Frugal Living




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Thoughts on Frugal Living, Saving Money and Retiring Early

I have always wanted to retire early. By retire, I mean, quit my full time job and get a fun little part time job that makes me just enough money to live on. I recently learned that this is what is known as a "soft landing" retirement. This seems ideal to me. I like to have plenty to do to keep me busy, but I also like to be able to use my time the way I see fit.

In order to get to this point, I will need to accomplish three things:
1) pay off the mortgage on the house, 2) save up enough money to last through retirement (ie. until both my husband and I die), and
3) choose a fun part-time occupation for my retirement.

#1 is easy: I make a monthly payment on the mortgage, which is as much as I can comfortably make: the minimum plus about $250. If I continue to make this payment, our mortgage will be paid off in December of 2015.

After that date #2 will kick into high gear. The amount that I was paying toward the mortgage, will then go into regular & retirement savings accounts. I don't want to divert it all to IRA savings because I plan on retiring early, and don't want to incur any early withdrawal penalties, if I need my money prior to turning 65. I also plan on living as long as possible, with a goal of at least 100 years old. That means I will need a lot of money for retirement, and a good plan to take care of myself and my husband in our old age. This amount is decreased though by #3, the fact that my husband and I plan on earning a little money to offset expenses in our retirement.

In the meantime, I will work on increasing earnings and decreasing spending so that we can save more. As far as increasing earnings goes I have very little desire to get a job that pays more money, because that might mean I have to work harder. I don't think life is about working - especially if that work consists of doing menial tasks that don't seem to improve anyone's quality of life in any way. Maybe if I worked to find cures for deadly diseases I might feel differently, but I am an office assistant for a large corporation, so my goal is to do that for the least amount of my life as possible. Instead of working to move up the corporate ladder, I do odd jobs on the side in barter exchanges. I handmake gifts instead of buying them for others. I maintain a dance studio website in exchange for free dance lessons. I grow a vegetable garden in the summer to decrease grocery costs, and live healthier. These things make money by saving money.

Here are some other things that we have done to save money:

- Get rid of cable TV. This is really easy to do now that free digital TV is available with an antenna. We got rid of cable about 6 months ago, and haven't missed it a bit. We still rent DVDs sometimes, but we did that when we were paying for cable too. We are saving $60/month or a whopping $720/year by doing this.
- Get a cheaper internet service. We were paying $49/month for Earthlink highspeed internet. Now we have a $10/month DSL service with AT&T. Granted its a special deal only available to new DSL customer who also have landline service with AT&T, but my point i
s - look around and see what deals are out there. DSL is a little slower than cable broadband was, but for the price difference, I hardly notice it.
- Change to a prepaid cell phone. This idea isn't for everyone, but for us it made total sense. We were paying $65/month for a family plan with US Cellular. Every time I called them to see if we could get something cheaper, they tried to give us more minutes. I would point out that I had used 45 minutes in the past month, and my husband had used a mere 11 minutes, so clearly we didn't need more minutes. If you are like us, and only use your cell phones for brief calls home to ask your husband to preheat the oven, or to say that you are going to be late, then the prepaid cell phone is for you. We recycled our old cell phones, and got new ones with Virgin Mobile. The plan only requires us to top up (add money) $20 + tax on each phone every 90 days. Unused money accumulates, and can be used later. Depending on the plan, minutes cost about 10 to 25 each. Neither one of us ever needs to top up any more often than 90 days, which means that we spend $14/month on cell phone service, versus the $65 plus tax and "other fees" we were paying before.

These three changes alone save us $1,800 per year!

One other important thing you should do when you find a way to cut a cost - estimate your monthly savings and really SAVE it. Set up a monthly automatic deposit from your checking account to a savings account for that same amount. You'll never miss it, because you were using it to pay a bill before, but it you leave it in your checking account you will probably find something else to spend it on, and then you haven't really saved that money, have you?




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