Frugal Tips for Soaring Inflation and Stock Market Crash

Classic Frugal Tips for Turbulent Market Times from Millionaires

Why reinvent the wheel?  Here are some of my classic go-to inspo tips for rocky market days, straight from the minds of seven-hundred and thirty-three millionaires.   I first published some of these tips in 2009 and they still work so well that even millionaires continue to do them after topping their number and building additional wealth.

Thomas J. Stanley, Ph.D., author of the Millionaire Next Door, interviewed those millionaires, with a net worth of $1 million or more, and catalogued this approach to living in The Millionaire Mind. You can get it on Amazon or from the library.  You can't go wrong following their frugal tips! 

Keep in mind that this group has a median net worth of $4.3 million.  Even with that level of wealth in mind: 

• They use Costco (or Sam's) and bring a shopping list before hitting the store.  It saves time and money.
• They buy household supplies in bulk.
• They don't spend much on cars. ($41,000 was the most ever spent) 
• They never spent more than $38 on a haircut including tip.  Barbers are cheaper than ladies hairdressers and can often give a better cut.
• They often buy pre-built homes, or foreclosures.  The majority of them live in homes that are forty years old or older.  
• Millionaires have shoes resoled or repaired.  
• They have furniture re-upholstered. 
• Even millionaires raise the thermostat setting on the air conditioner during the summer.  (See Michael Blue Jay's electricity site below for the fun in all that!)
• Usually they only vacation overseas once every two years.
• They do use tax advisors. 
• For fun they attend a child's sporting event, visit a museum, or play cards with great friends.  It's cheaper and more gratifying. 
• They stay married. 

A frugal tip anyone with a computer can use starting today -- calculate how much you can save by biking instead of driving, or how much money you can save turning up the thermostat by visiting Michael Blue Jay's Saving Electricity Site. 

I used Michael's calculator to find out which appliance was driving up my electricity bill -- it was the clothes dryer!  Michael estimates about .35 cents per load of clothes.  Not a lot except I dry a bunch of clothes every week.  And it seems to cost more in my area, here's how I calculated the savings of using an indoor dryer system (fancy name for clothes line!). 

For a month I clipped my clothes to a shower curtain and the bed sheets and towels hang outside on the porch.  I live in the hot south, so it doesn't take long to dry the sheets and towels.  (Plus they smell fantastic this way, no dryer sheets needed).  

My experiment saved me $35 in one month.  That's $50 that I would have to earn at a job ('cause - well - taxes).  Times 12?  $600 per year!  Passive income in a way.   I can't make $600 a year on CD interest with $100,000 saved right now.  Sweet frugality fruits, plus I actually enjoy hanging my clothes.  

The Millionaire Mind - I highly recommend this book to get a glimpse of the frugal lifestyle that pays off.  It's available on Kindle from Amazon and I'm sure it's available at your local library.  

What's your favorite frugal tip?  I'd love to hear your comments below. 

Money Screw Ups: And the Frugal Living Lessons that Will Save You - 1

2015 was quite a money ride.  Some of the progress toward financial freedom made following my own frugal living tips (outlined in this post "Can I make it on $3k per month?"  got tossed overboard.  
  

Cushion the Body Blow with Frugal Living 

I can recover because my frugal living ways helped me saved.  That and the personal finance software addiction and fascination with minimalism and aggressive downsizing. 

But my pride and confidence hit the surf and it felt like I slammed into concrete.   Worse, it may have derailed complete financial freedom by a year or more.  

And some of it I could have avoided by listening to those much wiser than myself.     

Surfing Lessons From the Sages

1.  Retirement really is a psychological journey and you might want to prepare for that.

The first time I retired was about 15 months ago.  

As the retirement sages on www.earlyretirement.org said might happen,  I experienced a sudden depression. 

I wasn’t ready psychologically or emotionally, which affected how I dealt with the other surprises to come (i.e., not great). 

Just like every one said -- a great deal of your self ­perception can be tied to your work identity and title.  

In the past party talk - "So, what do you do?"  

My answer  - "Oh, I am a marketer and public relations professional."  

Notice - I didn't say what I do.  I said "this is who I am."   

It took about a year to adjust.  Therapy helped.  So did part-time work and volunteering for professional associations.  

There are plenty of resources on the web about transitioning to a new life phase, even AARP has a coaching service available.    

2.  Sound financial planning is not an exact science.  

I asked all the wise ones on the early retirement forums for advice as to "don't I have enough to pull the plug on this job?"  

The answer wasn't as positive as I expected.  As much as I had saved, they still said, "you need more of a safety cushion, nobody gets this stuff right on the money.  Hold on!  Give yourself a 5-10% margin of error." 

5 Best Guides to Beginning a Life Free of Financial Worry

It is beginning "the thing" or "the change" that can be the hardest, isn't it?

When I was at my lowest financial point of worry and anxiety, these five books lifted me up and over debt toward a life of fun frugal living and some financial security.  So I'm sharing the wealth.

Amazon has it on sale from time to time

 

1.  How to Get Out Of Debt, Stay Out Of Debt and Live Prosperously

This was the first book I read that took the shame out of debt and addressed some of the emotional issues.   It inspired me to take a second job as an adjunct professor.  This didn't pay much per hour but the extra $2K in a year helped lift my family out of debt.  I felt like a cork, bobbing above the water and suddenly seeing the shore.  What a relief that was! 

I found a copy of this one for .01 on Amazon!

2.   "The Only Investing Guide You Will Ever Need" 

This was the second financial self-help book I purchased and still have on my bookshelf.  Why?  Because it's so funny, lighthearted and real.  

Tobias is a Harvard graduate who helped me understand that when I avoided buying something, or saved $1.00 on something, I was actually saving $1.50.   A penny saved is a penny and a half earned! And understanding how our taxes affect your personal finance is mission critical. 

If you are being taxed at the 25% marginal tax rate for federal income tax, then add in state income tax, then add in sales tax -- well, you could say that you are being taxed at approximately 50% (for the ease of the example, even though it might be a little high).  

So, as Tobias gives as an example in the book, if you go out to eat on Thursday night and spend $40?  Well, to replace that $40 could mean that you have to earn $50-$60.  

Even though Tobias is a very wealthy guy, he still buys canned tuna "long" (i.e., on sale), and stores the extra cans under his bed.   He goes "short" on tuna when it's very expensive (i.e., he uses up his stores).  


Seriously people, this is how rich people act.  Just be careful you don't overbuy on tuna and never use it.

This is about $8 on Amazon

3.  I Will Teach You to Be Rich

So inspirational and easy to read.   

Ramit promised to show me how to make $1K a year in a side gig.  I didn't think I could do it.  But then I did.  And I still make $1k a year doing a side gig.   

I don't know how he does it, just call it "Ramit Magic"

Found this for .01 on Amazon too -- great deal! 

4.  Your Money or Your Life

Ground-breaking,loving and practical approach to understanding how you are trading your "precious" life for that new toaster, or pair of shoes, or kitchen blender, etc., etc.  -- is it really worth it?  Good practical guide to understanding how much your job is really paying you per hour.   

Think you are getting $30 per hour?  Add in all those hours to commute, the wardrobe costs, the unpaid CEU hours, the hours just unwinding from the stress...  hmmm...  maybe it's time to rethink that hourly rate down to about $5!   And the toaster really cost you four hours of your precious life.  Hmmm...

Definitely an eye opener for me and one of the inspirations for Breaking Free From the Corporate Cube.    Inspirational for living well on less.   

Still about $10+ on Amazon

5.  The Millionaire Next Door

Last, but certainly not least, the granddaddy of them all, "The Millionaire Next Door."  Reading about this scene from the book (page 27), with the Decamillionaires (worth $10 million or more) is the best take-away you can have this frugal Christmas.

The professors who wrote the book wanted to study millionaires, so they invited the subjects to a focus group.  Wanting to make the millionaires comfortable, they provided wine and caviar for the group.   Here's what happened next:   When one of the group members (who owned several pieces of downtown New York property) was offered a glass of 1970 Merlot, he said 

"I drink Scotch and two kinds of beer - free and BUDWEISER!"  

It's also where I first heard the phrase, "Big Hat - No Cattle," -- a term the millionaires saved for those who flashed fancy cars and clothes, but had no assets.  

Here are more millionaire tips.

That's my top five that will keep you busy learning through the cold winter nights ahead.  Do you have a favorite I missed?  Share It!


Disclaimer:  If you do decide to click on one of the photos and buy one of the books, I will receive a small commission from Amazon.  It didn't affect my list one whit -- I've had these books on the shelves for years.  And any proceeds will go back to making the blog better!