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Home » Family Articles » Frugal Living Tip Giving Yourself A Reason To Save Money

Frugal Living Tip - Giving Yourself a Reason to Save Money

In the US and much of the Western world, we equate money with happiness, even though our personal experience seldom gives us reason to believe that the old saying "you can't buy happiness" is anything less than true. We assure ourselves that if we only get a raise or get a better job or win the lottery, all of the stress of daily life will disappear and we'll have time for those things in life we really enjoy.

This would be true, at least partially, if making more money allowed us to have more money in the bank. However, each raise in pay also raises our desire to spend, so a promotion at work can actually put us farther into debt. How many people do we know who bring in over $100,000 a year who are still living paycheck to paycheck? How many lottery winners end up in bankruptcy court, wondering where all the money went and how they managed to make such a muddle of this windfall that should have set them up for a lifetime of financial security?

An option to spending as much or more than you make every month is to live frugally - and it's refreshing to see the increase in interest in the voluntary simplicity movement. Being intentionally frugal can actually bring you the financial security that a high-paying job cannot. In fact, if you go one step further to voluntary poverty, as I have, you may be able to quit that job and actually do something that could really make you feel fulfilled.

The one frugal living tip that makes the biggest difference is to simply keep track of everything you spend for at least a month. You probably won't keep it up for much longer than that, but it will give you an idea of where your money is going, and whether or not the money you spend on each item is really giving you the satisfaction you're paying for.

However, just keeping track won't help much unless you have a vision of another way of life that would really give you pleasure or contentment. Saving money for it's own sake feels like a sacrifice, but saving money so you can retire early and start that little farm you've always wanted would be a goal worth working for. Creating that goal may take some true soul searching and many deep conversations with your family.

When you come up with a goal you all agree on, decide how much time it will take to get there - this time frame is important, and you should be as realistic as you can. Do you want to own your own home without a mortgage? Will it take 5 years of frugal living? Or 10? Would you like to retire all your credit card debt? How long will it take?

Once you have that goal in mind, the best way to start putting money in the bank is to notice where you're spending your money now.

One thing most people discover is that the simple act of jotting down the $3 you spend on coffee every morning, plus every other small or large expenditure, will magically cause you to have money left over that you ever had before. Keeping track causes us to be mindful of our choices, and even without adding up any numbers or making any deep decisions, we save money by spending more consciously.

Once you have at least a few weeks' worth of figures, you're ready to get out the calculator. Divide the items on your list into any categories that seem reasonable - such as lunch at work, utilities, dog food... Then add up the columns to see how much you really spend.

Then, go one step further to give yourself a true shock - multiply the amount you spend on each unnecessary category, like your morning coffee at Starbucks, by the number of months you think it will take you to reach that long-term goal.

If you spend $3.50 each working day at the local coffee shop, it doesn't seem like a very big deal. Multiply that by the average of 20 working days a month, and you may be startled to realize that you spend $70 a month on coffee that you could make yourself in your own kitchen. But the real eye-opener comes when you multiply that $70 times the number of months you need to reach your goal of financial security.

If you are willing to spend 5 years in frugal living to pay down the mortgage on your house or pay off all your credit cards, multiply your monthly coffee money by 60 months, and you'll see $4200 on your calculator screen. That 's enough money for a down payment on a reasonably priced house, or to buy a good used car for your teenager. It's also enough to pay at least several month's mortgage payments, or to put in the bank for a medical emergency. $3.50 isn't an important amount of money, but to almost anyone I know, $4200 is a serious amount of cash.

Do the same calculation for everything on your list that isn't truly necessary, and you may discover that you can reduce the amount of time you need to reach your long-term goal by several years or more. If your credit card debts are weighing you down and causing daily stress, this simple frugal living tip could lead to a complete elimination of debt in just a year or less. In my mind, that's more important than a fancy cup of coffee.

And here is another random article you might be interested in...

Reverse Mortgage Is A Special Kind Of Loan

A new term, reverse mortgage, is simply a loan against your home that you do not have to pay back for as long as you live there. That means that with a reverse mortgage, you can turn the value of your home into cash without having to move or to repay the loan each month. The best thing is that the cash you get from a reverse mortgage can be paid to you in several ways.

You can get it all at once, in a single lump sum of cash, as a regular monthly cash advance or as a credit line account that lets you decide when and how much of your available cash is paid to you. You can also have a combination of these payment methods.

It does not matter how this loan is paid out to you, you typically don't have to pay anything back until you die, sell your home or permanently move out of your home. To be eligible for most reverse mortgages, you must own your home and be 62 years of age or older. For once it is really great to be old!

To qualify for most loans, the lender checks your income to see how much you can afford to pay back each month. The difference with a reverse mortgage is that you don't have to make monthly repayments. So there is no need for a minimum amount of income to qualify for a reverse mortgage. You can have no income and still be able to get a reverse mortgage.

With ordinary home loans you can lose your home if you don't make your monthly payments on time. With a reverse mortgage there are no monthly repayments to make so you can't lose your home by not making them. The usual reverse mortgages require no repayment for as long as you or any co-owner live in the home.

The difference from other home loans are important in theses ways:

You don't need an income to qualify for a reverse mortgage

You don't have to make monthly repayments on a reverse mortgage.

You can easily see how a reverse mortgage works by comparing it to a forward mortgage which is the kind you use to buy a home. Both types of mortgages create debt against your home and both affect how much equity or ownership value you have in your home. They do so in opposite ways.

When you purchased your home, you probably made a small down payment and borrowed the rest of the money you needed to buy it. Then you paid back your traditional forward mortgage loan every month over many years. In that way your debt decreased and your home equity increased. One can say that your forward mortgage gave the result of falling debt and rising equity.

The purpose of reverse mortgages are different than forward mortgages. With a forward mortgage, you use your income to repay debt, and this builds up equity in your home. With a reverse mortgage you are taking the equity out in cash.

A reverse mortgage increases your debt and your home equity decreases. It is just the opposite, or reverse, of a forward mortgage as the lender sends you cash and you make no repayments. The amount you owe gets larger as you get more and more cash and more interest is added to your loan balance. As your debt grows, your equity shrinks, unless your home's value is growing faster than the interest rate.

In short on can say that a reverse mortgage is a "rising debt, falling equity" type of deal. But that is exactly what informed reverse mortgage borrowers want. They want to spend some of the value in their home while they live in their homes.