Financial independence. I recall the first time I read those words. Once I discovered what they meant, my immediate thoughts were – “I want this!”. Since then, I’ve been on a mission to understand what it takes to become financially independent.
There are lots of tips for reaching financial independence. What it boils down to on a very simplistic level is maximizing your income, and minimizing your spending.
There are many tips for achieving both but I’ll focus a bit on the spending side today.
How does one minimize spending? What is the best method? Personally, I find one word encompasses that goal well. Frugality.
I’ve grown to love that word. This is coming from a working female professional living in New York who in her 20’s would easily spend a couple hundred dollars EVERY weekend partying and indulging on food and drinks with friends. Then there were the shopping spree’s. Hours spent at Bloomingdale’s or shopping along 5th Avenue.
Fast forward to the present day. Late 30’s working female professional who saved 45% of her income last year. Gone are the days of fine dining, $20 cocktails, and designer clothes and handbags.
When I do get the urge to spend, I utilize two tricks to help keep my spending at a minimum.
- DELAY GRATIFICATION. Typically when I first get the urge to buy, my mind is usually convinced that I “need” this item. I always put it off a week (minimum). What a huge difference a few days of waiting makes. Usually the mentality that I am 100% convinced I need that item are replaced with the realization that I actually don’t need that item. Reasons include: I have a similar item at home, I can get a better deal elsewhere, I actually hate that style or color, etc. Funny how these thoughts don’t come up when I am first admiring the item. (lol) I keep a running list of items I want and unsurprisingly, most items don’t stay on my list for more than a week. For those items that do stick around for more than a few weeks, I feel confident in knowing that it’s a worthwhile purchase to make.
- ALWAYS BUY USED. We all know that the value of cars depreciate over time, especially in the first year. I don’t know the exact % but it’s a lot! The great thing about depreciation, especially if you are a frugal shopper like myself, depreciation applies to the value of many things! Buying used almost always means paying less for the very same item, albeit in a slightly used condition. The thing about buying used I find is that people hardly ever really use their items. A lot of times they’ve had the item for a few months, and in the worst case scenario, maybe a handful of years. Mostly, I find that people are so eager to get rid of their stuff, especially to “upgrade” to something newer, bigger and nicer, that they are constantly replacing their older items. Think of all the companies who inundate consumers with newer versions of their products (ahem Apple).
Frugal finds (purchased via craigslist):
- 1500W Electric Fireplace Heater Stove by FlowPro
Similar one’s available at Amazon for $109.99, purchased used for $50
- Sony KDL-32R300C 32″ 720p 60Hz LED HDTV
Google search reveals prices ranging from $249.99-$400, purchased used for $80 (bargained down from $100)
- Apple TV (3rd generation)
Available at Apple for $69, purchased used for $40 (bargained down from $50)
A few notes about my weekend purchases:
- I have been living 3 years without a TV. I opted for reading and watching the occasional movie on Netflix using my iPad (a gift). I recently paid off all my credit card debt and so as part of a celebratory gift purchased the LCD and Apple TV! Talk about delayed gratification!
- The LED TV I purchased over the weekend was originally posted for $100. I asked for $80 and without any hesitation the seller agreed. When I visited the seller’s home, I saw a brand new TV with a bigger screen sitting in his living room. One person’s upgrade mean’s another person’s sweet deal!
- The Apple TV was a gift that the seller received and was practically brand new.