The Plan: Live Frugally

In Our Feelings on Spending, Debt, and Budgets, I outlined the four main categories of our financial planning: establish savings, pay off debt, live frugally, and get real about the future. Since then, I've gone into more depth about savings, to include retirement planning, and debt reduction, but I haven't talked much about my ideas on frugal living.


I don't have too many ideas on frugal living, since I really haven't been living frugally. As I've said before, that is the biggest reason that I carry so much debt. Over the last year, it has become increasingly apparent that we need to plug some of the leaks in our spending, save where we can, and generally make better financial decisions. My lack of experience in budgeting and frugal living makes that quite the challenge.

The biggest struggle we face in forming a budget is finding the right balance between reducing expenses and still having enough "fun" money. In forming the budget, I am keeping three key factors in mind: flexibility, simplicity, and reality.

Flexibility - If the budget drills down to the last penny, it is doomed to fail. There needs to be enough room within the budget categories and within the budget itself to allow for unexpected rate increases, changing needs, etc. In addition, if the budget is too tight, one small expense that runs over budget throws the entire budget off balance.

Simplicity - If we can't figure out the budget, track the expenses, and know when we're reaching the upper limit of a budget category, it can't possibly work. To have too many categories, too many moving parts, or too much money shifting from category to category will result in failure. We may consider switching back to cash for our living expenses, instead of the debit cards, so we can track our spending by putting designated amounts in different envelopes. However, that introduces its own challenges and requires the discipline not to spend the cash out of category.

Reality - If the budget doesn't allocate enough money for certain things, it is doomed to fail. For example, expecting to buy enough groceries for the two of us for $25/week is unrealistic. Expecting to fuel both cars for two weeks on $20 is a joke. There needs to be enough money in each category to comfortably cover the expenses - and this is the biggest challenge we are facing.

Where does frugality enter into this conversation?

I want a budget that offers flexibility, simplicity, and reality. All three of these goals require one thing -- enough money. For the budget to be flexible, there needs to be enough money to go around. For it to be simple, there can't be a lot of moving money from one category to another to compensate for overspending -- there needs to be more money. For the budget to be realistic, there needs to be enough money to comfortably cover all of our expenses, and then some.

In order for the budget to succeed, we need to minimize our expenses wherever possible. I do not want to pinch pennies, but I know there are many ways we can reduce expenses with minimal work on our part. I've gotten many good ideas from other blogs, and I plan to throw them up here as time allows.

So, my Live Frugally plan is still pretty vague.

Until next time,
Jonathan