My goal with starting this blog was to hold myself accountable for getting out of debt. When that goal was reached I could track building my wealth.
Frugal to Survive
So, for the past couple years my frugal way of thinking was led by a need to survive or scrimp to pay off debt. Being mindfully frugal allowed me to save money that was redirected to paying down my debt faster. I sold some of my stuff on eBay and Craiglist so I could just stick to my budget and to find some wiggle room from living paycheck to paycheck.
The 3 Tips to Paying off Debt:
- Create a Budget
Getting out of debt requires a plan. Creating a budget is your roadmap to a debt free life.
- Live Below Your MeansMost people give up on their budgets within two months because they find it hard to acclimate to living within plan and/or it’s boring. No one said it would be fun.
Don’t become a sorry statistic, before giving up on your budget consider a few things. One, reevaluate your budget to see if you strapped yourself too thin; make a bit of wiggle room (yes, you still need to eat). Two, find some frugal blogs to discover small ways to save big (like packing your lunch for work). Three, come to the realization you need to hustle some side jobs for extra cash to help dig you out of your debt trap.
- Create an Emergency Fund and Snowball your DebtUse Dave Ramsey’s 7 Baby Steps to get the personal finances in order. The first two steps are key when climbing out of debt.
Currency (getcurrency.com), a service of American Express. Check out my recent articles, 6 Tips on Eating Out With Kids and Staying Sane, Don’t Wait Another Day to Plan Your Retirement. Trust Me., and Setting Up Your First Budget.
Frugal to be Rich
Although, I still have debt my way of thinking is slowy evolving into frugal to be rich. Which is ironic because I wanted to be rich and spend lavishly – like Hollywood show, Lifestyles of The Rich and Famous.
Now, I find myself being mindfully frugally so that I can maximize my retirement account or put more cash into my savings account.
I can see it now, pitching a show called, The Lifestyles of the Thrifty Millionaires. You think Hollywood swoop up my idea? Not likely. 😉
You see, becoming a millionaire recycles The 3 Tips for Paying off Debt and takes it a few steps father.
Here are 5 Tips to Become a Millionaire:
- Create a Financial PlanNot only is creating a budget a road map for a debt free life, its also a road map for creating wealth. Now is a good time to add annual goals, too. Some goals to include are financial goals for 5, 10, and 20 years ahead; like saving for a house or being able to pay the children’s college tuition.
- Live Below your Means (Frugal)Don’t give up on frugality now! Just because you have money to spend doesn’t mean you need to start buying designer clothes or a big flashy house. To continue living below your means creating extra cash flow to save.
- SaveThere is no secret here if you want to build a million dollars you need to save. By making more money than you consume, allows you to put the remainder sum into a high interest savings account or investment vehicle. I wonder if I’ll become a stingy saver like multi-billionaire Walmart founder, Sam Walton. He drives a 15-year old truck.
- Make you Money Work for You (Invest)Time to put that hard earned money to work for you. Open an investment account and diversify those stocks. You can commonly expect returns up to 10 percent on investments held for the long term.
- Consider Starting your Own BusinessWhile it’s possible to become a millionaire by working full-time for someone else, there is more wealth to be earned becoming an entrepreneur.
Thomas J. Stanley, author of The Millionaire Next Door, found that two-thirds of the millionaires are self-employed, with 75 percent of them entrepreneurs.
Paradigm Shift
I am on this total frugal kick right now. Bare with me as I spill my frugal thoughts into my posts. I have been doing things like washing out my Ziploc bags, washing my clothes in cold, cooking with more whole foods, borrowing movies from my friends and drinking tea or water with my meals.
This paradigm shift from frugal to survive to frugal to be rich is a nice change. It is fun knowing I saved $3 by making coffee from home versus buying it at my local coffee shop. And now that I can stretch my money arms, I am beginning to combine the steps towards reaching my goal to becoming wealthy. Steps like being frugal to save money to invest into starting my own business.
Frugality by itself will not make you rich, but by consuming less you are creating more to save. By making the steps work together you can reach your goal towards becoming debt free or building wealth. Please, do not give up on your financial goals! I know reaching them will be completely worth the hard work!
(photo credit: r.i.c.h. via Flickr)
I like this post. We have recently become debt free (except for the house) and saved up our 6 month emergency fund. Now I find it is becoming more difficult for me to stay frugal. It is so easy to slip into a sense of “we don’t have to skrimp like that anymore” – when the reality is that we do! I like the idea of frugal to be rich. Thanks for the post! 🙂
Congratulations on becoming debt free, Jennifer!!
Hope you reach your goal of frugal to be rich!
Thanks, Jennifer. Congrats on becoming debt free and having a 6m emergency fund! That is awesome. Have you put in an interview request with Brad from Enemy of Debt. He loves to feature people that are debt free (and I love reading them). 🙂
You are welcome for the post. I’ve noticed through this journey that you also need to enjoy your money, too. That it is okay to take a breather in between goals as a kind of reward. It’s like being on a diet and not getting chocolate cake! You need to reward yourself. Just make sure to stay on track.
Do you and your husband plan on accelerating the mortgage payments now? If you need help with your next moves, check out Dave Ramsey’s 7 baby steps. 🙂
It is a wonderful thing that you have done and your frugal habits will only help you along the way as you move forward! I think that once we start being frugal, we realize that we can be happy without being over the top. So many things can be acquired cost effectively and there are so many other things that we just do not need. And with that mindset, it is amazing how your cost of living declines and you have more left over at the end of the month. Stay frugal and stay happy.
I think not watching TV ads, throwing away the ads immediately after they come in my mail, and not driving around looking to be tempted helps alot in keeping the spending at bay. I also think many people shop because they get bored. Its something to do. It makes for a good time to pick up a hobby – I have done some gardening, crocheting, making halloween decorations with my daughter .
I like that, “Stay frugal and stay happy”. 🙂 Thanks!
What a great post. I love the paradigm shift between surviving and being rich. I would add don’t be afraid to dream to your list.
Thanks, Jenna! Great addition as its quite fun to dream. Now that survival is becoming rich, there is a possibility of making those dreams a reality. 😉
I would say number 2 is probably the hardest for most people, because they want it all and they want it…yesterday! No waiting, no saving for it, give it to me now.
In other words – debt. I have some ways to go myself before I can be where I want to be, but one thing I will never do again (as long as I live) is splurge when I don’t have it to splurge.
If most could get the “living below your means” thing, this world would be a vastly different place. Great tips!
Yes, I agree with #2. And as an individual we are solely not to blame. Media plays a big part in us wanting things now. There is a whole science, psychology to media – they know how to play on our wants and desires. So, as an individual – and it helps alot – throw away the mail ads immediately, skip the ones on TV & internet, and so forth.
I am not where I want to be yet either, but getting a taste of it, I know that I want more and will not put my self in this credit card debt situation again.
I like where this is going… except washing Ziploc bags? I do feel guilty throwing away such a useful thing after only one time (light usage) 🙁
Once you start eating home, you realize how ridiculously overpriced restaurants can be.
Hope it’s going all well for you, Christine.
Haha. I don’t think washing Ziploc bags will save me money, but I think its just the practice of being frugal. I feel so guilty for throwing away lightly used bags, too. That’s why I am trying to reuse them a few more times. 😉
Not only that… I love the food way better eating at home. Unless I was fine dining everytime I went out, than I might have a different perspective.
Everything is great, Moon. I hope all your niche sights are looking up! I really enjoyed your market samurai post. Kudos! Keep up the great work.
Good post! I really want to read that book millionaire next door. I just checked it out from th library. There are so many small ways for us to make money thy will eventually put us in a place to become millionaires. Thanks for all the good insights.
Hey Bruce, Thanks! Glad you checked it out, because it is a cool book. Your wife would probably dig the Millionaire Women Next Door. Charity seems to separate us women from men in the finance department. Let me know if you enjoyed the book. 😉
Glad you’re blogging. See you soon!
Ill keep you posted on the book and Ill look into the Millionaire Women next door as well.
Great post Christine…’Frugal to be rich’ I like it!
Hi Laura, Hope the break treated you well (the vacation sounded nice). Frugal to be rich – who would of thunk? 😉 So much for the Armani of Beverly Hills attitude. LOL. Does have a nice ring.
I think a lot of quirky behaviors frugal to be rich people have are good ones to practice as well. I also think that perhaps so many millionaries are entrepeneurs is because when you work for yourself you’re probably more passionate and more likely to like what you’re doing. That’s why I would like to become my own boss. 🙂
I’m trying to become my own boss and things are looking up. Lets see how much of full-time work plus entrepreneurship I can take before I dwindle down needing to pick just one so I don’t crack under pressure. 😉
My kids are going to think of me as the Scrooge if I become rich, because as most kids, they have the posh vision in their minds.
I just read a story about a bus driver on no more than $75K ending up with $3m in his investment portfolio. Love stories like these. Just goes to show its very possible for everyone to hit millionaire status but you need to be disciplined with perseverance.
I found it was much, much easier to save when I connected it to something like you’re doing. For me it was financial independence, so it became easy to make spending decisions – that $100 worth of books – or a day off in retirement? I didn’t scrimp on the really fun stuff that I wanted badly though, I bought the RV before hitting FI for example. I can see you building that mansion in your mind now – which is an awesome goal – hope you invite me to visit! 🙂
You know, one of these days I am going to do a roundtable discussion blog post with you and Jacob (ERE). I want to know how you balance such choices from being frugal to buying that RV of yours (I really want one, too). I assume it would be putting more thought into purchases and buying the best for your money. Like buying the generic brand of vodka versus a good bottle. 😉
Oh no! Jacob wouldn’t approve of (most of) my spending choices! Or my liking to work probably. Different strokes, he’s an introvert and I’m more of a mid-range extrovert – extroverts generally need more stimulation – new places, socializing, entertainment… If I don’t get that in one way or the other, I get depressed. Shopping used to give me that distraction so I just had to find free or cheaper ways to get it without doing that. I’m still figuring out what’s important to me too (for example, the house cleaners are STAYING in the budget – forever! In fact I was thinking of offering one free room and board for a bit of cleaning – my very own non-gay “wife”.) 😛
To be honest, the RV was an easy decision because at the time, I could have sold it up here and made 40% profit just from transporting it up. Most people don’t want to go through the hassle of cross-border shopping vehicles – or even know that it’s possible. Their loss. I cut my spending to the bone for 6 months to buy that thing and don’t regret it at all.
For me, I think the RV symbolizes freedom and total independence (and never being homeless). 😛 Next year when I sell my house, guess what I’ll be living (and traveling) in for the summer? Not just over a month like this past year – it’ll be 2-3 months. Plus I’d wanted to be able to do a month down south over Xmas, but I don’t think that’s going to fly this winter. Maybe next year… But I do think I might be able to swing the month of April in 2011.
LOL. Now I really want to have a round table discussion. All the more interesting for debate. 😉
Hey, I understand the ‘wife’ concept. In fact, Erica.biz was just asking for one, too. LOL. And Loral Langemeier form Live Out Loud, she agrees having a ‘wife’ gives us the freedom to make more money. I’m on your side. I think its a great idea.
I am glad you brought up the extrovert, because I am the same way – need some excitement in my life from becoming stalemate. Glad to know I can still do it and become FI.
With your travels, I will enjoy to see how the kids enjoy it. Its something I’ve consider doing with my own kids.
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Excellent. My 12yr old daughter remarks I’m cheap. Last supermarket visit I scored 25 cans of soup, retail 64.75, for just $5. I told her what I just saved bought her the dress her mom picked up the night before, a $150 retail that was $60 after a discount and Macy’s coupon.
Very few people will ever get rich while spending more than they earn. So when you do the math, and put that 20% aside, you then need to do what it takes to budget what’s left. We save north of 30%, but I make what’s left go a long way.
“Frugal to be Rich” – I like that phrase.
Dang. That’s a great deal you received on the soup! And the dress. 😉 I think I need to pick up some tips from you. I notice because I started my personal finance mission early on with my daughter, she is starting to pick up good financial habits (she is 10). My 16 yr old… well, that is another story. I almost feel I should send him out like father did in Richest Man in Babylon – and hope it works.
Maybe that is what I need PDITF to put on one of his shirts – Frugal to be Rich – I agree it has a nice tone! Have a great Halloween weekend!
Cooking with whole foods is insurance for your health and leads to less sickness and disease. That is definitely a good choice regardless of your income bracket. But, your tips on how to become a millionaire are spot on.