Committing to a frugal lifestyle can be a daunting task. Making ends meet and saving for the future involves more than just foregoing a coffee habit or watching what you spend. As my family travels this road, we learn something new every day, from how to deal with setbacks to uncovering our own unique spending triggers.
Research for this column has led me to the conclusion that there are certain “realities of frugality”; things we must accept in order to make progress on our financial goals. A recent interview with Dave Ramsey, author of best-selling books “The Total Money Makeover” and “Financial Peace,” as well as host of the nationally syndicated “The Dave Ramsey Show” and a GateHouse Media columnist, offered me the opportunity to confirm my suspicions. Yes, there are certain undeniable facts when it comes to frugality, but if you can accept them, the payoff can be great.
Those credit cards have to go: Most of us plead guilty when it comes to carrying and using credit. But the fact is that if we’re living within our means, we shouldn’t use, or have, any at all. Ramsey suggests paying cash for everything and eliminating all credit from our financial diet. “There is no positive side to using credit cards,” says Ramsey. “Even if you pay them off every month you aren’t beating the system. You spend more when you use credit cards.” He continues, “A study of credit card use at McDonald’s found that people spent 47 percent more when using credit instead of cash.”
Forget all about the Jones’: I really believe that it is human nature to be somewhat concerned with how you stack up against your peers, but there’s a point when it just doesn’t matter anymore. When your priority truly becomes financial freedom, those concerns evaporate. “The problem with the Jones’ is that the Jones’ are often more broke than you are. They have a big pile of stuff with no money and lots of debt,” Ramsey says. “We Americans have a problem with buying things we can’t afford to impress people we often do not even like.”
You need a monthly plan for your money: So many of us consider “budget” a dirty word, associating it with all kinds of deprivation and constraint. While Ramsey has seen thousands of people turn their lives around financially speaking, he says none have done it without a budget. “By creating a plan for your money, you are spending your money with intention and you’ll actually experience more freedom than before,” says Ramsey. “In fact, many people say they have found more money when they created a realistic budget and stuck with it.”
