5 Tips for Frugal Living That Won't Leave You Feeling Miserable

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CPA and financial expert Clare K. Levison wants you to know being frugal doesn't mean you have to give up on living the life you want. Her new book, "Frugal Isn't Cheap," offers practical tips and real-life stories about ways you can amass a solid savings account while juggling expenses.

"I wanted to get the message out that you can have a great life, really a better life, if you learn to live frugally and to save money," says Levison. "People think that means you have to scrimp and be miserable, but it really means that you need to take the emphasis off your possessions and material things. You need to focus more on free things like spending quality time with your family and friends."

Levison says she wrote her book in order to encourage people to practice frugality so it becomes a permanent practice. "The better you get at being frugal, the more fun it is and the more motivated you are," she says. "Being savvy financially is liberating. You're not beholden to banks, credit card companies, or to your parents when you have financial freedom." Here are some of Levison's tips for living frugally.

1. Find a way to save every day.

Everyone can find one thing they can save money on every day, says Levison.

"If you have a closet full of name-brand clothes and shoes, you should realize that if you have self-confidence and style, you don't need to accumulate all these clothes," says Levison. "You don't need to look frumpy, either. A $15 sweater from a sale rack or a consignment store can look just as good."

Skip the designer clothes -- or find other simple ways to save, such as, say, renting a DVD instead of going to the movies -- and put the saved cash in a jar. "Just seeing the cash add up in one week makes you believe you can really start to save money," Levison says.

If you use a debit card instead of cash, scoop some of the balance from your checking account into savings at the end of each week for a similar effect.

2. Start an automatic savings plan.

After you've begun the process of saving a little every day, Levison recommends transferring money out of every paycheck into a savings account. She suggests saving 20 percent of every check, but since that's a lot to tackle all at once, she says you can start with a smaller amount and reassess every three months. "Gradually work your way up to 20 percent," says Levison.

One caveat: If you have debt, Levison recommends only establishing a $1,000 emergency savings fund rather than funneling all your extra cash into a savings account. "Split the money you would be allocating to savings 50-50 between your debts and building that $1,000 fund," she says. "Once that's established, put every extra dollar toward eliminating your credit card debt."

3. Make a list of goals.

Levison recommends writing down a list of your priorities, such as saving for a new home, starting your own business, remodeling your home, or buying a nice retirement condo in Florida.

"Having goals that are exciting to you makes it easier to stay focused," says Levison. "Your savings should go to things that are a good long-term investment in your future."

For a short-term goal like saving for a vacation, Levison suggests finding a way to carve out extra money from your entertainment budget by cutting back on things like eating out.

"Beware of saving money and then spending it on short-term pleasures," says Levison. "Think of being frugal as building wealth for the long term."

4. Find a way to increase your income.

Sell your stuff on eBay or Craigslist, says Levison, and you'll simplify your life as well as bring in extra income. Do contract or freelance work in addition to your regular work, offer singing or music lessons or tutoring -- anything to generate extra money.

"Any extra income should go directly into your savings," she says.

5. Become a bargain hunter.

Get in the habit of seeking out the least costly options in every way, both big and small, says Levison.

"Start small with things like buying generic medicines and then adding the difference in cost to your savings account," says Levison. "Shop for deals and stay in a less expensive hotel while on vacation. When you get into larger purchases like cars and a home, your habit of choosing less expensive items will filter through into all your choices."

Levison says learning to trim your spending will free you to build a savings safety net and to accumulate long-term financial stability.

Michelle Lerner is a contributing writer to The Motley Fool. Try any of our Foolish newsletter services free for 30 days.

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cyzomaca

Love these tips! Thank u soo much :)

Here are some others I saw elsewhere:

1) drop the smart phone and get a "dumb" one. Save about $50 per month. Get a low-priced tablet (e.g., Kindle Fire) or use your old iPhone as a wi-fi only device. Wi-fi is available everywhere; you really don't need to pay for cell-based data plans
2) call your car and home insurance company and tell them you want to go through all your coverage because you found another carrier that is cheaper. They'll probably help you "find" 10% off or more.
3) speaking of car insurance - An expensive policy from GEICO, Progressive, etc. is not needed. You can find one usually for less than $25/month from a place like Insurance Panda. If you spend too much on car insurance from one of those big companies, chances are you are simply funding their expensive TV ads with cute animals.
4) compare what your house is really worth to your assessment. Many assessments have never been properly adjusted down to reflect the market over the last 4 years. We cut our property taxes by about 20%.
5) re-fi your 30-year mortgage to a 15. The interest rate will drop by at least 50-75 bps, more depending on your current rate. The payment may go up slightly, but it is because you are paying off your loan faster. If it's possible, get the mortgage paid off before the kids go to college. At a minimum, have it paid off before you retire. if you buy life insurance (which you should), don’t overpay. you can get $15 policies from places like Life Ant or gnworth.
6) review your credit card bills for all the things you are paying $10-20 per month for that you no longer need. I bet everybody has at least a couple
7) drop all magazine (paper and on-line) subscriptions. If you look around, you can find comparable content for free.
8) review your investment portfolio for ways to replace higher fee mutual funds or ETFs with lower fee ones. S&P500 funds/ETFs shouldn't charge more than 0.10% in fees. Fees may be higher for specialty funds, but they are all coming down fast. If your company 401K uses high-fee funds, talk to the folks in charge. A difference of 25 bps in fees will mean a difference of about 5% in your portfolio value after 25 or 30 years.
9) and of course the most impactful -- never carry a balance on a credit card. If you can't resist, cut up the cards.

May 09 2014 at 1:34 PM Report abuse rate up rate down Reply
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November 08 2013 at 10:49 PM Report abuse rate up rate down Reply
cpo1514

Is this article with the 5 steps for the 53% that are on Obama welfare???

August 04 2013 at 8:26 AM Report abuse +2 rate up rate down Reply