Image by M. Gustafson Gervasi, 2013 - Space Shuttle, Air & Space Museum at Dulles
Is frugal living a goal for you? Are you already frugal but wanting to take it up a notch? If so, then you must embrace the fact that at the heart of a frugal life is an ability to view life based on efficiency. Defined, efficient means achieving the greatest output from the least amount of input. Once upon a time I resisted this calculated approach to frugal living, I held on to my view that what mattered the most to a frugal life was the ability to stretch a penny. Yes, that is a factor, but when you view life through the efficiency lens you will take frugal living to an entirely new plain. Making this switch was facilitated by my marriage to an engineer seven years ago. Engineers -- the masters of efficiency. It's all about the numbers, not about the feelings. Sound cold? If taken too far, yes. But when applied to an amazing array of financial decisions it will result in not only a frugal life, but the road to a nice net worth as well.
Take housing for example. We married in 2006, the height of what we now know as the housing bubble. Newly married professionals out of school, everyone assumed we'd buy a home. Wrong. My newly minted husband ran the numbers, scratched his head, and muttered "it just doesn't make sense....renting is by far more efficient based on the $ per square foot". Unmoved by emotional attachments to property, we rented. And we saved. And we rented even though a baby joined the mix. And we saved, having no debt whatsoever. And then a second baby joined the family in late summer 2010. Three months later we were out walking and noticed a home (while renting my husband routinely scanned house listing monitoring the price per square foot), and it caught our attention. The numbers made sense, owning it would be more efficient than renting. And so, just as the housing market slid under water and people were shouting how horrible it was to buy, we bought, for $85,000 below its assessed value. Our savings meant we had a substantial down payment, avoiding PMI. Driven by the numbers, we avoided the biggest financial bubble in recent history. All because of efficiency.
But it is not just the big financial purchases that we are efficient on. He is an engineer and knows that all things have a failure threshold -- it will fail, the question is when. As a result, we know make an effort to minimize opening our garage door. In our new child care routine I have the kids while he works, and then he has the kids while I work, and we routinely trade off his car when we switch roles. Instead of pulling into the garage, he just leaves it in the drive. Metal wearing against metal will fail. He estimates it has between 3 and 5 thousand openings/closings in its life. So we use them knowing that we are using them up. It might get us an extra year or two out of the device. And the same goes with electronics (remember, he is an electrical engineer who designs circuit boards for electronics) battery life -- batteries on phones, computers, cameras, etc. can only be re-charged so many times. The lesson -- don't run the battery unless you have to, otherwise keep it plugged in. Want to drive him nuts, use your lap top to watch a DVD on battery mode -- highly inefficient. Taking care of the products means we get more life out of them, and it saves money.
But the biggest efficiency change I have taken is in regards to time. What does my time cost? As an attorney my time in the office is well compensated. I do not want to work a ton while the children are young, so I find myself home more than most working lawyers, a perk of having my own practice. I now view most activities as "how will this enhance or drain my energy for work or parenting?". If it is a drain, I just don't do it, even if it would be deemed frugal. Case in point, garage sales. Earlier this Spring I was dead set on holding a day long sale in conjunction with our annual neighborhood sale -- what is more frugal than selling your old stuff! Items were sorted, little round stickers stuck on items, etc. And then I watched the neighbor across the way have a sale.....for 5 days in a row he puttered in his yard, cars would stop, an item would be carted away. It seemed....draining. And then I ran the numbers. I'd probably put a solid 8 hours into the sale -- set up, selling the day off, clean up. And I realized it would be 8 hours away from both my kids and my clients. And the potential revenue not that much -- most of the baby items I planned to sell were ones I had bought second hand. If I put 8 hours into my legal practice I would be way ahead of the sale (something I know not everyone can do, but it is a factor in my efficiency thought process). So I gave away a bunch of items to a young family expecting a child, and am using Craigslist to sell the higher-end products. Far more time efficient, and I have more time with my kids and am more rested for when I am at the office. Already sold was an REI Child Carrier. We bought it from clients of mine for $50, and used it exactly one time.
Think about financial transactions as though it were a machine. Remove emotion from decisions, or at least identify whey emotion is motivating you (don't fall in love with "the" house). Realize things break eventually, nothing lasts forever. And figure out how much your time is worth. Adopt those ideas, and you'll be traveling down the path of frugal living, towards a nice net worth.