Greetings, frugal friends!! Today we welcome this guest post from fellow personal finance blogger Elsie, who blogs over at Gundo Money. Always nice to have the fresh perspective of a young person around here. Enjoy!
Back in 2012 I was living with a boyfriend who always reminded me about saving water. When the toilet was flushed or the shower got turned on we always had to state a reason. This all sounds funny to write about now but back then it was pretty serious—almost like our little water game. Sure California was in a drought but we weren’t poor and or desperate. Why the heck did we bother?
During that time I got to learn one of the most important lessons all frugal people know about and that is that money adds up! Any time something felt frivolous, like buying gas 10 cents cheaper or walking to work, he would remind me it all adds up. So despite how much I might have griped about his frugal ways at the time, to my chagrin I admit he was right.
Us personal finance nerds love to write about little money saving tips like $12 savings on the electric bill here, $20 savings on the grocery bill there. I’m sure my readers are asking themselves “what does this have to do with amassing savings, give us the BIG money saving tips.” The catch is, the small money saving tips are the ones that will change your financial life because those are the areas you’re not even noticing.
Money tends to get leeched from our wallets one small purchase at a time. Most families spend extra money all over the place that they don’t see, and eventually those little decisions add up to a big credit card bill. So what you really need to understand is that we make $1 and $2 decisions all day everyday and often the difference between money savers and money wasters is in these little details.
Another incorrect belief of the average money waster is that you can’t save a ton of money and still live well. Whenever I tell someone how much money they could be saving their reaction is either ‘that’s not possible’ or ‘you’d have to live like you’re poor.’ Neither of those statements are true. When you iron out the finances the average American lives a pretty ridiculously extravagant life. They live in houses and drive cars that are owned by the bank, spend $250 a week on groceries, and regularly throw their money away on $5 lattes. Then they sit there and tell me saving money like I do is nearly impossible. Well, with that lifestyle it is impossible!
Reclaiming your wealth is about living a bit more reasonably. You don’t have to go crazy, you just have to change your mindset and spend money in less ridiculous ways. So when you read TheFrugalFarmer or Gundomoney and we’re giving you advice on how to drive more fuel efficiently or downsize your house we really are spoon feeding you the tools you need to change your financial life. Keep in mind that you’re reclaiming your wealth because you’ve always been wealthy, you’ve just been shoveling your money into the fireplace for years.
The U.S. minimum wage is $7.25/hr. If the average minimum wage worker worked 24 hrs a day/ 7 days a week (not taking overtime into account) they would make $58,464 annually before taxes. So if you make more than that you make more than many Americans would if they never stopped working. Globally, if you make more than $34,000 annually you are in the 1 percentile. Here you were the one percent this whole time and you didn’t even know it.
So here’s the challenge, today when you go to work I want you to make five solid $1 decisions. Those decisions could be taking a shorter route to work to save gas, showering at the gym instead of home, not buying that $8 greens juice at the grocery store, or even just taking the kids to the park instead of seeing a movie. As my now-rich boyfriend would’ve said, it all adds up!
Elsie Brown is a blogger, student, and all around cheapskate who writes about how we can all live better lives on less. Visit her blog at Gundomoney.com
Laurie’s two cents: I can’t emphasize how right Elsie is here. It was the nickels, dimes and dollars that got our family into tens of thousands of dollars of credit card debt. No big purchases, no fancy vacations or new furniture – just the little things that we “really weren’t spending that much” on. Once we started tracking our spending, though, we found that our “little” purchases ($30 at the grocery store, $20 at the big box store, $10 on fast food) were adding up to BIG bucks.
Now that we have tracked our spending for 3+ years, we spend SO much less money than we used to. We started with a super high DTI (65%), and so debt payoff was super slow going at first but now things have really started to accelerate big time. The one mantra that has gotten us through the many slow periods of debt payoff is that “it all adds up.” Don’t worry that you’re only paying off X amount of debt each month; just focus on making those numbers go down.
Look back on occasion at how far you’ve come in the last year, or two years, or whatever. That will help motivate you to keep going. Also, keep looking for ways to cut costs. Analyze your budget every month and ask yourself “Do I really need to spend this?” If the answer is “no”, consider getting rid of the expense – just for a short while – so you can accelerate debt payoff. If you commit to perseverance, you will reach your financial goals, and oh, what a happy day that will be. 🙂