How I spend my money

Earlier this month, I shared a new financial framework I've been developing, one that stresses earning, spending, and saving as the building blocks of personal finance. Last week, I elaborated by sharing how I make money. This week, I'm turning to the other half of the basic personal-finance equation: spending. Or, more precisely, the lack of it.

Instead of talking about theoretical ways to cut costs, I'm going to share the things that Kris and I do (or have done) in our own lives to put frugality and thrift into practice.

Strategies

Though I could (and will) list some of the individual tactics I've used to reduce spending, they're less important than the broader strategies I've implemented. These strategies are the guiding principles that frame the way I look at spending. From them, I'm able to develop specific habits to help me pinch my pennies.

Here are a few of the strategies I've developed:

  • I practice conscious spending. I write a lot about conscious spending, by which I mean the intentional decision to buy (or not buy) any given thing. I used to be a compulsive spender. I'd just buy whatever I wanted — often without reason. Mostly, I've mastered that. Now when I buy, I buy with purpose. (Or try to, anyhow.)
  • I avoid recurring costs. A few years ago, I had subscriptions to three newspapers, a couple of on-line computer games, and a dozen magazines. I had a monthly phone bill, a cable bill, and a bill for the internet. I had hundreds of dollars in recurring costs each month. Gradually, I've cut these costs to the essentials. I've ditched the home phone and the cable television. I've canceled the computer games and most of the periodicals. I've learned to avoid subscription fees whenever possible.
  • I try to be patient. It used to be that when I wanted something, I wanted it now. I'm still like this, really, but I've learned the power of patience. I use the 30-day rule to make sure I'm not buying on impulse. And if I really want something, I consider practicing predatory shopping — waiting for the bargains and extreme markdowns so I can save big bucks.
  • I avoid the middle. Lately I've come to realize that “the middle” is where I used to waste a lot of money. Mid-quality and mid-priced stuff is often a poor deal. Instead, I try to buy at either end. If I know I'll use something often, I pay for top quality. (I still try to find it on sale, of course.) Otherwise, I try to buy used (or low-quality). One example is my wardrobe. I built much of it from inexpensive clothes found at local thrift stores. The rest of my clothes are more expensive, higher-quality items. (They key concept here? I'm getting great “cost per use” on the things I buy. When I bought from “the middle”, my cost per use was high.)
  • I've reduced my exposure to advertising. Though listed last, this may be most important. Radio, television, newspapers, and magazines are all vehicles for marketing. They're there to persuade you to buy. When I was exposed to a steady diet of this stuff, I bought. I couldn't help it. (And neither can you. You, with no training, are no match for corporations who spend millions of dollars learning how to persuade people to buy.)

These are just five of the broader concepts I use to guide the way I spend. In turn, these broad strategies lead to individual tactics I use to practice frugality and thrift. And what are those tactics? Let's look at a few.

Tactics

Sometimes people want to know if I follow my own advice. “Do you really do all the things you write about?” they ask. Well, I don't do all of them, but Kris and I try to do as many as possible. I've already mentioned the 30-day rule and “predatory shopping”. Here are some other tactics I use to keep costs low:

  • I drive as little as possible. When the weather turns nice in Portland — which it will do eventually, right? — I bike or walk for errands. And I'm still trying to make the bus a part of my routine. Biking and walking don't just save me money; they also help me stay healthy. (I just wish we lived in a more walkable neighborhood.)
  • We share with friends and neighbors. The real millionaire next door and I have a pretty good system going. I use his pruning ladder; he uses my greenhouse plastic. He fixes our flagpole; Kris bakes him cookies. He mows our lawn in spring; I mow his lawn in summer. And so on. But I do this sort of thing with other friends, too. By sharing tools and resources, only one of us has to own any particular item.
  • When possible, I buy used. Not everything is available used. And sometimes I'm not patient enough to wait for what I want. But there are plenty of times that I'm able to find books and CDs and DVDs and clothes and furniture for cheap, either at the local thrift store or on Craigslist. For example, some of my best yard tools were bought for just a buck or two at estate sales.
  • I don't watch television or listen to the radio. I don't say this to be “holier than thou”. It's a choice I've made. It gives me more free time, but it also means I'm exposed to fewer ads. (Kris and I do get shows via iTunes, but they're commercial-free.)
A tactic from my wife: “When I used to read the catalogs that came in the mail, I'd always find something to buy. Now, though, I've taken myself off most of the mailing lists, and I automatically dump any catalogs that still come into the recycling. I buy a lot less stuff because of this. When I need something, I look at the appropriate catalog. Otherwise, I don't let myself be tempted.”
    • We garden project, you know that Kris and I have berry plants, fruit trees, herbs, and a vegetable garden. You also know that Kris makes prize-winning pickles and preserves. We don't save a lot of money this way — but we do save some. Since we (especially Kris) enjoy this activity, it's also a hobby that gives us back something for our time and efforts.
    • When it makes sense, we buy in bulk. There are some things we use all the time. If we can buy in bulk for less — and if the items won't spoil — we stock up. Kris also avoids buying a lot of pre-packaged ready-to-eat foods; buying the quality ingredients to make our meals from scratch is cheaper. To save time and effort, we sometime cook in bulk and freeze portions for later. Again, cooking and baking are a hobby here, so we don't mind the loss of convenience foods as we cut costs. (Plus we think our stuff is tastier!)
    • We keep our furnace thermostat at 58 degrees. When I'm home during the winter, I bundle up. (Well, to be honest, I take a lot of hot baths too. But mostly I bundle up.) In the evening, we bump the temperature to 64 or 66. (We don't have air conditioning, so during the summer we simply open the windows and sweat on the really hot days.)
    • We use a clothesline — when the weather co-operates. Kris rigged up an improvised clothesline one summer. Then we found a carousel line at an estate sale. (Which I carried home, walking two miles.) When it's warm, this saves us a few bucks per month on electricity. Plus it prolongs the lives of our clothes.
    • We're gradually learning more about DIY home maintenance. I'm not afraid to call in an expert, but I'm also learning that there are some projects we can do ourselves. I have a feeling this summer will be full of them, actually. It's been a while since we focused on home maintenance.
    • We cut services we don't use. It can be tempting to keep your landline or cable TV, even though you don't use them much. But I found that one of the best ways to improve my cash flow was to kill these services. I've never missed them.
    • I self-insure whenever possible. I have high deductibles on our insurance policies, which lowers our premiums. Instead, I have extra money in my emergency fund to cover minor problems. I save the insurance for catastrophic needs. (This also means I don't buy extended warranties — except on laptop computers.)

These are just some of the things we do to keep our costs down. To be honest, I wish we did more. I feel like there are so many ways we could trim our spending. It's tough to keep them all in mind in day-to-day life, though. (Which is why it's so important to develop high-level strategies. It's easier to remember a handful of basic strategies than to remember dozens of individual tactics.)

Note: I want to stress that we don't cut costs on everything. We're frugal, yes, but we're frugal with a purpose. We use these tactics to curb our spending on the things that aren't important so that we can spend on the things that do matter to us. For the past two years, of course, that's meant travel. But for me, it also means my gym. And my Mini. And my Portland Timbers tickets. And we support our city's many excellent restaurants by splurging on excellent dining. I choose to spend less on some things so that I'm able to spend more on others.

Victory?

By using these strategies and tactics, I've reduced my monthly operational expenses significantly, freeing money to be put into savings or used for other priorities. But I'm far from perfect. I still spend money on things that I shouldn't, and I still make mistakes.

I recently subscribed to The Economist, for instance. I love the magazine, and in theory, a subscription is a fine idea. Reality is different. I paid something like $120 for 52 weekly issues. That's a lot of money, and it hurt to write the check. It hurts even more to see that I'm not reading the issues as they arrive. They stack up next to my recliner. Once per month, I spent maybe ten minutes flipping through the stack before sticking the pile in the recycling bin. It's like recycling money. I'd be better off buying the occasional issue on the newsstand.

So, as I say, there are lots of little areas left for me to improve on. And that's fine. I've made a lot of progress, and I'm willing to be patient as I continue to master the art of spending.

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Nicole
Nicole
9 years ago

Interesting.

One of the tactics I like to use is to stick something on my amazon wishlist when I want it. Usually it will stay there until Christmas or my birthday when someone will buy it for me. Often I’ll hit the library, check out a book on the list (if they have it), and decide I do or don’t really want my own copy.

Tim
Tim
9 years ago
Reply to  Nicole

That’s exactly what I’ve been doing as of late, Nicole. I’ve noticed that lots of items will stay out there for quite some time, many of which I’ve forgotten about!

Nicole
Nicole
9 years ago
Reply to  Tim

Right before gift giving holidays I’ll cull to see if I really want the things I put on there.

Moneycone
Moneycone
9 years ago

I went through some of the phases you mention! Started with recurring costs – moved to prepaid, got free landline, cut cable. The savings add up!

Home maintenance is expensive if I have to call in the experts as I’m learning! I need to get a handle on that.

I’m actually against bulk purchase – I canceled my Costco membership. I end up with waay more stuff than I need.

But very nice tips GD!

Gumnos
Gumnos
9 years ago

Re. line-drying clothes:

Any tips to prevent birds from pooping on them? I’ve tried line-drying on multiple occasions, only to need to re-wash several items because birds used them for target-practice. A couple big-ticket items like sheets were left pretty unsalvageable because of (berry? acid?) staining.

Or maybe it’s just the pernicious birds here in TX…

Amber
Amber
9 years ago
Reply to  Gumnos

That is weird! I’ve been a (weather-cooperating) line-dryer all my life I don’t know that that has ever happened. Since you’re in hot texas though, why not hang them out under your patio roof or some other shade? keeping them out of direct sunlight will save the colors from fading too.

Gumnos
Gumnos
9 years ago
Reply to  Amber

Sadly, our best shade is under trees–which means a graven invitation to the birds to camp out over the laundry.

Though it might be worth trying to hang clothes in the garage (instead of storing junk like most folks on our block, we actually use both bays of our garage for :gasp: parking cars, so when one of us is out at work, there’s a car-sized space in which clothes could be dried). Thanks for the suggestion.

Rosa
Rosa
9 years ago
Reply to  Gumnos

That was going to be my suggestion too – mine is on the screen porch.

To not occupy all the space, we installed it above head height. It’s on two pulleys, so I stand on a footstool to hang stuff up, but the line moves so I don’t have to get up and down over and over.

sey
sey
9 years ago
Reply to  Gumnos

Don’t people have basements in the US? It’s common in Europe to just put up a line in there, put up the clothes and go get them a few days later. Works great, and you don’t have to worry about weather! I’ve also seen people use the room underneath the roof.

Gumnos
Gumnos
9 years ago
Reply to  sey

Growing up in the north-eastern US, our family and most of our neighbors had a basement. Down here in TX, I can’t say I’ve seen a single house with a basement. Unfortunately, the garage is the only semi-outdoor space in which the drying would be remotely convenient. But I plan to give it a try.

DreamChaser57
DreamChaser57
9 years ago
Reply to  sey

Basements are often dank and damp. I would imagine that you’re just inviting mildew…

K. W.
K. W.
9 years ago
Reply to  DreamChaser57

Nah. I also live in the (wet) Portland OR metro area. We have a basement, and I hang up many items to dry (mostly to keep from setting any stains I may have missed the first time around, since husband works in industry with oils and such around). They don’t mildew unless you leave them too long in the washer before hanging them up!

SLCCOM
SLCCOM
9 years ago
Reply to  DreamChaser57

Not where there isn’t a high water table.

Tara
Tara
9 years ago
Reply to  Gumnos

My laundry room is pretty big and has quite a bit of space to hang stuff up, so that’s where I hang dry all of my shirts.

Is there a room inside your place like that?

leslie
leslie
9 years ago

I do the same think Kris does…any catalogs that come to us get recycled as I walk into the house with the mail. I literally don’t even look at them to see what company they came from.

Chaddogg
Chaddogg
9 years ago

Quick tip on the Economist, JD….if you travel a lot/some, you probably get airline miles. With American Airlines miles program (and probably others as well) you can actually use your airline miles to subscribe to magazines,including the Economist. That’s how I, at least, got a free year of the Economist…..pretty easy way to save $120, if you ask me.

Matt
Matt
9 years ago

Specifically for the Economist – you can get all their articles in digital format by subscribing to a (free) newsletter or RSS feed. I used to have 1.5 hours/day on metro and actually read each Economist issue cover to cover – now that I don’t have that commute, I just get the RSS feed.

J.D. Roth
J.D. Roth
9 years ago
Reply to  Matt

You know, I read most of my periodicals online now. That’s probably what I’ll do with The Economist. And, like I say, picking up an occasional issue when I have the time to read it probably makes a lot more sense than paying for copies that I never get to…

Drew
Drew
9 years ago
Reply to  J.D. Roth

If you really must have the paper copy (myself, I like to actually hold my reading material), the Economist goes on sale every now and then through sites like DiscountMags. You can set up a deal alert at Slickdeals.net and it will send you an e-mail anytime someone in the community posts a deal that matches the keywords you input.

Scott
Scott
9 years ago
Reply to  J.D. Roth

Hate to do this to you J.D.
I love The Economist as well, but since I already subscribe to Businessweek I passed up on the deal Groupon had on 4/21/2011: $51 for 51 weeks of The Economist.

Xenocles
Xenocles
9 years ago
Reply to  J.D. Roth

Looking up-blog, I see that you have a good number of United miles. You can get an Economist (among others) subscription for a few thousand.

Erica
Erica
9 years ago

I have a really similar mindset, with different priorities. But used the same route to get there. A gym membership, going out to eat, and fancy car are not important to me. Going to the theater, taking short day trips and certain subscriptions are. I have cut down in many of the same areas, though. I’ve assessed which subscriptions I care about, and cancelled the rest (the keepers are my local paper daily, the Sunday NYTimes, and the weekly New Yorker). I got rid of my tv and just listen to public radio. I try to get everything free or… Read more »

Marsha
Marsha
9 years ago

Several years ago, I was asked to contribute a money-saving tip to a booklet that was being published for a ladies’ group. Mine was “Don’t go shopping.” My advice wasn’t well received, but honestly, the best way to save money is to not tempt yourself into spending it. This would include staying out of the mall, discarding catalogs, not watching commercials, staying away from internet stores when online and blocking ads. It’s amazing how much stuff you didn’t realize you needed until you saw it, so I try to keep myself from seeing it in the first place.

pliglee
pliglee
9 years ago
Reply to  Marsha

I HATE montly bills! That alone is reason enough for me to not get cable. I just watch my favorite shows online instead. I do, however, have a cheap gym membership ($12.99/month) because I simply don’t have the drive or discipline to work out at home and I don’t want to wait until I have 50 extra pounds to find that drive! Hopefully someday I will get fed up enough with paying that bill that I’ll find my inner drill sergeant.

pliglee
pliglee
9 years ago
Reply to  pliglee

Oops… I meant to make my own comment not a reply!

fetu
fetu
9 years ago
Reply to  Marsha

I agree with you Marsha….walking through the mall just makes you want to spend money. Now I do not even go in stores unless I have something definite to buy. The only shop I will look around in is the book shop….a look at what is new and if I really want something I will write the title down and order it from the library .

Justin @ MoneyIsTheRoot
Justin @ MoneyIsTheRoot
9 years ago

A lot of great points here, but in some regards you need to enjoy yourself too. Cable TV is a luxury, but certainly one I enjoy! I work nearly 12 hours a day, I go to the gym regularly, it’s part of my time to relax As for A/C and heat… I keep the A/C cranked in the summer, and the heat is usually around 70 in the winter… i want to be comfortable. Again, after a long day that is important to me. My parents use a clothesline, and did with my clothes growing up. I use a gas… Read more »

Pablo
Pablo
9 years ago

Another reason NOT to purchase extended warranties on electronics is that, not only you’re entitled to a nice 12 month period by default, but most credit cards (at least Mastercard and Visa) automatically extend that to 2 years if you use the card to purchase them. Not many people know this, and it’s a bit of a hassle (you have to pay for replacement/repairs, then claim the expense), but it’s definitely better than the overpriced, just-in-case warranties they push through you at the checkout counter.

LennStar
LennStar
9 years ago

With the Economist: Ever asked your library?
Perhaps they have it, perhaps not. If not, give it to them is better then throw it away – especially if without reading it before 😉

Pamela
Pamela
9 years ago

My definition of conscious spending is a little broader than yours. I include spending in ways that supports my values. For example, I hate the idea of saving money by buying stuff made by people who aren’t being paid a decent wage or being treated fairly on their jobs. I want to reward companies that are doing the right thing. So I buy most things used, to avoid supporting companies that use sweatshop labor. Clothing and shoe manufacturers are especially guilty of this. Sometimes I can’t buy things at all because I can’t find a product not made in China… Read more »

E. Murphy
E. Murphy
9 years ago
Reply to  Pamela

This comment is very interesting as clothes are important to me. I also would not like to support oppressive labor conditions. But I have not the faintest idea whose factories are oppressive. I’m not at all certain that avoiding everything made in China is the correct way.

Seriously, how do we know what sources outside of the U.S. are providing opportunities or simply exploiting the local populace? Also, my understanding is there are still sweatshops in the large cities of the U.S. who exploit recent immigrants.

This is certainly food for thought.

Amber
Amber
9 years ago
Reply to  E. Murphy

E. Murphy you are so right. we are intentionally kept in the dark on these issues. I love clothes too but try to buy US, Canada, used, etc. when I can. Check out Green America thogh they have a good shopping guide with lot of info on material sources.

J.D. Roth
J.D. Roth
9 years ago
Reply to  E. Murphy

Place of origin isn’t important for me, though I know it is for a lot of people. When I buy stuff at a thrift store, it’s sometimes tough to know where it’s made. But then it’s tough to know where the “middle-quality” stuff is made, too. But I’ve found that, for the most part, when I buy quality clothes (and other items), the manufacturers almost always say where the stuff is made — usually because it’s not China. I’m not sure this is true for all high-end places, but it is for the ones I’ve been using.

Pamela
Pamela
9 years ago
Reply to  E. Murphy

You are all right that it takes a lot of research to nail down everything. I short cut things a bit. I know that countries in the EU, the US and Canada have labor laws. They’re not always perfect and people fall between the cracks. But it meets at least a minimum standard. Labor laws as we know them don’t exist in many other countries unless people there choose to meet higher standards such as fair trade. So I only buy items made in countries with labor laws or that are certified as fair trade. I don’t worry about where… Read more »

Kevin @ Thousandaire.com
Kevin @ Thousandaire.com
9 years ago

JD! Did you watch my video? Amazon is almost always cheaper than iTunes for TV shows. Unless you have an Apple TV or you watch the shows on an iPad or something, you may want to consider switching to Amazon for your individual show purchases.

J.D. Roth
J.D. Roth
9 years ago

Haven’t watched any of the videos yet! Won’t get to them until the middle of next week…

Weston
Weston
9 years ago

When you say

“When I’m home during the winter, I bundle up. (Well, to be honest, I take a lot of hot baths too.”

You seem to be saying that you take hot baths because you are cold in your home. Have you calculated whether it would cheaper to just raise the house temp a few degrees? It’s my understanding that hot water use is one of the biggest energy hogs around.

KC
KC
9 years ago

Totally agree on line drying for the clothes – especially cottons, which seem to really get messed up in the dryer. I might dry the clothes with a dryer sheet (which I cut in half) for 10 minutes to get them soft, but then they go on a drying rack. On a nice day I can put them outside, but I don’t have a permanent line – the rack works fine. This greatly prolongs the life of jeans, t-shirts, cotton shorts and other materials – but it mostly helps the frequently worn, cheaper clothes last longer. Women’s undergarments never hit… Read more »

Wilson
Wilson
9 years ago
Reply to  KC

I’ve been trying the opposite – line drying and then when they’re all stiff and crackly putting them in the dryer with a sheet on tumble. That also gets out some of the funk outdoor smell and dust that gets in them. Seems to work ok and keeps the wrinkles down.

Samantha
Samantha
9 years ago
Reply to  Wilson

That’s the order I do it in, too. Air dry, then pop it in the dryer for a bit.

Steve
Steve
9 years ago

You don’t have to pay that much for The Economist. They actually have a plan with a price of 12 issues for $12, and it auto-renews indefinitely. I save a ton of money off the cover price.

Erika
Erika
9 years ago

Did you know that the Economist halted production so people can catch up on reading it?

http://www.theonion.com/articles/the-economist-to-halt-production-for-month-to-let,20090/

Shalom
Shalom
9 years ago
Reply to  Erika

Funny! I had that same link to post, and then saw you’d already done it.

I read the Economist from back to front, becasue the fun stuff in the back is more interesting to me. We get our subscription with airline miles, too, as another poster suggested.

phamtq
phamtq
9 years ago
Reply to  Erika

“ESPN The Magazine announced Monday it would be suspending publication indefinitely until its readers learned to read.” LOL. The Onion’s always good for a laugh.

Everyday Tips
Everyday Tips
9 years ago

58 degrees? I would die. Do you turn up the thermostat for guests? I know I didn’t like visiting my father in law because he kept his house at a chilly (to me) 65 degrees. However, I am one of those people that is cold all the time. Therefore, I am willing to spend on heating. I feel the same way regarding subscriptions. I find magazines almost like a chore sometimes. I see the pile stacking up and feel like I have to do something about it. I have not renewed any magazine subscriptions in the last year except to… Read more »

J.D. Roth
J.D. Roth
9 years ago
Reply to  Everyday Tips

It’s only 58 during the day when we’re not around. (Or if I’m home by myself.) It kicks up (to 65, I think — it’s Kris’ bailiwick) in the evening.

Really, though, it shouldn’t be getting down to 58 this time of year. BUT OUR DAMN WEATHER HAS BEEN TOO COLD FOR TOO LONG. Can you tell it’s driving me insane? 😛

Nicole
Nicole
9 years ago
Reply to  J.D. Roth

I will trade weather. And gladly. 58 sounds delightful.

GayleRN
GayleRN
9 years ago
Reply to  J.D. Roth

We had 4 inches of snow yesterday. So what was your problem again?

everyday tips
everyday tips
9 years ago
Reply to  GayleRN

My thoughts exactly Gayle!! Next week, the highs in my part of Michigan are supposed to be all the way in the mid 50s, and accompanied by rain.

Can you tell it is driving me insane? 🙂

Kevin
Kevin
9 years ago
Reply to  J.D. Roth

JD – I feel your pain. I live near Cincinnati and we are having a miserable spring. Rain and in the 50’s almost every day. I haven’t even been to a Reds game yet because I refuse to be cold at a baseball game.

rb
rb
9 years ago

I am careful with how I spend my money for the family and practice many of these things as well. What I find interesting is the response I get from my coworkers when they see me turn down take out or drive an old paid for car. I was told that if my car had 100K on it I shoud get a new one, >200K miles is unacceptable (from a physician). It is tempting to blow the budget at times with these outside influences though.

Hunter
Hunter
9 years ago

I can especially relate to “limiting exposure to advertising”. My children are noticably more needy and demanding after watching commercial television for a couple of hours. Switching to PBS saves us money as the kids are not as aware of the plastic junk, and sugary slime. It makes for easier shopping trips to the grocery store as they are not scrambling to put the bad stuff in the cart. I suppose this is one justification for TEVO, as it allows the ads to be zapped away. It also shows how closely the marketing machine has focused on young minds…they are… Read more »

MacroCheese
MacroCheese
9 years ago

Living in Texas makes no A/C in the Summer a no-go for me.

But I have no problem cranking down the heater in the “winter” down here – its the wife that tends to veto that decision!

sam i am
sam i am
9 years ago

I like your notion of either buying cheap or going all out. I hate buying junk, and I try to save up for a quality item as opposed to buying something that just won’t last. My s.o. doesn’t always understand what I do, but we both benefit from this habit of mine. My father was the same way. Subscriptions and recurring costs add up really quick. That’s why they’re so dangerous. You might think 5 bucks here, 15 bucks there is not big deal, until you’ve got 5-10 subscriptions going and they’re taking out 150 bucks a month. I also… Read more »

Dan
Dan
9 years ago

JD, You and I approach things in similar ways. I think about what I spend (and make the wife do the same) and more importantly, what pot of cash it comes out of. The later is the critical thing. She used to think I was being “difficult” by making her think about spending as little as $5. On the face of it, it does sound cheap, but I budget *everything.* Not down to the penny — I do have an “everything else” fund — but those little purchases add up and can’t be ignored. That’s the important thing. I avoid… Read more »

Christine, Random Hangers
Christine, Random Hangers
9 years ago
Reply to  Dan

Try going over to billshrink.com. You put in your phone number, they pull your recent usage, then they tell you whether there’s a better plan out there. The site makes money from these suggestsions, of course, but it’s a good place to start. I found out that we already have a pretty darn good plan for our usage, for example.

J.D. Roth
J.D. Roth
9 years ago

Yeah, BillShrink is a great place to check. I keep meaning to write about them, but haven’t made time. Plus, you might look at pre-paid plans.

Tara
Tara
9 years ago
Reply to  J.D. Roth

I second the looking at prepaid plans. Most carriers now have monthly prepaid plans that are comparable to postpaid plans, depending on your usage.

For example, T-Mobile has a 1500 Talk & Text plan that costs $30 per month and gives you a combination of 1500 anytime minutes and text messages – the 1500 can be used for minutes or text messages, which is quite flexible.

Rosa
Rosa
9 years ago
Reply to  Dan

Are you using the max # of phone lines for the family plan? We share our family plan with another couple – we pay $60/mo for the family plan plus $10/each for 3 more lines, so it’s $25/person.

We all went together to the Verizon store to get our phones set up, and all our names are on the bill, so I assume they’re OK with this usage of the plan.

Kelly M
Kelly M
9 years ago

The “avoid the middle” idea is food for thought. I think it’s a great approach to things like your example of clothing. Cookware is another example that comes to mind. I think it can be dangerous for people who are just starting to get out of debt or get over a shopping addiction, though (some might see it as a license to buy the most expensive clothing, cookware, etc., when they really need to be making big cuts in spending). And, sometimes the middle is the sweet spot. I don’t need the most expensive toilet paper, but I don’t want… Read more »

Tanya
Tanya
9 years ago
Reply to  Kelly M

You’re right; sometimes the middle is the sweet spot. If you can get quality department store clothing on sale, for instance, you land in the middle. A good store brand might not quite be the cheapest, but you’ll save some money, putting you in the middle.

Once in awhile though, you do need to buy the best. I bought leather boots that I wear often and that absolutely were worth breaking my budget to buy because they have held up and been so practical!

J.D. Roth
J.D. Roth
9 years ago
Reply to  Tanya

Good points, Kelly and Tanya. I guess the correct advice is to pick a level for any particular item, and know why you’re picking that level. For me, the middle just doesn’t work when it comes to clothes and a lot of other stuff (like electronics). I’d rather have cheap or high-end. But I can see how it’d make a difference with some things — like toilet paper! 🙂

BenZ
BenZ
9 years ago

I agree that advertising is a powerful negative drain on financial independence. My first “real” job was for A.C. Nielsen. Most have probably heard of the Nielsen ratings (for tv ratings), but the company also does tons of market analysis on in-store advertising. The power of simple strategies to get people to buy stuff was appalling to me. The metrics are interesting though. Each product would have it’s own elasticity of demand for shelf space, etc. Most of the strategies are well known (products at eye level sell more, products with more shelf space would sell more). Some of the… Read more »

Dan
Dan
9 years ago
Reply to  BenZ

One of my classmates works out of their Cincinnati office. In Cincinnati, there are *so* many cpg marketing analyst jobs for companies supporting Proctor and Gamble, Nielsen, etc. But, I’m the opposite of you. Although my classmates and I were educated with a quantitative mindset, I find the intersection of math with consumer psychology very fascinating. This includes shopping and banking/lending. I guess it just goes to figure that I’m an avid poker player, where part of the game is to manipulate the other guy into doing what you want (bet more when you have a good hand, fold when… Read more »

BenZ
BenZ
9 years ago
Reply to  Dan

I agree that those aspects of consumer phychology are interesting, and I don’t blame the manufacturers for wanting to sell their products. What was appalling was how easily consumers could be manipulated. I guess because I live frugally, I don’t like seeing people manipulated into buying things they can’t afford. I don’t think I should dictate to people what they can afford, but it also was not something I wanted to support. It wasn’t something that got me excited to go to work.

Eric
Eric
9 years ago

I second the mention of checking your local library for a copy (copies) of The Economist or whatever magazine you may want to or already subscribe to. My local public library stocks The Economist. Yours might too.

squished18
squished18
9 years ago

JD, You mentioned your sharing with your “millionaire next door”. I think the concept of “sharing with your neighbors” deserves a posting or two. Talking with my barber the other day, he lamented that he sees very little sharing amongst neighbors these days. To illustrate the point, he mentioned that when someone needs an egg for baking these days, they are more likely to hop in their car and drive 20 minutes to the nearest Wal-mart instead of knocking on their neighbor’s door and asking if they could spare an egg. I think that’s a great example. It’s way more… Read more »

J.D. Roth
J.D. Roth
9 years ago
Reply to  squished18

I actually wrote about our informal neighborhood exchange back in 2006. I should write about it again. I like it. It not only saves money, but also builds social capital. And you know I love social capital!

Bella
Bella
9 years ago
Reply to  squished18

Hear Hear!
I think that the turning point of having ‘neighbors’ instead of ‘people who live next door’ is when you reach the point that you can ask for an egg, or a cup of sugar. Despite living in suburbia – we have that and I love it about our neighborhood.

Dan
Dan
9 years ago

JD, One other question… do you *really* find it cheaper to cook from scratch than to buy the prepackaged stuff? I read many places that cooking healthy is more expensive than the prepackaged stuff — and I’m not referring to organic or truly high end stuff either — just run of the mill normal stuff. I cook a lot at home, and our grocery bill isn’t cheap — about $400 for two each month. I could save a lot of money if I picked up a frozen pizza every night. We eat healthier and we eat better, but I can’t… Read more »

Nicole
Nicole
9 years ago
Reply to  Dan

AeroGarden gobbles electricity. Our electric bill went down after DH finally decided to stop using one he got for Christmas.

Dan
Dan
9 years ago
Reply to  Nicole

Do you know by how much? For you to notice it, I guess it would have to be substantial — at least $0.50 per day.

I’m trying to get a good feel for the true financials of the thing — it costs $100 to get, seed kits are $15, but $0.50/day in electric costs is nothing to ignore. I figure I spend $15-$20 on herbs each month but waste some of it.

Nicole
Nicole
9 years ago
Reply to  Dan

If your apartment has a window, you can still plant basil. It thrives on the windowsill so long as you remember to water it. We also had success with dill back when we were apartment dwellers.

fetu
fetu
9 years ago
Reply to  Dan

some herbs can be frozen so you are not wasting them. Freeze in ice cubes of water….then throw a cube into your cooking. Or they can be dried.

Wilson
Wilson
9 years ago
Reply to  Dan

You can’t omit the future costs to your health when quantifying your food expenses. This month it might be cheaper to eat frozen pizzas, but when you have to go to the doc b/c of HBP, diabetes, etc., see a dietitian, pay a trainer, etc. those savings are out the window. The cheaper the processed food the worse it is for your health. The companies want to make money, the’yre not giving you any nutrition in a $2 Totino’s pizza. Not familiar with the AeroGarden but herbs are cheap. A big bunch of cilantro or parsley is maybe 1$. You… Read more »

Dan
Dan
9 years ago
Reply to  Wilson

Yeah, you do have a point on health costs. I’m not going to stop cooking — I enjoy it, and it tastes too darn good.

I think you might live in California or something like that, because where I live, “a big bunch” is over $2 at the major grocery stores. The commercial packaged stuff is $1.69 for the little plastic container.

Thanks for the tip on freezing. I’m going to try it.

Wilson
Wilson
9 years ago
Reply to  Dan

Live in NOLA. I’ll often go to the smaller Hispanic groceries, generally cheaper fruits and veggies, esp. avocados. They’re not the bright shiny waxed up ones at the big chains that look all pretty, but they taste just as good.

Jen
Jen
9 years ago
Reply to  Dan

I guess it depends on what you’re cooking for yourself. Definitely cheaper and healthier to cook non-processed for my family. I find that we eat more of the processed type foods anyway, or that their portions seem smaller so we have to buy more to eat the same “visual quantity.” We probably have a pasta based meal twice a week, which is truly cheap — even if we make a clam sauce from canned (on sale) clams. Red sauce, olive oil and garlic, carbonara, all cheap and easy. Mac and cheese is probably my most expensive pasta dish — because… Read more »

J.D. Roth
J.D. Roth
9 years ago
Reply to  Dan

This is a complicated question, Dan. Looking only at costs, pre-packaged will always be cheaper. And if you’re hard-pressed, I think it’s fine to have a diet of processed foods until you can afford better. But, processed foods are demonstrably bad for your health. When I say we can make our own food more cheaply, I mean for the quality. So, for example, when we make bread, a loaf of similar quality would be more expensive. You could probably find cheaper loaves, but they wouldn’t be as healthy (or as tasty). Does that make sense? It’s a balance between health… Read more »

Nicole
Nicole
9 years ago
Reply to  J.D. Roth
SLCCOM
SLCCOM
9 years ago
Reply to  J.D. Roth

Do you have any actual, objective, medically-substantiated by good,well-designed, peer-reviewed medical studies that don’t rely on the people “recalling” what they eat that processed foods are “demonstrably bad for your health?” (Hint: Dr. House has it right: people lie!) I have never seen any such, and there are a lot of loose dietary statements being made that are not supported in the medical literature.

Anna B
Anna B
9 years ago
Reply to  SLCCOM

LOL! C’mon, SLCCOM, all you have to do is READ THE HEALTH INFO ON THE PACKAGE. Lots of cholestoral and sodium = unhealthy.

No recall of diet needed…

SLCCOM
SLCCOM
9 years ago
Reply to  SLCCOM

That is hardly an objective study. There is no evidence in the medical literature that cholesterol and sodium are “unhealthy.” Try actually researching the matter. Talk to a real scientist who knows how to design a study. People with low cholesterol die sooner, for example.

Or, go on. Believe what “everybody knows.” Just don’t feel high and mighty because you “eat healthy.” You don’t.

Sara
Sara
9 years ago
Reply to  Dan

Dan – Try this Herb Keeper from Amazon if you cook a lot with fresh herbs but can’t grow them at home.

http://www.amazon.com/Cuisipro-747134-Herb-Keeper/dp/B001RRN4E4/ref=wl_it_dp_o?ie=UTF8&coliid=ITFSG5VIIY3SJ&colid=1N0V0ELVF9BVR

It seriously helps keep them way longer.

Tina
Tina
9 years ago

I take my read (or unread) magazines to the local used book store whenever the pile gets large enough. Getting a few dollars for them makes me feel better than tossing them into the recycle bin.

Sierra Black
9 years ago

J.D., you can send me your Economist mags! I love that magazine, but gave it up when we cut all our subscriptions.

I love your notion about avoiding the middle in shopping. I try to do that too, but I hadn’t really articulated it as a practice. The way you laid it out makes so much sense!nearly everything I buy I get used, but I still make distinctions between things I need to spend more on to get high quality, like my computer, and things I can accept less from, like my thrift-store jeans.

Wendy
Wendy
9 years ago

Have you considered cancelling your Economist subscription and getting a partial refund? At one point, I had too many magazine subscriptions, and I cancelled most of them. I would have been happy just to NOT get the magazines any more, but all of the publishers gave me a refund.

J.D. Roth
J.D. Roth
9 years ago
Reply to  Wendy

I’ve put this on my list of things to do. I’ll give it a shot.

-B
-B
9 years ago

Re: Commercials/Ads I watch plenty of TV, but I instinctively either mute commercials or deconstruct them to strip away all the bells and whistles and get down to the point of what they’re trying to say. Usually I get pissed off and end up riffing on it for a few minutes much to my fiancee’s delight or annoyance, depending on how funny I am. Ex: Miller Lite ads. Their basic message: “If you don’t drink this beer, you’re a fruity queer and women won’t like you” I know that there’s no such thing as bad publicity and all that, and… Read more »

Sharon Villines
Sharon Villines
9 years ago

I use the library. This cut my book purchases from well over $100 a month to less than $25 on average. Sometimes I decide that I want a book that I’ve checked out of the library. Those and professional/technical books not available in the library I buy from ABE Books online. Magazines are also available in the library. You may have to go to the main library for more specialized titles but doing so not only saves money but supports a vital public resource. My librarian loves me because I “keep the numbers up” by reserving books online and having… Read more »

Anna B
Anna B
9 years ago

This really only works if you read mainstream books (or perhaps if you live in a larger city). I live in a University town, and trust me, I don’t find many of my preferred Catholic or theological books at the public library. You can get lots of anti-Catholic and anti-Christian books there, though! *sigh*

Scott Messner
Scott Messner
9 years ago

I too turn the heat down in the winter but 58 is a bit extreme for me. We keep our house at 65.

Great tip on “self-insuring”. Pay the minor things out of pocket and save the insurance for major claims.

ADN
ADN
9 years ago

This will be one of my favorite posts! DH and I are trying to subscribe to these habits. While we do alot of the items on the list, we are not consistent. Consistency is key in order to reap the savings of not spending. Often I have overspent or go on a spending spree after a few months of not spending. Essentially the net gain there is 0 or even negative because I have deprived myself during those months of minimal spending. I have also learned to stay away from blogs and forums that promote consumerism: fashion blogs, celebrity oriented… Read more »

phamtq
phamtq
9 years ago

Along the lines of high deductible insurance, would a health savings account (HSA) work well in your situation?

Jeff McJunkin
Jeff McJunkin
9 years ago

Good to see you excited about finances again. More articles relating to you would go a long way to revitalize you, I think.

Enjoy the weather — it should be nice today, tomorrow, and Saturday.

Dave Steele
Dave Steele
9 years ago

I’m a big user of my local public library system here in Milwaukee. With my library card I have access to not just all the libraries in the city, but all of the surrounding inner-ring suburbs, meaning that I have the collections of about two dozen libraries at my disposal. With a convenient online system for finding and requesting materials, just about anything can be had quite easily if you’re willing to wait a few days for it to come in. I haven’t visited a video store or used Netflix in quite some time, because most of the movies I… Read more »

Tara C
Tara C
9 years ago

About a year or two ago I went through and eliminated or reduced as many recurring charges as I could – that helped a lot. I also avoid advertising and shopping malls – no network television, only TV5 French satellite TV which has no advertisements at all. It costs me $12.95 a month but is totally worth it. Same with Sirius satellite radio. That is basically my only entertainment, for $24 a month, I think it’s cheap. I use internet at work and don’t have a landline, use only prepaid cell phone. This year my goal is to not turn… Read more »

KM
KM
9 years ago

I absolutely agree with eliminating the insidious financial drag of recurring monthly payments. They are counting on you not paying attention to how they add up.

Another important thing to avoid: magazine subscriptions that “auto-renew” every year.

Auto-renew eliminates your chance to reflect if you really want another year of a magazine before you pay for it again. Many magazines these days are being sold to different publishers, and over the course of a year the content can deteriorate or change rapidly in which case you won’t want to renew.

Alexandra
Alexandra
9 years ago

Try putting your magazines in the bathroom instead of beside the recliner. You need to spend time in there anyways, right?

Just don’t lend them out afterwards 😉

Kevin M
Kevin M
9 years ago

Great strategies, JD. Housing, transportation and medical insurance are our biggest expenses, and probably most readers as well. You’ve talked about the first two, but what about health insurance? Are you covered under Kris’ plan?

I know for our family a HDHP/HSA works great – our premiums are pretty low and we like the self-insurance aspect of it since we are pretty healthy.

Ginger
Ginger
9 years ago

Why do you get insurance on your lap top?

J.D. Roth
J.D. Roth
9 years ago
Reply to  Ginger

Well, I don’t automatically do so. I actually have a system worked out. I buy Apple products. I know they’re more expensive, and I know they have their disadvantages. I don’t care. They all have certain advantages, and I’m willing to pay for them. When they work, they just work — no hassles. Anyhow, Apple always wants you to buy their extended warranty. I don’t do it. Instead, I wait eleven months to see how well the computer is doing. If I’ve had to make more than one trip to the Apple Store to get a problem solved, I pick… Read more »

KarenJ
KarenJ
9 years ago

When it comes to both finances and healthy eating, its “progress, not perfection!” Habits are never easy to change, but it’s also important to find that middle ground (moderation), that seems to elude so many people. We try to practice moderation in both areas, but we slip up sometimes also.

Frugally Savvy
Frugally Savvy
9 years ago

Hey J.D.,

I like how you spend your money. You are a very smart man

Tara
Tara
9 years ago

Living in an apartment building in a city that doesn’t get very cold, I don’t turn my thermostat on. I turned it on back in November for about a week when it got really cold. My electric bill every 2 months is about $30-50. (The $50 bill was when it was colder and I had the heat on.)

Angela
Angela
9 years ago

I haven’t read all of the 80+ comments, but did anyone mention JD not listening to the radio? No TV I can understand, but no music? Wow.

Theora
Theora
9 years ago

I use line dry my clothes, too, but I have a question – Is all you laundry blue for some reason? C’mon, JD, branch out a little!

Just a little kiddin’. I like your blog a lot.

average guy
average guy
9 years ago

>>I know they’re more expensive, and I know they have their disadvantages. I don’t care. They all have certain advantages, and I’m willing to pay for them.

That quote is the slippery slope [out of] of frugality. Certainly valid when managed properly, which we can all assume JD does. But dangerous nonetheless. I am not talking specifically about Apple products (which was the subject of JD when he said it) but in general. Depends of course on the situation, both the products in question and the state of one’s finances.

Maria
Maria
9 years ago

Nice philosophy on spending J.D. 🙂

I’m currently working on spending too, not so much to control, but to spend without feeling guilty so that I can enjoy the fruit of our work. I don’t know why, although we save and tithe enough, I tend to feel guilty spending.

Darwin's Money
Darwin's Money
9 years ago

58 degrees! That would be grounds for divorce in my house!

I set it at like 65 and go to work and my wife says I’m trying to freeze them out. At night it’s around that as well.

I think 58 would be too low, especially with young kids.

But kudos if you guys can handle it, you’re surely saving a bundle!

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