Frugality & you; How were YOU frugal today?

Question

Good Day/Evening Bigger Pockets!

Tonight, I wrote down a goal: Save $10,000 to invest before Oct. 7th.

As I began thinking of ways to accomplish my goal, a thought about how investors are being frugal came to mind. Please take a moment, and think about what you've done today to be frugal.

In what ways, do you find yourself saving the most time/money? Do you spend all day obtaining comparative prices?  Do you feel the savings you find outweigh the time invested? Do you prefer to shop online for the best price, or do you look locally at the best price for an immediate return? How much time do you spend being frugal? Do you feel your frugality provides enough return for the time invested?

Besides the HOW you are frugal, WHAT do you do with those savings? i.e. The $20 you saved on buying a years supply of Toilet Paper, did you put that in a separate account or spend it on the next purchase?

Joshua D. · Answer

@Trevor Kolb

Here are some ways we have been frugal while investing.  This has allowed us to buy 9 deals(2 of them were flips) in the last 4 years while making 35k a year.

1. We always lived within 10 blocks of where I work. (Now I live 1 block away)

2. If we drive... we combine trips and drive our cars 15+ year old car.

3. House hacked 3 deals (this has by FAR had the biggest impact)

4. Make delicious home cooked meals, eat out less than 2 times a month

5. No cable, and no TV (lifestyle choice, to many deals to do)

6. Rehabbing houses myself (when it makes sense)

7. Self manage rentals

8. Hunt my own food (this saves us 500+ a year, our family eats a lot of meat)

9. We camp at a mountain lake nearby for vacation in our $500 camper and we love it! Montana is flipin sweet!

10. We don't wear name brand clothing, however we do buy nice clothes

This list could prolly go on but I'll leave it here.  I want people to realize that we enjoy or lifestyle thouraly, and don't feel the need to spend more money. As if getting more stuff would make us happy. We have found that getting rid of the tv and hanging out with my kids in the living room has brought WAY more happiness than buying extra doodads.

Our friends who make double what we do in income and spend all of it think we are crazy, in their mind there is no way you can raise a family on 70k in Montana.

Frugality, on some level, is important.  We had to be more extreme because of the lower income, but this will look different based on who you are and where you live.

Scott Trench · Answer

@Joshua D. nailed it in my opinion.

Frugality is all relative. I'm frugal because I save between 60-75% (and sometimes more) of my take home pay each month. This is largely because I live for free, bike or make a short drive to work (I injured my foot and haven't been able to bike as much recently), and bring lunch to work.

However, I also have no problem going on a nice vacation to Orlando with my GF, or spending $100-$200 per weekend on drinks and nice dinners with friends. I try not to sacrifice experiences, but I have no interest in "things" like nice cars, nice TVs, cable TV, nice clothes, fancy booze, or other "luxury" experiences.

To answer your question about what I'm doing today. I plan not to buy a single thing, other than groceries and health related products (I'm getting surgery on aforementioned foot) for this week.

Over the next few years, I plan to repeatedly house-hack, invest, earn more, and spend as little as possible on my living situation, but still have enough to enjoy day-to-day life with my friends, family and co-workers.

If you wipe out your housing and transportation expenses, you may find that the rest is just discipline.

Jerry W. · Answer

@Trevor Kolb, I have over 30 doors.  So a fridge will not sit for over 2 years at longest.  I save a third of its cost, so my return is over 15% a year at worst, and 33% at best.  For the water heaters, the newer ones often cannot have a thermocoupler replaced, it requires the entire assembly so harder to work on and more money.  Also the new ones have more insulation so are BIGGER.  I want one or two to fit in the VERY tight spots so I don't have to tear out a wall and rebuild to replace a water heater.  Not more efficient just more insulation required.  There is also the very real problem of leaks over the weekend when the hardware store is closed.  I rarely buy new stoves anymore, they rarely wear out.  I am replacing a lot of old electric stoves in my apartments to use gas stoves and use the 220 line to make new 110 lines to help the aging electric system.

Jerry W. · Answer

One of the biggest savings I do is vehicles.  My truck in 24 years old and runs perfectly.  I have had it for about 21 years.  My current car is 12 years old and I bought it 10 years ago.  Runs great and only 80K miles.  I have never bought a new vehicle.  Other than one vacation to visit my brother in Germany, I have not spent over $800 for a vacation.  I have actually gone on very few vacations and plan to change that.

On my rentals I watch prices on appliances.  I can usually save at least $300 on fridges, sometimes more, and a few hundred on stoves by buying during big sales.  I just put them in my storage area and replace the next fridge that goes bad.  I also bought 2 water heaters on sale awhile back just before the government required more insulation on the tanks.  They were $300 cheaper than a water heater is now.

I also do my own roofs.  I hired guys I know to help do one or 2 then just hired laborers to do more.  Figure I save about $4K a roof and I kind of like doing them, well until it gets over 80 degrees.  I also install my own water heaters.  Takes a little over an hour saves me about $500.  I also try to use a handyman when I can to fix things rather than a plumber or other expensive tradesman.  Changing out a faucet or a sink is easy.  Working on a furnace requires a plumber/heater repair guy.

Jeff Brower · Answer

The biggest one for me is my car. I see friends posting on facebook all the time about their new cars. They post pictures of themselves at the dealership proudly posing with their keys.... I silently shake my head. I admit, I do have two vehicles, but one is a 2004 truck I bought on craigslist with 210k for $3k. The other, my daily driver and commuter, is a 2004 chevy cavalier that I have been driving since high school over 10 years ago. It is rusting, and I definitely do not look cool when I pull up next to someone at a stop light. What is cool about it? No $500 monthly payment.

Adam Christopher Zaleski · Answer

I cooked some meals for the next 2-3 days. I do this twice a week (Wednesdays & Sundays).

Trevor Kolb · Answer

Wow! I'm loving all the advice people are bringing to the discussion! Sounds like most investors are fragile in the common areas of reducing their take-out spending, driving older vehicles, and practice budgeting their finances very well.

@Jerry W. That's some amazing frugality and great advice on the appliance side of things! Though what do you think your lost opportunity cost is by sitting on the additional inventory? Couldn't you find a better investment for the time you wait to fix that water heater? Also, if they are improving the efficiency of most appliances, would the future costs not be deferred by the future savings of such appliances?

Elizabeth Colegrove · Answer

My husband and I have bought 8 rental properties in the past 5 years. We saved $60,000 while he was deployed in 2014-2015 to buy 2 properties when he got home. What I found is its not about cutting my starbucks addiction but about making the BIG changes that allow the biggest ability to save money. For us that has been housing and employementFor example, we have ALWAYS worked really hard to reduce our housing cost. Whether that was living on a boat, buying  a house, buying a foreclosure, renting out a friends room while he was deployed with my husband (stuff was my roommate), etc . I left an easy job for a job that with 25% more pay and 45 miles one way closer to home. So while I increased my work hour dramatically, my income went WAY up!

Kyle Doney · Answer

Being frugal is a way of life in my opinion. Not being a crazy couponer or going too extreme where you waste valuable time and don't focus on the big picture, but just make everyday decisions that add up over time. Spend less than you make and as your income goes up keep the same habits and lifestyle. Before you know it things start compounding and your friends wonder how you got to where you're at and why they're in the same position for years.

Cary P. · Answer

I just found "You Need a Budget" to budget our monthly expenses.  A lot of people use it as a purchase tracking tool and move money around from one category to another when they have spent too much.  I think that is the wrong philosophy.  I say "I have this much for groceries" and I am finding ways to stay at or below that amount.  My budget is only about 60% of the monthly take home - that other 40% goes into savings.  We drive 10 year old cars, we wear non-brand clothing, we keep the heat at 65/62 in Denver during the winter months (September through June :) ) and at 75 during the summer. We have a budget for $100 for eating out - we only eat out fancy once a month (Ted's type fancy, not Ruth Chris) and we don't binge on TV or movies, etc.

As far as the rentals go, we have bought well by buying properties that are on transportation lines in up and coming areas that are in the process of revitalizing.  And it doesn't hurt that we are in the Denver Metro area with some meteoric raises in property value and rents.  A house we bought in May 2012 for $205 is now worth about $375 with no changes and rent jumped from $1300 to $2000/month while our fixed rate mortgage didn't budge.

Frugality & you; How were YOU frugal today?

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