What is frugal living?

[debtprison]

I think a question that should be asked is "Why is it necessary or virtuous to live frugally?"

Certainly it may be necessary at times or for some individuals and certainly it is more virtuous than spending money one doesn't have, however, my life's goal is not to see how very little I can live on.

There is nothing inherently wrong with enjoying the fruits of one's labor, including enjoying luxuries one can reasonably afford.

This is true. It's a question of what you believe and no one has a right to tell you what to do regarding such decisions.

In my case the reason for wanting to live frugally after increasing income is in order to save and pay back debts. I plan on doing a 50/50 split of disposable income. 50% to debt. 50% to savings.

[BkinTX]

That's awesome.

[sigferl]

Thanks for your post drown. I respectfully disagree with you completely. People abused banks and credit cards, the banks did nothing but follow the rules in the contract.

The banks gave you credit to use wisely as a convenience card.

Do you blame gun manufactures for gun deaths? Do you blame beer manufactures for people becoming drunks? Of course not, and the same goes for banks.

Banks also offer CDs and savings accounts, why don't people 'abuse' them by saving to much money?

If we called them convenience cards instead of credit cards would you still blame the banks?

PS. I never want to hear that banks are the abusers.

God helps them that help themselves.

Why do you keep insisting that "the people" Abused the credit system? I feel that the people were suckered in, into getting their credit cards. The banks who issused the cards are the Abusers!

I remember back in the 70's when all the ads, the Banks, and yes, the government were pushing credit down everyone's throat. They pushed that all the interest paid was tax deductable. They issued credit lines of $500 with minimum payment being $10 and then advertised that you really needed to buy that new appliance ar whatever..blahblahblah. You think, yeh I can afford that so that's the beginning. Remember too, back then minimum wage was around $1.65 and it would take just about forever to save up to get to pay cash for the item. Why do that when you can "charge it" and deduct the interest too? Before you know it, there are all sorts of cards with higher limits being offered to you by the Banks. Next thing you know, they drop the interest deduction from the 1040s. Banks start raising the interest they charge for the money you are using and next the payments that you thought you could afford have now trippled! Wow, what a scheme. NO, the PEOPLE are not the ones abusing the cards, the BANKS are abusing the people. When my 13 year old business failed in 2001, the first thing I did was call Advanta and told them what had happened and that I really wanted to repay my balance and asked if there was any whay they would work with me on this, maybe by freezing the interest and letting me pay off just the balance ($28,122) or by lowering the minimums. They laughed at me and told me that since my business was no longer a business my interest would go from 5% to 29.9% and that if I had a problem with it then I should file BK. I just about choked.

I never want to hear that people are the abusers. THE BANKS are the abusers.

[sigferl]

Thanks for your post need. You are a definitely making the effort to be financially secure but you have to realize that you are in the minority, just go to the 'general bK' forum on this site and look at the 'filing BK multiple times' thread.

You asked me if you measured up to 'my standards'. That is a hard question and really only you know at the end of the day if you have done enough.

How many hours do each of you work?

I would also like to share some living examples from my parents who are the most frugal and hard working people I know.

-Dad worked full-time in a factory and farmed 120 acers part-time by working most evenings and weekends.

-Mom was able to can and freeze lots of food and beef, two freezers worth.

-Mom rarely used dryer, hanging cloths out do dry.

-No Air Conditioner in Ohio.

-Dad did most/all repairs on cars and house.

Living frugally before filing...well I guess we qualify.

My husband lost his good job 7 years ago and started working at half his salary, I went back to work and we have scrimped and done with out for 7 years trying pay off this mess of medical bills, coming up about 100 dollars short every month and having to cut money from other things.

So, what do we do to live frugally?

We have rented and never bought because it wasn't an option.

We live in 880 square feet with 2 kids and 2 adults.

We don't park our cars (with over 200,000 miles on each of them) in the garage because that is where the kids sleep.

We do have a dishwasher because it came with the townhouse we rent.

We live in the ghetto, a place where in the past 13 years our cars have been broken into so many times we have lost count, and not even to steal anything, just to break out windows for "fun" apparently.

Because we got in so much of a mess as a result of not having insurance, the first bill to get paid each month after rent is the medical insurance bill, to the tune of 400 dollars, plus kids medications to the tune of 100 dollars, plus doctor visits to the tune of 200 dollars.

We have a washing machine that holds only 2 pairs of jeans at a time, so we don't wash very often, and things never get dried in the drier, I have strings around my house to dry things on.

We never buy anything full price, books, toys, clothes etc, all come from good will or ebay.

We have never celebrated Christmas with gifts (thank goodness) but the kids birthday gifts went from appx 200 dollars apiece each year to about 20 dollars apiece, supplemented by the money sent to them by grandparents etc.

We don't have any pay TV, in fact we don't even have a TV.

My kids have the small hand held game boys that were purchased used by my parents (not DS) and no gaming systems.

We read for entertainment, from the library.

We don't go out to eat.

We don't go to shows, movies or music productions even though we love them.

We don't go to the doctor or dentist, the kids need it more than we do.

I spend appx 2 hours a week organizing and matching up coupons to save over 50% on my grocery bill and we eat what is on sale.

I spend months in the summer locating, picking and preserving produce to help with our grocery bill since my kids cannot eat things with preservatives (it triggers seizures for both of them) and organic preservative free is too expensive for us.

That being said, after 7 years of living this way trying to pay this off....in the past month, since we quit paying the bills...we took the kids out to dinner and bought each of them a brand new lego set with all the pieces in there. It was like Christmas morning in our house! And we are going to be able to move at the end of October into a town house in a better part of town that has some more room in it so we can actually put our kids in the house rather than the garage. Finally, we have hope.

So tell me....do I qualify for BK by your standards sig?

[IBroke]

God helps them that help themselves.

Well, "God" certainly helps the banks as well..

[justplaintired]

Garage came with the house, too small for a car, full of dh junk.

Dishwasher here when we moved in, use it, water miser setting.

3 late model cars, high miles, some rust. owned outright.

Cable tv yes, we watch it. Why? Because that's all we do.

Eat out, yes, McDonalds mostly, once a week or so. Real treat, pizza or chinese buffett.

Clothes come from garage sales or Goodwill. Can't even remember buying new, I honestly hate clothes shopping.

We do occasionally go trash picking. Yes I know groce. But here we have what they call big trash pickup and people put nice stuff on the curb, we drive around and see if there is something we want.

Buy groceries by the ads, eat whatever meats on sale. Same with veggies... Look for orange sticker prices in grocery, sold for quick sale.

Haven't been to the movies for years. Do let the kids go with friends now and then. They're kids, and they are good kids, they deserve some fun.

My kids have a Xbo360 my youngest son bought with his own money.

We have 2 computers (laptop and home computer) and we are on the net, obviously.

Have cell phones, and plan on keeping them, may do away with home phone.

Live in an old house, which we love, nothing special, but it's home and affordable.

Shut off lights, run A/C at 78.

Heat with wood and kerosene, furnace set at 58.

Wash in cold water, no hot water.

No longer get local paper.

Go to Dollar stores for necessities.

No new furniture, buy mostly used, nice but used.

Not really big spenders, happy with small stuff. Love a good find at Goodwill or thrift store or garage sale.

Feels good to be living within our means, but then we have been since Jan 08, soon as we quit cc, we had to learn what that meant. Personally, I love it. I sleep at night, and if we have a little extra cash, we go to McDonalds, or maybe get ice cream. And now it's always with cash.

[hereforinfo]

And THEY made the choice to extend it.

Yes, but the majority of borrowers do not default. The credit card default rate right now is around 9%, obviously that number is unusually high due to the state of the economy and loss of jobs. Historically it's lower than that, usually around 3-5% over the past 20 years. Why should we restrict everyone's access to credit, when the vast majority of the people don't have a problem with it?

If you loan money to someone and he never pays it back, does that make you the a-hole?

[IBroke]

Why should we restrict everyone's access to credit, when the vast majority of the people don't have a problem with it?

9% doesn't seem much but the impact of these defaults seems to be quite hefty. Looking at the consequences, it tells me that these 9% are still too many. I don't know how many of these 9% simply "misused" the system and how many fell behind due to these "misusers" because they lost their job and had no bad intentions. The banks played poker and by giving out "unrestricted" credit, they also faced "unrestricted" risks. Worked out in 91% of the cases - but that's obviously not enough.

Nobody is asking for a restriction in regards that specific loans aren't simply granted anymore. But what about stricter documentation rules? If somebody claims he/she makes income x and therefore, can afford credit y, why didn't the banks ask for proof of income? Credit history on your report is insufficient. It doesn't even include income. You can be on welfare and have a 800 Fico-Score...

I guess the reason is that it would have complicated the entire procedure and would have required additional labor, resulting in a lower profit. That's why I believe they are to blame as well. If you (bank) want to save money instead of purchasing a no-fault insurance (requesting proof of income) and somebody without coverage (consumer) damages your car, you should at least ask yourself if you made a wise decision. That's how I define the "fault" of the banks. They were simply negligent or not as conservative as other banks around the globe. The "damage" in Europe, i.e., is far less than here because they were more careful. I highly doubt that customers over there wouldn't have grabbed the money if it would have been as easy to get as it was over here.

If the consumer is expected to know that the real estate bubble will burst one day, I assume the lender has to know that as well. I guess banks already learned - now you often need a pay-stub to obtain a simple car-loan. When I obtained the loan on my $100K M5...well, NO PROOF OF INCOME needed. If I would walk into a German BMW-dealership and ask for such a car with $0 down, no proof of income and no bank-reference authorization (so the dealer is authorized to contact my bank), they would think I'm nuts..

Do you know what documentation besides my credit-application Countrywide was asking for on my $400K mortgage? N O N E - not even a bank-statement.

And then you have the people who COULD afford their payments IF they would still have their job. Very difficult to blame them. The irony is that we lost so many jobs BECAUSE we suddenly stopped the credit-society.

[momisery]

Part of the problem in trying to live within your means is that your job will not allow you to. Hubby HAS to have a laptop and internet hook up and a cell phone the receives text messaging. They send him out of town, so he has to have a GPS or a trunk load full of maps. He is trying to sell insurance at age 60 no one else but full commission will hire him. So, he is burning gas and tires. The cell and computer and hook ups are a MUST have, but we pay for them. The GPS I guess he could do maps, but have you ever tried to find a home in St LOUS or Kansas city? He has to do several stops in a day so the GPS we have on his phone rather than buy another items like a tom tom and pay for that. Where I work I bought my own hole punch and rolodex while the bank is showing profits for decades and now a loss so it will not budge on expenses. My RMs are spending money on things too to meet with clients. Where I use to work and actually made a living there was a mortgage broker. They gave me VPN so I could work from home and set it up with their own IT buy. BUT I have to buy the computer and the software for office, and have a higher speed connection which I again paid for. And for those who think this is all OUR fault.. geesh.. The home I bought and that started all this trouble was horrible and in a bad location. The appraiser who WF said we HAD to use one from their list over appraised the property and we were new to the area so we didn't know the darn place was sliding down hill. That was before the bust too. We could not sell it before the bust for waht we owed on it. And the inspector that the REALTOR recommended overlook about 40,000.00 per the next inspection in 2 years time when we tried to sell the place. Banks took advantage plan and simple. And they do with their credit cards too. The next new game in small print is the opt out. Tell me they are simply not trying to get you when they come up with a new shell game all the time. Many use their cards to get buy when wages are dropping what else can you do?

[Ifonly]

I'm not going to comment on the frugal part but on the "hardworking" part. What do you do when you literally can't find a job? I scour the papers and the internet every day. It's not as if I'm being picky. I'm going to restaurants and saying I'll wash dishes, I'll bus tables. I'm applying for part time entry level bookkeeping jobs just to earn even $100/weekly. I'll do anything to earn money right now (seriously, I might just consider doing anything). I have two college degrees, I'm a CPA and I can't find work!

Now I'm sure that I'm not the only person in this boat (I do read a newspaper from time to time, LOL) and it's not a reflection on "me" as an individual - if I bought into that, I'd be too depressed to get out of bed.

So what do you do when you're desperate to work and there is no work? Living frugally takes on a WHOLE new meaning.

I'm looking at what to cut and there really isn't much. I need the internet to look for work and hubby's job (driving around looking for work is starting to burn too much gas and I've run out of open restaurants to walk in to). The internet is a package deal with the telephone and the cable so if I cancel the cable, I will actually pay MORE than I'm paying now. Cell phone is paid by hubby's work so it's a non-issue.

I shop at Aldis and BJ's. The heat hasn't been turned on yet and I plan on trying to burn wood in the fireplace as long as I can before I turn it on. I'm sitting here with zero lights on in the house. Already downsized the car to a used car - insurance is the lowest sensible limit.

Soooo.....now what?

[hereforinfo]

9% doesn't seem much but the impact of these defaults seems to be quite hefty. Looking at the consequences, it tells me that these 9% are still too many. I don't know how many of these 9% simply "misused" the system and how many fell behind due to these "misusers" because they lost their job and had no bad intentions. The banks played poker and by giving out "unrestricted" credit, they also faced "unrestricted" risks. Worked out in 91% of the cases - but that's obviously not enough.

Nobody is asking for a restriction in regards that specific loans aren't simply granted anymore. But what about stricter documentation rules? If somebody claims he/she makes income x and therefore, can afford credit y, why didn't the banks ask for proof of income? Credit history on your report is insufficient. It doesn't even include income. You can be on welfare and have a 800 Fico-Score...

I guess the reason is that it would have complicated the entire procedure and would have required additional labor, resulting in a lower profit. That's why I believe they are to blame as well. If you (bank) want to save money instead of purchasing a no-fault insurance (requesting proof of income) and somebody without coverage (consumer) damages your car, you should at least ask yourself if you made a wise decision. That's how I define the "fault" of the banks. They were simply negligent or not as conservative as other banks around the globe. The "damage" in Europe, i.e., is far less than here because they were more careful. I highly doubt that customers over there wouldn't have grabbed the money if it would have been as easy to get as it was over here.

If the consumer is expected to know that the real estate bubble will burst one day, I assume the lender has to know that as well. I guess banks already learned - now you often need a pay-stub to obtain a simple car-loan. When I obtained the loan on my $100K M5...well, NO PROOF OF INCOME needed. If I would walk into a German BMW-dealership and ask for such a car with $0 down, no proof of income and no bank-reference authorization (so the dealer is authorized to contact my bank), they would think I'm nuts..

Do you know what documentation besides my credit-application Countrywide was asking for on my $400K mortgage? N O N E - not even a bank-statement.

And then you have the people who COULD afford their payments IF they would still have their job. Very difficult to blame them. The irony is that we lost so many jobs BECAUSE we suddenly stopped the credit-society.

We were discussing whether it's the bank's fault or the borrower's fault they got into trouble with debt, not who's to blame for the economic meltdown. If the debtor lies about his income, how is the bank the "abuser" for believing him?

[Ifonly]

And I don't blame the banks for me accepting the 2nd mortgage, etc. but I do agree with the negligent part. We always paid our real estate taxes outside of our mortgage and Countrywide used to ask us for proof of payment every year which we always provided. Well, in 2008 they simply neglected to ask for proof. That isn't why I didn't pay the taxes, my losing my job is the why but Countrywide could have protected themselves by doing a little due diligence. Now they're stuck with the back taxes for 2008, 2009 and probably 2010 by the time they foreclose - I don't feel bad for them one single bit. I can't pay what I don't have, they wanted to foreclose - well, now you have what you wanted.

[hereforinfo]

9% doesn't seem much but the impact of these defaults seems to be quite hefty. Looking at the consequences, it tells me that these 9% are still too many. I don't know how many of these 9% simply "misused" the system and how many fell behind due to these "misusers" because they lost their job and had no bad intentions. The banks played poker and by giving out "unrestricted" credit, they also faced "unrestricted" risks. Worked out in 91% of the cases - but that's obviously not enough.

Nobody is asking for a restriction in regards that specific loans aren't simply granted anymore. But what about stricter documentation rules? If somebody claims he/she makes income x and therefore, can afford credit y, why didn't the banks ask for proof of income? Credit history on your report is insufficient. It doesn't even include income. You can be on welfare and have a 800 Fico-Score...

I guess the reason is that it would have complicated the entire procedure and would have required additional labor, resulting in a lower profit. That's why I believe they are to blame as well. If you (bank) want to save money instead of purchasing a no-fault insurance (requesting proof of income) and somebody without coverage (consumer) damages your car, you should at least ask yourself if you made a wise decision. That's how I define the "fault" of the banks. They were simply negligent or not as conservative as other banks around the globe. The "damage" in Europe, i.e., is far less than here because they were more careful. I highly doubt that customers over there wouldn't have grabbed the money if it would have been as easy to get as it was over here.

If the consumer is expected to know that the real estate bubble will burst one day, I assume the lender has to know that as well. I guess banks already learned - now you often need a pay-stub to obtain a simple car-loan. When I obtained the loan on my $100K M5...well, NO PROOF OF INCOME needed. If I would walk into a German BMW-dealership and ask for such a car with $0 down, no proof of income and no bank-reference authorization (so the dealer is authorized to contact my bank), they would think I'm nuts..

Do you know what documentation besides my credit-application Countrywide was asking for on my $400K mortgage? N O N E - not even a bank-statement.

And then you have the people who COULD afford their payments IF they would still have their job. Very difficult to blame them. The irony is that we lost so many jobs BECAUSE we suddenly stopped the credit-society.

How would asking you for proof of income have prevented you from default? Did you overstate your income? Are you saying that most people lie about their income on loan applications? If not, then how would forcing the banks to verify income make much difference? Personally, I think a lot of people did lie on those no doc loans, the borrowers and the mortgage brokers. The original intention behind those types of loans were good, until people got more and more creative and took advantage of them.

I agree 100% that the banks should always verify income and employment. I just don't think the government should force them to do it with a law, per se. Of course there are ways to go about that without making it a law. The government-backed mortgage investors (freddie, fannie) can say they won't buy any loans that aren't fully documented (which is what they are doing now anyway). The banks are free to fund their own loans or sell elsewhere if they don't want to abide. The problem is, those government entities pretty much control the industry and determine what most of the banks will do and what types of loans they will offer. FM and FM are the ones that lowered the criteria to begin with, pushing all of these risky loans. I don't have much faith in anything backed by our federal government. whenever our government regulates something to try and "protect" us from ourselves there usually ends up being some other unintended and unexpected consequences. They just create some other problem that needs to be fixed or regulated down the road.

[IBroke]

We were discussing whether it's the bank's fault or the borrower's fault they got into trouble with debt, not who's to blame for the economic meltdown. If the debtor lies about his income, how is the bank the "abuser" for believing him?

Well, IMO, these topics are tied together.

Don't you think people get in trouble with debt when they lose their job due to the economic meltdown? Don't you think banks needed a bailout because they didn't get their money back due to the high unemployment rate?

A bank is responsible for making wise decisions and the determination of risks. I've been working at a bank several years ago in Europe so I know what I'm talking about. There is no place for "believing" in the banking business - "believing" belongs to church and religion. And if a bank is not willing to invest in efforts to keep losses low, they haven't done their homework. They were NEGLIGENT. Period.

Did you know that the people who worked for some credit-card call-centers received an extra-bonus if they managed to CONVINCE their customers of a HUGE credit-line increase ALTHOUGH the customers weren't even asking for it? Is that responsible lending? Is it? They increased the credit line based on what information? Did they ask for a tax-return? And do these companies deserve a bailout after they had to lay off these employees in the call-centers because the customers used the credit the bank was "convinced" they should have? So what about the credit these call-center employees obtained? What about their mortgages and CCs? They are now a factor in this economic crisis WITHOUT their own fault.

In our days and economics, almost EVERYTHING is tied together.

BOTH are to blame. Ever heard of the "don't ask, don't tell"-policy? Applied to credit-applications in recent years as well.

Banks weren't concerned if consumers were able to pay their debt. Debtors weren't concerned either and needn't provide proof of income.

If that's not negligence from BOTH sides, I don't know what is...

[IBroke]

How would asking you for proof of income have prevented you from default? Did you overstate your income? Are you saying that most people lie about their income on loan applications? If not, then how would forcing the banks to verify income make much difference? Personally, I think a lot of people did lie on those no doc loans, the borrowers and the mortgage brokers. The original intention behind those types of loans were good, until people got more and more creative and took advantage of them..

Well, I might have prevented me somehow. Indirectly. I lost my job due to the meltdown. The company simply stopped doing business in the US. Many clients were using credit to obtain goods and services at my former company. Debtors who obtained loans they couldn't pay back forced the banks to stop handing out credit, reduce credit-lines etc. That led to the end of my employment. Now what if these debtors would have stayed current?

It's a vicious circle because on the other hand, I can't blame them either. Why? Think about all that money that was spent irresponsibly: How many jobs did it create? How much income did it provide? At least for the time it was flowing...It truely is ironic.

I didn't overstate my income and made timely payments on my debt until I lost my job. I do believe that many people lie on their credit-applications. Not about major things like the name of employer or if they are employed at all. However, a little income boost to be on the safe side happens from time to time - of that I'm sure.

I agree 100% that the banks should always verify income and employment. I just don't think the government should force them to do it with a law, per se. Of course there are ways to go about that without making it a law. The government-backed mortgage investors (freddie, fannie) can say they won't buy any loans that aren't fully documented (which is what they are doing now anyway). The banks are free to fund their own loans or sell elsewhere if they don't want to abide. The problem is, those government entities pretty much control the industry and determine what most of the banks will do and what types of loans they will offer. FM and FM are the ones that lowered the criteria to begin with, pushing all of these risky loans. I don't have much faith in anything backed by our federal government. whenever our government regulates something to try and "protect" us from ourselves there usually ends up being some other unintended and unexpected consequences. They just create some other problem that needs to be fixed or regulated down the road.

I don't think it takes a law either. Banks are already (well, I don't think "already" is the right way to put it) looking closer on these applications and ask for things like pay-stubs when you want a car-loan. Is that bullit-proof? No. Can you still lose your job the next day? Sure. But it's a start.

It's not necessary to make that a law because it just makes sense. And if a particular bank still believes it's not necessary, that's fine with me. HOWEVER, I don't want THEM to get a government bailout due to THEIR NEGLIGENCE.