Apr 14 2008

Trading debt for contentment … and other reasons we’re frugal

What inspires you to be frugal? And, what keeps you in that frugal mindset long-term?

For us, it’s the prospect of living debt-free and, being able to save money for our immediate needs and long-term goals and learning to be more content with what we already have.

If we eliminate our remaining car debt, we’ll free up a substantial portion of our income to use for other (better) things, such as saving for a house, saving to buy a second car with cash, saving for vacations, etc.

We won’t be under our creditor’s thumbs–instead, we’ll truly be “free to do what we want.”

As I mentioned awhile back, we recently had several thousands of dollars of credit card debt. We quickly realized that we wanted to pay it off, and got pretty aggressive to make that a reality.

The long-term benefits are numerous. For one, we no longer have that debt.

If we only made minimum payments and made no new charges, it would take us more than 10 years to pay off. Uh, no thanks.

We no longer have to factor in “credit card payment” in our budget–a nice thing that means it takes less money for us to live on than it did a few months ago. That’s the equivalent of a 15 to 20 percent tax-free raise (at least!) for us.

The biggest long-term effect is that our views on credit card debt have changed.

We don’t look at credit limits as extra sources of income, an emergency fund, or as necessary tools to build our credit (as we once did). While I realize that some people never rack up credit card debt, I’ve seen how quickly it can add up and turn into a big headache or worse.

Sometimes, people say that when you use a credit card, it doesn’t feel like you’re spending real money.

I think there’s truth to that. You’re certainly spending real borrowed money, but it doesn’t have the same psychological effect as using cash or a debit card.

Now that our views on credit cards have changed, we’re no longer worried about getting cash-back rewards or points from our credit cards. We’re no longer charging more than we can immediately pay off. In fact, we’ve stopped using them altogether. It’s liberating, actually.

We’re inspired to continue living frugally because we see the value in spending less than we earn. We think, “How cool would it be to have a paid-for house by our 30s?” and we’re inspired to stick with it to see if we can make that happen.

Living frugally has helped us curb our materialism.

We don’t buy nearly as much stuff as we once did. We don’t pay much (if anything at all) on entertainment. We don’t want to, and we certainly don’t feel deprived.

I asked my husband, “If you had to spend our $1,200 economic stimulus check on something, what would you buy?”

“I’d save it. Or go on vacation,” he said.

Well, we’re going on vacation next month anyway, so…that money is going to go toward savings, since we don’t know how we’d spend it, even if we were forced to.

As a result, we’ve found that using what we have and not frivolously spending our money has made us more content.

How much does it cost for you to have a sound peace of mind?

I’m really excited by my little emergency savings status bar growing in my left sidebar. But for me, it’s more than seeing a dollar amount increase.

It’s knowing that right now, if our income would abruptly cease, we could pay all of our bills for two months. And, if we don’t need to tap that fund, by the end of the summer, we’ll have enough to live off for six months, if we needed to.

It means that if our car was in the repair shop for a few weeks, we’d be fine. If we wanted to, we could afford the outrageous expense of renting a car at our age.

It means that if we need to jet home to be with family at a moment’s notice, we could go without it having a negative effect on our monthly budget.

And, on down the road when we’re living in a house, it means if the furnace stops working or the dishwasher conks out (an emergency in my mind!), we’ll be able to pay cash for another one (after shopping for the best deal, of course).

For me, my peace of mind costs about $10,800 (six months worth of expenses). But, lemme tell ya, our partially full emergency fund still has an immensely positive effect on my state of mind.

So, there ya have it! Just a few reasons for why my husband and I are trying to live frugally. We want to avoid being in debt, avoid tendencies to be hyper-materialistic, and avoid preventable financial catastrophes.

Trading debt for contentment is a great thing!

I hope you’ll join me in considering your own motivations for living frugally, paying off debt, and building up your savings. Remember why you’re doing this in the first place, and whenever you’re starting to get off track, you can remind yourself why you made the choices you’re making.



16 Responses to “Trading debt for contentment … and other reasons we’re frugal”

  1. Thanks for being such an inspiration. I have quite a bit of credit card debt (mostly left over from college) and hubby and I also have a HELOC that is left over from when we sold our house and had to take a hit. :( But we’re working hard at getting things paid off. (oh and we also have a mortgage, car payment, student loans, etc…) it looks hopeless sometimes but I love reading about how you pay off debt and live better for it. Thanks!

  2. Very nice post. It’s a great feeling to rid yourself of all that debt. On the Credit Card thing, you just have to know how much you can spend each time you go out. I’ve always been very frugal and I buy relatively nothing when I’m going out, but I haven’t used cash in years. Credit Cards are to be treated like money you have on hand and not money your borrowing, otherwise if something happens how are you supposed to pay them off if you don’t already have that money on hand?
    But yeah it’s really important to have that couple months of savings that’ll keep you running in the case of some lost income, that peace of mind feels great. It’s nice to have that insurance behind you.

  3. I keep sending my hubby your posts. He and I are not on the same page and I want to convince him that we can be frugal and still live life. He thinks money is meant to be spent as soon as we get it. *sigh*

    castocreations’s last blog post..Manic Monday – Bud

  4. For awhile, I would just keep an eye on our credit card spending and pay the balance every month.

    But now, I really hate doing that.

    I hate sending money to the credit card companies, period.

    I think we do end up spending more money if we charge it and pay it off, rather than using debit or cash. But, for some people, that’s not the case.

  5. Aw, thanks for the comment, Castocreations!

    To your hubby, I’d encourage him to read Dave Ramsey’s “The Total Money Makeover.” It’s such an eye-opening book, and it’s a fun read.

    I hope that you’ll both be on the same page soon.

  6. That is really inspiring. GUESS WHAT: I decided the next time I need to pick of a few groceries, I’m going to try out Aldi. My parents already do that. Now it’s my turn.

  7. Well it’s really nice to be able to have a credit card with an online option which allows you to go after a purchase and pay instantly, no fees or anything. That way you never have a problem with paying fees at the end of the month.

  8. I’m going completely ‘off the wall’ and I’m going to talk about a statement you made when you said “We don’t look at credit limits as extra sources of income, an emergency fund, or as necessary tools to build our credit (as we once did).” You don’t necessarily say that you used to have more credit cards and now only have this ONE credit card. But – just as a precaution, if you DID have more credit cards, have you gotten your free credit bureau report? Have you ensured you’ve ‘closed’ those credit cards? It varies from company to company on how you close them, but if they are still open, then there is a problem. Because the line of credit that is available on those cards that you cut up, or quit using, but never ‘closed’ with the credit bureau is going to bite you in the butt. Because the line of credit for those cards is considered a potential debt. So please, if they are still ‘open’ with the credit bureau, call and close those babies out. You’ll be glad you did.

  9. “Living frugally has helped us curb our materialism.”

    This is one of the MAJOR reasons I started learning about frugality. I grew up in a home run by pack rats, my mother has a beautiful house now with so much STUFF that she’s giving it away, and I lived with a cohabitator who was a packrat (at least with electronics).

    When I finally got free and on my own, I started finding out just how much I could live without. I didn’t do it because I was poor or because I was a single person (thus, I would have to haul everything up the stairs…alone), but because I was curious why people push for a frugal lifestyle.

    Turns out that you can live well in a Spartan fashion. I didn’t own a frying pan (ever) until last night when my BF got tired of my way of doing it and bought one! I don’t own a microwave – and I get a ton of stares for that one, let me tell you. I own enough furniture to sit comfortably without feeling crowded. I own enough towels (and use them to death) so that no one has to go without clean, dry towels after a shower.

    In honesty, frugality has curbed my need to HAVE, and I realize now why so many “poor” people are happy…they appreciate what they have more than people who spend needlessly.

    Amphritrite’s last blog post..Would you like $22 + $200 of Free Stuff?

  10. @Save Money, that’s handy indeed, but sometimes they’ll try to get you for paying early. Sounds strange and twisted, but it’s happened to people. Penalties and interest jacks.

  11. Wow, I have never experienced that in all my history with CC’s. Thats not a comforting thing to know.

  12. Great post! You are very inspiring! And good questions to think about why frugality is important to me. I may have to ponder that for a while, then maybe I’ll blog my answers.

    Btw, I love your sidebar thingies too and I’m wishing I could figure out how to add one to my blog but I’m not that technical so it has to be super easy!

  13. I love your blog! I’ve had some money problems in the past, but finally started to save a few years ago. I have depleted most my savings a couple of times, but I think I need to take a cue from you and tighten up a little more and make a 6-month goal!

    Sure, you get the occasional fit of jealousy when you see the new cars and cute decor your friends have, but there is a sense of pride that comes with making it without help.

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Hey! I'm Kacie, wife to Shane and mother to Jonathan (7), Vivienne (5) and Amelia (2) . I write about my family's finance: how we save money, improve our spending, and plan for the future.

I hope I can inspire and encourage you to improve your situation. See disclosure.

I'm adopting a much slower-paced posting schedule, and treating this as a hobby blog now.

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