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Thursday, March 26, 2009

5 Keys to Frugality

* Patience really is a virtue.

We tend to live microwave lifestyles where every whim is a 'need' and we want instant gratification. Even those of us who are learned at being frugal will benefit from slowing down and being even more patient. Do you need to see the latest movie release? Can we make it home to prepare a decent snack there instead of stop at a fast food drive-in? Can't we do without the car for a few days while we save up for a repair? Must the kids see Disneyland this year instead of next? Even taking asprin for a headache is a means of 'instant relief' when just laying down for a nap might be just as effective.

I am constantly reminded - CONSTANTLY - of how my impatience wastes money. Start noticing how patience would have benefitted you and you will also see new ways to save.

* Be prepared.

This is the flip-side to the patience axiom. If I have dinner pre-planned and waiting for me at home, I'm less likely to cave into an eating out urge. If I washed, ironed and hemmed my nice pair of slacks, I'm less likely to race to the store because "I have nothing to wear." If I do the small repair on the roof today, I am less likely to have to pay for a major roof replacement (and other damage) later. Just saving money "for no reason at all" is a way to be prepared.

Opportunities are won when we are in a position to jump on them. Think of the current times. So many big ticket items are at bargain prices right now. If we were out of debt and had loads of money in the bank, we'd be in a position to snap up these deals. However, if we're one of the many who are 'in a hole' and needing to liquidate, then those opportunities are lost to us.

* You can't buy a lifestyle.

I see people do this all the time. Signing up for a gym membership doesn't make us healthier. Buying a truck-load of camping equipment doesn't make us 'outdoorsy'. Buying adorable baby clothes and toys doesn't make us better parents. Graduating from a pricy private college doesn't make us well-eduated. And buying the latest item to hit Target doesn't make us stylish.
We tend to seek qualities by what we buy instead of what we do.

The other day DD and I were walking through a street fair. On the sidewalk were two guy playing music to earn money. Their equipment was nothing more than a few metal pots and over-turned plastic buckets. I turned to DD, who has be bugging me for drum lessons instead of piano, and said, "See. If you really want to play drums you don't need the fancy equipment." She just smirked. In reality, what DD wants is the cool drum set, not to play the drums. I want her to learn not to try to buy a lifestyle.

* Be clear on your values, priorities and goals.

Yes, you can have it all IF you know what "it" is. I know a couple who dropped out of college just before graduating. They decided that what they really wanted out of life was to be married and raise their children in the same small town where they grew up. They determined that a college degree wasn't going to do anything to help them achieve those goals, so they dropped out. To this day - with their children grown - they haven't regretted it. However, if your biggest priority in life is to travel the world helping people by providing much needed medical treatment, then an advanced college degree would be the answer for you.

Once we know what we value most, we can make much better decisions about how we spend our time and resources. I may adore a closet full of gorgeous new clothes, but if my main goal is to travel the world, I might decide to save my money for airplane tickets instead.

* The quality of your decisions in the past affects the quality of your decisions in the future.

This is the companion axiom to the statement above about priorities, values and goals. It also ties into the concept of being prepared. If you to be a doctor, you'll probaby have to decision to attend medical school. If you want to snap up great property deals during an economic depression, you have to save up some money and eliminate debt during a housing boom.

As in all things in life, there are exceptions to every rule, but that axiom has to do with the quality of your decisions. Yes, you could probably practice medicine in some third-world country without a doctorate, but is that the quality of the decision you intended?

Tuesday, March 17, 2009

Casual goals

I don't know WHY this works, all I know is that it does ... create a casual goal.

Most of us have a hard time designing a goal and sticking to it because we think of it as something we have to work on all the time. Instead, I set a casual goal and let my progress be driven by my subconscious.

Step 1: Design your goal.

The goal must be realistic and be dependent on your abilities instead of luck or something out of your control. For instance, you can try the goal, "I'll win the big lottery" but I doubt it will work. Similarly a goal of "I'll inherit a million dollars" would be dependent on someone else doing something. A realistic goal would be "I'll have $5000 in my savings account".

Step 2: Set a deadline.

The deadline must be a specific, do-able date. Don't make it a moving target. For instance, "in 6 weeks" is a moving target. Every time you see that goal your subconscious will push out the deadline another 6 weeks. A specific deadline is a date as in 12/31/07.

Step 3: Write it down.

Simply write down your goal someplace where you will be able to revisit it occasionally. For instance, write down, "I will have $5000 in my savings account by 12/31/07" on the top of your budget booklet or on the top of your check register. The place doesn't have to be anyplace special but you do need to be able to find the goal again later. You do NOT have to decide HOW you're going to accomplish that goal.

Step 4: Allow the goal go into auto-drive.

Relax. Once you've written down the goal, let it be. Remind yourself of the goal periodically but don't stress over it. Don't consciously do anything to force the goal to happen. Of course, when an opportunity comes along to further your way toward the goal, take advantage of it.I believe one of the reasons this system works is because we subconsciously become aware of the opportunities that come our way. Once we start tuning in on the possibilities, we slightly change the way we operate. I liken this system to changing stations on the radio. When we turn the knob we start hearing static. Our opportunities are hidden somewhere in that static and we start to hear key phrases that encourage us to listen a little more carefully and to stop and dial in the station a little more clearly.

Step 5: Revisit the goal periodically.

We have to remind ourselves of the goal so our subconscious can work on it. If we don't other priorities and urgencies take over. This is also a good time to evaluate if this is still your goal. If it isn't, give up on it.

For instance, I once made a goal to install a hot tub in my backyard. As I progressed along, I decided, while a hot tub would be a nicety, that really wasn't something I wanted to work on at that time. Other home improvements were much more important to me and I had an alternative access to a hot tub that meant I didn't have to out-right own one.

However, I have used this technique several times to get where I wanted in life. I do recommend having only one goal at a time otherwise it gets confusing and takes too much effort.

About Me

A little about the author ... I'm known as Cookie. I'm a long time frugal fanatic so when I shop, I prefer to save money. There is no reason to spend more than we have to! However, I also appreciate convenience and fine living. I strive to strike a balance between a nice lifestyle, simplicity and frugal living. I work hard for my money so I like to make my money work hard for me.