The Four Phases of Frugality

In Need of a New Wallet by somegeekintc on FlickrI have not always been frugal. In fact, there are times now where I often feel less than frugal, as I occasionally make an impulse purchase or indulge in something that isn’t exactly frugal. But hey, I’m human.

What I have noticed over the years is that our frugality has gone through very distinct phases, nearly coming full circle (but not quite).

We’re Deep In Debt – Time to Cut ALL Spending

A few years ago we found ourselves deep in debt, and decided we’d had enough of sending our paycheck to banks and credit card issuers. I returned to my frugal roots (which I’d lost for much of my 20s, or as I like to call them, my “Spendthrift Years”).

We instantly recognized that to reduce our debts we had to work on both sides of the equation – income and outgo. I also recognized that I couldn’t instantly boost the income side of that equation, but we could make a significant dent in expenses. And make a dent we did.

We canceled the cable. We stopped eating out. We stayed out of stores, movie theaters, and anywhere else that might try to separate us from our money. To us, that money represented something very precious – a debt payment – one step closer to debt freedom.

OK, We Still Have to Have SOME Luxuries

That first phase lasted a good six months. We made significant progress towards debt freedom in that time. Then life happened. My mom had a devastating illness that rattled our family, and after a year of grueling rehabilitation following a stroke, she died at the age of 53. Relatively healthy one week; then in the hospital for 102 days, and rehabilitation for months to follow.

It was a life-altering event for all of us. For me, it was a reminder that life was short. I began to question our radical spending cuts. We weren’t having much fun. The kids missed their favorite television channel. My wife and I missed the occasional dinner out as a break from the routine of cooking and cleaning. We all missed taking an annual vacation (which we had skipped a couple years in a row throughout the ultra-frugal phase).

I felt like a big, mean, financial ogre ruling over the household with an unyielding zeal for frugality.

So, we decided to loosen the tight grip on our finances, just a bit. We did ultimately reach debt freedom, but it probably took a little longer than it would had we continued our Spartan existence.

Debt Freedom – Ready to Spend Again

Once we reached debt freedom, we went a little bit nuts. Seriously. We made up for our lack of vacations with a trip to Disney World – the first for our kids. There wasn’t very much frugal about that trip, but we decided our first visit would be a fun one without much consideration to costs. Admittedly, this strategy was not financially smart in hindsight.

In the coming months we also did a little clothes shopping, and spent money on a few other things that had been put off for months (even years). I’m not proud of that time, because looking back, it was sort of antithetical to everything I’ve written here at Frugal Dad. Again, what can I say, I’m human.

That Was Fun, Now Back to Frugality

I guess the major difference in the old me and the new me was that this time around it was much easier to recognize my spendthrift ways and get control of them. Rather than putting everything on a credit card (which has a way of really adding up), we decided to go back to an all-cash basis, with the occasional debit card purchase.

We took a more frugal vacation this fall, spending a week in the mountains and enjoying the peace and quiet (a much different setting than Disney). We clip the occasional coupon, order water with our meals and split the occasional entree. We’d rather stay in and watch a movie than go to the theater. We look for sales to proactively buy seasonal clothing for the kids. You know, the little frugal moves that don’t cause much pain, but still help keep that expense side of the equation from creeping up to high.

I’ve learned many lessons over the last few years, but this last one was the most important. Being able to recognize when you are off track and make small course corrections is really a key to financial success.

The old me would have never recognized I was off track, and if I did, I would have just floored the accelerator into the nearest wall. I lacked the financial maturity (and I’m not referring to age) to keep myself in check.

So I’d encourage you to celebrate milestones, like reaching debt freedom, with a little spending splurge. Do something you’ve been longing to do, but put off because you were in debt. Upgrade an item or two around your home that adds value to your life.

Should that spending slope begin to feel like a slippery one, remember what it felt like to be in debt and adopt our family motto, “Never again!”

Comments

  1. I agree with giving yourself some room to spend every now and then. But like you said, you need to be ready to reign it in again if need be. It’s such a vicious cycle. It still baffles me that so many people can’t adjust what they are spending. When I recognize that we are spending too much I take a week and I start writing down every single thing we spend. It gives me an idea of how fast it goes out. And with teenage kids and all kinds of activities it can go out rather quickly.

  2. I totally relate to this post. I feel like money management and weight management are so similar. You do really well so you give yourself some “freedom” and next thing you know, you’re veering in not good territory again. Balance is tough and it’s not a one-time thing which is what is so hard about it. Great post.

  3. I really appreciate this – we have a good sized family (five sons, 8-18) and you can imagine the expenses involved with that. We don’t live extravagantly, my wife and I earn a fair wage, but with some valid debt (medical bills) and careless debt (credit cards), the bank ledger gets a bit thin. We’ve been debt free before (except for the home) and are working our way back to that place again by spending smarter. It’s doable, and it’s gratifying.

  4. I read this story and have too much to say. In fact, I want to say that I was deep in debt.Because I like shopping very much. Often, I was happy in the process of shopping and spending,but felt guilt and shameful when I back home. But now, I still shop frequently. However, my budget is in good condition with the help of coupon sites CouponSnapshot, RetailMeNot and some others. Maybe I am not frugal ,but I think I am a smart shopper.Just as you said, back to Frugality and to be debt -free is fun!

  5. I agree with the sentiment “Never Again.” It’s so much fun to have the occasional splurge, but the key is that we’re in control of our money. That is pivotal because before our money was controlling us. We might not have known it, but we were not in control, just as you mentioned in your journey. Thanks for sharing your process with us. Cheers, and congratulations on the financial maturity.

  6. Wow, Jason! I had never known of Frugal Dad before. I like the “some luxuries” and “ready to spend again” phases. I know too many people who go on financial FASTS, only to wind up in a fiscal gutter, hung over from too many emotional impulse buys. Constant “cold turkey” doesn’t work for everyone. This is a great site. I’ll be back!

  7. This list is so true! I feel myself going through the “That was Fun” phase every so often. It’s so easy to spend this “extra” money now that I’m out of consumer debt.
    I’m just glad we have blogs like this to bring us back down. It’s much like any addiction, you need a sponsor. We’re never cured!

  8. I wonder if Frugal Dad ever made it “off the grid” as he referred to in one of his articles. We have found several ways to create/provide alternative sources of power; wind, solar, etc. But would like to know of others who have successfully done so. We hate to put resources into something that is only a Great Idea but really won’t work. You see so many ads and books about this issue now days. Would appreciate any comments or helpful info!

  9. Interesting analysis.
    My two thoughts are:
    Anyone mired in grinding poverty with no perceived way of emerging from it in their lifetime is likely to need a splurge – at times.

    If you keep your standard of living constant while your imcome increases and your debt decreases you will be way ahead.

  10. I’m a bit late to this post, but great post.

    Maintaining your good financial health is not unlike maintaining your physical health. When you’re young, you don’t have to worry about it as much. You burn more calories, and are perhaps more active, so you can take some liberties with your diet.

    As you age, responsibilities happen. You become less active. Your metabolism slows, and all of a sudden you’ve gained 30 pounds.

    To shed that weight you have to make changes to your diet. Cut out some ‘frill’ foods. Eat cleaner. Become more active.

    And yes, you have to recognize when you’ve gone off track. The scale will tell you. Your clothes will tell you.

    We all wished we could eat whatever we want and not have to worry about the consequences, just as I wished I could buy that Porsche in the showroom. But most of us recognize that it’s not the best approach to maintaining our health, both physical and financial.

  11. I really like this post but I 100% disagree with the fact that this is a cycle. I think you can work your way from the 1st phase of frugality to complete financial success.

    I wrote a counter article on my blog about what I believe the 4 stages of frugality to success are. http://ayoungdad.com/the-4-phases-from-frugality-to-success/

    ps. Don’t worry I gave you credit and linked to you so people can see the original article.

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