our debt as of Summer 2005: This is what we still have to pay off: $6,000- Most recent car replacement $3,000-Extra medical bills (June 03-Jan. 05) By the way, in case you’re wondering why we haven’t received much income from the book business, it is largely because I am only able to work a few hours a week on it because I am chronically ill and, unfortunately, books don’t sell themselves. We are making changes to the publishing business and hopefully we will be able to make more income from it. Anyway, that is the rest of the story. Tawra

Update 2010- at this point we are completely out of debt except our house, which we are working to rapidly pay off in 3-5 years. Mike is currently working full time for Living On A Dime. It is doing better, but he still works 2 other part-time jobs to bring more income. Tawra

From: Dig Out Of Debt

 

photo by: Alan Cleaver

Breakdown Of Debt Reduction

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We have said that we paid off $20,000 debt in 5 years on an average income of $22,000 per year. Here is an accounting of the debt (over and above our regular bills) and the payments that we made to eliminate the debt. If you’d like to know how we paid it off, here is our debt reduction story.

Debts

$3,000 -Mike’s credit card debt when we married
$2500- Cost of moving to Texas
$2500- Cost of moving to Idaho
$2085- New transmission for our car
$500- Cost of repairing cracked head on the car
(These two repairs occurred when we were in Colorado (1200 miles from home) and needed the car to get home.)
$2500- Purchase 1991 Buick
$7,200- Out of pocket medical bills from the birth of our daughter.

Total debt incurred $20,285.00

Income for years 1995 through 1999
1995- $19,382.00
1996-$17,530.00
1997-$19,646.00
1998-25,444.00
1999-$26,509.00
Total Average income over 5 years $21,702.00

Debt Payments

Monthly

1995- $100 month – $1200/ year
1996- $100 month- $1200/year
1997- $100 month= $1200/year
1998-$300/ month=$3600
1999- $300/ month= $3600

Total- $10, 800.00

Extra

$1,000.00- gift when BJ was born
$1,200.00- gift when Elly was born
$3,000.00- cashed in for Mike’s retirement
$700.00 sold Geo Metro
$601.00-1996 income tax return
$1830.00- 1997 income tax return
$688.00-1998 income tax return
$2359.00-1999 income tax return

Total- $11,378.00

Total Debt Payments- $22,178.00 (includes interest)

photo by: Alan Cleaver