Frugal Journey

I don't write a whole lot about frugality here in my blog. The main reason being that if I were to write about frugality, it might sound like a post on "How to spend excessive money on groceries" or something like that. And that is becasue frugality and the measure of it means different things to different people. These days sleep is a little elusive for me and I was thinking about it and what it means to me and what I learned since I started on this journey.

I was never a great spender to begin with. When you have to live on $600 a month, with a very real possibility of no income over the summer, frugality comes naturally. Especially if you are aspiring to graduate with no debt. Although I never spent inordinately after I started working, I never thought much about any of my purchases either. I might shop around a little bit, but that was about it. I never questioned the necessity or the long term value much. I believe that after graduating school, where I denied myself a lot of things, I felt a sense of entitlement. Today when I clean the cupboards, I come across a lot of those "entitlement posessions," which now serves the sole purpose of creating clutter and getting on my nerves.

When I started blog-reading in 2006, frugality was a thread in most of the blogs I read although they were not expressly blogs on frugality. As is my personality, the experiment on frugal practices was mostly crash and burn. I was high on saving money by couponing for a while and then suddenly, I lost the charm. The lack of health didn't help. But the experiment helped me in many learning many lessons, some of which I am going to share here.

1. It created awareness.

I became aware that I might not be as frugal as I thought I might be. The first step in implementing a cure for anything is realizing that there is a problem. One of my bad habit was stocking up on fruits and vegetables and then throwing them out as we (usually) never managed to finished them on time. It never occurred to me that though it is nice and good to eat fruits, I don't have to buy strawberries, cherries, watermelon, pineapple, grapes, and oranges all in one week.

2. Its not the same for everyone.

There is no standard measure of frugality. It varies. We don't have the same privileges or restrictions as a 1-income family as of now. So I don't have to run from pillar to post trying to save 40 cent on grapes while ignoring other things. There is a funny story that goes with it. My life is all about irony. I was once trying to hit 3 or 4 stores getting good deals on different stuff on the way back from work. Then I went to CVS scoring free toothpaste, and by the time I got home, I was too tired to cook and we ordered pizza. The cost of the pizza was more than what I saved and I ended up with free toothpaste I didn't really need. I had to laugh at myself on my money saving skills. There are time, flexibility, distance restrictions that might make it difficult for all familes to implement all the excellent means and methods of money saving that might be found online.

3. Food habits.

We are a predominantly veggie family. I once posted a picture of the amount of veggies we eat. And that is only half the week. Most of them are not even available in the traditional grocery store. And yes, it is expensive. The spices? Expensive as well. So the nice weekly $40 food budget which works for the family of 4? Doesn't work for us. I tried cheaper Asian stores, but the quality was bad, most of the veggies were half rotten and it was just not worth the trouble.

4. Sitting on making a decision

Or in other words, intentional buying. This has been the biggest money saver yet. Before I started on this journey, if we needed something, we always bought it. No brainer, right? Afterall, we are not talking about wants here. That is what I used to think. Now, I look for alternatives. A good story would be about the tape converter. I promise I will post that soon.

5. Not all needs are created equal

Recognizing the difference between a need and a want should have comes to me easily. But again, the sense of entitlement pokes its ugly head. We travel a lot, we get lost easily, so we need a GPS. The sub conscious thought is this: everybody has a GPS, I want one too. never mind that my phone has google maps and web access, I deserve it becasue I work so hard and I am so special. When I look down deep into the recesses of my thought process, a lot of needs end up like this. This is not to bash anyone who buys GPS. The point is to tell you how I challenged my thinking on wants that on the surface looks like needs.

6. It is not meant to suck every joy out of life

We travel a lot, and we love doing it. We take 1 or sometimes 2 vacations in a year. Although vacations never made the cut and I never questioned that expense, I was more cognizant of the choices I was making while I was traveling. Again, irony abounded. For example, I am a water person. I do not drink tea, coffee, wine etc, and started to drink coke only after coming to US. That too very sparingly. The same with juices. We still buy juice in the house for my husband, but I never bother to drink any just becasue I don't like it very much. That being the case, I noticed that I would order juice at a restaurant when we travel! Basically I would order juice for many times the cost at a restaurant (and not even drink quarter of it), but drink water at home. How stupid is that?

7. It is not meant to hamper giving

There is always a hoarding mentality that comes with saving money, but it is important not to go overboard with frugality that it becomes painful to give. I always think of "give as I go" a good way to do it. If I wait until all my personal goals are settled, then many years down the line, I might have the money, but not the heart to give.

Were you always frugal or did you learn along the way like me ?

Two Income Trap - Part 2

See Part 1 here

In this long-awaited (yeah, right!) post, I will address the argument about Mom being the safety net that was put forward by the authors in Two Income Trap. The basic premise is that when there is only one income, couples buy house based on that, and since mom is a safety net, if dad loses the job, mom can go into the work force until that time dad gets another job.

There are three (broadly) reasons why moms stay at home while dad goes to work.

1. Religious reasons

2. Lack of education, so no good job choices

3. Educated, but prefer to be home with the kids

I think choices 1 and 2 are self explanatory and so I am just going to focus on the 3rd choice. There is an argument that is commonly put forward for moms staying home which is that if they go out to work, the family have to pay for child care, gas and maintenance on the second car, clothes, and all the trappings that come with a second job. I recently read somewhere that the mom needs to make at least $50,000 annually to make a contribution to the family finance. It sounds reasonable since many jobs do require all of the above. So many of the families who keep Mommy home do think of this. The cost benefit analysis show that it is better financially that a Mom remains home since for some jobs it takes money for her to be in the workplace.

So let us consider such a family. Jane is reasonably well educated, has 2 kids, never worked. John has a good job which brings in $50,000. They manage the home with that. She is frugal, watches the pennies, they don't eat out, do not go for vacations. She sends Junior 1 to public school and Junior 2 who is a toddler stays home with her. Now the economy turns bad (not hard to imagine now, is it?) and dad loses the job. Now, according to the book, this is when mom steps into the work force and rescues the family until Dad finds a job. Maybe I am being naive here, but I don't think there are a lot of employers out there offering anyone a $50,000 job with no experience, is going to be there only until the husband finds a job. (which could be one month to 6 months or maybe even more) A good job is not something you walk in and out of. And it is not rocket science what happens when putting an inexperienced mom suddenly into a work situation. In majority of the cases, she cannot hack it.

So John's and Jane's situation has changed. Jane is working at store X as a a clerk. The economy which cost John his job is not kind to Jane either. That is all she got since she has no experience and is not there for the long haul. She needs new formal clothes, she can't get home until late evening, so they need child care. John has interviews to attend and jobs to apply, so he cannot look after the kids while Jane is at work. Jane is tired coming from work, and looking after children, so she has no energy to cook, clean or pinch pennies. Expenses are more, and she brings in nowhere close to what John used to bring. I don't really think there is any hyperbole in the situation that I presented. It is a very possible outcome of such a situation.

Another problem I had with the book was that it does not give really good solutions as to how to get out of the Two Income Trap, a lot of families find themselves in. The book is good reading to understand how people get into saddening life situations, but I feel it doesn't do much good for a family already there. The overwhelming feeling I got after reading the statistics that the book provided was sadness. The answer to a crisis such as Dad losing the job is not to send a Mom who has never worked before into the workplace. I don't think it will work in real life for the reasons stated above.I am not saying I have the answers. But there are some things which I believe are good tips for a couple starting out in life.

1. If both husband and wife work, buy a house with a mortgage+utilities which you can afford to pay with one income. If you cannot afford to do that, you are not financially ready to buy a house. The book touches on this about keeping your fixed expenses below 50%.

2. Live WAY below your means. It means different things to different people. But you know where you are. Save well.

3. Don't worry about what other people are making or not making or emulate their lifestyles. Look at successful people and learn what they are doing right. Take control of your OWN finances.

4. Learn about investing. E.g. A car is a depreciating asset and is not a wise investment choice.

5. Above all, don't forget the source of every blessing.

Since I cannot say it any better, I leave you with Amy's words. If you are poor, let it be becasue the Lord wills so, and not becasue of your foolish choices.