January Extreme Frugality Challenge!

Happy new year everyone!  I hope 2016 was successful for you, however you define that in our own life.

A lot of folks start off the new year with a “new me” approach.  Some resolutions, a new gym membership, that sort of thing.  While I’m not a formal resolution type of guy, I do have plenty of goals for 2017.  Among them are my current yearly goals.  Every year, my list includes seeing a new country, visiting family, reading more, and volunteering.  In 2016, I didn’t quite hit my volunteering goal, but everything else worked out great!

One of the things on my list for 2017 is to cut back a bit on my spending.  I’m relatively frugal already, but it’s one of those things in my life that’s important to me, so I want to keep getting better.  Every so often, I find myself getting stuck in a consumer whirlpool, and my quality of life decreases directly with the amount of junk I have.  Time for a check up!

If you’re not familiar with the Frugalwoods, they’re very much in the same genre as Mr. Money Mustache, whom I mention from time to time here on the Financial Hippie.  I’ve added their site to the Resources page, so be sure to check them out more often!

They’ve put together a great little challenge, called the UBER FRUGAL MONTH!

Their Uber Frugal Month challenges participants to…

1) Examine all spending

Really look at everything, save receipts, track it all, and take a long, hard look at what you spend.  It may surprise you to see the small decisions you make adding up to quite a sum by the end of the month.  I’ve been tracking everything on Mint for a few years now, so I have a decent handle on where everything is going.  Still it’s good to adjust; I find some learning processes take a long time, and work much better as a manual exercise than an automatic one.

If Mint isn’t your cup of tea (get it?) I’ve heard great things about Personal Capital as well!

2) Determine mandatory versus discretionary spending

This is definitely an important step.  You have to be honest with yourself, what is truly mandatory spending?  Rent, food, utilities all come to mind.  Make sure you think about even those though!  A video game budget?  Pretty clearly discretionary spending, you wouldn’t die without that new game, would you?  But food, well, you do need it.  But how much of that food is eating out?  How much is wasted?  How much is spent on junk food?

My “mandatory expenses” include rent, utilities, child support, and gas (about $80/month, I’ll explain when we wrap all this up).

Hint:  Very little spending is actually mandatory!

3) Identify any ability to reduce or eliminate spending, then pull the trigger

Build on step 2 by actually reducing some of that discretionary spending!  Eating out is a great example, and I don’t think many people truly realize how expensive it can be.  Add up the bill, the meals tax if you have one, tip, did you order a bottle of wine or a draft beer?  And how did you get there?  Yep, add in the gas and mileage, the parking meter, and the ticket for when the meter ran out..

I still eat out occasionally, but much, much less than some folks.  This is a huge spot in your wallet to save money!  Take all that money you saved and put it to work for you!

4) Live super frugal for one month

Don’t take out your wallet for anything this month!  Ok, I know you’re going to have to spend money on something, at east once.  But try to avoid spending as much as possible!  A lot of money can be saved just be a little extra planning:  pack lunches, buy only what you need, peruse Craigslist before heading straight to the mall.  One of my favorites – public transit.  The transit system in Boston isn’t quite world-class, but I’m sure it’s saved me a small fortune on gas, vehicle depreciation, parking fees, tickets, and everything else transportation related.

5) After all this, figure out what level of frugality is comfortable in your life long term

This challenge is all about learning.  Learn about yourself:  What do you spend your money on?  Why?  Where could you save?  The key to this kind of thing is not judging yourself.  Simply bring awareness into your habits.  With awareness comes the ability to change your life.  Even if it’s only one small step at a time!

Uber Frugal Month Challenge:  the Financial Hippie Expansion

So, I decided to hop on board.  Be sure to sign up for their emails and pearls of wisdom throughout the month, to keep you on the right track!  In the interest of realism (and maintaining my relationship) my girlfriend and I added a few new rules.  Simple stuff, and I encourage you to tailor this sort of challenge to your own goals and needs as well.  Feel free to use these same rules if you’d like!

Expenses not Included

We chose not to include one major expense during the month of January:  car insurance.  I pay my car insurance in full every year, and the bill happens to come in January.  One major expense like that, and Uber Frugal Month is doomed, so we opted not to include it.  If I had better planned this exercise, I would have simply paid the insurance early, in December of 2016, and been done with it.

Three Freebies

I know, I know, this is practically cheating, but hear me out.  The girlfriend has some family in town this week that we don’t get to see much.  These are kind of a “get out of jail free” card, if they want to grab dinner or go out for drinks.  Only 3 chances, and I’m hoping we don’t even use all of those!  By mid-January, we should be well on our way to uber frugal lives!

I hope to gain a few things at the end of this month.  Obviously, I’m hoping to jumpstart my savings for 2017.  While spending less, I’ll be putting more into my retirement and savings accounts this month, and I’ll be able to get a headstart on my 2017 savings goals.  The second (and probably more important) goal is to use this challenge as a bridge for communication.  I’ll leave it at this:  money isn’t always an easy topic to talk about, especially with those you love.  I hope we can align our goals and values a little bit more, and each of us will be able to see the other’s point of view more clearly.

With that, I’m off to find some fun free things to do this month!

I encourage you to take the challenge too, wherever you might be in your finances.  It’s great to practice living simply for a bit, and saving money makes it even better.

Wishing a happy, well-traveled, and prosperous new year to you all!

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