First of all, let me state categoricallythat I am not frugal. Regrettably, I'mprobably the opposite. But with thethought that our more needy forefathershad a financial and possibly moral pointin living a less consumer-oriented existence,let's run through a few ideas andsee if any of them stick or appeal. Keep inmind that the money saved can be invested,so that when the time comes we haveeven more money to spend.
Home Steep Home
This approach is all about mindset; soour first task is to avoid falling into thepenny-wise, pound-foolish trap that wesometimes delude ourselves into thinkingrepresents thrift. I know, I check thepennies-per-ounce cost of detergent toowhen my wife drags me to the supermarket.Then we celebrate our ersatzcost-cutting by eating out. No, the placeto start is with the big, painful stuff thatwe usually take for granted.
For example, where you choose tolive is a good place to start. A low-costof-living state or locale makes a huge difference.Why do you think so manyretirees move away from their long-timehomes when the time comes? There aremany reasons, of course, but a big one isthat the new area costs less—taxes, realestate, whatever.
And a corollary is that your house andall its attendant costs are your secondlargest outlay. Therefore, downsizing orat least freeing up your burgeoningequity is important. For many people,their recently swollen home equity istheir pension plan.
Less Expensive Options
Okay, so you say, "No, I can't move.My roots, family, and business are here.What else ya'got?"Well, assuming youhave refinanced your mortgage likeeveryone else in the past few years topick the low-hanging fruit—you did refi-nance didn't you? I see the hands, so let'sget on the stick people—there's seriousmoney to be saved.
The second biggest cash outflow formany people is automotive. The governmentrecently released a report thatsaid the average lifetime outlay for avariety of cars is between $250,000 and$500,000. That figure assumes that youneither drive a luxury car nor replaceit often—ouch. In my case, I live inCalifornia, where the law states that youare what you drive, especially becausewe spend so much time in our cars. Thatbeing the case, you always want to beseen in something more expensive thanwhat you can afford.
But for our purpose here, buying aused, high-gas-mileage, low-maintenancecar like a Toyota or Honda seemsappropriate if you want to save somebucks. Drive safely (the alternativeis very, very expensive) and if possiblededuct part of the cost for business.It also helps avoid expensive replacementif you maintain it and drive it for a longtime. Voila, a lot more saved for collegeand retirement, if not moral comfort.
The other things you read about likebulk shopping, off-season shopping,comparison shopping, and buying onsale can also save you a bundle. Butthese things take time and effort.Sheesh, money stuff is hard work. I thinkI'll relax and go shopping.
Jeff Brown, MD, CPE,
practicing physician who is a
partner on the Stanford University
Graduate School of
Business Alumni Consulting
Team. He welcomes questions
or comments at email@example.com.