As usual, when I start to write a post about budgeting every month, I think why do I do it?
Why don’t I just delete the whole category of “budgeting” and save myself the trouble.
They’re the least read posts (trust me, thanks to Google Analytics, I can tell), they’re not sexy or pretty to look at – and I’m saying this. Me. The person who’s writing this stuff.
While this all may be true, budgeting is the most important category and here’s why: You can buy a shirt used (vs new) and get the benefit of saving money on that shirt but the real savings, or “How Finances Figure in Frugality”, are the behind the scenes benefits of frugal living. Dollar for dollar these far outweigh the effort or savings of that shirt you just bought and there’s no social stigma.
These are some big items that payoff frugally but are not what first comes to mind when you think of “frugal living”…
How Finances Figure in Frugality
Health insurance
Don’t be fooled. It can be expensive, even if your employer contributes toward the premium. If you’re healthy, consider purchasing an individual policy. Our individual policy may be considered “catastrophic coverage” to some but if you’re healthy, take care of yourself, and exercise, how many times a year are you going to the doctor? If you’ve lost your job think twice before signing up for COBRA. In most cases, it’s much less expensive to get an individual policy for you and/or your family. What about dental insurance? Even our dentist told us it’s not worth purchasing it if you have good home care. Why? Because the cost of the insurance is going to be more than just paying as you go.
Mortgage
If you want to buy a house, make sure to put enough money down so you don’t have to pay PMI (private mortgage insurance) and get some skin in the game! If you can’t afford 20% down for a down payment then maybe you’re buying more house than you can afford. You don’t have to listen to the bank. When they say, “You can afford this much house”, think long and hard about it. Purchase a house for less than the amount the bank says you can afford. Every month, you’ll be thankful.
Credit Cards
Pay off your balance each month or don’t use one. Simple. Live within your means. If you do use a credit card, review your statements! Yes, I’m yelling! Check your receipts against your statement every month. Come into contact with what you have spent. It only takes a few minutes to do this but you need to make sure no mistakes were made, no double charges, and all credits are accounted for. Bring it with you on an errand while you have to wait. I do it during piano lessons (before I doze off in the chair…).
Cable TV
Come on, now. Really, do you really need this? Don’t be a spectator in life and waste time in front of the TV. It’s expensive so don’t pay for it. Must see a show? Get it from your library. You might also pick up a book or two on investing or budgeting while you’re there. I can honestly say I have no idea who “Snooki” is and couldn’t pick her out of line up if I had to. Yes, friends, that’s all thanks to no cable TV.
There you go. These are a few of the big things that can provide substantial savings in your life. Being frugal is about the small and large things and the great thing about it is the more you do it, the more you realize the benefits, the easier it gets.
What’s part of your big picture? Do you get caught up in the little things?
Go Gingham related links:
Tried and true investing strategies – a question asked by Annie!
Just balance that checkbook! You can do it!
Debt – you decide on the level you’re comfortable with
What does it mean to budget? Find out here
Frugal living is the key to saving
The problem with budgeting – yes, the problem!
How finances figure in frugality
How to save money on your smart phone bills – great tips from readers!
Go Gingham 
Right on, Sara! I am totally with you, and I love to read your posts about budgeting. Just yesterday I took my daughter to Goodwill and we shopped for pajamas. I got 4 pairs of pajama pants and 1 top for $14.
Your first item regarding health insurance intrigues me and is the only one I currently don’t do. My husband’s insurance is free for him (through his employer), but I pay for myself and my daughter through my employer’s plan – over $300/month for vision/medical, and $30/month for dental! I am not sure how this compares to what I would pay for “individual catastrophic coverage”. Because we are healthy and have no medications, I can’t help but think we could save some $$ here.
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Hi Liana and thank you for the thumbs up!! Check out LifeWise – that’s who we use and they’re a local company for you. And, please send me some pictures of your daughter in those PJs…I’d love to see them! Happy Thanksgiving to you and your family.
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Budget is the word no one wants to hear. A few friends and some relatives will constantly be “too broke” and wonder how much I must be making since I never complain about not having enough money at the end of a pay cycle (and I’m only paid once a month).
I tell them quite honestly that I have and keep a budget which includes paying into my savings first and then acting as if it isn’t there. No dipping in for a new shirt, a gallon of milk, etc. That is there for long term goals and rainy days.
My Mum was shocked when I bought a much smaller house than the bank said I could afford, co-workers talk about their new cars as I drive my 10 year old corolla, being frugal is about the big to the small, always ensuring enough by knowing when to say yes and when to say no. I’m glad that self discipline is coming back in style though.
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Hi Indigo,
You’re smart to pay your savings account first. I think most people contribute there last and with whatever might be leftover. Well done on buying a smaller house than what the bank told you was affordable for you. The banks aren’t setting our budgets – we are – and it’s much wiser to take on a monthly payment that is affordable rather than being “house poor.” Thanks for leaving a comment!
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I read the whole thing! Nice job, as always.
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Thanks Erin! You’re the best! Hope you had a great Thanksgiving.
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Nice time to re-post my video on understanding your credit…having a 760+ beacon will save you money when you do have to borrow.
Another trick…you may have the juice to make the mortgage payment, just not the down payment. In that case, take out two (PMSI) mortgages, one for 80% and one for 17%, putting 3% down. This keeps you from owing PMI because no one lender is extending you >80% loan-to-value (ltv).
Tip your waitress, I will be here all week…I got more…maybe you should interview me? Hahaha!
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Hi Peter,
You’re right and here is your link:
It’s excellent and very helpful.
Thanks for leaving a comment…
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Credit cards are evil. No, really. Even if you do pay it in full each month AND get miles (or whatever) for each dollar you buy on it, the evil could be on the other side of the transaction…
Local merchants (local=your neighbor) eat that 3% transaction charge with each purchase. So when you are merchanting low margin goods, that 3% ends up turning into death-by-a-thousand-cuts.
Liana and I have started using cash (that green paper money stuff) to transact our local purchases. Who knew the $2 bill was such a conversation starter and twice as easy to carry than the $1?
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You are so right about the $2 bill!! While I see your point about the fees, we do use our credit card for almost every purchase because it’s how we track our expenses. We do pay our credit card off every single month and rarely have cash on hand. Yes, I have burned by this! Other countries, the Netherlands in particular, deal with the merchant fees differently than we do here. Many merchants simply don’t accept credit cards. Something for us to consider…
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