by a.b.

So you’ve decided your life needs to change. You’re tired of taking orders from your boss who failed up the corporate ladder, but your credit card payments force you to stay. You dream of a life of freedom, traveling the world to new and exotic places, but don’t see how you could afford to. You just don’t want to deal with all of the complications around you. It sounds like you’re craving some financial freedom.

The first step is probably the hardest. You have to decide what you want and make a commitment to it internally, a Meeting of the Mind that creates harmony of thought and action.

First, find your “why.” You won’t stick to a lifestyle change unless there’s a darn good reason. In AA they call it “admitting you have a problem,” and that’s a perfect fit. Do any of the following apply to you?

  • I have a problem working for other people. I don’t like corporate structure, and have found that it doesn’t like me too much either.
  • I have a problem with credit card debt. I don’t want to spend the rest of my life paying interest on a series of $20 purchases because I didn’t “get it” at the time.
  • I have a problem taking care of other people before I take care of my own household. I end up loaning cash to my friends, and putting my groceries on a credit card.
  • I have a problem discerning which resources I should be using, so I don’t do anything and my money just vanishes by the end of the month.
  • I have a problem with [fill in the blank] that’s keeping me from achieving my goals.

I bet that last one got you. The truth is financial freedom isn’t as complicated as people make it out to be; it’s a combination of increasing income and reducing expenses. (Granted, many people have circumstances such as disability or long term care of a loved one that can deter them from escaping to Tahiti even if they did get their finances under control, but they still might be able to obtain some peace from taking these Simple Steps to Frugality.)

Frugality is the process of reducing expenses. What are the benefits? If you reduce expenses you can change, and eventually control, the direction your money flows. Instead of paying for that premium cable package you can pay off your credit card faster. Once you pay off your credit card, instead of paying interest, you can start saving for emergencies, travel, or even retirement.

“But I like my premium channels!” you say. As a society we over-complicate the difference between a need and a want. If you work a 40 hour week and sleep 8 hours a day, how many hours can you really watch those premium channels. Would you be able to stop working overtime if your expenses were less? Much of the long term process of frugality is determining what you really can live without, which is dependent on personal circumstances, geography, etc. However, what you are willing to give up will be indicative of how committed you are. These steps are simple, but they force you to take a look at what you need, and are not for the faint of heart.

Secondly, once you’ve made your commitment, you need to involve the people directly involved in your life in the decision-making process, especially your financial partners (spouse, partner, older children). This can also apply to a roommate situation. I don’t want you cutting off the cable bill only to wake up with three sets of angry eyes staring at you in bed. The most important part of this stage is clear and concise communication:

Bad Example:
Person A: Hey, I want to cut our cable so that we can cut down our credit card bill.

Person B: Sounds great.

What went wrong here? There are no guarantees these two people are on the same page. Person B might be thinking: “Great! If we drop our credit card bill, there will be enough room on it for us to buy XYZ.”

Good Example:
Person A: Hey, I’ve been thinking about our future. I worry that we aren’t setting enough aside to enjoy each other’s company, and I start to wonder what we’re working so hard for. I’d like to start making some changes, like cutting the cable bill for starters, or eating out less, in order to pay down our credit card bill. After that’s paid off, I’d like to take an out-of-pocket trip together, and start saving for our retirement. What do you think?

Person B: I see what you are saying. I’m okay with cutting the cable bill, but I don’t want to give up our Friday night dinners, because we really enjoy them and it’s a good chance to talk.

Here, Person A said what (s)he wanted, why (s)he wanted to do it, and created a clear plan with both short and long term goals. Person B showed (s)he understood what Person A was asking and set clear boundaries of comfort.

This is just the first part of a negotiation process, but if you don’t have a Meeting of the Minds with your financial partners, you are setting yourself up for bitterness and perceived sabotage. A solid next step might be Person A saying: Okay, I get that Friday night dinners are important for us. Could we do a Saturday lunch instead? Or a Friday happy hour? We’d still get the same benefits at a lesser cost.

So in short: Make sure you know why you want to make a change, that you are committed to a different life, and that your family and/or immediate financial partners are on board, and on the same page. If you’re not sure what you want to do, or if your partner isn’t sure what’s going on, start with small compromises, lots of communication, and negotiate.

Photo Courtesy of Scarleth White

Andi B.

Andi B.