New Year Resolution #2: Live Frugally Ever After
My second resolution is less about a particular action (like checking my credit reports) and more about a way of life.
I spent much of my early 30s getting out of debt, as my first Queercents post explained. I spent my middle 30s getting situated financially: that included saving for the down payment for my first house, which I finally bought in 2004; setting up a 529 college fund for my niece; and contributing in earnest to my 401(k) retirement fund.
Now, in my late 30s, I resolve to get serious about a way of life. My resolution is to firmly break out of any remaining “consumerist” lifestyle choices, and set my partner and me up for financial freedom later in life.
Those two things”the consumerist lifestyle, and financial freedom”are intimately related. If I allow myself to chase after the latest cars, clothes, gadgets, or vacations, then I am blowing my chance to become financially independent. By that I mean, at some point in life not having to work and being able to live (frugally) off investments and interest.
The last few years have definitely been a bit spendier than I would have liked, in order to set up my household. When my old college car finally died after 10 years of loyal service, I bought a Toyota Prius (a hybrid that not only saves a lot of gas, but will provide a hefty tax write-off for 2006). I spent a lot buying the house itself, plus new carpet (because the original one was literally bare in places) and new bathroom sinks (all of them had rusted through); interior paint throughout and a refinished deck (both of which I did myself, saving a lot on labor costs).
And I think that’s all fine: it’s good to set up home, and over time the new car will save a lot on gas and maintenance. But I can finally say, regarding my lifestyle, “things are good.” Sure, there are nifty items I would like, but these are wants, not needs. So it’s time for a clear set of guidelines in my life.
1. Long term trumps short term. A friend recently called to invite me and Rob on a gay cruise from New York to London (and I love London!) But frankly, for the same money, I’d rather pay off my Toyota car loan two years early. This will save about $1,980 on interest. Over 30 years at 10% appreciation, that invested $1,980 will multiply more than 17 times and become $34,549. That heap of savings can pay for quite a few cruises, and costs me nothing but time.
2. Quality of life is more important than quantity of things. I recently received a pretty great job offer doing something similar to my current job, but for a *lot* more money elsewhere. But the new job would require going in to the office every day, whereas now I can work from home a lot. And the new job doesn’t offer domestic partner health insurance, while my current job does. I’d rather skip the commute and insure my partner has excellent benefits, even if it means passing up a pile of money.
3. Never go into debt if I don’t have to. I’d love to remodel our kitchen. The linoleum floor is pitted, the cabinets are tired, and the lighting sucks. Friends of mine recently remodeled their kitchen, and it looks absolutely fabulous. Unfortunately, the remodel cost nearly $100,000 and six months later, my friend was laid off from work. No doubt my talented friend will soon find another job, but in the meantime it’s pretty stressful for him. Frankly, I can live with my kitchen for now. If I desperately want a new one, I can save up and skip the home equity loan.
So those are my three guidelines this year, and I think they will produce far more happiness than their opposite.
What are your resolutions?
Good for you! Very sensible resolutions! Well….back in 2000 i dropped to part time due to my battle with Lupus….. i am happy to say i am now in remission….. and just moved back up to full time on Dec 24. How’s a five figure raise for a christmas present? :o) While being part time I learned how little i can live on….and the difference between wants and needs……the first few months back to full time i will be socking money away for emergencies…..the next few months after i accomplish that i will be paying off credit card and a loan. After that i am debating on investing in mutual funds or CD’s.