Monday, February 16, 2009


"Frugality without creativity is deprivation." - Amy Dacyczyn

In these days of economic problems, 'frugality' has come back in fashion. Everyone is trying to be frugal. Sometimes stupidly frugal. Going several miles off to get gasoline at few cents less per gallon is an example of stupid frugality. Buying items in way too much bulk is another stupid frugality. By buying several items to last for an entire year can result in few thousand dollars up front. That is money locked in without any interest. In the mean time, prices of some of the goods may go down. You may end up throwing away some items if they have expiration dates. Long live stupid frugality!

Desperate times drive people crazy. People who have splurged all along get suckered into all sorts of frugality gimmicks and lose out big.

Why not be frugal all the time? That way hell or high water, your financial situation is always manageable.

It always helps to stay a few steps behind the curve in terms of purchases especially electronic goods. Electronic goods go down in price sharply year after year. Simple example - a decent GPS navigator cost more than $300 in 2005. Now excellent GPS navigators can be purchased for less than $100. Same with iPods, digital cameras etc.

What are the items now selling at premium? iPhone, Kindle, Flat screen TVs etc. Do we need these right away? Nope. Wait for the prices to go down.What is the necessity to keep up with changing technologies? Are the new features in those gadgets must have? People do not use most of the features anyway. For example, Cell phone - as long as you can make and receive calls and access your contact list, that should suffice.What other feature you really need? So, it does not make sense to upgrade. Live with your gadgets for few more years. Rule of thumb - use all your gadgets for 5-7 years before buying a new one.

Cash is king - anytime and all the time. Cash or cash equivalents should be amassed if you need a sense of security. All other items can not be converted into cash easily. But cash is versatile. Cash can get you anything in a minute. Worst case scenario is to make sure you have a few credit cards with a combined credit limit that can cover 5-6 months of your living expenses. This not ideal but last resort.

Also, if you want to be frugal, start shopping online more. First it is easier to compare and shop online. You can find several deals and compare. You do not do much impulse buying online because it takes some time to register with the web site, enter credit card details, provide shipping address etc. These slow you down. If you are lucky, while you are doing all this extra steps, you may decide not to buy the item at all.

You know, they said roof over head, food and clothes are the most basic necessities of life. It has not changed at all. If we can simplify our lives and focus on basic necessities, life becomes simple, life automatically becomes frugal and your money worry goes away automatically. Reducing most of your purchases to basics does not mean that you live a spartan lifestyle. You just need to be creative to make sure you meet your basic needs in style. Have we not all seen people who dress nicely with a limited wardrobe? And there are people with tonnes of clothes but can not seem to have one good pair for Monday morning. Either their wardrobe is full of ill fitting clothes or they have accumulated so many clothes that they can not manage their wardrobe anymore. Once again simplification. Few pairs for work and a few pair of leisure is all you need to keep a tidy wardrobe. What more?

It is simple to be happy. It is most difficult to be simple. One way to simplify is to start eliminating all that you do not need. Hesitate to throw something away? Fine. At least start sorting things out first. Sort all your possessions into two pools. 'Keep' and 'Trash'. After a few months, look into items in both groups and re-evaluate. By then, you must be able to say whether items in 'Trash' are  really trash. If yes, get rid of them mercilessly. Simplify, simplify, simplify.

Simplify your paper work. It is mind numbing to see how much paper people accumulate. First step is to reduce the amount of paper work you get. These days most of the service providers happily provide only electronic receipts. Opt in for that. Eliminate paper at the first step. Then for the papers that you must keep, maintain a simple filing system. Few files at most. That's it. If you still feel compelled to have copies, scan your paper documents and get rid of actual paper. As long as you have some sensible way to store soft copies somewhere securely, you are well off on your way to reduce the clutter.

As less you carry in your head simplifies and rejuvenates your brain, so will simplifying everything around you. Somebody said 'renounce and rejoice.' I would modify that to say 'renounce junk and rejoice.'


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