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.

June 2009 Goal Review

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F-side
photo credit: FLY2005
It is the last Sunday of the month and time once again for the monthly goal review.

My first goal is to increase my passive income. I didn’t make any progress on this goal. I looked at buying a rental property but that didn’t happen. I have a different house I’m looking at buying now. I might buy another dividend stock next month but I’m holding off until I see what happens with the possible house purchase. If I’m able to buy the house I’ll consider this goal met for the year. If not then I’ll need to come up with some other ideas.

My second goal is to lose 30 pounds. I went backwards on this one. My weight went from 218.8 pounds last month to 220.4 pounds this month. I went the first half of the month without eating any extra fast food meals or drinking Dr Pepper. That resulted in no weight loss so I decided “screw it” and resumed indulging in fast food and Dr Pepper. That quickly led to weight gain.

I’ve lost some of that weight being in-house for the study. When I have limited choices in what to eat I don’t eat very much. I’m not hungry either although I’m craving a burger. This is only day 4 of 9; I’ll probably really be craving one by the time I get out of here.

Despite my lack of progress I still think I can get down to 180 pounds by the end of the year. This is because I’m going to spend a month hiking and three months living in Guatemala. In my previous hiking experiences I’ve always lost about 10 pounds a month. Hiking 15 miles a day with 30 pounds on your back and only the food you are carrying to eat does work well for losing weight. I lose the 10 pounds a month even though I pig out when I make a town stop while hiking. This isn’t a good long term weight-loss strategy though because when you quit hiking your appetite will remain although you are no longer burning the calories. This causes the weight to come back rapidly.

I also have averaged losing 10 pounds a month when I’ve lived in Guatemala. This was without even trying. I attribute it to walking everywhere and having less fast food and soda. When I first lived there they didn’t have any American fast food places. They just had Pollo Campero. The last time I visited they had a McDonald’s and that has been nine years ago so there might be more chains now. That might make losing the weight a little more difficult but I still think it will happen.

My last goal was to increase my RSS subscriber count to 500. I made progress on that goal this month. I finally went over the 400 subscriber mark and had a high mark of 409 subscribers. I’m not sure if I can improve on that in July because I will be traveling half the month. I’ll need to do more to promote this site to reach the 500 subscriber mark by the end of the year.

I only made progress on one of my three goals this month. I still think I have a good plan to meet these goals by the end of the year. I’ll keep checking in each month to make sure I don’t stray too far from my plans.

Medical Study Update

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My new Guinea Pig!
photo credit: j.reed

I checked in today for a nine-day stay at the clinic that is conducting my medical study. It has been easy money so far but having to stay in-house for nine days will be a drag. Considering the money I am getting paid I won’t complain too much. We have tons of free time which is generally spent on the Internet, watching TV or reading.

I was hoping to get a lot of work done on the Internet while I was here. Unfortunately, their wi-fi Internet here sucks. It has been out most of the day and when it is working the speed reminds me of the old dial-up days. If the connection doesn’t improve I might be posting sporadically over the next nine days. I will make sure I get on tomorrow to draw the winner of the Amazon $5 gift card giveaway.

Should You Concentrate or Diversify your Income Sources?

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I had a challenge for myself this month to do something different every day to make extra income. I haven’t been able to come up with that many different ways to make extra income but I have had some insights based on my experience so far.

Most of the things I’ve done to make extra money don’t pay much and don’t have much potential to make significant money. These things just take time away from other projects that have better prospects. For example, I already belong to a survey site so I might do an occasional survey for an extra $3 if I have extra time but I don’t think it is worth my time to pursue more survey opportunities. I only have so much time and mental energy available and it is best to spend that on projects that have better income potential.

Also I can see a possibility of getting bogged down by looking at all the different ways to make money that are out there. You might spend so much time trying to find the best way to make money that you never get started. Or you might try to develop several ways of making money at once which will probably lead to inferior results. This is because you don’t spend enough time on any one of them to improve your skills and become better. This is where the jack of all trades, master of none analogy applies. I think the better income potential would be in concentrating your efforts on just a couple of projects.

My main focus now is going to be on improving my blogs and websites. My secondary focus will be on working on my writing and selling it. This should work well since my secondary focus complements my primary focus. If I think of another income source that would fit with these two I might add it as well.

I’ll still have some other income streams that take a minimal amount of time and mental energy (i.e. interest,dividends, cashback).

Let me know what you think.

Freelance Checklist

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076
photo credit: danielbrezina.com

I was pretty amazed by the response I received to yesterday’s response. I feel like I’ve written a post just responding to all the comments. I really appreciate all the support.

In a fortuitous coincidence Trent at The Simple Dollar had a post today on “15 Things to do to Make Jumping into Freelancing/Self-Employment Financially Successful.” Let’s see how I’m doing on his list.

  • Learn to live on less.
    I’ve been doing this for a long time and live on much less than the average American. I plan to significantly reduce my expenses below my current level in the next couple of months.

  • Create a budget both personal and business.
    I don’t keep an actual budget. I do track all of my income and expenses and know where my money goes. I also have a target amount that I try to keep my monthly expenses under. My business expenses are minimal and should stay that way. I don’t think I’d benefit from doing a budget currently. If my circumstances change to where I think a budget would be of benefit then I’d start keeping a budget.
  • Build up a big emergency fund.
    I have about two years of expenses in savings. I think that qualifies as a big emergency fund.
  • Now make it bigger.
    Well, I’ll be adding a little more to it as my study money comes in. I think my emergency fund is quite big enough. If I do happen to make some surplus money though I’ll keep adding to the emergency fund.
  • Start reaching out to your audience and client base now.
    This step is partially done. This blog counts as reaching out to my target audience but I could do more to expand its reach. Also, I need to work on reaching people on Twitter and sites other than my blog.
  • Eliminate as many regular bills as you can.
    This is normal for me. I will be reducing my bills even further in the next couple of months.
  • Write a business plan.
    I haven’t done this. I do need to come up with a more detailed plan but I’m not sure if I need an actual business plan for what I’m doing.
  • Now rewrite the business plan.
    My thoughts on this are the same as my thoughts on the step above.
  • Find a mentor.
    That could be helpful. I do get advice from my readers and other bloggers. It should seek out advice more often.
  • Make it easy for people to see the good stuff you can do.
    I plan to make money mostly from my writing and anyone can see my writing right here.
  • Communicate,Communicate,Communicate.
    This is one I need to do a lot of work on. I rarely tell people about my blog in real life and don’t do a lot to promote it online either. I need to change that.
  • Build connections with local small business/entrepreneurship groups.
    I read a lot of blogs that are focused on what I want to do but I’m not involved with any local groups.
  • Have a place where you can focus on work – and only work.
    I need to do this. I get easily distracted from my work right now.
  • Build your current bridges as strong as you can – and don’t burn them when you leave.
    I’m not sure if I have any current bridges but anyway I won’t burn any bridges.
  • Practice,Practice,Practice.
    I’m working on that and by its nature it is something I will always continue to work on.

    • Overall, I think I’m doing pretty well on this checklist. My main focus is going to be coming up with a more detailed plan of how I’m going to make my money. In addition to that I should work on my networking/communication but I’ll need to somewhat overcome my introversion to be successful at that.