Living the Frugal Life

There's hardly enough money left at the end of two weeks to buy a cheap, fast-food burger meal.You've paid your bills: the $240-a-month car payment, the $97 heating bill, rent or mortgage and the $100 Visa installment. There's only a few groceries in the refrigerator, remains of your trip to the store last week. They include brand-name TV dinners, a frozen pizza, egg rolls, hot dogs, individually wrapped American cheese slices, a little milk, soda, instant coffee, a shriveled orange and lots of juice drink in half-gallon cartons. You take home, after taxes, a decent wage for a single person -- about $650 every two weeks. Maybe less.If you're married, be conservative and double that. But it's likely you and your spouse net more than $33,600 each year. None of the food in the fridge looks good to you tonight, so you head to the store and charge to your Visa a roasted chicken and mashed potatoes from the store deli and a roll of chilled chocolate chip cookie dough. Or maybe you go out to dinner with credit card in hand. Or spend that pocket change on a fast-food "meal deal." You order what appears to be the least expensive meals to save money. Or ask your parents if they would mind some dinner company at their house tonight. Just until the next paycheck comes. In two weeks, you're in the same spot, scraping by until the next payday. Where did all the money go?The safest way to double your money is to fold it over once and put it in your pocket. -- Frank McKinney Hubbard (1868--1930)It's been all over the news for the last couple of years -- wages and buying power are down, corporate profits are up and the middle class is shrinking. Fewer family-supporting jobs are available as companies voracious for bigger profits head to cheap-labor countries or lay off workers. It's nearly impossible to save any money from today's meager paychecks. Not so, says Amy Dacyczyn, author of The Tightwad Gazette newsletters and three books by the same title.If you're in a tight financial fix, it's probably because you spend too much on unnecessary things, she says. And if you earn even a conservative paycheck, you have the most powerful tool available to turn your financial status around. No lottery win, Publisher's Clearing House prize or miracle inheritance needed.Having what you want by cutting back on things you deem unnecessary is quaint advice everyone has heard from elders who made do in hard times. What many people don't realize, Dacyczyn says, is the immense financial power they fritter away every time they buy a 60-cent can of soda, a 75-cent bag of potato chips, a $2.99 burger meal, a $4 frozen pizza, a six-pack of pudding cups, a new car every three years, or high-priced children's clothing. Dacyczyn (pronounced 'decision') should know. A spendthrift through college, she married in 1982 with an ardent desire for a large family and house in the country. After years of working, her and her husband's combined savings totaled $1,500 on their wedding day. They had little to show for years of modestly-paid labor: a few sticks of furniture and one car.She and her husband Jim did what many American call impossible. Relying on Jim's Navy annual salary of $30,000 a year, she quit her part-time, $20-per-hour graphic designer job in Boston, became a stay-at-home mom, and called up all the frugal know-how her parents had taught her as a child. Seven years and four children later, the Dacyczyns had saved $49,000 and put a hefty downpayment on a $125,000 farmhouse in rural Leeds, ME, and did it solely on Jim's $30,000 annual salary. And it's not as if they hadn't bought anything in the meantime. They had spent during those seven years $38,000 on major purchases such as cars, furniture and appliances. They did it by assessing what expenses were important to them and which ones were not, then cutting the frivolous spending to the bone. There was no alternative if they were going to afford their dream of raising a big family in the country, Amy says."I learned to spend money on things that have more permanent value," said Dacyczyn. "I spend less money on things that are not permanent." Fancy clothes weren't important, but useful, inexpensive garments were. Yard sales yield the best clothes for a frugal budgeter. The Dacyczyns outfit their children -- six of them since the birth of twins in 1991 -- for about $50 a year, or a remarkable average of $8.33 per child. A time-honed system of buying rummage sale shirts, pants, boots, tennis shoes, dress shoes, snowsuits, hats and mittens, taking hand-me-downs from relatives and organizing the clothes in 39 labeled boxes in the attic makes it possible. Whenever a child needs a shirt or grows out of a pair of pants, Amy opens one of the boxes filled with yard-sale buys. If the old garment is still good, a smaller child gets it.Convenience foods that come in little boxes have no place in the Dacyczyn's food budget. Making the most of their food budget by buying in bulk, investing in a freezer for stored food and learning how to make things from simple, scratch recipes ends up costing the Dacyczyns pennies per serving. Amy spends an astounding $41.53 cents a week to feed a family of eight. It took her a few years to get the bill that low. The cost doesn't pay for gourmet fare, just healthy, home-cooked meals made from her stash of bulk staples, home-canned goods, meat bought on sale and generic brands. "If a meal is reasonably tasty and reasonably nutritious, what more do I need?" Amy writes in The Tightwad Gazette III, the final volume in a trilogy of books filled with tried-and-true, realistic and no-nonsense tactics for frugal living, what Amy calls "black-belt tightwaddery."The third volume, published in December, includes eye-opening advice and facts about what it really costs to raise a child today, staying out of debt, achieving financial independence, a breakdown of what it actually costs you in time and money to shop and cook from scratch, an "unmagical" time-management method, the economics of home canning, decorating your home for nothing, cheap breakfast cereals, conquering picky eating, smart food shopping and dozens of readers' letters and tips. She proves her point by including specific examples and costs.Do not despair your modest, middle-class income, she says in the book's introduction. Instead, stop drowning in your rising expectations and sense of entitlement."The major reason I started the newsletter was that I believed (people could raise a family on a middle-class income)," she writes. "It seemed to me that boomers were victims of their own inflated expectations, not the economy, and if they didn't live so extravagantly and planned better, they could easily afford what they really needed." The same goes for the so-called Generation X that came after the Baby Boomers.Making, instead of buying, things you need usually means simply replacing one action with another, Amy said. Those who assume that cooking from scratch takes too long don't consider how much time and money goes into buying prepared meals instead."I found that I was simply trading one habit with another," she said. "Instead of driving to the store, taking the time to shop and then preparing food every few days or once a week, I bought in bulk, have the ingredients at hand and make the food. Remember, time is money, too."Frugal living tactics are getting Whitewater, WI resident Laura Honan and her husband out of deep debt. A letter from Honan appeared in a "Tightwad Gazette" newsletter and The Tightwad Gazette III. Honan, 38, began using some of the advice in the Gazette out of necessity about six years ago when her husband quit a hated job at IBM to attend law school. The couple ran out of savings in his third year of school, and eventually racked up $35,000 in school loan and credit card debt. "We would start putting everything on our credit card, and that really hurt, but we had no money," she said. After graduation, her husband landed a job making $26,000 a year, $4,000 less than his former IBM job, and one that provided no benefits. The birth of their fifth child four years later spurred the Honans to begin scrimping in earnest.They were able to save by buying food in bulk, cooking from scratch, eliminating most restaurant visits, and buying clothing and nearly all of their furniture at rummage sales. Honan picked up a wood dining room table with four chairs, an upholstered chair and a dresser, all in "very good condition," she says, for $100. The couple spends $350 a month to feed seven people."I still think I spend too much on that, but a friend of mine with two children told me that she and her husband spend $450 a month. So I guess I'm doing OK for seven," she said.They moved from Iowa to Whitewater and eventually saved enough for a downpayment on a home and consolidated their debts in the mortgage. All the credit cards have long since been cut up. They own one new car, which the couple shares during the day. Her husband recently got a new job that pays $40,000 a year, which will help them pay off more bills, she said. She reports no problems in getting her children, ages 2 1/2 to 14, to wear a second-hand wardrobe."I try to explain to them in a positive way that they don't have to buy expensive clothes to be considered good people," she said. "And they haven't really asked for the expensive items yet. (Buying used) clothes saves a ton of money. I can find nice things that other people found in nice stores." Setting a frugal example is the best thing a parent can do to prevent their children from asking for too many expensive things, says Dacyczyn. A parent can avoid pressure from a child to buy a $80 pair of Nike athletic shoes if the parent asserts some authority."I consciously never communicate any value of new over used, so my kids don't pick up on it from me," she said. They accompany her to yard sales, where they can see for themselves how far $1 or $5 can really go. And she never takes them to toy stores when she shops for the rare, new Christmas or birthday present."I see parents walking down the aisles with their kids and I think 'Are they crazy?' She laughs. "That's the worst thing you can do." Her children, who receive money for birthdays, holidays or for doing extra jobs, get no allowances. "I think it's important to link the attainment of money with work," Amy says. They spend their own money on things their parents won't buy.If a child is adamant about having an expensive item anyway, Dacyczyn has some advice. Offer them an amount equal to what you usually spend on their gym shoes, and tell them they must pay for the rest out of their own pocket. "Put the child to the test. If it's important, they'll do it. If they say no, then that tells me that having the item really wasn't that important to them after all."Of her six children, only her 11-year-old daughter occasionally requests new, more expensive things. "She doesn't completely buy into all this, but she put only five things on her Christmas list and she got them all." The Dacyczyns cap their Christmas spending at $30 per child which can include one new item and an armful of rummage sale bargains. "People are horrified when I tell them what I spend and that anyone would even consider giving a used toy to a child for Christmas," she said. "But my children have plenty of toys and clothes and almost always get everything they want on their list." Their lists include items they know their mom can find at yard sales, often in mint condition, such as a 50-cent pair of Fisher Price rollerskates for one girl. The skates cost up to $20 retail. It's difficult to look at a retail sale rack the same way again, once you've paid a quarter or a $1 for a great rummage sale or thrift-shop find, said Whitewater homemaker Honan."Once you get used to paying so little for some nice things, you don't want to spend that money again," she said. "It took me a few years, but there came a point when I looked back and found my outlook had slowly changed." All this from a woman whose mother took her and her siblings to Neiman Marcus once a year for new school clothes, who grew up eating often in fine restaurants and who's parents paid professionals to fix any and all broken appliances."Coming from this environment, I thought frugality meant buying something on sale at a nice retail store," Honan says.Frugal shopping and curbside trash-picking have furnished and clothed Milwaukeean Jennifer Alcorn, 31, for years. Nearly all the furniture in her apartment, including tables, chairs and a couch, was nabbed curbside. Years ago, she picked a small, black-and-white TV out of the garbage and used it until it died a year later."That was our TV, and it worked fine," Alcorn said. "I guess people didn't want it because it was black-and-white." She bought a small, black-and-white TV for $8 at a rummage sale and used it for two years. finally giving it away to friends who still use it. Her best find was an Art Deco-style watch that needed a new crystal and a cleaning. She paid $1 for it at a Milwaukee St. Vincent De Paul thrift shop, paid $35 to fix it up and was astounded when the jeweler told her it was now worth $125.She estimates that she would have spent hundreds if not thousands of dollars on clothes, jewelry, fabric, crafts and furniture had she bought them new. Her thrift hasn't affected all of her or her husband's spending habits, she said."We still go out to eat a lot, at less expensive places, and I know that probably costs us a lot of money, too," Alcorn said. Black-belt tightwaddery isn't always necessary to save money, says New Berlin, WI resident Kathleen Balge. A brown-belt approach sometimes does the trick, depending on the family's goal.Balge, 38, once a subscriber to "The Tightwad Gazette" newsletter, says she found that cooking meals at home, buying some commonly used food in bulk and using a car that has 130,000 miles on the odometer has helped her and her husband, John, save college money for their two children, ages 4 and 8. They don't scrimp on every purchase -- although John uses a simple tactic for making worn windshield wiper blades last "one more season" -- and don't feel they have to. She's willing to spend $8 (regularly $40 new) for a little girl's dress at a resale shop. Both work, John full-time and Kathleen part-time, and have grandparents who take care of their children during the day. She's organized an annual, block rummage sale a few years ago. She doesn't document her buying and spending habits like Dacyczyn does, but knows her frugal ways are making an impact on her pocketbook. "I am now starting to see its effect, because I've noticed I now have less to sell," Balge said. "I think it's because I'm buying less junk now." Managing wants and reducing needs is the key to saving money for what some consider to be unattainable goals, says Dacyczyn. The goal can be anything -- not necessarily a big family, house and nice furniture. An article published in the January issue of Money magazine details most of the Dacyczyns' expenses from last year. Amy found one mistake in the chart, however. The number listed for vehicle maintenance and gas expenses actually includes the amortized costs of buying two cars. The family spent less than $2,200 per person last year according to the figures they gave to Money:*vehicle maintenance, gas, purchase costs $5,250 *groceries $2,640 *utilities $2,500 *medical and vet expenses $1,550 *property taxes $1,400 *auto insurance $1,100 *homeowner's insurance $ 830 *furniture $ 520 *gifts $ 500 *house repairs $ 250 *telephone $ 250 *miscellaneous $ 230 *vacations $ 150 *clothing $ 115 *entertainment $ 100 *hunting, fishing licenses $ 75 *Girl Scout, Boy Scout fees $ 70 *books and magazines $ 50 Total $17,583"I don't expect everyone to live the same way we do or to save money in the same areas we do," Dacyczyn said. "The point of it is that you can take what you need and use what works for you." Those with the greatest power to save the most money are singles and married couples without children."Single people don't realize they are in a prime position to save, as long as they keep their debts low, or pay them off as soon as possible," she said. "When children come along, that ability to save is immensely diminished." It's also a time, just after a single person gets out of school and takes a job, that the discretionary income often gets blown. "I know. I remember what it was like," she said. "I was just out of art school in Boston and you feel sort of sense of entitlement to spend. 'I have this great career. I make so much per hour. I'm entitled to...'" Her thing was movies and Broadway shows. She saw hundreds at full price, dined out all the time, hailed cabs because she had no car. "I spent all my money on temporary things," she said. "And of all those dinners and movies, I can remember maybe five that impressed me." If she could do it all again, she would spend her time and money more wisely, she saidWhitewater resident Honan wants to travel someday. "To me that's more important that having a nice, big house," she said. A few debt-ridden years ago, traveling was a pie-in-the-sky pipedream. Not anymore, she said. It can be as easy as forgoing soda four times a week, hang-drying laundry in the summer, or denying yourself a beverage at a movie or at a vending machine. A case in point: Dacyczyn visited a fast food chain, grocery stores and a movie theater to gauge the price of soda. She found that the price of a liter bottle from a store costs $2.63 per gallon, soda in a six-pack costs $4.28 a gallon and soda from a vending machine costs $6.40 a gallon. A soda, without ice, at a fast food chain cost $7.54 a gallon. Movie theater soda, minus ice, was off the scale, at $14.98 a gallon. Frugality is more than just a means to an economic end, Dacyczyn says. "I'm also concerned about the impact this consumerism has on the environment and on other people around the world," she says. A TV news investigation of child labor in the South Seas hit home one night when they and their 11-year-old daughter, whom Dacyczyn called "my most disgruntled child" when it comes to penny-pinching, were watching TV. "The TV crew followed around a young girl, about the same age as my daughter, as she worked in a factory that made Barbie dolls. I noticed that my daughter was just watching very still and quietly as they showed this other girl go to work early and ride her bike home a couple miles after midnight every day. A reporter asked her if she would like to have a Barbie, and she said 'yes.' Then the reporter asked her if she would be able to afford a Barbie, and she said, 'no.' My daughter was quiet for a while, and we asked her what she thought of that, and she said that maybe we in this country should go back to the way things used to be."Americans' demand for more and more goods puts little girls like that to work in terrible conditions, a point she imparts to her own children, Dacyczyn says. The "Gazette" folded in December after a seven-year run and with a subscriber list that topped 100,000. The first two volumes of the Gazette books have sold 475,000 copies. The Dacyczyns paid off their mortgage recently with the lucrative proceeds from a $12 a year newsletter subscription and earnings from book sales."I prefer the luxury of freedom from a job to the luxury of material goods," Dacyczyn writes in Gazette III. "All along, I have pointed out that both earning and saving money should be a means to an end, not the ends in themselves."There is more wealth, more luxury and more opportunity out there than most people realize, and they have more power than they know to live a more comfortable life doing the things they once thought were unaffordable. "If you doubt it," Dacyczyn says, "sit down and have a long talk with your parents and grandparents."