Frugality

Save Money with Back to School Sales

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One common frugal tip is that you should stock up on an item when it is on sale. Stores are starting to have their back to school sales. This is an excellent time to stock up on school or home office supplies. The large department stores and office supply stores have a variety of merchandise for extremely low prices.

For example, Staples currently has many items free after rebate, Wal-Mart is selling 70 sheet notebooks for .15 cents, and K-Mart is selling Elmer’s glue for .20 cents. That is just a few of the deals available and there will be new ones every week for the next few weeks.

About a decade ago I took advantage of a cheap notebook offer and I haven’t paid for paper yet. During my four years in law school I never purchased any school supplies. I either already had the items needed or was able to get them for free. With a little planning you can stock up on supplies as well and not have to buy them again for years.

Frugality 101: Housing

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Housing is the area where most people can see their most significant savings. Most people live in too big of a house and spend more than necessary on housing. The average U.S. home size has gone from 1400 sq. ft. in 1970 to 2330 sq. ft. in 2004. Granted the average American has gotten larger during that time period too but it isn’t like they are taking up that much more space.

My housing cost has been around $400 the past few years. With a little effort I could reduce that and I probably will before the year is up. I think $400 a month is a reasonable target for your housing expense. It is much easier to do here in the Midwest than in other areas but it is possible in more areas than you would think. My best friend lived in the S.F. Bay area last year and paid $400 a month for a room in a house right by the ocean. Even in some high cost areas you can find reasonably priced housing if you are willing to be a little unconventional.

If you find the $400 amount too constricting you could consider keeping your housing expense at 20% of your income. That would still keep your housing cost below average and should allow you to save a significant percentage of your income.

If you still think it is impossible to do this in your area then you might consider moving to a different location. I’m going to do a separate post on location in regards to frugality.

If you need some ideas on how to lower your housing cost check out “Twelve ways to become rent or mortgage free” at Wise Bread or check out Jacob’s post on living in a RV at Early Retirement Extreme.

Frugality 101: Mindset

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I haven’t written too many “how-to” types of posts on frugality. This is mainly because frugality comes natural to me and I do not put much conscious though into being frugal. People do seem to be interested in how I can live on so little so I’m starting a series on frugality to give everyone an idea of how I do it. You might find some of my ideas a little extreme if so you can adapt these ideas to fit your own needs and still be pretty frugal.

I think the most important thing to change when becoming more frugal is your mindset. You need to get out of the mindset that money is the only way to solve problems and that money is the key to happiness. With a little creative thinking you will find that it is often possible to solve problems without spending money or at least without spending too much money. You will also find that there are plenty of things that make you happy that cost no or very little money. I’ll have specific examples of the most common categories as this series goes on but I think it is best to establish the mindset first.

You also need to be conscious of your spending. Many people buy a meal out, the latest bestseller, or some electronic gadget and don’t give the purchase a second thought. I consciously aware of every purchase I make. I don’t agonize over whether I should a McDonald’s extra value meal or not but I am aware that I am unnecessarily spending money and make a mental note of it. Making occasional small, unnecessary purchases of this sort won’t keep you from being frugal but allowing them to become a habit will.

There are several tools you can use to help develop a frugal mindset. Tomorrow I will post about the best tool for helping you develop a frugal mindset and seeing where you have the most room to become more frugal.

The Crazy Cost of Health Care

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Stethoscope & ophthalmoscope
photo credit: a.drian

The cost of health care seems crazy. I had some lab work done last month and for one lab test I was charged $110. My insurance company decided that a fair amount for this test was $7. My total bill of over $450 was reduced to a total of $50.50. If I wouldn’t have had health insurance I would have been ripped off. This experience makes me wonder if the lab seriously overcharging at $110 or the insurance company is seriously underpaying at $7 or both.

I think that something needs to be done to better the nation’s health care system. I’m not necessarily advocating a nationalized health insurance plan. There would be plenty of drawbacks to such a system. I’m not sure what the answer is. For now, I just plan to keep my health insurance,check out my health care costs ahead of time as much as possible, take better care of myself, and hope for the best. With luck this will keep my health care costs from getting too crazy.

I’m Doing It! Buying a Small House or Van

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Little House
Little House

It has been my dream to buy a small house or a van to live in for quite some time. I’ve never done it though because the circumstances weren’t quite right. Well, sometimes the circumstances were right but I came up with some other excuse because I was afraid to actually take this step.

I’ve decided it is time to actually do this. I’m interested in the house in the picture. It is currently for sale for $15,000 but is already under contract. If the buyers back out I plan to buy it if it doesn’t have any major problems. The house is rather small at 504 sq. ft. and has 1 bedroom and 1 bathroom. That will be big enough for me.

If I can’t buy this house or find a similar deal than I’m going to go ahead and buy a van to live in. This would be a lot cheaper upfront although probably more expensive in the long run. The real estate agent is going to let me know in a couple of weeks if the house becomes available again. In the meantime I’m perusing the real estate listings and vans for sale to find another deal. My goal is to have a house or a van purchased by the end of next month.