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.