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Is It Possible To Be Young And Frugal And Still Have A Vibrant Social Life?

Posted by Daniel in Advice, Finance, Frugality, House, Jobs, Life, Uncategorized

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Mathematically being young and frugal makes a great deal of sense; save as much as you can now, and let the compounding interest build up over the course of your life. 

In theory if I were to invest $50,000 in a decent mutual fund at the age of 23, assuming it earns at least 10% a year (slightly less than the historical average of the stock market), I would have $2,262,962.00 by the time I’m 65.  That sounds great, and the numbers don’t lie, however it’s not that easy.

Achieving this goal, while feasible, means that we need to continue living the way we are now (very frugally) and save for over two more years before we would be back in good financial shape to buy a house.  We could do it, but it wouldn’t be fun, and we are already committed to the house.  

The fact of the matter is that being young and frugal comes with many opportunity costs; the biggest being a social life.  Personally, it’s in my nature to not be able to rationalize going out to bars and paying big bucks for a drink I can make at home for a fraction of the price.  Plus I’m not a big fan of loud crowded spaces.  I do however love hanging out with friends and meeting new people…who doesn’t?

In college I hated going out to bars, I would much rather have hung out with a few of my roommates or thrown a party at our house than go out.  As a bonus we would host the parties, charge a cover to get in, drink for free all night, and have money left over to pocket or pay the resulting tickets.  It was a pretty good setup :) …until we lost about 80% of our deposit when we moved out.  

I know there are always alternatives to going out to bars, but for the most part, when you are hanging out with friends, meeting new people, or even networking you will most likely be doing so while spending money.  Whether it be at a bar, a movie, the golf course, or over dinner, you’ll be spending money.  It’s called social spending, and it’s a fact of being social.

To be honest, this aspect of being young and frugal is less than fun.  It especially sucks in the office because everyone I work with goes out for lunch at least 3 times a week.  The frugal train of thought on this is to take your lunch to work and it will save you a ton of money, so this is what I do, and it does save a great deal of money.  On the flip side, I’m certain that I am missing out on a great deal of good networking (and the male bonding) that comes with going out to eat with the guys.  Also, I’m wondering if my being social with my bosses at lunch could have an effect on an increase in my salary, thus offsetting going out to lunch.

Mary and I have kept room in our food budget for us to each go out to lunch with our co-workers once a week.  At the time we set the budget it was a reasonable expectation, and while it is a reasonable expectation, it’s getting to the point where I feel bad telling them I won’t be going to lunch today.  I love that I am always invited, but I know that there becomes a point where you are turned down so much that you don’t ask anymore. I’m hoping that I am not approaching this point.

Outside of work it’s hard for us to make new friends right now because of our extreme frugality and location (both will hopefully only be around for the 2-3 more months).  We live 45 minutes away from work, and we are more than 45 minutes away from “uptown” where any sort of nightlife in Dallas occurs.  On top of that all of our childhood friends from the area no longer live here!

So with all this, is it possible to live frugal and still have a vibrant social life?  I’m sure it probably is, but for Mary and I, and our extreme situation, it seems that we have struck out.  Our saving for our house and preparing to be house poor is strike one, our current location is strike two, and being married seems to be strike three because all of our peers are still single. 

I am more than open to suggestions on how get our social lives back on track while still living frugally, so if you have any please post them in the comments section. I’d love to hear what you have to say!

Frugality Increases Earning Power (And Saving Power!)

Posted by Daniel in Advice, Frugality, Jobs, Life

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I want to share a story about how being frugal can help you make more money, and not just help you save it. 

Ever since Mary and I decided to build our new house we have been living frugally for the first time, and I feel that it has opened my eyes.  I’ve always hated inefficiency with a passion, and I pride myself on trying to find the most efficient way to do things, but lately with frugality on the mind I’ve been seeing waste everywhere.  For example, this waste has forced Mary and I to become active instead of passive about recycling.  But it isn’t just at home I’m seeing waste and inefficiency, I see it on an everyday basis at work. 

The company Mary and I work for is not exactly known for being a leader in employee benefits, and it’s no secret around the company that the employees aren’t thrilled with the 401k.  But by being in the unique situation of working at the same company as my wife, and by talking with some friends, I was able to uncover something that could save the company upwards of two million dollars a year… 

From my Human Resource classes in college I know that an employees health benefits can cost the company around $4,500 a year if they are enrolled.  Because Mary started her job before I started mine, I have been under Mary’s benefits.  Each additional person on an employees benefits costs the company a fraction of that amount more, so assuming that it costs the company $2,000 a year extra to insure me under Mary’s plan, I’m effectively saving the company $2,500 a year by not being enrolled for my own benefits.  Unfortunately for Mary and I, it is more expensive for us to be on the same plan ($480/year more) so it isn’t cost effective for us, even though it’s cost effective for the company. 

In speaking with a friend who works at the same company as his wife, he mentioned that  his company offers a $500 incentive to not be enrolled in their benefits.  An incentive like that would make being on one plan cost effective for us!  So I ran some complicated numbers and realized that if a small percentage of our workforce decided to accept an incentive to not be enrolled in the company’s healthcare system and instead be enrolled in their spouses, the company could save millions of dollars! 

I took this idea, and I approached my boss, I showed him the math, and he loved it.  The next thing I know, I’m in the Treasurer’s office pitching it to him.  He also loved the idea, and even came up with the idea of re-allocating the saved money to improve the 401k (which would double the matching they do now).  After his office, I got an appointment to meet with the Senior V.P. of Human Resources, who also loved the idea!  

They will be passing it through the ranks and may be implementing the idea for the next enrollment period. By looking at things like this with a frugal eye, I have potentially saved the company money and/or doubled the retirement plan our company offers!  And while it’s nice to think that I’ve done this for the company, I’ve really done it for myself.  I got great visibility out of it, and now the executives know who I am and say hi to me in the halls, which is pretty cool for being in my first job out of school.  Hopefully I’ll be able to leverage this later on when it comes to my evaluation! 

I’ve also found that our company doesn’t recycle, and I probably throw two reams of paper away a month as part of my job.  My next task is going to be saving my paper instead of throwing it away, so I can approach my boss with a large stack of paper from only a weeks worth of saving, plop it on his desk, and ask why we don’t recycle!

Planning Ahead

Posted by Daniel in Advice, Life, Planning, Uncategorized

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Not planning ahead can get expensive. This weekend we went on a ski trip with my family, and I didn’t adequately plan ahead. I assumed everything was taken care of (which it was for the most part), but I missed the opportunity to save my family at least $20 a day on lift tickets (we were already getting a good deal, but we could have gotten better via Craigslist or ebay). I also assumed that we would be staying in a cabin or condo on the slopes as we usually do.

Had I fully read the e-mails ahead of time I would have seen that we had to ride a shuttle from the house to the slopes, making it hard to go back to the place for lunch. Without realizing this I paid for lunch on the slopes… BAD IDEA. Not only did Mary and I have to hunt down a table (on a busy holiday weekend), I was price gouged by paying $31 for lunch for the two of us. That amount doesn’t sound too bad, but when we each got a cup of soup, a half a sandwich, and a vitamin water it’s pretty ridiculous. Needless to say, Mary and Stacy (my sister-in-law) got smart and decided to make lunch for day two on the slopes. I volunteered to wear a backpack all day, and we ended up having a great inexpensive lunch, even though it was a bit crushed as the backpack wrecked havoc on my balance in the terrain park.

I usually do plan ahead for things like this, but this time it all just snuck up on me. From now on I will be actively involved in planning trips and I will research before I go.

TV…It’s A Trap!

Posted by Daniel in Advice, Frugality, House, Life, Time

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As I watched the Super Bowl the other week, I was reminded how much I hate commercials. I have Tivo, and so I usually fast forward through commercials, but it was the Super Bowl, you are supposed to watch for the commercials.  Anyway, I really haven’t been watching TV much in the past months due to the writers strike but now that it is over, while most Americans are leaping in joy over this announcement, I’m upset. Why, you might ask? Because I’m over it, I’ve kicked the habit. All of “my shows” were taken off the air due to the strike, and as a result I feel free.   

In my pre-Tivo days I was a true slave to the TV, I would schedule my evenings around shows, and diligently watch the entire program. I wanted things that were advertised to me during the 8-20 minutes of commercials per show, I needed those items, and I would spend my money to buy them. Then one day, I impulse bought a Tivo with Lifetime Subscription, and I thought it would change my life. No more would I be a slave to timeslots and advertisements, I would watch my shows when I wanted to, and I wouldn’t have to worry about missing a show due to class (or occasionally missing a class due to a show). I would be free at last!   

Too bad that didn’t work out the way I wanted it to, my life didn’t change. Instead, I became a slave to the Tivo, and ended up watching more TV as a result. Wouldn’t you? The average 30 minute show has 8 minutes of commercials, so you could watch 2 shows in the amount of time it used to take me to watch one and a half. I could stay up a little later and watch 4 programs in the time it used to take me to watch 3!   

Soon I was staying up just so I could find time to watch all of the shows I needed to watch. It didn’t matter if I had never seen them, if it was a Tivo recommendation I’d need to watch it to see if I liked it. Of course I usually would enjoy it and would add yet another show to my season pass list. With Tivo, I would watch 1.5 to 2 hours of TV a day, but because of the strike I cut down my viewing to about 30 minutes before bed.

With that time not wasted, I’ve been reading, writing, and running; all things that I feel have enriched my life. Even more importantly, I am not being advertised to nearly as much as I was. I no-longer am forced to view targeted pop-ups during a show or convenient and overly blatant product placement (after all, every Office fanatic needs a Dwight bobble head doll).  But over all, giving up TV hasn’t been too hard.  It’s been much easier since all of my friends and coworkers aren’t talking about the shows the day after, because they simply aren’t on.   

I’m upset about the strike ending because everything I had grown to love, and now hate, will be back for me to learn to love again. I’d be lying if I said I didn’t miss Jim’s witty antics toward Dwight, but I’m going full force in trying to not watch TV.  Ok, I will watch The Office…and Heroes, but I want to maintain these things that have enriched my life and not fall back into my old ways.   

When we move Mary and I have decided that we will only have local channels, and we will hopefully keep it that way for many years to come. This will definitely help us out from a financial standpoint, because instead of spending $60+ a month on cable, we will be able to save that money.  Plus it will give us more time in the day for more important things, like each other, keeping fit, and working to achieve our goals.   

The bottom line is that being frugal isn’t about just finding ways to save money, it’s about finding ways to save time too.  This fits the bill for both!

My Frugal Best Practice

Posted by Daniel in Frugality

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Mary and I grew up without ever having to see our parents struggle, and growing up like this, we never worried about price, and to an extent we didn’t understand the value of money.  In college if we wanted Starbucks, we would go and pay $4.00 whenever we “needed” one.  If we wanted to order take-out, or go out to dinner, or when Mary “needed” to shop (we did live in Los Angeles) it was no issue, because our parents were paying for it in the end.  Sure we both had jobs, I had internships all the way through school (most of which were paid), and Mary babysat for extra money, but we knew we always had a safety net in our parents.  

Now that we are truly independent (sans cell phones because it’s cheaper than paying $250 to break contract), in anticipation of our house payment, we have already begun to make sacrifices, and are living more frugal than we ever have. 

After tracking our spending for a few months we made some drastic changes to the way we live, and continued what we were already doing well… below are some examples. 

We carpool.  Sure we have two cars, but we both work at the same place so why not?  After all, we currently live more than 30 miles away from work, so it really does save us a great deal of money and we alternate by week which car we take to regulate mileage. 

We changed our routes.  We were taking about $4.00 worth of Toll Roads to and from work, costing us over $120 per month in tolls alone!  And even this route was taking us an hour to get to work.  We changed routes when an HOV lane opened on our non-toll route, and now it only takes us 30 minutes to get to work without tolls! 

We cut our Satellite package.  We were paying about $65/month for TV.  Now we are paying about $40/month, and we don’t miss the extras!  This expense will go away with the new house because cable will be included in our HOA dues. 

We Take Lunch to Work.  This alone has probably saved us at least $300/month.  It seems absurd, but when you add it up ($10 per person per day) it definitely is an expense!  Even if we are lazy and take a Lean Cuisine, it saves us money, because the frozen meal is only $2.50, vs. $5-10 for lunch. 

We Stay Fit and Eat Healthy.  This may seem minimal to most people, but we consider it an investment in our future and it’s been proven that when you are in shape you spend less on medical bills.  For instance, when I was on the high school swim team, it improved my breathing and my lung capacity by over 200%.  I used to have severe asthma, now my asthma is under control and much better.  Now there is a company gym available to us for only $10/month, and we will have a community gym in the new neighborhood that is paid for by the HOA dues. 

We Cook Our Own Meals.  Mary is a fantastic cook, and I dabble, but since cutting down how much we go out to eat we have saved well over $200/month.  And most importantly we have found that experimenting to see what we can accomplish in the kitchen is much more fun than a night in a restaurant.  We even bake our own bread once a week.  We haven’t starting inviting people over yet, but I have a feeling it would be a great double date to have another couple helping in the kitchen! 

We Shop at the Dollar Store.  I’ve been made fun of for this, but in all sincerity, try it out.  Mary and I buy all of our cleaning supplies, toiletries, and paper products at the dollar store.  And while we don’t often need these supplies, we have probably saved over 50% on each visit, and we get the exact same stuff we would have gotten elsewhere! 

I haggle.  Mary frequently will jab me or apologize to the other person out of embarrassment; but it works.  It doesn’t work all the time, not even most of the time, but every once and a while someone will hook me up! I never push someone for a better price or a discount (large purchases excluded), but I always ask.  Frequently enough the cashier will give me 10% off.  After my brother saw me haggling he decided to try it, and he ended up getting 10% off an already discounted grill because he asked the Cashier! 

These are just a few examples, and as you can see we’ve already cut our spending by over $500 per month.  I’d also like to hear about what some of you do to save money, so please leave some suggestions in the comments!

-Daniel

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