Living the frugal life is not always fun and games. Most of the time, the frugal life is irritating in one way or another. But frugal people overlook the irritants in the now for the benefits in the future.
Think of it like a diet. Most of the time, you don’t start a diet thinking, realistically, that you will achieve your goal weight/shape/size overnight. Instead, you put in the work to bring about the future you want.
Personal finance works the same way. You have to put in the work to have a better future.
Now I know there are thousands of frugal rules and frugal rule lists out there but this is the list I use for myself and my life.
1. Buy Quality Items
One of the primary differences between frugal and cheap is the ability to recognize when to spend money.
Buying poorly made items and replacing them several times is almost always more expensive than buying the high-quality item. For example, take sandals. Buying 10 pairs of Old Navy sandals every summer for 5 years will be about the same as buying a pair of Rainbow Sandals. I know people from high school that still wear their Rainbow Sandals (from about 7-10 years ago). That seems like a good investment to me (even though I personally wear Chacos).
Buying quality also cuts down on waste. 50 pairs of Old Navy sandals isn’t that big, but imagine 5,000 pairs of Old Navy sandals. Anything you can do to cut down waste helps.
Buy quality items in all categories: cars, furniture, appliances, clothing, bedding, etc.
Buying quality is not the same as buying new. There are many places you can buy high quality, gently used items for much less than the new price. Places like resell stores (Plato’s Closet, Once Upon A Child, etc.), thrift stores, antique shops, Craigslist, and much more.
2. Learn To Do Some Things Yourself (And When Not To)
Being able to do or make some things yourself can be an amazing thing for your budget. Here are a couple things we do/make at our house:
- Laundry detergent
- Face wash
- Changing the oil, tires, brakes, and other basic car maintenance
- Making dog toys, treats, and beds (particularly for our super-chewer dog)
- Basic household maintenance
There is also a limit to our do-it-yourself ways. I will not allow my husband to completely revamp our plumbing and electrical work by himself. It would end up like one of those sitcom episodes where the man swears he can do it then breaks the entire house and it costs $10,000 to fix. I’m not going to let that happen.
The same general rule applies when making it yourself costs more than you can buy it for. Just don’t.
3. Save Money (By Hiding It From Yourself)
This is not about tips and tricks to cut costs, like reusing tea bags (though I’m currently making my second pitcher of tea with the same tea bags). This is about putting money aside.
Every single person will tell you that you need to save money. I’m sure you already know that. I’m also relatively certain you wouldn’t be reading this is that line by itself was working for you.
I’ve talked many, MANY times about Capital One 360 (yes, that’s a referral link because I think they’re thebomb.com). The main reason I love Capital One 360 is because it has a decent interest rate, even if you don’t have a lot of money. I joined ING Direct (later bought by Capital One) in 2009 to start my retirement fund and a separate savings account.
I love Capital One 360 because it’s strictly an online bank. It quickly takes my deposits out of my primary bank but it can take up to a week to transfer money out of your online account which means you don’t have immediate access to it. As a former impulsive shopper, this is an AMAZING feature. I can also easily set up recurring deposits into both my IRA and my savings account.
Enough about my excessive love of Capital One 360. Whatever method you find that helps you hide money from yourself, you should pursue it unless it’s detrimental to you (like giving it to your sketchy cousin). This can be an online bank, CDs or bonds, investing, or just creating a separate account at your current bank.
4. You Don’t Need THAT MUCH Credit
Credit cards are not my favorite thing. I think there is far too much credit card debt in the world and it concerns me. I have 2 credit cards so please don’t think I’m trying to judge you. I’m mostly concerned about the habit people get in to, of just scraping by month after month. Credit cards often have people teetering on the edge of losing everything if they miss just one payment.
Not to mention credit cards have crazy high interest rates! We’re talking around 19-24%! That’s too much extra to pay for those new shoes, so put them down or pay with cash money, honey.
Credit cards also lead to a major problem of carrying a balance. My rule of thumb is that if I cannot pay off my balance before the end of the month, I can’t put it on my card. My husband’s only use for his credit card is to pay his phone bill, which he promptly pays off as soon as the money is charged.
Having credit cards isn’t an inherently bad thing. The only time it becomes a bad thing is when you use it too much or use it wrong. As long as you pay off your balance by the end of the billing cycle, you won’t have to pay interest and you’ll improve your credit score.
You don’t need several credit cards to be successful. To be successful, all you really have to do is do something well.
With credit cards being covered, let’s move on to good debt.
5. Only Get Into Good Debt
Have you ever heard the phrase “good debt”? If not, it refers to the types of debt lenders view as ways of improving your future, like student loans or buying a house. I still think the name “good debt” is an oxymoron or a fantasy like a unicorn.
Some debts can be necessary and some are definitely not necessary. You will probably need at least one loan to get through college, unless your lucky. You will mostly likely require some type of loan to buy a house. You do not have to buy a new car and finance through the lender. You definitely don’t need to finance through the furniture store.
And please promise me you won’t ever, EVER take out a title loan or a payday loan. Promise me!
In the crazy world of personal finance, it’s crucial to do everything to keep your head above water, like not stuffing your pockets full of rocks (metaphor for debt).
What are your favorite frugal rules? Share below so I can learn from you!