Embracing Frugality – How to Live a Debt-free Life

Frugality - How to Live a Debt-free Life

Imagine what it would feel like to have no bills. Or at the very least to have no debt. Every time you get paid you won’t be waiting anxiously for your check to clear the bank. Instead, you always have more than enough money in the bank. Many people dream of the day they are rich enough to not worry about money. Especially if you have a family to take care of. But you don’t have to win the lottery or wait for a rich uncle to die to put your money worries aside. Living comfortably isn’t about how much money you have – it’s about how much money you spend.

The Benefits of Frugality

We live in a society that is focused on consumerism. We buy things for “retail therapy” or because it feels good to have the largest television or the newest phone. But do we really need all the things we are buying? Probably not. We see the evidence of our surplus spending every time we open a closet and see all the clothes with tags still on. We see it in the food we throw away every week after not cooking it. And we see it in the bills that come every month and the low balance in our bank accounts. 

Frugality is not denying yourself the things you need or even the things you want. Instead, it’s a mindset of only buying what you need and even then, paying as little as possible. In simple: Less is more. You don’t need a giant house when a small cottage will do. You don’t need to drive the top luxury model of sports car when you spend half as much as drive the same version that’s four years old. Big decisions in your life drive frugality, but it affects all of your daily decisions as well.

When you spend less on the big stuff, you have more money available for the things you need or want. And why spend more than you need on those? The best place for cash is in your bank account or investments where it offers you peace of mind that you’ll never be in a financial position you can’t handle.

Get Started with Being Frugal

If you’re just starting out, start out frugal. If you’ve already made major purchases, plan ahead for the day that you can adjust them as needed to save serious money.

Buy Less House

Heard of a starter home? The idea here is that you buy a small home to “start” in, and then later, just as soon as you can afford to stretch your budget for it, you jump into a giant two-story home with more bedrooms than people. Naturally to make the payments, you stretch it out over thirty years because this is your “forever” home. Or it is until you realize that you don’t really need 3,600 square feet with only two of you. 

Don’t think in terms of “starter” homes. Just think of a home. Buy the smaller house that you can easily afford. Set it up on a fifteen-year mortgage. Then throw a bit of extra cash at each month over the minimum payment. You can easily have your home paid off completely within ten years, roughly two or three decades before your friends finish paying for their expensive behemoths. 

Drive Cars Forever

If you’ve gotten in the habit of trading in your car every few years for something new and shiny, stop. Stop now. Keep the car you have and drive it until it’s not reliable anymore. For most cars that is close to ten years or well over 100,000 miles. If you need a new car, consider one that is only a couple of years old. Someone already paid the bulk of the depreciation when they bought it new and traded it back in after a couple of years. Good thing it wasn’t you!

Pay Off Debt Quickly

Debt is like an anchor. It’s holding you down and tethered to your expensive financial life. Making minimum payments every month barely makes a dent in expensive debt, so make it a goal to pay it off as quickly as possible. Start by budgeting your money for the month so you know how much you can send to the debt. Then pay off the first card or loan. When that one is done, send the money you were paying on that loan to the next debt in line. With some focus you should be clearing out your debts before you know it.

Consolidate Loans and Debt

If you’re paying a lot in interest on various credit cards and loans, you can easily consolidate all those smaller debts by using a personal loan. Take out one personal loan with the shortest terms you can afford – maybe as little as 6 or 12 months. Then pay off the small debts with the proceeds. Now you pay only the monthly payment on the new personal loan and you’ll have the debt cleared in no time.

Being Frugal on a Daily Basis

Once your big bills are set, you need to focus on the smaller payments we make every month. Being frugal doesn’t mean that you deny yourself the fun of eating at restaurants or buying a new outfit for a special occasion. It might mean saving the extra from that meal for lunch the next day or buying just one new outfit instead of five, but that isn’t a hardship for many of us.

Keep Track of Your Spending

How much money have you spent this month? If you don’t know and you can’t find that information quickly, you’re not using your financial apps and websites to their best advantage. There are so many features through banking software. There are budgeting apps that can link your bank accounts to your budget so you can see how much you’ve spent and how much money you still have in your account. 

Never Pay More than You Have To

The biggest thing to keep in mind as you approach your smaller spending with a frugal mindset is to never pay more than you must. Use couponing apps to help you find rebates, coupons, and discounts. Take a few minutes to upload receipts to a cashback app to save money for future purchases. Use credit cards that offer discounts and cashback. 

If you’re making a big purchase, shop for the coupons and best price while you’re also shopping for the item. Apps and discount websites can make this simple, and you’ll enjoy having that extra cash in the bank.