I didn't quite like the negative tone of that article and how it was portraying us when it comes to money matters.
Therefore, I wanted to write something to counter that article by sharing how Mrs. ATM and I save money and there are millions of my fellow Americans who are doing the same and even better.
Internet is full of blogs and stories of such people who have worked their way into financial independence by adopting frugality.
I liked a recent story about Warren Buffet (the billionaire investor) where he took his friend Bill Gates (the richest guy in the world) to McDonalds and used coupons to buy their meals. He is not cheap, he is smart in applying the concept of 'value buying' to everything he purchases.
Anyway, I can only speak for myself and my family, so I will share how we have saved money over the years and continue to do so by following simple common sense approaches to money management and spending. BTW, we don't do budgets.
We use an approach that starts with having a mindset and a strong desire to do something to change our life while applying simple and common sense ideas that work long-term and without making us feel as if we are missing out on life.
In this post, I am going to mostly share those simple and common sense ideas that we have implemented in our life to get to where we are today with regards to saving money and being financially independent.
We spend more on Needs vs. Wants
We like to focus more on needs than the things we want. This means we only buy items we need to live a comfortable life while limiting spending on things that don't add much value in our lives.
Even when we get the urge to buy some new gadget or a new car or that new super high definition TV, we ask ourselves - Do we really need it? Would it make us happy long-term or make our life better? If the answer is 'No' then we don't buy it regardless of how enticing the item may be.
I know it's hard and requires discipline, especially when you see your co-workers, friends and extended family spending money on fancy things and big vacations.
You have to tell yourself that you can buy all those things and more but you choose not to because you are taking a long-term approach and one day you can have all those things and more and will actually able to enjoy them more because you would be able to afford them outright; unlike many people who buy things now for instant gratification using credit/loans which they can't afford and can lead to financial problems and ruins in the future.
By focusing on what we need vs. want has allowed us to live with everything that we need to live a comfortable life while preventing us from wasting money on things that may add no long-term value in our lives.
We don't like wasting food
We absolutely hate wasting food. When we go for grocery shopping, we try to buy items that we like to eat. We make a list of foods we like to eat and try to stick to it when we go shopping.
Every once in a while we may try a new brand or a new type of food, but we try not to overdo the exploration and instead stick to what we like and need. Many stores do offer samples which we love to try before deciding if we actually want to buy that item.
We also try to stick to a single brand item that we like. For example, we only buy one type of cheese that both of us like. We may change it to some other brand in the future but it would still be only one type.
We go grocery shopping once a week and like to buy enough to last us the entire week. This helps reduce additional trips to the store, which saves us in gas and time while limiting a risk of over buying.
We like to take advantage of store memberships as they help save us money. We don't buy items just because they are on sale. Stores like Costco are useful as we can buy items in bulk such as bread and freeze it while only eating what we need.
Stores like Target and Whole Foods have online Apps that are very handy to use and replace old paper coupons. The Target App "CartWheel" even allows you to scan an item on the shelf and see if it is on sale. We love using those apps.
By end of the week, our fridge is usually near empty. If there is an item we didn't eat much or didn't like, we make a note of that and avoid buying it next time we are shopping.
We are Mindful of Spending
We don't like to make budget for daily or monthly expenses. It's too cumbersome and in most cases doesn't work. I think of budgeting for daily spending as dieting to lose weight. They don't work long-term for most people.
People get excited about making elaborate budgets to control their spending, but truth is not many can follow their own budget for a long-time. And similar to dieting, when budgets fail, there is a big rebound and all the savings are lost.
What works for us is to be mindful of weekly spending by tracking all our spending to make sure we are not over spending in any given area. Also, knowing what we need vs. what we want ahead of time helps us stay on track and prevent us from impulse buying.
Don't be penny wise and pound foolish
I've seen people complain how tight money is and bring lunch to work everyday to save a few bucks, but then I see the very same people driving in fancy cars and taking loans to buy a house they can't afford.
I would rather spend a few bucks to buy that lunch at work or have a morning latte if it makes my day go better than spend big bucks on that new car and a house that will make me feel poor later.
Small little pleasures in life normally don't cost much (some are even free) and can add more value and happiness in ones life than big and expensive shinny things.
We don't buy luxury items or brands
I can't remember the last time we bought a luxury item. I don't think we even own one.
For us, luxury is to be experienced and not owned. In other words, we would pay to have a luxury experience for a short period of time such as on a vacation, instead of owning it.
No vacation home for us. Why buy a vacation home that we would have to maintain year long whether we stay there or not? Why pay someone to maintain it while we can't be there all the time? Besides, we don't like to go to vacation at one spot, we like to see different places, it doesn't make sense for us to own a vacation home.
Instead, I would rather rent a cabin or a house, even a luxury one in some exotic place for a week or two. Just pay for what we use and have no long-term commitment. That's how we like it.
We don't have to have the latest greatest gadgets
We don't have to have the latest version of iPhone, neither do we need that Ultra-High Definition TV. Our old iPhones are working just fine and would be good for another 2-3 years. Our six year old TV is still more than enough.
Our computers are few years old and powerful enough to tackle whatever we throw at them, no need to go and buy a new computer or laptop. Being a computer engineer, I can build my own computer or fix them if I need to.
We never pay credit card interest or bank fees
Banks already make money off our money that we have deposited with them and the transaction fees they earn from merchants every time we use our credit cards, so why should we pay them additional service charge or interest? They should be paying us some cash back.
We use credit card for all of our monthly expenses, it allows us to track expenses easily while earn points from the credit card company. I use the points to pay for entertainment.
We get all the great offers in the mail for shiny new credit cards, but we toss them all into the shredder. We don't want to signup for a new credit card just to earn some new introductory points as there is always a catch in terms of annual fee or some other fees that the credit card companies hope the customer will run into.
The key to keeping good finances is simplicity and being able to track ones finances. Too many cards, loans, this and that is simply too much to manage and will likely lead to missing payments and hefty fees down the road.
Banks are waiting for you to take a misstep, so they can slap you with a big fees. Don't give them that chance.
We track our expenses regularly
I use Quicken to track and manage personal finances on weekly basis. Even though we don't use budget, it is still a good idea to track expenses and be aware of where money is going.
Quicken is not free but I like it. I have been using it since 1997 after I got my first job. I was always obsessed about tracking my expenses and Quicken was way ahead of any other software at the time.
I also use Quicken to manage my investments. It's a good and streamlined way to aggregate all accounts into one place.
Personal Capital is another software which is available for free. It's a cloud/online only application that you can signup to use for free. But again, there is probably some catch. Though, I have heard good things about it, so may not hurt to give it a try.
As for me, I would stick to what I like which is Quicken.
We negotiate for better deals
We don't like to overpay for anything. Six months ago, I called my long-term insurance company and told them I am getting tired of them raising my rates every six months and I haven't had any claims in years. Therefore, I am going to dump them unless they give me a better deal. They responded with lowering my auto insurance.
After six months they tried to raise the premiums again, I told them I am going to leave and I did leave to prove that I wasn't bluffing. I found a way better deal with Geico, saving close to $900 a year on auto insurance.
My old insurance company got the message and they promptly reduced my home insurance, so I don't completely leave them.
The insurance companies want you to buy all of your insurance from them so that it would be difficult for you to leave them. They would give you multi-car discounts etc. to make you feel that you are saving money, but in reality you may be losing money by paying high premiums and not shopping around.
In today's day and age, it takes only 5 minutes to get a quote online and another 10 minutes to get a new insurance that could be way cheaper and better than what you have now.
We keep exceptional credit score
Even though we don't need credit, we like to maintain an exceptional credit score by being very responsible with our money. This means paying credit card balances on-time and in full. We don't have a mortgage or any type of consumer loan.
|My Credit Score|
A good credit score helps when buying big items as it shows the lending bank that you are a responsible person who pays his/her bills on-time and are not in a debt hole. Having a good credit score would likely qualify you for better rates and deals while getting a better treatment on existing services.
When looking for a new job, an employer may even check your credit score to determine whether you are a responsible person or not.
How we treat money reflects on us in a very personal way and says a lot to others about the type of person we are.
Well, I hope you got something useful out of this blog entry. Like I said, we are not budget crazy people nor do we think of ourselves as cheap. We are simply mindful of our finances and spend according to what we need and seldom what we want. This approach has worked for us for a long-time and has helped us live a financially worry free life.