In our journey to financial freedom, we face a dilemma. To reach our goals, the math does not lie; we need to either reduce our spending, or increase our income, or both!
We try to increase our income with constant self-improvement and career development. For example, I studied a lot while working full time to pass new reglementary exams which got me sweet promotions and, most recently, got a 15% raise by switching companies. However, the income side of the equation is not unlimited (technically it is, but I will not become CEO anytime soon) nor does it come without a catch. The more income you want to earn, the more hours you need to put in (usually). Even with passive-income projects, the time has to be inputted at one point before you reap the rewards.
Most 6-figure jobs expect you to work a lot of hours and put the job before your family. Even if you have the top job in your firm and you are now earning $1,000/hour, you had to put the time in to get there. People who do not put in the time, whether it is to study, to network, or to prove themselves, simply do not get the top promotions.
Unfortunately, neither of us has a strong desire to put in a lot of time towards our jobs. We work 37.5 hours per week and once we get home, work can wait. We do not bring back work at home and stop thinking about it all together. We are constantly self-improving at work and try to learn things to add to our skill set but aside from little side hustles we enjoy running, we are not aggressively pursuing the dollars.
So this brings us to the other side of the equation; cutting our spending.
We are not cheap, we are frugal. We are prudently saving by consciously thinking about our purchases and try to minimize wasteful spending. This does not mean we do not spend money, we actually spend a lot on things we like a lot.
Inspired by previous Money Challenges, we invite our friends to share their top 5 Frugal, Not Cheap items and we will track all of them for you to get inspired.
Frugal, Not Cheap Challenge!
Our first point on the list is Transport. Unlike some other frugal bloggers, we do not bike to work. Actually, we do not remotely bike enough to even consider it a mode of transportation. We live in the suburbs and work relatively close but still need cars to get around. We own one, small, hatchback car and one, large, SUV.
Our frugal hack here is that we buy used, old, good quality, cars. The secret is to look for reliable cars that match your needs. We did not buy the cheapest cars available on the market since, over the long-term, the maintenance, and repairs (and the hassles) are just not worth it. We bought quality vehicles when they were a few years old and they still have plenty of years to go without any major repairs. Both our cars were purchased around the 5 to 6 years mark and both had roughly 50,000 miles on the meter. For that reason, we paid half price for them, our insurance premiums are lower, and we are losing less to depreciation when the time comes to sell.
We bought quality vehicles when they were a few years old and they still have plenty of years to go without any major repairs. Both our cars were purchased around the 5 to 6 years-old mark and both had roughly 50,000 miles on the meter. For that reason, we paid half price for them, our insurance premiums are lower, and we are losing less to depreciation when the time comes to sell.
Here is a chart of the depreciation of our Honda Fit over the first 5 years. Basically, this is what we saved by buying used!
|Year 1||Year 2||Year 3||Year 4||Year 5||5 Yr Total|
By the end of year 5, we saved over eight grand but the car still runs great, looks great, and never had any issues since. We also have an SUV which we bought about five years ago. It is certainly not a frugal purchase but we buy things that make us happy and this vehicle brings us (and all our gear) to a ton of fun activities we like to do like skiing, biking, hiking, and camping. Having that extra space is worth it for us and we still made a conscious choice when buying this SUV. We got it used, with about 50,000 miles on it and it did not have any major issue since.
|Gas mileage||27 mpg||vs||20 mpg|
|Cargo space||20.6 ft3||vs||78.2 ft3|
Source: Car Sort
Some sports cars have worst mileage than our SUV but we did not this to show off (even if it is pretty nice!). We got it for the weekend trips, for the fun adventures, and for the road trips! The chart above compares the gas mileage and cargo space between our car and SUV. Sometimes, we spend a bit more if it is in line with our needs. If you do need a car, try not to lease or buy brand new and stay away from financing a brand new car purchase. Search through Craigslist or other sell-by-the-owner websites to find a good, used, model that suits your needs and will last years to come.
If you do need a car, try not to lease or buy brand new and stay away from financing a brand new car purchase. Search through Craigslist or other sell-by-the-owner websites to find a good, used, model that suits your needs and will last years to come.
Or next frugal hack comes from a recent Computer purchase we made last week. Anything techno can become a real money-grabber but again, staying conscious about your purchases can greatly help your wallet.
Mrs. Xyz has been working on the same laptop for about 4 years. It worked great for here but recently started to reboot or shutdown by itself. We tried fixing the issue but it seems to be some hardware that disconnects or something. In addition, it is getting pretty slow so it was time for an upgrade. Our tip here is shopping! We compared a dozen sites and compared new versus refurbished options. We ended up getting a refurbished laptop from Best Buy which still comes with a 1-year warranty and our credit card gives us an additional year warranty for free as part of the benefits so we are covered for the next 2 years. In the end, we spent a bit over $400 for the same laptop we wanted at $800 just by buying the refurbished version.
Our tip here is shopping! We compared a dozen sites and compared new versus refurbished options. We ended up getting a refurbished laptop from Best Buy which still comes with a 1-year warranty and our credit card gives us an additional year warranty for free as part of the benefits so we are covered for the next 2 years. In the end, we spent a bit over $400 for the same laptop we wanted at $800 just by buying the refurbished version.
We did not go cheap on this one; we bought a good-quality laptop that will run all our fancy programs easily but we found a frugal way to get what we needed.
Our third point on the list is Travel. We spent over $9,000 on travel last year, it was definitively our largest expense after housing. However, this year, we started travel hacking and now book all our flights through reward points and stay in fancy hotels for free with points. Our travel expenses were cut by 90% with this one simple trick! With the right credit cards, you can accumulate enough points to travel the world for free but remember; always pay your credit card balance in full each month!
Traveling on points is the furthest thing from being cheap. We stay in 4-star hotels, get to use luxurious airport lounges, and fly the world in comfort. But it is certainly frugal! On our latest trip to California, we only spend a few hundred dollars on food but all the rest was free.
Our next frugal move was on Clothing expenses. We do shop for new clothes but again, we shop consciously. If you want affordable new clothing, shop at places like Winners or Marshalls instead of Walmart. You can find great deals on high-quality clothes instead of buying cheaply-made clothing from fast-fashion stores. Buying quality means that you are buying less, consuming less, and polluting less.
We tend to buy outdoors brands such as Patagonia that will last a lifetime and that are timeless. Our latest find was a Patagonia flannel shirt at our local thrift shop for a grand total of $1. That’s right, a $99 shirt for only $1, now that’s frugal!
Lastly, our next tip is to save on your Food expenses. We limit eating out to social activities and do not eat out just out of laziness. Meal planning is an easy way to cut down on restaurants and lower your food expenses. We find the right mix of online stores, grocery stores, and bulk stores to save on groceries.
We found that most household items are cheaper on Amazon and ethnic supermarkets offer the best produce at the lowest prices. We also subscribed to a local, organic farm, food basket that delivers almost all the vegetables we need every week. That is a frugal way to eat very high-quality meals and you will eat a much healthier diet.
Be part of the Frugal, Not Cheap Challenge and share your tips!
Mr. and Mrs. Xyz.
Link 1: Othalafehu
Link 2: Working Optional
Link 3: The Financial Journey Man
Link 4: Kiwi and Keweenaw
Link 5: Physician on FIRE
Link 6: One Percent Decisions