Whenever I talk/write about the need of having an emergency fund and trying to save money as much as you can (especially in those good months), some of the people that get my message will immediately tell me “but I want to live my life“.
Their definition: we splurge on anything we feel like, we’re having a “little” stress when having to find the money to make the payments for our loans, but other than that it’s great. We do purchase the latest gadgets (even if the older ones are still functional and not that ‘old’), we get a new car every 3-4 years, we take exotic vacation (for which we sometimes don’t have the money, but we can take a loan), we’re eating out every day, have too many clothes to wear them and never bother save (not that we’d have any money left anyway).
It all goes great and the frustration of never making ends meet from one month to another is gone fast, after a nice meal at a restaurant or those new shoes that we “had” to have.
The problem with this thinking is that eventually something will break. While these people seem to be happy now (and maybe they are), anything that could happen to them (a job loss, medical issues, divorce etc.) will get them into deep trouble. We do know such people for whom losing a job meant a huge problem. They’re neck deep in debt and have stopped even going to their regular summer vacations, since they can barely make the payments. They are frustrated (as one can imagine) and don’t see any chance to get better financially, until they’ll be able to clear some of their debt.
Those who haven’t yet gone through losing a job or any other kind of emergency, that would make the monthly payments harder and getting into more debt the only way to ‘survive’, are a ‘ticking bomb’, a financial disaster waiting to happen. And since the economy is bad in most countries, it’s just a matter of time until something will happen to them.
So, does this mean we need to live a joyless life just to save the money?
As long as we’re not inheriting some crazy fortune, it’s clear that we’ll need to make some choices and really understand what makes us truly happy. Most of us can’t have it all: vacations, new gadgets every year, new cars every few years, eating out, luxury clothing etc., so we’ll need to take a hard look in the mirror and see which of these are not as important to us (so we can save on them) and which things make our lives better (and we’ll ‘invest’ more in them).
Our case: traveling has been important to us and it still is. We’re taking a little time off, until our daughter is born, but we’ll resume our vacations (smaller and longer) as soon as she can come with us. We’re already planning a vacation in Croatia next year, when she’ll be 6-7 months old and, if it all goes well, we’d probably have a really great time again. For this passion we have already spent a small fortune. It’s not cheap to travel and being away from home for months in a row (as we were so kindly offered a place to stay at our friends in NYC) did come with a steep price.
We’re both ‘geeks’, so you can imagine we did make sure we have the items that we wanted to own: laptops (each has its own, I also have a smaller laptop for travel and a Nook Tablet), DSLR cameras, a camcorder etc. Sure, purchasing them all cost us quite a bit, but we have been using some of them for more than 2 years and are still happy to do it for as long as they keep on functioning. The only thing I needed to replace was my main laptop, since the one I purchased in 2010 ‘died’ few months ago. The previous one worked for 6 years, so I was pretty mad to see this one stop working after just half the time.
My car is 6 years old now (even if it does have 25K miles on it only), so for many people this would mean I need to trade it for a new one. As long as it works properly (and it looks/feels as if it was still new), we don’t plan on changing it anytime soon. We’re both looking to really get our money’s worth, so we won’t throw things away just because there’s a new model being released.
Since we’re both working from home (so we have access to our great internet connection), we don’t have data plans for our mobile phones. His phone is 3 years old, mine is 5. They both work very well and, even if there’s a new smartphone release every few months, we’re not wasting time or money with this. When they’ll finally break, we’ll get a smartphone that’s not costing as much as my laptop and keep our phone bills small (he pays 10 bucks/month, mine is 4). We don’t like signing contracts, we don’t feel the need to show off the latest iPhone, we don’t need this anyway. Another thing that has little importance to us and helps us save more money.
We don’t eat out. Not only that it’s more expensive, but most of the food sold in restaurants is worse that we can cook at home. We eat healthy, we don’t use processed food, we don’t use cheap oil or condiments. So, instead of eating out and paying a lot for a meal we might not really enjoy, we save money by doing our own grocery shopping and cooking.
Our clothes are used until they are not looking good anymore. We have jeans that are 4-5 years old. As long as they still look nice, we’ll wear them. Even if I am a woman, I don’t have tens of pairs of shoes. I buy what I need and don’t ‘collect’ shoes and bags just to see my closet filled with items. We are well dressed (we usually go for good quality clothing/shoes), but we don’t have a huge wardrobe.
What are the things we do spend on?
As mentioned before, when it comes to travel, we do pay the money. We also buy nice clothing and quality appliances/gadgets. We don’t like to save buying something unreliable, since it would mean having to purchase new ones too soon. We do use them for as long as they will function properly, even if all others are thrilled to sport the new gadgets. We don’t need a data plan and an expensive smartphone, so we don’t waste money on these. We don’t grocery shop on a very tight budget: we’re both foodies, so you won’t find us getting almost expired produce, just because it’s cheaper or buying anything we don’t really like to save few bucks. We do indulge in fresh products and sometimes more expensive ingredients, since cooking at home already cuts our food bill a lot.
A balance can be reached in our lives so that paying off debt and saving won’t make us feel like this is not a life worth living. But we all need to understand that we can’t have it all. While we save on the things that are not important to us (luxury clothing, jewelry – I was never interested in this, new gadgets, eating out etc.), this allows us to indulge when it comes to what really makes us happy: good food, doing sports, traveling, photography etc.
We have friends who expect us to be unhappy, since we don’t spend money on things that are ‘vital’ to them. But we are happy, because our few important needs are being met. We understood that we won’t be able to live in luxury (unless we agree to get in debt for it), so we choose the few things that make our lives better and stopped wasting money on stuff that’s not important to us.
Your turn now: does being more frugal kill any joy in your life? Are you finding that balance between your real “needs” and “wants”. Are you happy or does paying off debt/saving bring you only frustration?