Minimalist money: 6 steps to simplify your financial life

Finances are one of the most complicated things in many people’s lives … and yet, they don’t have to be. With a little effort, you can simplify your financial life and end the money headaches most people face.

I consider myself a minimalist. As such, I shy from all kinds of complexities. I look for ways to simplify. I like worry-free solutions — I like to forget about it, so I can focus on things that are more important to me.

Here’s how I simplified my financial life:

Step One: I Opted Out of Consumerism.

This is the first and most important step. If you’re a long-time GRS reader, you already know all about this — if you’re new, dig through the GRS archives for some great stuff about frugality and the consumerist mindset.

Too often, we get into the mindset of buying, of attaining more, of shopping for pleasure or stress relief or finding self-worth, of impulse buys. This is a mindset that comes from years of exposure to advertising, and it’s hard to stop. Start by becoming more conscious of it, and by telling yourself that you will no longer find pleasure in buying and having material things.

When you find yourself with an urge to buy, stop and breathe. Put the item on a 30-day list and don’t buy it until 30 days after you put it on the list. Usually the impulse will dissipate. Give thought to every purchase and ask yourself, “Is this really necessary? Can I live without it?” Try to live only with what’s necessary and get happiness from doing things — from spending time with people, from creating — rather than from material goods and spending.

Step Two: I Saved Up an Emergency Fund

Before you can find financial peace of mind, you need an emergency fund, otherwise you’re always going to be living on the edge, from paycheck to paycheck. Every unexpected expense that comes up will derail everything I recommend below. This point has been driven home many times on this site, so I won’t belabor it. But start here: Save up at least $500 by putting $50-100 per paycheck towards this fund, and gradually build up to $1000 or more.

To do this, cut out unnecessary expenses. Look closely at your spending, including regular payments you might have forgotten about, and see what can be cut. There’s always something:

  • magazine subscriptions
  • monthly payments for services you don’t really need (including online services)
  • buying books when you could use the library
  • cable television
  • a bigger car than you really need
  • gourmet coffee when you can make your own at home
  • a bigger home than you need
  • storage space when you could just sell your stuff
  • clothes and shoes when you already have plenty
  • gadgets and computer purchases you don’t really need
  • going out to lots of restaurants or bars or clubs or other expensive entertainment when you could stay home or do fun things without spending much

Put the money you cut into your emergency fund until it gets to at least $500.

Step Three: I Got Out of Debt.

Again, this has been well-covered here at GRS and elsewhere. But it’s important — otherwise, minimalist finances will be difficult to achieve. Debt payments are not essential — you shouldn’t have them in the first place. But until you pay them off, they’ll be headaches.

After you’ve saved at least $500 for your emergency fund, put most of your extra income towards debt payment, one debt at a time, until you’re all paid up. Maybe put a little each paycheck towards your emergency fund.

This step will take the longest, but it’s well worth it. And you can do the other stuff on this list immediately, without having to complete this step first.

Step Four: I Use Cash, Not Credit

I’m a big fan of cash, and a big credit card hater. Credit card bills are a blight on most people’s finances; they make it too easy to spend money you don’t have, and then you end up paying tons in interest and fees.

Sure, it’s possible to use them responsibly, but in most cases, it’s an unnecessary temptation. Ditch the credit cards and use cash and (sometimes) Visa or Mastercard debit cards. These are better only allow you to spend money you already have.

Cash is great because you can withdraw a pre-determined amount each month, and you always know how much you have left. With credit cards, it’s easy to spend more than you have budgeted; to stay within a budget you’ll have to constantly track your expenses. No need to track expenses with cash — you can see you only have a little left. Try the envelope system for cash: Put designated amounts of cash into separate envelopes for groceries, gas and other spending.

Step Five: I Automated My Finances.

I don’t like worrying about bills, so I’ve made my finances automagical. I have all my income automatically deposited in my checking account, and I’ve set up automatic payment for all bills. Some are done by automatic deduction, when possible, and others are done by using the online bill-paying system of my bank, set to recurring monthly payments. Other bills — my rent, for example — I’ve paid in big chunks, six months to a year in advance. I also make savings transfers automatic, and when I was in debt, those payments were automatic as well.

It helps to have a sizable emergency fund so you can make payments like this and not worry about whether there’s enough in your account for all of your automatic bill payments. I’ve actually split my emergency fund into two:

  • Most is in an online savings account.
  • The rest is in my checking, so I always have a comfortable cushion in my checking account.

It takes a little while to get automated finances just right, but you can start today by setting up automatic deposits and deductions and bill payments. It’s nice, because your finances also become paperless.

I recommend putting a reminder in your calendar to check on your bank accounts once a week, just for peace of mind. Otherwise, you can now forget about finances.

Step Six: I Don’t Buy Unless I Need It — And Have the Money.

This is such an old and common-sense piece of advice that it’s almost embarrassing to put it here. But it’s important.

Once you’ve done all of the above, you’re debt-free with a good emergency fund and automatic finances. But what about purchases from that point forward? Should you buy a bike if you want to commute by bike? Should you buy new furniture? The answer is two-fold:

  1. Don’t buy it unless you really need it, and
  2. Don’t buy it unless you have the money already. Not “if you have the money next month or next week”, but only if you have the money in hand.

It’s as simple as that.

Avoid debt as much as possible. The last car I bought was used, and I was able to pay cash for it (with a trade-in). I hope to buy my first house completely with cash (or at least mostly with cash).

Don’t buy it unless you need it — and only if you have the money. If you follow these two rules, you’ll never have to worry about finances again. You’ll be able to bask in the glory of your worry-free financial life — and laugh in the face of humanity.

Update: Trent at The Simple Dollar has posted a follow-up to this article that provides some concrete examples of the advantage of going minimal.

More about...Planning

Become A Money Boss And Join 15,000 Others

Subscribe to the GRS Insider (FREE) and we’ll give you a copy of the Money Boss Manifesto (also FREE)

Yes! Sign up and get your free gift
Become A Money Boss And Join 15,000 Others

There are 98 comments to "Minimalist money: 6 steps to simplify your financial life".

  1. Stephen says 09 October 2009 at 05:33

    Agreed…I live a limited consumption lifestyle similar to yours. However, I don’t know if it’s possible to give up both cable and not going out to bars, restaurants etc.. My better half and I have a compromise, we limit eating out to once a week, and keep the cable per her request.

    I don’t think having a big car is the real issue – perhaps buying new cars often is most individuals biggest dilemma. If most folks kept their car(s) for 10-12 years, there wouldn’t be a problem with size.

  2. Little House says 09 October 2009 at 06:08

    These steps cover just about all anyone needs to know to become financially independent and free. The only other thing I’d add would be a step seven, begin investing in your future through a company 401K or stocks and mutual funds. I’m just now thinking about this step and still need more info on it. I haven’t yet researched all of my options.

    thanks for an informative post-
    Little House

  3. Tim says 09 October 2009 at 06:10

    I don’t get it. How does not buying stuff simply your life? I don’t get it. I buy stuff I need and want and my life is simple. Seems to me in the quest for simplicity, you actually are making life more complex. Things like credit cards are designed to make life simpler and less complex–that is, i don’t have to make a trip to an atm machine or bank in order to make a purchase. that to me seems one less step. if i have to worry so much about not spending and implementing mechanisms to resist temptations, that seems to me to make my life more complex.

    i also don’t get this whole only buy if you need it concept. you only need to buy subsistence items, but that doesn’t provide you with much of a life beyond just subsisting (unless that is what you want to do).

    i also find it odd, and perhaps it was word choice, that everything is so black and white all the way up to debt, where “avoid as much as possible” is used, rather than thou shalt not do this, thou shalt do that.

    living frugal means living within your means…it doesn’t necessarily mean you can’t spend money, enjoy things, etc–that is, unless you choose not to. ahh, choice…that’s what living within your means offers.

  4. Another Dave says 09 October 2009 at 06:25

    I’m all for the simple life and that’s how we live. Getting simpler and simpler as we go. But one thing we can’t get behind is Automated payments. Maybe it’s different for you guys, but my family (thru various banks) has had numerous problems with Automated setups. Things like due dates being changed purposely so you miss payments (as credit cards have done recently). Bank systems being down so you can’t even download your statements online, and payments can’t go out thru the automated system (I can always use Credit/Debit card at the bills online website). To transfers not coming thru in a consistant manner, so money for payments isn’t available. All these things cause un-reliability in my eyes and even one mistake will make it ruin the effectiveness of the automation becuase now it takes time to clear up the issue.
    We do online payments (either web or phone in) and have not had a problem yet. And it’s only takes a short period of time while we’re doign the budget anyway.

  5. Nancy L. says 09 October 2009 at 06:37

    I think the point about size of cars is valid. When I bought my Civic, I heard a lot of comments about “Gee, I could never drive a car that small!” Yet the interior and trunk storage is more than sufficient for all of our family needs–even when we cart around other kids to activities, and the smaller size is great for parking. As for safety, many larger cars are more prone to rolling over than smaller cars, so it’s not like you magically are safe once you are in a big SUV or minivan. I know that there are people who truly need specific vehicles, such as my friend with horses. She needs a truck to trailer the horses, as well as for transporting hay and bedding. But a lot of people buy their car based on the 2-3x per year that they *might* want room for 8 people rather than the rest of the year when they only need room for 4.

    One thing I would add to the 30 day list suggestion is asking yourself “Am I buying more features than I really need?” We used to always choose the top-of-the-line model, bc, hey–it’s the top of the line! Now we ask ourselves what our needs truly are. For example, we stopped buying $300 DVD players and use a $30 one b/c we found that we didn’t use any of the fancy features. (The funniest thing is that the $30 one has lasted longer than the more expensive models did) Now I make a point to figure out exactly what I want a product for, and I don’t get caught up in getting unnecessary features. We’ve found that we’re fine with cheaper level scanners, printers, and other electronic devices because as long as they do their primary job fine, we don’t need the “benefits” of the higher priced models.

    OTOH, I think I may be the only person who doesn’t want to automate my finances. I find that if I automate something, I stop paying attention to it. This inattention allowed me to ignore the debt that was building up. In addition, I’ve just read too many horror stories of automatic payments being messed up or overcharged and people having to spend months fighting to get back their money. I actually still use pencil, paper, and a real checkbook register, and do a quick balance/budget check every Monday. Because I do it regularly, it takes me very little time, and if my spending is out of line for the month, I’m able to quickly address the situation and adjust my plans. I do use online bill pay so that I’m not wasting money on stamps, but I manually enter in the payment each month and authorize each payment individually.

  6. Craig says 09 October 2009 at 06:48

    I use cash not credit whenever possible as well. It helps me manage my money better and I can see the deductions right away unlike credit mentality. An emergency fund is key because you do not know when things may occur.

  7. Shane says 09 October 2009 at 07:04

    The key thing here is to combat consumerism. The American way of life is to keep up with the Jones’. This includes buying large homes, expensive cars, the HD TV, etc. The big guns of this country use us little people as pawns to make more money.

    Here’s some examples:
    1. The switch to digital broadcasting for television. It required a lot of people to either get a converter box, or a new TV set. Just another ploy to make us spend money. My solution: don’t watch TV.

    2. Manufactured foods contain many cheap, unhealthy additives that adversely affect our health. A popular additive, High Fructose Corn Syrup, actually doesn’t allow your body to produce insulin and leptin. These two chemicals are used to control hunger. So basically, the food manufacturers want to make you fat with non-filling foods, which makes them more money. And guess what, the FDA is aware of this and is doing NOTHING about it. How to combat it? Skip the processed food:

    3. Cash For Clunkers is a terrible program. The government is basically trying to persuade us to buy new cars that most of us are unable to afford. Why throw away a perfectly fine car to strap yourself with debt that you’ll be struggling to pay for the next five years?

    This entire country revolves around the “upgrade” idea. I say, in order to upgrade, let’s cut the crap and stick to the things that really matter.

  8. Oleg Mokhov says 09 October 2009 at 07:14

    Hey Leo,

    When you have only what you need, life is simpler. There’s less choice, and decisions are made quicker.

    I feel your Step One (opt out of consumerism) is the most important one. When you live a frugal life–buy and have only what you need–your finances and life become minimal, and simplicity leads to happiness.

    Objects become tools to accomplish a goal or solve a problem, not stuff that’s neat to have but clutters up your finances, your house, your life.

    @Tim: I don’t think Leo meant not to buy at all, but don’t play the consumerism game ie. buy the latest gadgets, toys, fashions, and other things that you don’t really need. More stuff = more choices, more distractions, and a more complicated life.

    Nice tying frugality and minimalism into finances,

  9. Karen says 09 October 2009 at 07:17

    I agree with Tim—many times buying things actually makes your life simpler, and credit cards can be used to do the same thing. The trick is to buy things that you actually do need and to pay off your CC each month (it’s not that complicated, you know).

    For example, I finally traded in my 10 yo midsize sedan and purchased a new Honda CRV last year to haul me and my 2 kids and their etc around. With the added space, 4WD, and a ski rack and bike rack and trailer hitch, life is soooo much simpler now. No breakdowns! (Honda engineering is the best). I don’t get stuck in my driveway anymore when it snows, or skid into the ditch when it’s icy (yay 4WD!). The defroster works so I can see out the window in the winter! It has super safety features like side airbags and anti-skid technology, and I like that it has more steel in the passenger cage than my dinky old sedan–protection for my family. I can take home improvement project equipment and materials/furniture/whatever from the store myself instead of begging someone with a truck to do it for me. I can plan and do driving/camping/biking/skiing vacations and activities with the family.

    I also love my new kitchen appliances: the freezer actually keeps things frozen! The milk doesn’t spoil! The fridge doesn’t use as much electricity as my 20 yo old one and the compressor doesn’t rattle and fail frequently! My new dishwaser actually gets the dishes clean and I don’t have to wash them before putting them in there. It’s quiet and uses about 1/4 the water as the old one.

    I buy everything on my CC (including child care) and pay it off every month. It’s so easy to track my spending with online real-time access to my account and annual spending summaries and breakdowns from my CC provider/bank. It’s also linked to my bank accounts so it’s a cinch to pay online each month. If I paid cash I’d have to save every receipt and log them myself into a budget program.

    I bank and use bill-pay online, but I’d never set up auto-pay: it’s too easy to forget, too hard to cancel, and it’s too easy for those things to get screwed up. I like seeing exactly how much I’m spending each month and on what.

  10. Peggy says 09 October 2009 at 07:41

    Count me in with the ones that don’t use autopay; too much potential for screw-ups. Paying things manually also keeps me mindful of what I’m paying for, and why.

    Cash is great, because you can leave as much of it at home as you want. With credit or debit cards, it’s all or nothing.

    To keep from “worrying about bills”, I keep a calendar of when the bills are expected to come. I write a reminder to pay the rent on our main appointment calendar. I wouldn’t prepay rent for months in advance, unless they gave me a discount.

  11. JoesMoney says 09 October 2009 at 07:46

    Great guest post.

  12. Dara says 09 October 2009 at 07:50

    @Shane (#7)

    I am very interested about what your sources are for High fructose corn syrup inhibiting leptin and insulin. Please share as I would love to research this more. I’m a personal trainer and need all the reasons I can to get my clients off the processed crap!

  13. EscapeVelocity says 09 October 2009 at 07:53

    I have my paycheck directly deposited, but I still pay the bills every month–I feel like it keeps me more aware of what I’m spending, and is more secure. I have two bill-paying days marked on my Google calendar, and a folder into which I put the bills as they arrive.

    I find the tough thing about living within my means is finding friends who are of the same mindset. It’s kind of wearing being the only one without an iPhone sometimes. There’s been a definite drift upwards in what’s considered a middle-class lifestyle since I was a kid (partly because half the crap you’re expected to have now hadn’t been invented then).

  14. MarcoK says 09 October 2009 at 08:02

    I don’t understand everybody’s fear with CCs. Do you really need a hard limit on spending by bringing a certain amount of cash when you go out? Do you always spend all that cash and want to spend more? Yes, it definitely is quicker/easier/simpler to use CCs, but that’s the point. Also, it’s safer if you lose your wallet. Call the CC company and cancel. With cash, you are just out all that money.

    In fact, I have the opposite mentality of those who are the side of cash only. CCs allow you to see exactly when, where, and how much money you spend. It gives you a record years back at the touch of a button. Also, with cash, it seems easier to spend since it’s right there. Also, I don’t have to face up to where and when I spent the cash at the end of the month when I review the statement.

    The best thing about a CC are the rewards. I make as many purchases as possible (except, usually, food/restaurant since I usually take out an allowance every week for those items) on my CC because of the 1% cashback reward. If you spend $15,000 in one year on the CC, you get $150 free extra income. For me, $150 is a great little outing on the town.

    This is all assuming you never ever carry a balance. Pay it off at the end of every month in full and it’s practically free money. IMHO, but to each their own.

    (Also, forget autopay! It just seems like every time I enroll in one of those programs the bill just happens to have a $15 extra charge by “mistake”. Maybe it’s alot better nowadays.)

  15. Scadman says 09 October 2009 at 08:19

    I cancelled my cable and am at least 10x better off because of it.

    Any Show you REALLY actually want to watch can be found online for free.

    Otherwise you get advertised into sticking around for another show, and another and another, and pretty soon you are watching rock of love 3 for mindless entertainment (if you can call it that) and your productivity has come to a halt.

    Use your free time to learn more and gain future earning potential, or work on projects. You’ll be much more satisfied and will sleep better because your mind will be ready to rest….Not to mention the 50-100$ saved each month on the cable bill.!

  16. Bella says 09 October 2009 at 08:47

    Great post – as most others have noted, turning away from the consumerist lifestyle – becoming a concious consumer and spending with intent is key! Since I work in the technology field it definetely feels that I’m the only one in the room without a shiny little iPhone (with a shiny little skin, and the latest aps), but honestly, knowing what I spend my time and money on – and that those were consious decision based on what I think is important – is MUCH MORE REWARDING. To the poster who said it’s hard to find friends who agree, start looking in new places. Explore the thing you love – your hobbies – and you’ll be more likely to find others who spend on the things you like and appreciate too. Or maybe you can be an inspiration to your current friends on how to lead a more value (instead of consumerist) driven life.
    As for autopay – only on bills that never change – mortgage and car payments
    everything else needs to be reviewed – I want to know if my phone/gas/electric bill goes up by 100% percent BEFORE I pay it. And more importantly since I’m now a more consious conumer – WHY…

  17. DPK says 09 October 2009 at 08:49

    I don’t understand the fear of credit cards as a way to pay for things you already have the money for providing you pay them in full every month. Credit cards have superior protections than debit cards, especially in case your number is stolen or used fraudulently. The time frame for reporting problems is much shorter with a debit card and the amount you could lose, even if fraud is proven, is a lot higher.

    May I suggest having a column related to the risks and benefits of credit cards vs. debit cards? You may want to start here:

  18. Gee says 09 October 2009 at 09:07

    “Step six: I don’’t buy unless I need it –– and have the money.”

    Only buy what I need. Interesting idea…..hmmm….

    Well, so I don’t need hobbies. There goes the enjoyment I get out of knitting and cross stitching. I enjoy knitting, but I don’t need it.

    That dance class I took last year. Waste of money. Darn my consumerist mentality.

    We don’t need a car. Sure it makes our life easier. But we don’t need it. Ok, no car.

    Our house. Heck, you don’t even need a two bedroom rental if you have a child. A bachelor will do fine. Let’s see how many children we can have before we need a separate bedroom!

    I don’t need to go to synagogue or pay my dues. My rabbi will be so pleased when I tell him I’m simplifying my life.

    Visiting our parents, friends, family and other people who live outside walking distance (since we no longer have a car and the bus costs money). Not necessary. Sure, it’s nice to see them and sure my grandmothers will be sad to never see our child, but we don’t need to see any of these people.

    Oh, and can’t call them because we wouldn’t have a telephone and wouldn’t be using a payphone. Communicating with loved ones is not a need.

    Newspapers, any kind of entertainment, board games, media of any kind – not necessary. Why bother. It just costs money. I could be meditating, I guess.

    Toiletries. I should wash my hair and body with soap only. Any kind of beauty product is an absolute waste. I only need, just enough product to keep me clean.

    We should have only one plate, knife, fork, spoon and bowl each. It will be cute. Guests can bring their own. Better yet, no guests. They aren’t necessary. It’s just simpler this way.

    Those appliances – which ones are necessary? Do I need a slowcooker, toaster, kettle, oven, bbq, microwave and fridge?

    But hey, I’ll have lots and lots of money. And I won’t be some nasty consumerist monster. Ahh… the simple life.

  19. Brent says 09 October 2009 at 09:11

    I don’t completely understand people’s aversion to digital and automatic finances. I actually get frustrated with cash because its not meticulously recorded to the penny for every transaction I make. As for the Auto-pay. I love the ability to not worry about making sure its paid on time. No chance to forget, No late payments. Apparently some people have had issues with auto-withdraw. But not only have I never had it take an incorrect amount, I always see the amount before it transacts emailed to me before its payed. If you are uncomfortable with the bank draft, consider paying by credit card so that you can use those features to get back your money.

  20. Melissa says 09 October 2009 at 09:14

    I think using cash is definitely smart if you CANNOT pay your credit card in full every month. However, if you can pay your credit card in full every month, a points program credit card is the way to go. Most offer them. I like the Bank of America Upromise card. 1% of my purchases goes into my Upromise account tied to a 529 plan. Since my husband and I use our Bank of America credit card for everything, we rack up around $50 a month in our Upromise account!

  21. Jill says 09 October 2009 at 09:18

    I’ve had two things in my life get automatically billed to my credit card- my Sunpass (Florida version of EZ Pass) transponder because I don’t want to have to worry about getting a large ticket because I forgot to add another $25 to my Sunpass account, and an AOL account from the days when I used them as an ISP. Never had a problem with the Sunpass account, but the AOL account was another matter. When we switched to a cable-based ISP after a move, they refused to cancel our account, and we literally had to change our credit card number in order to get them to stop billing us. After the AOL experience, I’d never let anyone take money directly out of my checking/savings account for a bill.

    We do also have our mutual fund directly withdraw from our checking account, but that’s just a case of moving the coins from one pile to another, and it’s realtively easy to get that money back into M1 form if need arises.

    As for cars, I used to be extremely pro-small car until I was spending an hour and fifteen commuting every day, all the while with my Corolla surrounded by giant SUVs that seemed like they’d just crush right into me at any minute. Ended up trading it for an Outback that’s one of the safest cars on the road, and that I can probably keep for 10-12 years.

  22. chacha1 says 09 October 2009 at 09:18

    @Dara and Shane, I’m also a certified personal trainer and based on my reading (Men’s Health, Women’s Health, American Fitness, Yoga Journal, IDEA Fitness Journal, and others), there is no known/documented metabolic effect of high fructose corn syrup that is different from those of other, “natural” sugars.

    The current consensus seems to be that the negative health effects that some are associating with HFCS are commmon to anyone with a high-sugar diet, regardless of the source of the sugar.

    That said, any food with HFCS added definitely has one too many ingredients, typically is very high in sugar, and generally has less nutritional benefit than foods that use natural sugars.

    When it comes to simple living, food is a good place to start; manufactured foods end up costing a lot more from source to consumption and are never as nutritionally sound as eating natural food. Good nutrition = better health = fewer doctor visits, medications, and illnesses = time and money saved!

  23. Dara says 09 October 2009 at 09:27


    I appreciate your response, but are any of those readings peer reviewed journals? I have read Men’s and Women’s health and do not like them. I prefer to get my information directly from the studies, and I like to see who is doing the studies and who is funding them. I don’t know the other journals you mentioned, so if they are peer reviewed please let me know. I would imagine that many of the articles saying that HFCS is no more harmful than regular sugar are supported by studies that are funded indirectly by the HFCS industry. This has just been my experience with what is commonly pawned off as “research”. Thanks!

  24. Oisbroke says 09 October 2009 at 09:32

    🙂 love the last line!

  25. Menace says 09 October 2009 at 09:37

    Thanks Leo. I love your site as well. These are the simple ideas that keep me reading GRS. Nothing mind-blowing, just good reminders to be mindful.
    @ Gee- come on. Point taken, but really. Knowing Leo’s website, his life seems to be devoted to spending time with his family, enjoying the things he loves, and just filtering out the unnecessary consumerism to appreciate what’s in front of him. Take from these posts what’s pertinent and meaningful to you, and then move on.

  26. Rob Bennett says 09 October 2009 at 09:49

    I of course agree that simplicity is good. But some view it as a benefit of simplicity that you don’t need to spend time on money management. I don’t see that as a plus. I view money management as Life Management. I find it exciting and fun to plan my life (to the extent possible). So I very much enjoy the time I put into understanding money management better.

    I do tend to favor simple strategies, though.


  27. Tyler Karaszewski says 09 October 2009 at 09:55

    Not that any of this is bad advice, and I agree with all six points (although I do buy indulgences sometimes, but only with money I already have), but is there anything new to say about personal finance or are we just going to repeat the same things we’ve heard 1,000 times before?

  28. Frank says 09 October 2009 at 09:59

    Good post. $500 is ok to start off with for and emergency fund. Ideally you want to have at least 6 months of living expenses stashed away for an emergency fund, however much you make after taxes per month. Multiply that by 6 then you have a decent fund in case you get laid off or your car decides to blow a transmission etc. It takes time like the man says but better to have it than end up using the dreaded credit cards, if you have no savings for unexpected expenses this is how the trouble starts. Do as he commands.

  29. Shane says 09 October 2009 at 10:04


    I will post an article about High Fructose Corn Syrup on my blog that I’m just starting. I will also include the sources in which I read the information from.

    Also, with you being a personal trainer, I would like your input on balanced diets to assist in my blog. Although eating natural foods is a lot healthier than processed, it is still necessary to have proper intake of all nutrients.. a topic I’m not too familiar with.

    My email is [email protected], or you can visit my blog and leave a comment: (not complete yet)

  30. brooklyn money says 09 October 2009 at 10:12

    Simplicity is good, but paying rent six-months in advance is not very smart. Why let your landlord earn interest on your money?

  31. Foo Finance says 09 October 2009 at 10:13

    I too am a huge fan of losing the cable TV and am against consumerism. I have written an entire post about dropping Cable TV on my blog (click my name above). The internet can be just as bad for consumerism but it is a lot easier to pick your battles online.

    I must admit that I am not a fan of auto-pay either. I agree that it can be good for some (such as my dad) but others can forget when payments pull and overdraw their account. I also actually enjoy looking at my finances (I am a Finance degree holder!) and seeing where I am improving or falling behind. A monthly review of all bills and budget is a must anyway.

    I am also not a fan of cash only as I lose out on interest, if it is lost then it’s gone, and I like my Skymiles :). Having to go inside and pay ahead for gas is a pain and you have to go back if the car doesn’t hold that much. I’ll use my CC as that is simpler. Cash is a lot harder to track even if you use the envelope system. Lots of manual entry. Yuck!

    Again I will say that rewards cards only pay if you can pay them off. People with less self control are better off with a rewards debit card and/or cash. I will stand behind online bill pay as checks get lost and stolen. Stamps are expensive these days as well!

    In the end you have to do what works best for you. There is no right or wrong answer here. Living simpler is better but you can over simplify and be just as miserable. Everyone has to find their balance that works for them. One person’s simple may be another’s complex.

    Just my 2 cents,

    Bobby (Foo Finance)

  32. Suzanne says 09 October 2009 at 10:16

    @Tim and Gee,

    Not sure why you follow this type of blog if you already have all of the money you need to live the lifestyle that you want to live. I am guessing that, like me, most of the people who read these articles are trying to pay off debt, and are trying to find creative ways to reign in spending. For us, it is very helpful to think in a new way. My goal is to pay off a HELOC and student loans. These hints have allowed me to bring my monthly spending budget down by $400/month. I hope to have my loans all paid off in less than three years.

    Of course once you have your emergency fund, have paid off debt (if you even had any), and are saving and spending wisely, then you have the choice to spend your money any way you want. Buy an elephant, and start a circus. Why not? In fact, you can spend your money any way you want at any time. The author is just making suggestions to those that want them.

    One last thing, for those who wonder about the downside of credit cards, I recently read a study that people will spend up to 20% more on similar items if they use a credit card. There’s something about spending abstractly and not feeling every dollar that you spend that makes us looser with our spending. I still use my card to make my life easier, pay it off every month and get the rewards. But I am very mindful to try and still use the card wisely and only within my budget.

  33. Doug DePrenger says 09 October 2009 at 10:31

    I second not automating payments. Besides being complacent after a while, if you try and stop an automated payment (say you quit the service), some companies have “problems” stopping. I speak from experience. Also, changing the pay time can be difficult and time consuming.

  34. Gee says 09 October 2009 at 10:36

    Suzanne –

    I think it is normal to buy things you don’t need.

    I think being told to never buy anything I don’t need is silly. That’s the kind of extreme abstract advice that people, like me, ignore. It’s not something I can apply to my life.

    Under the espoused theory of this article – I shouldn’t buy an elephant, even if I can afford it. It didn’t say have a good/reasonable/frugal budget and enjoy the leftover. (At least I’m assuming that an elephant is a want. If I started a circus, I might need one to make it work from a business perspective).

    And no, I’m not perfect. I have lots of bad financial habits. But that doesn’t mean this article was helpful.

    Also… I too love my cc.

  35. valerie says 09 October 2009 at 10:36

    Like several others have said – it’s not very smart to pay your rent that far ahead, you lose money that way! Is it really that hard to write a check on the 1st?

    Same point with buying your first house. Unless housing starts appreciating faster than the stock markets, it’s better to make a 20% down payment and then pay it off quickly (i.e. <15 years). Especially considering interest rates are quite low right now.

    A cash purchase of a house makes sense if you’re using it as rental property to provide positive cash flow.

  36. Dara says 09 October 2009 at 10:38


    I have read similar studies about credit cards, and I think that may be true for some people, but I’m actually the opposite. I like the fact that with a credit or debit card you have a track record for everything you spend. I’m much more likely to use cash for impulse purchases than pull out the plastic. For that reason, I don’t like to have cash on me. To each his own of course, but I would like to see a study done in this regard as I suspect I’m not the only one that feels this way! I think it’s more important to identify your own personal habits and tendencies.

  37. Suzanne says 09 October 2009 at 10:41


    I actually agree with you to some extent. I have found that very detailed budgeting (down to the $1.00 vending machine, no kidding) works well for me. Credit cards help me achieve that. When I just take out $100 it goes much faster. I do think it helps to have the information about how credit cards tend to affect people. I’m sure that not everybody is affected that way, but in general most people are. I use this information to make sure I stick to my budget more closely.

  38. Suzanne says 09 October 2009 at 10:49

    @Gee, it seems like you were looking for a disclaimer.I suppose he could have included a sentence at the top: “For those people that are looking for ways to save money, consider becoming a minimilast spender like me. Here’s how:” He does present extreme suggestions. I think it’s implied that you should take hints from this that would be helpful to your situation.

  39. Adam says 09 October 2009 at 10:51

    Great tips!

    However, here’s my pet peeve with financial advice – Credit Cards. There are some really huge advantages to using credit cards over cash. I will share two:

    1) The rewards – I have an American Express cash back card. I pay NO fees, NO annual membership, nada, nothing. Last year I received almost $1000 for my purchases. To me, that’s free money (tax free as well).

    2) Consumer protection. Hands down, the biggest advantage. I have multiple times asked for a charge back, always with great outcomes. You just can’t do easily with cash. I have double warranty with loss from theft or misuse.

    Perhaps a better way of saying this is: If you have trouble with credit cards use cash. Otherwise enjoy the perks!

  40. Notta Hatter says 09 October 2009 at 11:13

    Don’t know about the Leptin/HFCS connection, but
    High Fructose Corn Syrup contains Mercury.

    Just Google ‘High Fructose Corn Syrup Mercury’ for more articles to read.

    Mercury ingestion leads to fertility problems and madness
    -the mad hatters of lewis carrolls story were real.Felt hat makers. See:
    or Google ‘ Mercury Mad Hatters’

    Related to personal finance, I recently got a Discover card and set up a high interest ING Direct savings account to hold money for paying it in full every month.I earn better interst than my brick& mortar checking account, get the ccards grace period to earn interest and then cash back from Discover. I’ve been tracking my spending for 2 years and know what my monthly grocery/telcom/train pass costs are so I maintain twice that amount in the ING account to pay the ccard and any over spending. YMMV. HAND.

  41. james says 09 October 2009 at 11:15

    I have done all of the above. I am 7 months away from paying off my house. I am 33 with a wife, 2 year old and one on the way.
    While it may SOUND good to people in debt for me to say “I find no joy in money anymore” its kind of sad. If I get $100 or so from an ebay sale or as a gift, it no longer has the appeal and joy it once had… kind of sad.

  42. EscapeVelocity says 09 October 2009 at 11:24

    I use both credit cards and cash. I put my grocery budget into cash–I spend a lot of it at the farmers’ market, so those are cash transactions anyway, and I’m very bad about stopping to write down exactly how much I spent and then entering it into Quicken when I get home. So I’ve started just withdrawing the grocery budget in cash on the first of the month and then keeping it in a separate wallet, along with my grocery coupons. When I run out, I just live off what I have in the house for the rest of the month. I try to consolidate my other grocery-store purchases, like cat food and kitty litter and toilet paper and OTC medicines, into one trip a month and use the credit card for those.

  43. james says 09 October 2009 at 11:27

    my wife and I have been talking about doing the grocery cash thing as you have…

  44. Dustin | Engaged Marriage says 09 October 2009 at 12:00

    Well said! My family already follows every step you outlined here, although we could always do better.

    Our financial freedom has greatly enhanced our marriage, and it is one of the topics I am excited to continue covering on Engaged Marriage!

  45. liz says 09 October 2009 at 12:05

    Hmm.. I know a ton of college students, including myself, who cannot afford the college they’re going to and have to take out loans. I also know many, many people who wouldn’t be able to get to work if not for taking a loan out on a car. These tips work if you’re on a stable, comfortable salary and have just been silly about finances, I guess.

  46. Shawn says 09 October 2009 at 12:45

    I tend to take Gee’s mentality on the “needs” part of this post. You really don’t “need” anything until you start wanting things. You technically don’t even need to eat…unless you “want” to live.

    I think this post needs to somehow define “need”; Where is the line?

    Personally I think you should rate how much you “want” something on a scale of 1 to 10, then depending on your financial situation, only purchase things that are X or higher.

    For someone trying to get out of $30,000 in debt, I would suggest only buying things that are a 9 or 10 on the “want” scale.

    I understand that I am being very technical about the needs topic, but I would imagine everyone has a different idea of what is or is not a need.

  47. Stephanie says 09 October 2009 at 12:49

    I know that there are people who cannot resist the temptation to overspend when using credit cards. But there exist many people who use them wisely. And I don’t see the point in pretending that credit cards are to be avoided whenever possible. Know yourself. Know what works for you. But the credit card isn’t the problem when someone is in debt. The consumer is.

    I make 90% of my purchases with a credit card. I have never once in my life carried a balance from one month to the next. It is paid off every single month. It is a free 30-day loan. And I get some important consumer protections from using the credit card – like the ability to do a chargeback when warranted. Maybe it helps that I am extremely debt-averse and don’t like shopping to start with. But the credit card is an excellent tool for some people.

  48. Cougar says 09 October 2009 at 13:16

    Good advise. But, what is said in here, that hasnt been told earlier by JD and other blogs? We all have read several times in here about not using CC, automate finances, not spend. why another post telling the sam thing in different words?

  49. E says 09 October 2009 at 13:42

    I agree there’s nothing new in this article. Also I’m not sure what’s meant by “simple.” Some interpret it as bare-bones, no frills, no fun. Not very appealing. Some think it means no credit, no debt, no consumerism. That’s old news and not necessarily helpful. Some are hearing automate, don’t look at your bills, pay everything way in advance so you don’t have to think about it. How does that help a person get rich slowly? I guess I just don’t know what the author is trying to say. What is meant by “the simple life?” What is meant by “minimalist?”

  50. Broke MBA says 09 October 2009 at 13:44

    This is a great way to simplify everything, but stay on top of your automatic drafts. Be careful not to overdraft.

    Also, I had a bad experience with the local utilities company who failed to inform that they had been unable to draft our account due to an expired debit card until we were three months behind!

  51. Chickybeth says 09 October 2009 at 14:33

    To Dara (#23) for peer-reviewed articles go to and do a search.

    There are articles there that found a link between a liver disease and HFCS and also some that were the basis of the Washington Post article about the high levels of mercury fond in HFCS.

    Although it appears the data linking HFCS to metabolism issues have only been fond in rats so far, nutritional studies on humans are notoriously hard to conduct because people cheat on their diets!

    As for the article, I liked it a lot, but I can’t carry cash. I do the envelope system on my computer but use my debit card for everything so I have a record of the transaction. If I carry cash, I end up blowing it right away.

  52. mapster says 09 October 2009 at 15:04

    A quick google search re: HFCS and leptin turned up this article at the American Journal of Clinical Nutrition .

    Being a reader of Leo’s blog, I believe that he is saying to buy what you “need” to be HAPPY. Each individual must decide for ourselves exactly what those “needs” are ~ but make sure are basing your “needs” on what you want, enjoy, and will enrich your life and not what the t.v. tells you to want.

    I also disagree with automating payments. There are too many “computer mistakes” in this day and age for me to feel comfortable giving someone basically free access to my money. The only automated payments we have are the vehicle and personal loan through our bank, which are not variable amounts. Soon those will be all gone

  53. Manisha Thakor says 09 October 2009 at 15:13

    Leo – Bravo! I love this post so much I can barely find the words to express it. So instead, I’ll highlight my two favorite passages:

    *Finances are one of the most complicated things in many people’s lives … and yet, they don’t have to be. With a little effort, you can simplify your financial life and end the money headaches most people face.

    *Don’t buy it unless you need it – and only if you have the money. If you follow these two rules, you’ll never have to worry about finances again. You’ll be able to bask in the glory of your worry-free financial life

    Could not agree more. Thank you for sharing your thoughts on simplicity, financial style!

  54. mapster says 09 October 2009 at 15:14

    A quick google search of HFCS and Leptin turned up this:

    I believe that Leo is telling us to buy what we “need” to be happy. However, we have to decide what those “needs” are based on what we want out of life and what we enjoy. We can’t let the t.v./posters/billboards tell us what our “needs” are.

    I also disagree with automating payments. To me, that is basically giving some faceless individual in Sometown, Somestate, USA free access to my money or bank account. There are also too many “computer errors” (read: user errors) on a daily basis. The only automated payments we have are the vehicle and personal loan payments. Both loans are through our bank and paid to our bank, paid on the same day each month with no variations in amount. Those will hopefully both be gone soon and never happen again.

  55. Marie says 09 October 2009 at 15:40

    One thing keeping us from simplifying our financial life is the incompetence of others. We have my husband’s direct deposit on its own account because they screw up constantly–the secretaries forget to run payroll by deadline, and several times a year we get letters saying “Oh, sorry, your pay will be issued by actual check and will be a week late.”

    I also have a separate account for my online selling, especially since PayPal loves to help themselves to your dough. It’s frustrating to have a bunch of separate accounts because people can’t be trusted with access.

  56. Tim says 09 October 2009 at 15:46

    @Suzanne post 32: I think you will find a wide gamut of individuals at varying stages of financial dependence/independence here. there are plenty of people in the “now what” category post debt just as there are many in the in debt category. There has to be more to getting out of debt than just getting out of debt.

    It does come down to choices. debt limits your choices, so it is good to get rid of debt and to live within your means in order to have flexibility and choices. once you’ve attained it, then there is no reason not to enjoy or spend money. After all, money is in fact a medium for spending and buying. I like having choices, whether it be a different shirt in the morning or a different brand of cereal. Consumerism isn’t all that bad. remember that without some level of consumerism, all that hard work earning money is pointless if there is no economy.

    credit cards are perhaps one of the biggest disputed items around. If you have issues with self control, then cc are perhaps not for you. however, there are very good incentives to using them like 5% discount on gas and groceries, to purchase protections, to convenience. Let’s not ignore the fact that cc do make life easier. If it didn’t the cc companies wouldn’t be promoting them and all the studies wouldn’t be warning about them.

    you can still be a consumerist and minimize your financial life or still be frugal doing so. i’m not sure of the purpose of getting rich if it means you can’t spend at some point. Is it all about hoarding cash? Is there some ephemeral joy one gets for being rich with lots of cash and not spending it? I’m not sure what is worse. I won’t begrudge anyone wanting to buy crap that they feel demonstrates the fruits of their labor. we all have different ideas of what success means or what fulfills our existence. the odd thing is that in the process of wanting to demonstrate our frugality, we are still trying to impress people. it’s a reverse catching up with the Jones because you are still trying to impress others. Your financial situation should be about you and your family, not about anyone else.

  57. Dan K says 09 October 2009 at 16:48

    I agree, consumerism is an evil in the United States and other wealthy countries that rely on consumer spending to keep the economy going. T.V., especially, is the worst thing for productivity. If people would just think deeper into what they are purchasing and their amount of life energy that they worked in order to own that much money, then they probably wouldn’t purchase half the materials they want. I’ve read about he founding fathers and it amazes me about how unselfish they were. They didn’t care about material wealth or power. They actually protested against it. And they all referred back to God for their motivation. This country was founded on Christian principles and we have gradually been moving away from it and causing problems.

  58. Jason says 09 October 2009 at 17:50

    Dan K — you need to read up more on your founding fathers. While some were indeed thrifty, frugal and God-Fearing (I’m thinking of Adams), there were several who were slave owners (Washington and Jefferson), one was a fashion plate (Washington), one was well-known as a philanderer (Franklin), another got a slave girl pregnant (Jefferson) and one never added up his accounts and was pretty much broke! (Jefferson again). I’m pretty sure the remainder of them were as flawed as the rest of us.

    I’m not saying that the Founding Fathers didn’t have qualities that should be emulated — far from it. Each of the flaws I singled out above can be tempered by virtue. I’m saying they were human and therefore given into temptation, making mistakes and not without sin.

    Life isn’t all about being productive, either. If I choose to watch TV, so be it. Sometimes after a productive week at work all I want to do is order some takeout, make a martini and watch Stargate. Doing anything productive is FAR from my mind.

    All that said, I do agree with the general gist of the article.

  59. Shelley says 09 October 2009 at 17:51

    I agree with this advice. Thank you for posting these common sense tips. At a time when credit card companies can raise their rates, at any time & for any reason, including for their own fiduciary gain, we are all on thin ice every time we use these ‘modern conveniences.’ We may be able to pay the bills, at the agreed upon rate, but what happens when the interest rates suddenly double or more? You have several other practical tips here, as well. Thank you again!

  60. Ann says 09 October 2009 at 18:11

    At some point, topics get recycled. Perhaps JD can implement a post rating system, perhaps using the personal finance stages he mentioned in previous posts, so people in the third stage can skip the “credit cards are evil” messages.

  61. james says 09 October 2009 at 18:53

    I ran a blog for 3 years… i recycled. now i dont run that blog anymore… no hints here.

  62. yourfinances101 says 09 October 2009 at 19:03

    I still think credit cards can be money makers in your life if chosen and used properly. Everything else seems right on point

  63. John G says 09 October 2009 at 19:21

    Thanks for the post – I think it’s true about credit cards if you have little self control. I enjoy auditing my credit card statement and paying it off 2x a month or more. or quicken or money can help you categorize your purchases on a debit/credit card. Credit cards also protect you from fraud!

    Not having cable was the best thing I ever did for recurring costs. I watch the office on hulu and I have a 1-disk netflix plan that lets me watch my heroes in HD 🙂

  64. Jen says 09 October 2009 at 20:01

    Regarding HFCS: In addition to the fact that it is HIGHLY processed (nothing natural about it), it is also made from genetically modified corn.

    We are still in the debt payoff stage, and I appreciate this post. I do agree with many other commenters regarding auto pay. I have a system that works great for me, and I have no desire to give everyone access to my money.

  65. Chett says 09 October 2009 at 21:03

    Is there an echo in GRS? Agreeing with many other here, Leo is repeating what has been said many times. This may be new information that can be helpful to his loyal readers at Zen, but not for the astute readers at GRS.

    This is the equivalent to listening to the flight attendant rattle off the list of safety precautions for the pre-flight routine. A few first time fliers are listing but other than that, we’ve heard it before.

  66. J.D. says 09 October 2009 at 21:06

    Wow! I missed quite a discussion today. I’ve been out and about running errands for the past 12 hours, and have only just now read the comments.

    There’s a huge range of readers at Get Rich Slowly. Some have reached the “third stage” or personal finance, as I have. But many are just getting started on their journey. Most of the time, I try to feature advice that’s applicable to a wide swath of the readership. Sometimes, however, I focus on one end or the other.

    I have an article about municipal bonds I’ve been working on, for example. This will be of no interest to those just starting out. But it will be of some interest to those who have money they’d like to protect. I’m also thinking about doing a post on how to find huge discounts on cruises. This is absolutely useless to those who are struggling to get out of debt, but might be interesting to those who have their finances under control and want to save money on a vacation.

    On the other hand, I do want to feature content for those who are still in the earlier stages. I do have a “Basics” category. Anything that I think is for people just starting out, I label with “Basics”. This post is a perfect example. My current series on the tents of GRS is another.

    Also, guest posters don’t always represent my viewpoint. Actually, neither do staff writers. This post from Leo is anti-credit card. Baker is anti-credit card. I am not. I used to be — and I still believe strongly that if you struggle with debt, you should destroy any cards you have — but I’ve come to believe that not only is it possible to use credit cards wisely, it’s actually fun to do. I get 1% cash back on nearly everything I buy. Because I’m careful with my money, I go through life paying less for everything than most people. (Yes, I understand that the CC merchant fees are thus passed on to all consumers. But they would be even if I didn’t use my card. I’d be foolish not to do this.)

    I guess what I’m trying to say is that though GRS has been very much about my journey, I’m aware that not everyone is in the same place I am. I like to present different viewpoints and different voices.

    Have a good weekend, everyone!

  67. Sherry says 09 October 2009 at 21:07

    Ummm…this article is a bit of the same old, same old isn’t it? Just a different author?

  68. J.D. says 09 October 2009 at 21:09

    That said, however, Chett (#65) has a good analogy, and it makes me understand where you all are coming from. One request in the reader survey was a section for beginners. Maybe I should make it a priority to pull that together, yes? Then new readers could browse those old posts and you veterans could enjoy fresh ideas every day. 🙂

  69. Lucy says 09 October 2009 at 21:09

    How to avoid consumerism: Be the executor of your parents’ estate. OMG. What IS all this junk that they thought so highly of? All those treasures they held so dearly can’t even be given away at a yard sale, much less sold on eBay. (Why does anyone need 5 different sized pie plates, anyway?)

    The next time you pick up some trinket you think you might want, ask yourself, “What will my heirs do with this when I die?” Chances are, you won’t buy it.

  70. Zengirl says 10 October 2009 at 01:48


    I get it what you are saying and means a lot. I have been reader of your blog for sometimes and I have reached a stage in my life, where buying more does not make me happy, enriching my life and close family and friends is more valuable. Thank you.

  71. Rika says 10 October 2009 at 05:21

    Why is the photo upside down?

  72. almost there says 10 October 2009 at 09:22

    Life was simple when I lived on Guam. Born there and two navy tours there. In the 93 earthquake my spouse lost all of her waterford crystal collection. Have not replaced it. I miss the carefree days in Dededo. Life got complicated after moving back to the states. I threaten to move back to Guam. Maybe after 2012:)(if it is still there)

  73. Sherry says 10 October 2009 at 12:56

    @JD – a beginner’s section would be great – make it easier for people to go through. That is what I look for when I start reading a blog that is new to me, and I always appreciate it when it is easy to start from the beginning without having to look things up just by subject or having to click “view older posts” over and over and over again on some other blogs.

  74. Jane says 10 October 2009 at 13:00

    Well I feel a bit chuffed. I’ve done points 2-5. I still buy things I don’t need.

    I don’t understand though, because not being able to do this seems overly harsh and would seem to affect my personal development.

    For example I recently bought myself a ukulele, a ukulele tuner and some books for teaching myself. I don’t need any of those things, but I’ve never learnt a musical instrument and always wanted to. It’s so fun! At least for the first few days until it got really hard to get any better, but I perservere. I would love to have lots of different musical instruments. I don’t understand how you can really enjoy making music without having musical instruments which you must buy in order to have, but one can never say you need them either – which is why we never had them in my family. How do you get around that?

    I also spend money on art supplies and flowers for inspiration, and sometimes I buy books and CDs to help me learn languages, and pay to go to classes. It doesn’t seem sane to skip these things if you can afford them.

  75. friend says 10 October 2009 at 14:20

    Lucy #69–

    Amen, sistah. I e-mailed your comment to myself, and I’m going to make a point of reading it over when I’m tempted to buy crapola. (I’m still digging through boxes of my dad’s precious junk.) Thank you.

  76. friend says 10 October 2009 at 14:22

    Rika #71 and J.D.–

    What is that a photo of, anyhow?

  77. Financial Samurai says 10 October 2009 at 16:52

    Leo – I agree. It’s been 40 days since I spent money on ANYTHING other than food, and I love it. I’m tracking it over at FS, and it’s helped keep me honest.

  78. Mr. Not the Jet Set says 11 October 2009 at 09:40

    Simplicity is a thing of beauty – and a feature that no credit card can offer.

    Great outline, Leo

  79. Satoko says 11 October 2009 at 10:27

    @76 friend – I’m neither Rika nor JD, but that’s an old Chinese coin, from about 150yrs ago.

  80. Allan says 11 October 2009 at 10:54

    I would say sleep on it before buying something. Wait for a few weeks before buying that game console you think you need or that coffee machine. Because most of the time after a few weeks of rationale thinking, that impulsion will kick off.

  81. Anthony says 11 October 2009 at 11:57

    The “buy only if you need it” idea borders the fine line between quality of life and strict budgeting. We all love instant gratification but the big picture here is earn financial independence, stability and wealth. A paid-off home, savings and investments.

    When he says “buy only what you need” that also can be asked as “Will this be a waste in 3 months” is there a cheaper/smarter alternative? What will happen if I don’t make this purchase?”

  82. Craig Ford says 11 October 2009 at 15:31

    One problem with a beginners section is that personal finance is all about fundamentals. If your ‘beginning’ values and principles are wrong it will be impossible to reach your desired destination. With that said too many of us will think we don’t need the beginners stuff. As you mentioned you used to think cc’s were bad, but now you’ve changed. As personal finance is always evolving I think it is good for all of us to have a chance to go back and re-check our fundamental assumptions. Changes are they will change over time.

  83. Lily says 12 October 2009 at 08:01

    I’m with the people who love their credit cards. How can I buy things on-line, cheaper and without wasting time, without a cc? If I take money from an atm and machine and I go to shops in town, I’ll certainly spend more. 😉
    The point is having enough self-control not to wast money, cash or virtual.

    I also agree about the article being too black-and-white, but that’s Leo Babauta’s way, always too simplistic.
    Need is very subjective and discussion on “need” always borders on judgmental. I don’t need dvds to be alive, but I love each dvd I own and they sure make my life better. I always look for bargains to get my fave movies and series. People can say it’s a waste of money, and I could say they waste money in another ways, which could sound sillier to me.

  84. Josh says 12 October 2009 at 08:50

    @74 (Jane)

    Don’t let the real or perceived judgmental views of others rob you of the joy of your musical adventures. My keyboard wouldn’t even fit in the nano-sized houses after which some extreme minimalists lust. I’ve had it for three years, and even if it only lasts another five, can anyone argue with 75 cents a day for half an hour or more of enjoyment each night?

    Is pleasure a need? People have been having fun – e.g. making or appreciating music – for ages. Are we so advanced now that we are certain our poor, ignorant ancestors would have been happier to own nothing and meditate on how to be more minimal all day? Is spending a reasonable amount of money to have fun in moderation not acceptable to the need police? It must suck to be them!

  85. FuturShoc says 12 October 2009 at 14:40

    I’ve been thrilled to discover GRS a few weeks ago. Just a fantastic blog.

    I’m 35, single dad with joint custody.
    About 14 years ago, I was in a $7,000 hole and declared bankruptcy because I thought that was my only option. (Of course, now, I wouldn’t dream of doing that, but hindsight = 20/20)

    After being married for 10 years to a woman who is financially prudent, I learned to budget. Although she stayed home or worked part time, she did our budget weekly in a very simple way: Pay bills when they come. Sounds obvious, huh?

    Anyway, thanks to that experience, my bills are never late. However, I only really got serious about saving a few years ago.

    The current good news:

    — My investments total only about $20,000. BUT…
    — This week, I’ll be paying off my one credit card thanks to some freelance work I did.
    — I’m contributing the maximum to my company 401k in order to get my “free money” matching, but not more.
    — As of this month, I’m restarting my regular RothIRA contributions to the max. ($96/week) I stopped earlier in the year due to a job change and didn’t restart it because I lost that job after 6 mo. Thankfully, I’m re-employed with my previous company.
    — I’m in an affordable, modest house that is all I need at a fixed rate for 30 years. I’m considering refi at 15 years and a slightly lower rate. This would actually give me the *same* payment thanks to current rates.
    — I have just under $6,900 left on my 2006 Honda civic loan. I think I’ll start paying extra on it next week in order to eliminate that last non-mortgage debt.

    Thanks, J.D. and all the others who are sharing their experiences!

  86. Vas says 12 October 2009 at 22:50

    If everyone only bought what they needed industries and businesses would be collapsing left, right and center. I know what message he is trying to get across but let’s not forget that life is for living and enjoyment. There is enough to balance both spend and save. If we do not enjoy a bit from time to time there is a high chance of losing track of the end financial goal. We will quit and get fed up because that’s what will happen after years of boredom, saving, budget and no fun.

  87. Kat says 13 October 2009 at 01:55
  88. Jurgen says 13 October 2009 at 02:31

    Here in Europe almost nobody outside business people use a credit card. Everything is paid either by cash or a debitcard.

    Some readers here state that the advantage of a credit card is the statement you get so you can see where all your money flows to. But you can get the same with a bank statement. The problem with credit cards is that they make it too easy for you to buy stuff you don’t need at all. Maybe this is less prone to many the readers of this site – you are here for a reason, aren’t you – but in general I truly believe the credit card is the root of the gigantic debt problem the United States have nowadays.

    I suggest pay of your credit card debt and then cut the card itself in half. Just don’t use it. Pay by debit card, cash, or automagical.

  89. Jurgen says 13 October 2009 at 02:43

    Oh and another thing… Leo says you should buy as little as possible – only the things you truly need, use and like.

    I agree with that totally – but here’s an addition: if you do buy something – and you actually have the money for it – then always buy quality, even if it costs you more.

    You should not hold back on the quality of things you need and use on an almost daily basis. The most important example: the bed you sleep in. You spend a third of your life in bed, so I would never buy matrasses that are cheap but of poor quality. I’d rather spend (much) more on that and sleep alot healthier.

    The great thing is: if you buy only the things you truly need, you will often have saved so much money that you are able to buy that better quality. So you get the best of both worlds: buying less and thus lesser distractions and simplifying your life, having more money ánd buying better quality products when you do need one. I do this and it gives me a feeling that I can have my cake and eat it, too.

    Buy as little as possible, but make it quality.

  90. lily says 13 October 2009 at 08:07

    i’m so amazed at all of the negative comments here of people raging against the basic idea in this post: simplify.

    this is not a difficult precept to understand. by examining our lives, and letting go of the things that are not necessary, we actually have better lives.

    by imagining we Need things – dance class, cable, iPhone – to be happy, we are missing the whole point of happiness, that it comes from within.

    spend time having a better relationship with your family (free) with your friends (free) educating yourself (free) heightening your spiritual awareness (free) and you’ll begin to see the pointlessness of shopping to fill up your life.

  91. Walter says 13 October 2009 at 15:00

    @ Lily #90

    Most of these readers have obviously taken his ideas literally, as opposed to logically. Sometimes it seems as if they look for something to gripe and moan about.

  92. Gee says 13 October 2009 at 15:42

    For those who think some are nit-picking…

    I think he was being unclear.

    A good discussion on simplicity should help me discern what I need and outline ways to deal with the urge to want things. I think Lucy at 69 has something more insightful to say than this whole article.

    I really believe that seeing your wants, as a want enables you to prioritize them when money is tight.

    I think it is equally foolish to believe everything good in life is free. Lots of great things in life are free or readily accessible. (Technically, for most people, the library is not free. It’s simply something you already pay for through your taxes.) However, not every good in life is free.

    I think it’s very airy-fairy to just say do the free stuff. Seeing my family and friends often is not free. Ever met someone for whom bus fare is a thought out purchase? How many people save all year to travel long distances to see family on the holidays? And sometimes a need and a want are mixed. I need to eat, but I don’t need to eat 12.00 cheese. But I like my 12.00 cheese.

    I wouldn’t mind seeing a discussion of simplicity and wants and needs that deals with how to make these choices and how to make them consistently. Simply telling me to only get what I need is not helpful.

    It’s like telling an over-eater to eat healthy. Not the least bit helpful….

  93. Lily (capital L) says 14 October 2009 at 02:16

    “I think it is equally foolish to believe everything good in life is free …
    I think it’s very airy-fairy to just say do the free stuff”

    Exactly. I love the “live simply” way of life and I don’t live for owning stuff, but I don’t think free and simple are the same thing, the concept is kinda moralistic. lily (the other one at #90) say happiness comes from within. Yes, but I’d add: also by making experiences. A lot of experiences which enrich me are not free. I pay to have a good yoga lesson, to fly to a new country, to watch a good movie (at the theater…) I love walking and running in the park, but there are other experiences I need in my life. I have to pay for some of them – so what?

    In the end each of us have to have their priorities and choose for quality (whatever quality means to them), that’s all.

  94. FinanciallySmart says 14 October 2009 at 11:31

    A very insightful and wonderful blog. When one is able to simplified his/her life then there will be bigger reward and the changes will be financial freedom. Wants, debts and Credit Cards only set us back in life which is not good if we are seeking financial freedom.

  95. GE Miller says 14 October 2009 at 17:29

    6 steps and 1500 words on how to simplify finances seems a bit much. How about ‘spend less than you earn’? 5 words was all that was needed. Leo is an exceptional marketer, but not feeling the personal finance love.

  96. Jurgen says 15 October 2009 at 02:17

    GE Miller, ‘spend less than you earn’ is a good basis but not enough. Even when you spend less than you earn, it might still be that you’re spending money on things or services you don’t really need or don’t give you quality.

    In that case, yes, you’re saving – but not as much as you *could* and still living the life you want.

    Also, for most people, spending less than they earn would not be possible in the first place if they don’t cut out all the expenses for stuff and services they think they need but don’t need at all.

  97. Lucy says 26 October 2009 at 21:13

    FuturShock (#85): When you re-fi, can you get enough to also pay off the Honda? Perhaps a HELOC? Deductible interest!! I made one payment on my Fit and then drew on the Home Equity – 2.95% vs. 8.0% – it’s a great feeling to be paying it off at such a low rate. (And actually hold title.)

    I also suggest that everyone assign Power of Attorney to someone you love and trust. In case something dire happens and it’s actually needed, it’ll probably be too late to get it. Do it NOW.

  98. Mia says 22 November 2009 at 20:34

    Some basic, common sense tips there that so many people nevertheless do not follow. It is so important to buy things in ‘cash’ not credit or other loan (unless it is a mortgage on a house).

    Bills and accounts are such a confusing hassle for me. I’ve automated all of the payments that I can. I keep getting letters from various government departments and banks wanting me to file various returns. And then follow up letters reminding me that I am late and that they will be fining me for it. I am 22, so this is a new stage of my life, I will get my head around it soon – I’ve recently started up a business and all the tax returns etc are totally confusing to me right now.

Leave a reply

Your email address will not be published. Required fields are marked*