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I’ll Never Stop Telling People to be Frugal

Frugality is not one size fits all. Money management is centers around understanding your behavior habits towards money. Frugality makes you conscious+better at understanding your behaviors and getting financial confidence

Frugality is not one size fits all. It’s something more. It’s a mindset used to be conscious of spending and priorities.

Every person’s financial journey comes to a point where they put more emphasis on either saving more or spending more. These two opposing perspectives are not mutually exclusive. Frugality isn’t something that has to be tossed aside in favor of making more money. They can co-exist.

Throughout my varying levels of frugality (broke college student frugal, entry level salary frugal, all encompassing general broke-ness 🙂 ) there have been critics about my level of frugality. Every step of the way. Some were simple joking around while many were bitter comments on my lifestyle.

Last summer

My car squeaked as I pulled into the driveway to park. Along with the periodic squeaking, my car would do a series of beeps when I turned the ignition off.

Why don’t you just get a new car already? You have a job, stop being cheap. 

My older brother looked in disdain at the car. Like others, he keep insisting I needed to get rid of my 12-year old car with 190,000 miles and go ahead and get a new car. Not another used car, not a pre-owned car, but a ~new~ car.

You want to buy a new car because then you know everything is brand new and you don’t have to worry about constant repairs. 

This was mentioned to me over and over by several people. Buying a new car was a “good” buy, they said, because it was reliable and making the monthly payments would help my credit score.

Being a person who focused on the “making more” approach, the thought of getting a new, better car started to creep up.

Why not get a new car? If I focus on making more money then I will be able to afford a car payment. A new car would be more reliable…

BOOM. Lifestyle inflation.

My frugal mindset quickly snapped in. I didn’t want to buy a new car. My 12-year old, 190K+ mile car was running fine. There was the repair I would have to do ever so often but the repair costs didn’t come close to what I would have been spending on a monthly car payment.

At the time, I was working my first full-time job out of university. With lots of student loans and an entry level salary to boot. I didn’t want more debt. I didn’t want to buy a new car because it was “the right” thing to do. I didn’t want to have a more costly “nice” apartment, mindlessly go to the movies every two weeks because “it was something to do” and charge $12 drinks to my credit card. I didn’t want any of that.

I want to pay off my student loan debt in a timely manner and focus on the writing and design projects I did in my free time.

During my first year out of college, several things weren’t a priority to me:

  • Going to the movies
  • buying a new, “nicer” car
  • getting a ~cool~ apartment that took 40% of my pay
  • Mindless hookups and hangouts
  • “get together” lunches and dinners
  • extravagant vacations
  • shopping
  • and many more…

Frugality stems from deciding what you really value and want in life. For me? I wanted to be debt-free. I didn’t want to buy a new $29,000 vehicle and have payments hanging over my head for six years. Student loan debt was not something I wanted to carry around with me throughout my twenties.

I wanted to live a life on my terms. Working a job I enjoyed, being debt-free and having time during the weeknights to work on my writing and design projects. Weekends being able to be used for adventuring and being active, both physically and creatively.

Although, as many know, building your ideal life can take time. So frugality helped me implement strategies to get there.

For over a year after college, I lived without a massive rent payment, didn’t go to the movies or get drinks or brunch constantly, and I aimed to live a more simple life.

I would come home from my job, exhausted, then got to work on my passion projects. Every month I saved a good chunk of my income, threw it towards debt repayment, some towards retirement and some towards my emergency fund.

All the while, family and various people kept commenting on why I wouldn’t buy this or do that. I nodded my head politely and went on my way.

One day, an opportunity presented itself: moving to Southeast Asia, Thailand to be exact, to teach English.

Leaving my full-time job, moving to Thailand and teaching English for a monthly salary of about $850 USD? It seemed crazy, until I looked at my current situation and saw it could actually work.

Due to my frugal ways in the months leading up to leaving the U.S., I was in a good financial standing to take the plunge.

I didn’t have a car payment, wasn’t bound by an apartment lease, and I hadn’t succumbed to lifestyle inflation after graduating university. With steady progress made on my student loan debt, a moderate amount of savings. and not a lot of personal possessions, I was able to quit my job, move abroad and experience a new lifestyle.

People are different. They have different personalities, goals, and lifestyles. So why does frugality still carry this stereotype of being cheap and missing out on fun?

I didn’t clip coupons, reuse paper towels or do any of the other extreme measures people often associate with frugality. I made it work for me.

Following the various personal finance advice of cutting lattes, cable didn’t entirely fit for me. Neither did the opposing advice of “don’t focus on spending less, but making more”.

If I had focused on making more while ignoring the spending less, I would probably be sitting here with a hefty car payment to my name.

Frugality helped me understand the importance of being money conscious. It helped me understand how delayed gratification can sometimes be a good thing.

The debate between spending less and being frugal or instead focusing on making more money is a hollow. It assumes money management is about following rules. It isn’t.

[tweetthis]Money management isn’t about following rules, it’s behavioral. [/tweetthis]

I’ll never stop telling people to be frugal. If you are not conscious with your spending, do you think making more money is the ultimate answer? It most likely isn’t.

If money management were as easy as just following what financial experts said, then everyone would be great with following a budget and saving 10%, 20%, or 30% of their income. Making more money would be the key towards solving our money woes.

Making more money does have it’s place. It’s easier to put more towards retirement, save 50% of your income, and ramp up your emergency fund when you’re making $60K versus $30K.

However, it’s not the be-all answer (check out #26 on Broke Millennial’s post). Being frugal, no matter how much or how little you earn, is important. [tweetthis]Frugality targets behavior and willpower, big components to understand on the path towards financial confidence.[/tweetthis]

Everyone should be frugal in some aspect. It doesn’t have to involve obsessively clipping coupons, reusing paper towels or living without toilet paper. It’s flexible.

Frugality is adjustable. Make it fit your lifestyle. 

 

Do you practice frugality? How have you analyzed your behaviors and habits towards money management? Let me know! 

 

 

What is Your Needed Internet Speed?

What internet speed do you really need? Use the handy infographic to help you figure out!

What is your needed internet speed? The speed in which you can comfortably browse your favorite website (Buzzfeed?) or send an email to grandma or to watch your favorite Netflix show.

In a former life, I worked for a telecommunications company. From my stint there, one thing stuck out to me: many people really don’t know what internet speed/package to get and usually end up paying more than they need.

Misconceptions and confusions run abound. I have the 6 mbps package. That’s fast, right? I just upgraded to the 75 mbps turbo package! Super fast internet for me!

Nobody likes to pay more for something they don’t really need, right? Heck yeah, right! Gotta save those nickels and dimes.

Below you will see a nice little infographic I put together to help you figure out what internet plan you really need.

What size internet package do you need? Check out the infographic to find out!

The casual user: If you’re a person who just needs simple web browsing, some Netflix (standard definition, SD), streaming Pandora or Spotify and sending basic emails then a low package will be more than enough to fit your needs. A 3-6 mbps internet package is good for a single user.

Moderate users/couples: A 6-12 mbps plan will work for people with a needed internet speed package that allows them to send big emails with many attachments, watch Netflix or YouTube without the annoying buffering, and online gaming. This package is good for 1-3 users.

Families/work from home types: A 12-25 mbps speed will work great if you do work from home or have a family of people using the internet.

Now this post is about finding out what internet package/speed works for you. Finding out and comparing service providers is another thing you will need to do. This can usually be a stressful and time intensive endeavor.

Some quick tips as you go through it: Understand companies quality of service greatly depends on regions (remember that when reading online reviews! Ask people in your area.) and don’t forget to look into local companies as well.

What internet speed do you currently have? Is it fitting your needs without breaking the bank?

Naysayers of Personal Finance & What to Do About Them

 

personalfinance_hate

There are always those people that kill your vibe. The ones where, when you explain some things you’re doing, they instantly retort against it. Sometimes, certain topics get more of an adverse reaction than others. Personal finance is one of them.

Talking about money makes many people nervous. Money management, saving, making more, and investing aren’t talked about much because for some reason it was decided to be a hush hush type of topic.

It’s interesting (and sometimes heartbreaking) when people brush off the discussion of money. When it comes to the naysayers of personal finance and money talk, I’ve experienced and learned of the different kinds of people who are so resistant to talking about money. Let’s take a look at them.

1. The Yolo (You Only Live Once) person

This is a big problem with millennials and people my age (I’m 21). Whenever the topic of saving and budgeting comes up, the YOLO person throws up their arms.

“You only live once! I want to enjoy my life, not have to restrict myself! I could die tomorrow for all I know!”

Yes, you could die tomorrow, but there is a greater possibility of you living much longer. Don’t you want to make sure you have a good financial foundation to enjoy your later years as well?

They make lots of impulse purchases and cover with the guise of “treating themselves” or “buying things that they need”. These are the “treat yo self” people. The type of people who may need to get better at being more intentional with their money and seeing the long-term.

The YOLO person fails to see money management as an opportunity rather than sacrifice [LINK]. They don’t understand it’s possible to live a good life and financially prepare for the future. These two are not mutually exclusive!

2. The “Thanks Obama” person

The title doesn’t have much to actually do with Obama, haha, it’s more discussing a particular mindset. A “thanks Obama” person is someone who complains about their situation and attributes their problems towards other things rather than focusing on actively working to better themselves.

They’re the ones who would rather hope for getting on a loan forgiveness program rather than look for ways to pay off their loans. They’re the ones who don’t know how to take the meaning of something and and shift it to fit their needs and goals.

How often have you read articles on income reports, people paying off big amounts of debt, working lucrative side jobs and so forth? On those articles, there is usually always someone in the comments who says how the situation won’t work for them.

I have three kids and a mortgage, there is no time for a second job! 

I only make $12 an hour, there is no way I can pay off my debt faster!

This person paid off 8,000 of debt in three months? That’s not possible for me!

This type of person focuses on the exact details of the above example stories, rather than focusing on the overall lesson: having a reason behind doing what you’re doing and making a plan that works for your situation.

3. The “On a better day” person

Most often known as a person who always says “I’ll do it tomorrow”, a “on a better day” person waits to get started. They believe things in their life aren’t in order at the moment and they will focus on their financial goals “on a better day”.

They constantly talk about how they don’t have this or that to get started or are too busy right now. Often times, they cast this mindset on others and try to guilt them.

“You run your own online business? Well I could run one too if I had a fancy laptop like yours.”

“You maxed out your Roth IRA this year? Well I have too many bills, I couldn’t possibly do that. Maybe when I start making more money…” 

4. The Overly Optimist

There is no need to build a good size emergency fund, right? Things will work themselves out. That debt will eventually be paid off. A big experience I had with this was when I was in college and talked with other people about their student loan debt.

“Oh, I’m not focused on it. I’ll worry about it when I graduate”

Besides rolling my eyes at the statement, my college self thought maybe it was just people not being exposed to the real world as the reason for this overly optimistic attitude. Nope! Being out of university now, I realize even lots of people in the real world do it.

They don’t pay their credit cards in full every month, they don’t make bigger payments towards their student loans, and they don’t focus on building up a bigger emergency fund. I mean, having $1,400 in a savings account is a good enough emergency fund, right? Right…

These types of people can bad for your finances. They may be great people, wonderful friends, and so forth, but they’re bad with money. How can you do about them?

Explain your ‘why’ and provide an example. 

The types of people above don’t have a definite ‘why’ behind their personal finance, so that’s why they see things like saving, investing, and making more money as not something worthwhile to focus on.

You could tell them your reasoning in dealing with personal finance and what you hope to get out of what you’re doing.

“I’m practicing frugality in terms of cutting my cable bill and limiting dining out. Nothing too extreme. I want to use the money I save to take that vacation to France I’ve always wanted to do.” 

“I’m working a second job as an Uber driver. I’m using the extra money to pay off my student loan debt. I want to pay it off faster so I can focus more on my passion project of painting, without having to worry about debt.”

“I made a budget for myself. I want to see where my money goes every month so I can see where to save. I want to use the saved money to put towards a down payment on a house.”

A lot of times, people just need to be explained why something might be beneficial to them. They may see personal finance as some daunting, big task. It doesn’t it have to be.

Everyone starts somewhere. It all starts with one thing. Doing one thing every day and working towards building a more solid foundation.

 

Have you encountered naysayers of personal finance and money management? What did you do about it? 

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5 Things I Know to Be True About Money

money truths money management

Lately I’ve developed a not so good habit of reading copious list articles on personal finance. You know the ones that go…

10 money things you need to know before turning 30

7 finance fundamentals you should know

8 ways to get better at money management

They’re addicting, aren’t they? This past weekend, I spent more time than I needed to scanning through LifeHack and Rockstar Finance reading several different list articles. I digress, it’s because I’m trying to learn more about finance and get better at managing and growing my money.

Throughout the trials and tribulations with life, I’ve learned something: being knowledgable about money is super duper important. I’ve always known this but have also resisted it. I would scribble down things I had spent money on for a certain day but then not want to actually go through with making a budget. I’d read about credit card rewards but then scurry away from them because I thought credit cards were horrible things to have.

Money is something we have to interact with everyday and whether we like it or not, many of our decisions involve money in some way or form.

As I’ve become more involved with my money and the personal finance world, I’ve learned some things. This list isn’t comprehensive of any and all money lessons (that’d take a while to talk about!). It’s just a few key takeaways I’ve learned so far.

1. Focus on building wealth in your early working years 

Building wealth and investing early is one of the most talked about things in the personal finance world. Most have seem the various charts showing 20-year old investor A and 40-year-old investor B. Investor A usually always comes out on top with more returns on their investments over the long run.

A while back while in my remaining semester for college, I was looking for information on retirement planning. I felt lost and needed actionable information. No one around me (twenty-somethings as well as older adults) talked about retirement planning.

Whenever I spoke about it with older adults in their 30-50’s, they would get this frightened look on their face and just say “Do it! Do it! Save anything you can!” over and over without giving any clear advice on how to go about doing it.

Things are moving along better now. I’ve been reading more about index funds, Lifehacker’s April money challenge, and even picked up The Index Card: Why Personal Finance Doesn’t Have to be Complicated (Loving it! Will write up a review on it soon). 

2. Just because everyone else is buying the next “life” thing doesn’t mean you have to

When I graduated college (about 1.5 years ago), I continued to drive my rickety Ford Focus with 185,000+ miles on it. I knew I didn’t want to buy a new car and have to take on a car payment. So I made a savings goal and started putting money toward buying a preowned car in the future.

Everyone questioned me on this.

The most memorable occasion was when I was over at my mom’s house one day. My brother made a sly remark about how it was “embarrassing” that I was still driving my old car. He went on and talked about how I “needed to stop being cheap” and just go ahead and buy a new car. (This is a guy who bought a truck he didn’t need and wastes his money on irrelevant things every month).

Buying a house and financing a new car were two big things repeated over and over. A lot of people around my age started buying new cars, getting really nice apartments, and so forth.

Do I regret not taking on 20-30K in additional debt by getting a car? Heck no! Not being tied to a car payment is what helped ease the transition to moving to Thailand.

3. Having good credit is super important

The importance of good credit has really been ingrained in me recently. Having good credit is so critical to financial wellness. I’ve been vigilant and made sure to pay my bills on time and my credit card balance in full every month.

A person’s credit score is now even started to affect their employment prospects. W0o0w!

4.  Credit cards can be useful (i.e. not evil) things to have

All throughout high school and college, my parents as well as other adults would give horror stories about people saddled with high-interest credit credit card debt. Credit cards were made to seem like the devil’s advocate.

I would picture Janice Ian from Mean Girls whispering: Evil takes the plastic form with credit cards.

Credit cards are not evil. When used responsibly, they can be really beneficial.

There are three big benefits to using credit cards: building credit, security, and rewards! Resolving charges from getting a stolen credit card is easier than with a debit card. Credit cards provide a myriad of rewards based on the type you get and they help you build credit.

As long as you are responsible with them and pay your balance off in full every month, they are pretty useful things to have.

5. Finance wellness takes practice and patience

When I started getting into personal finance more, I quickly got discouraged. Everywhere I looked, I would read things about people having 10,000+ in their emergency funds, bloggers making 10K+ per month, people maxing out their IRA’s every year and so forth.

Reading all these success stories made me feel less than stellar with my efforts. Almost as if I was doing personal finance the “wrong way”. I’ve moved away from that bad feeling and follow something better now.

Do what you can, with what you have, where you are —Theodore Roosevelt

There are different stages to financial wellness and big things usually don’t happen overnight. The important thing is to just start. Make small steps towards a bigger goal. Everyone has to start somewhere.

I’m sure as time goes on, I will learn more “money truths”. I’m only 21 after all. Still a long way to go!

What are some things you know to be true about money? What has your journey in personal finance looked like? 

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The New American Dream

the new american dream

What’s this “American Dream” all about? Judging from movies and the ever constant article about its relation to millennials, I think it went like this: work hard in high school and get good grades, go to *the best* college, again…get good grades, graduate, find a good-paying job, get married, buy a house in a suburb with a white picket fence, have 2-3 munchkins, continue working at your job for years to collect a pension+also count on social security to support you, and live happily ever after.

Hahahaha. Sorry,just writing it is funny. It’s interesting to see the shifts in perception millennials (and even younger Gen X-ers) have when it comes to the ever elusive “American Dream”.

Buying a house or…?

When I graduated college, I kept being told by my parents friends and other older adults that I needed to buy a house because “renting is throwing money away”. The statement isn’t quite true. People are doing several things rather than buying a house young.

The first of two big things going on is a lot more people nowadays are moving back home after graduating from college. It’s a buzzkill to relive in a childhood bedroom again but hey, the rent is too damn high and Sallie Mae wants her money.

The second big thing is the tiny house movement. It’s grown a lot in popularity with many articles and shows like Tiny House Hunters and Tiny House Nation covering it. I LOVE the tiny house movement. It’s one of my near goals to be able to build one of my own. 😉

SO MANY people buy houses before they’re ready. The concept of home is changing. One of the things that boggles my mind is the lack of affordable housing. It’s a strong reason why so many are still living with their parents, renting, or living in a tiny house/RV. Why are houses so massive nowadays?!?

Jobs & Stability

What do you define as a “stable job”?

My first thought is the tech industry, many think it’s this lucrative and stable career path yet companies all around are doing mass layoffs. I’ve started to see more and more articles about having an emergency fund with 3-6 months of expenses saved up. Layoffs seem to be happening more frequently than in years past.

With stagnant wages, job security woes, and mountains of debt, side hustles seem like an essential thing.

Retirement

Many people still appear to want to retire at the traditional age of 65. Pensions are for the most part a thing of the past. Every now and then, my mom and uncle (both in their sixties and retired) nag me about how I need to get a job with a pension because “these 401k’s aren’t working for people”.

It made me think about how my generation has to reallllyyy plan for retirement, something previous generations didn’t have to focus on as much. Despite the retirement crisis and social security woes, people still aren’t actively taking charge of retirement planning (<—-amusing article, go read it, I’ll wait).

People appear to be more focused on keeping up with the norm: buying a large house, new cars (with *all* the extras), and $10-15 drinks at the bar.

Kids

So many people ask me when I am planning on having kids, how many I want and so forth. It’s strikes me as a little odd since I’m a 21 years old and single. Nonetheless, it’s worth pointing out kids are super expensive. Really, really, expensive. (#RIPwallet).

The amount of kids people are having is decreasing and some are opting to not have any at all. Whether or not a CNN Money estimate is accurate is beside the point. Raising a kid is expensive. People are becoming more aware of this nowadays.

What’s your american dream? Not sure? I’ll tell you mine…

My personal american dream:

  • Be as financially literate as possible and aware of where my money is going
  • Have a healthy emergency fund at all times (3-9 months expenses depending on where I am in life)
  • Work a job in a career I enjoy, that propels me forward
  • Not have a mortgage control me (Not opposed to buying a house, but when I do it will be something I know I can afford and manage)
  • Be conscious and weighing the options when taking on debt
  • Max out my Roth IRA ever year (not going to happen this year because of debt payoff but within 2-3 years I want to start maxing it out every year)
  • Never let a flashy ad or society encourage me to take on debt I don’t need

There are more, but those are the ones I could think of off the top of my head. Plus I didn’t want the list getting too long, haha.

What do you think about previous depictions of the “american dream” vs. today’s definition? What’s your idea of “the american dream? 

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