A question that my husband Thom and I get every now and then is: “Are you guys independently wealthy or did your parents leave you a bunch of money?” The answer to both of them is “No!” As I’ve written before, both of us grew up in blue-collar households and we’ve been self-employed our entire lives. We’ve never once received financial assistance, unemployment benefits or won the lottery. Regardless of whether it sometimes look like we live the life of leisure, let me assure you, we’ve earned everything we have. It wasn’t always easy, and we made a bunch of mistakes early on, but fortunately, that’s changed. Along the way, we picked up some SMART and frugal practices that helped us hang on to much of the money we make. Now we use our money to do things we enjoy, and support people and projects we believe are worthy. I’m convinced we all have the potential to do the same.
Here are ten ways to save money and enjoy peace of mind:
#1 Go debt-free.
Yes, it is possible. And according to Survey.com, up to 20% of U.S. adults are completely debt free. Being completely debt free means that you don’t have a balance on your credit card, a car loan, a student loan, or any other debt. Best of all is when you have no mortgage on your home.
I get that it’s not easy for everyone, but this step was the most important thing Thom and I have done to be financially secure. When we rightsized our lives, moved into a house and neighborhood that easily fit our finances, we found a freedom that the truly wealthy usually enjoy. Trust me, it is worth all the effort.
#2 Live Below Your Means
Thom and I didn’t always live below our means. Like most Baby-Boomers, we grew up thinking more was always better, and going bigger the solution to everything. Thankfully, after many years of debt and hand-to-mouth living, we began to realize that the weight of trying to keep up with a lifestyle that exceeded our income wasn’t worth the stress. When we tailored back on our needs and expectations, we discovered that most of the time we didn’t really want all that stuff anyway.
Gradually we learned to focus on the things in life that we really enjoyed most. Things like freedom, travel, spending time with each other and friends and more, didn’t really cost that much. Instead of buying things, we learned to embrace experiences that made us happy. We stopped trying to “buy” happiness and instead let it wash over us in the simple and everyday experiences in our lives.
#3 Make Choices From A Place Of Peace of Mind Rather Than Fear
Many people, ourselves included when we were younger, make choices from a place of fear. Of course, people don’t like to call it fear, but when you get right down to it, fear is guiding their decisions. What kind of fear am I talking about?
- Buying an overly expensive car because you are concerned about how other perceive your “image.”
- Insisting you have to live in a certain house or neighborhood regardless of whether you can afford it.
- Doing things for your kids or your family that hurt you financially because you fear those people will stop loving you if you do.
- Going to an expensive college for your degree with an enormous student loan because someone told you that that is the only way you’ll get a decent job after graduation.
While some of these choices might be beneficial, if you are doing them out of fear rather than conscious choice, you will likely find that the “price” is much higher than expected.
#4 Keep Your Eye On The Prize
Let’s face it, every single day we see dozens of beautiful, desirable and interesting things we can do and buy. If we lose site of our intention to be debt free and live with peace of mind (the REAL prize), we might find ourselves forgetting what is important and end up buying everything in front of us. Stay focused.
#5 Develop Habits That Help You Choose & Save
Learning to embrace habits that not only help you save but also help you avoid spending in the first place, will serve you for the rest of your life. According to the September 2016 issue of Money Magazine, “a full 78% of millionaires cite frugality as a reason for their success.” When we learn to carefully monitor our money, it becomes a habit that gets easier the longer we live.
#6 Plug Your Money Leaks
According to that same Money Magazine article, “two-thirds of would-be exercisers never use their gym membership.” In other words, don’t sign up for things you will likely never use. Go through all your bills and credit cards and locate things you signed up for and never use. Things like a $30/month credit monitoring service, movie channels you never watch, or fees for travel rewards can easily be eliminated and save you money.
#7 Never Hesitate To Renegotiate
Last year when it came time to renew our health insurance I found by shopping around that I could save $300 a month (Yes! That works out to $3,600/year!) just by switching insurance. I also saved $60/month on my cell phone bill. Sure, it takes time and is sometimes a hassle, but the money you save when you renegotiate or shop services can be significant.
#8 Stop Going Out To Eat Frequently
I know people who make far less income than Thom and me who go out to eat nearly every night of the week. When they say they can’t seem to save money, I don’t even know how to respond. Not only will you save a great deal of money by eating at home, in most cases it is far healthier for your waistline, your overall health, AND your finances.
#9 Learn To Do Things For Yourself
I realize that not all of us have skills and talents to do certain things around the home or in our lives. But I also recognize that many times people will still hire out some of the most basic services rather than do it themselves. And why not try to learn? Where I live in California nearly everyone has a gardener. We did too until we decided to put in low maintenance desert landscaping and do it ourselves.
#10 Stop Using Your Hard and Long Hours At Work to Treat Yourself To Things You Don’t Need
I have friends who work literally like slaves at jobs they barely like. But because they do, they use those jobs as excuses to buy things for themselves (and others) to make themselves feel better. One friend leased a brand new expensive car for $800/month and then complained that he couldn’t quit because of that car. That’s a choice, not a requirement. I have other friends who go out to eat nearly every night. They say they do it because they are too tired to cook. Why not find a job with fewer hours and spend the time cooking and being with friends and family? Most of the money excuses people use make them slaves to a lifestyle they really don’t need.
BONUS TIP: Learn the Value Of Delayed Gratification.
Learning to resist the temptation offered in the present moment for a larger and more enduring reward in the future is one sure indication that we are well on our way to living a rich and more peaceful lifestyle. As the famous “Marshmallow Experiment” proved back in the 1970s, those children who could resist a marshmallow for a short time in return for the promise of more in the near future, grew up to live the most successful lives 40 years later. Anyone hoping to live well, peaceful, healthy and happy in the future must learn this important practice.
Of course, my strongest suggestion is to stay conscious about how, when and where we spend the money we devote the hours of our day generating. And ultimately, working at any job just to produce large sums of money but not having the time, energy or freedom to live your life is not SMART. Never loose sight of the fact that there are things each of us can do to reduce the stress that comes from debt and overspending. And no matter what, it is SMART to remember that peace of mind makes us wealthier than any amount of money.
Great article. As a “Baby Boomer” I totally understand the mindset. Working in the financial industry has given me an “insiders'” view of many people that struggle with their choices.
You are right, simplifying and deciding what is truly important frees you in many ways.
My family is debt-free and frugality is a huge pat of it. Consignment shops have been a huge help reducing costs of clothing and home furnishings.
Hi Cristin! Good for you and good for your family! Doesn’t it make such a difference? And I know that consignment shops are a very good way to make a difference in reducing clothing costs, especially with growing children. Thank you for adding that suggestion and for your comment. ~Kathy
This just outlines everything so well, Kathy! Love this: …”be debt free and live with peace of mind (the REAL prize)!” We could do better, but we have the means to pay down some debt.
Hi Terri! Thank you…..and good for you to be in the position that debt is not a problem for you. I know you are both working so that changes things a bit and offers a level of comfort and security. But trust me, I guarantee that when you do decide to pay it all off you will be so happy with the feeling it gives you–far beyond the tangible. Let me know when the time comes. ~Kathy
Great tips. I often reevaluate my monthly expenses and drop things (like Netflix DVD plan, just yesterday) and see what can be changed. I’ve been debt-free for 17 months now and it’s awfully nice.
Hi Walker! YAY!!!! Good for you for being debt-free. Doesn’t it feel fantastic? While we sorta, kinda thought it would be good, we were almost surprised to see how awesome if feels. I think a HUGE part of that is reevaluating your expenses. It’s funny how costs here and there creep in and we go unconscious about them. Thanks for reminding me. ~Kathy
Great tips. We are on a budget, rather fixed, so we use Netflix and PBS to fill out our entertainment. I do all my own cleaning and most of my gardening and John helps me. We plan meals together and rarely eat out–but when we do we enjoy it immensely. We also have season tickets to the symphony. Purchasing gifts for our grandchildren or traveling are our biggest expenses–and quite often we are called upon to help our younger son whose salary is rising, but it has taken some time. I was raised in a frugal household. We had what we needed but did not splurge, so this isn’t
hard for me. Right now I would love to recover my couch. And buy a new headboard. It will happen. John planned very well for our retirement, so we are good!! Beth
Hi Beth! Thank you so much for sharing how you cut back in your life but still enjoy living! Of course, it sounds like you grew up that way so you likely have plenty to teach the rest of us in ways to conserve. I also think that once we get into the habit of it all, that it actually becomes entertaining to find new ways to enjoy ourselves that don’t cost much. Thom and I have just taken up pickleball..and while we aren’t that good we are having fun! Once you buy your pickleball paddle, there are courts everywhere to play for free. Thanks again for your thoughts and good for you for being prepared! ~Kathy
hi gorgeous. so because I get your posts in my inbox I’ve been reading a lot here lately. always a joy to be inspired by your wisdom in living modesty, healthy, happy love and participate in frugality as a way of life, one that has allowed us to make long term family world travel a reality that also, most thought we enjoyed because of our wealth. no… worked for that too. hugs. Gabi
Hi Gabi! I hope you and your family are well and happy! You are such an inspriation to all of us for your fearlessness to take your family and do so much traveling. Many of us are too afraid to leave our comforts to even try. And like you said, who says you have to have money to do it–just work as you go along. Sending good and positive thoughts to you all on the other side of the world. ~Kathy
Great tips, Kathy. I think one of my most frugal decisions is that if I am going to buy something, I have to figure out what it is going out of my closet or elsewhere in the house before I can purchase the new item. That often convinces me I don’t really need that new trinket!
Hi Nora! That is an absolutely great idea. I have read that on your blog and others and it sounds like a perfect way to provide a check and balance to your purchases. I haven’t mastered it completely yet, but I’m getting better and better. ~Kathy
Great article and a good reminder to stay on track. Thanks.
Hi Deb! I’m so glad you found this helpful. Thanks for letting me know. ~Kathy
Excellent advice! If more young people embraced a lifestyle that was SMART and fiscally responsible, they, too, would be in a much better position to enjoy a comfortable existence (in retirement, if they want that) as they get older. Obviously, bad stuff happens that is out of our control, but being financially aware puts us in a better position to get through challenging times. Of course, it’s never to late to turn the ship around… it’s just harder to make up for lost time. I can’t pick a favorite habit from your list because they are all interrelated and important.
Hi Janis! I know you and I are on the same page about this because we’ve talked about it several times. To the extent that we can learn to be both fiscally responsible AND discover what is most important to us carries such freedom. But thank you for also pointing out how it helps to prepare us, or at least take the edge off of challenges if they arrive. We never know for sure what the future will bring but it helps tremendously to know that you won’t be destitute should an emergency come along. Thanks for sharing your thoughts and keep rightsizing!!! ~Kathy
Great tips Kathy. Setting priorities of where money is spent is important. For me I can not stand a cold house. I am willing to spend more on heat than go out to eat.
Hi Haralee! I think it is more important to have a clear “knowing” about what you really like, need and enjoy than to not spend money on anything. It sounds like a warm house is important to you so naturally, that is where you would want to devote some of your resources. (but hopefully you do have some leftover to eat, too!) That’s why I love the idea of rightsizing so much. It reminds us that we are the ones doing the choosing–and then pick accordingly. Thanks for sharing your thoughts on this! ~Kathy
Would you be willing to share whee you obtained the less expensive health insurance? I am a sixty year old retired female and am paying a huge amount for a bronze level health plan.
Thank you,
Barbara
Hi Barbara! As a self-employed person I was able to set up an HSA for both Thom and me years ago so we always go with a high-deductible HSA plan. We were with Blue Sheild for years but they kept jacking the plan and reducing benefits. So this last year, 2016, when I got the notice they were going up over $300 a month I shopped it and found a similar plan with Blue Cross–and it was $300 a month less. Unfortunately I have just received notice that Blue Cross is raising my premium $250/month for 2017 and changing my PPO to an EPO. Not acceptable. I have shopped again and I will be switching back to Blue Sheild with a PPO HSA account. My only other option with HSA is to do an HMO with Kaiser. By switching back I will save $50/month. Either way, we saved $3,600 this year alone and now it will be $600 for 2017. Not sure if you are using HSA but you might want to look into it for all the other benefits. Insurance costs suck big time. It is our ONLY big expense with being debt free so I am a big proponent for a single-payer health care system. Sorry if this was all more than you wanted. Good luck. ~Kathy
Kathy,
Thank you so much for responding so quickly and with so much information.
I live in Arizona and am enrolled with BCBS. we are grandfathered unti April 2017 and then AZ will only offer one company – Cigna. All the rest have pulled out of AZ. My premium for a breeze plan will ghave from $291. per month to $948!!!
I thought one could only set up a HSA if one was working…
I’ll check it out.
I always look forward to your Friday blog. It is so optimistic and encouraging. Like you, I live a simple, yet very fulfilling life.
Thank you for all you are doing. I am grateful for you.
Best Wishes,
Barbara
Thank you Barbara! I’m glad you find my writing encouraging….I surely do my best. And sorry to hear about your insurance and lack of choices…that certainly sucks. And sorry I don’t know about whether the HSA works for you. I hope you find something that you can better afford. ~Kathy