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I realize the tone of my writing recently has shifted to frugal living and I hope all of you are still with me. Perhaps this is a natural segway since it is obviously going to take many more months, if not years, to develop some additional income streams (though at least a few of you have helped in this capacity, particularly by signing up for the free Mint.com online money management service and, in doing so, kicking a small amount of money to this site-- thanks! My review of Mint.com is here.) and this entire blog is the chronicle of my eventual transition from the military, which is still at least two years away. Anyhow, right now my mind is on frugal living, so bear with me!
While I was deployed to Afghanistan in 2010, I bought my wife a Nespresso coffee machine (Amazon link). Both she and I are hopelessly enamored with good coffee and we've tried a variety of machines throughout the years in search of the perfect cup of home-brewed coffee. After reading a review of the machine from Robert Scoble, I hit purchase on Amazon (yes, from my Polish satellite internet provider in Afghanistan-- isn't technology and globalization wonderful?) and had it sent to her back in the US. She was thrilled and we've both been in love with the machine since, as the brewed coffee is tasty, the machine has a built-in milk frother to make lattes and cappucinos, and clean-up is a breeze (clean up hassles were always the problem with other machines). So how does an expensive coffee machine have anything to do with frugality? Two things really. One, we like a lot of coffee and in proper European fashion, the Nespresso brews dainty little cups of coffee. So, inevitably given our caffeine addiction, we end up drinking two or three cups a day each. This leads to problem two: the little pods that fuel the machine are about $.70 each, so we were spending about $75 a month on coffee pods.
Newly frugal me is deeply troubled by this amount, especially when I lump coffee into the "groceries" part of our budget and I'm trying mightily to get our family of five below $1000 a month on groceries. So, we came up with a plan:
This week, we moved the Nespresso up to our bedroom and made a bedroom "coffee bar," where we'll enjoy our fine quality Nespresso coffee when we wake up on weekends. The big 12-pot normal coffee maker is back in its place in the kitchen for weekday coffee consumption. Now we get to truly enjoy the premium coffee experience on weekends (take that, hedonic adaptation!) and save during the week. Total savings: $8,960 over ten years. What's that you say? Nearly $9,000 by switching our coffee consumption habits? How? Well, I will save $50 a month by not buying coffee pods and that money instead applied to some investment compounded at 7% a year ultimately adds up to $8,960 over ten years.
I know this sort of thing might seem tedious, but I'm suddenly making these ten year calculations with everything we do.
Haircuts every two weeks for me and every month for the boys: $15 each after tips. Haircuts with clippers at home: $0. Savings invested over ten years: $8,448. Yes, my wife is our barber and she is getting better all the time at home haircuts...
I've also begun to shave with one of these (Amazon link). Good enough for Grandpa, right? Well, it is good enough for my wife and I too. Shaving soap is $2 at the military commissary and it lasts six months. The brush should last much longer than that. The kind of shaving gel we were buying was $4 and it lasted one month, plus clogged some landfill after we used it up. Switching to shaving soap yields $660 over ten years. Plus, since I shave first thing each morning, it is a good reminder at the beginning of each day about living a frugal lifestyle. How about those four-blade razors that they lock up at the store? Gone, as soon as my current stockpile is exhausted.
Cut $200 from the grocery bill? $35,840.00 over ten years. Get rid of cable television? $17,024.00 over ten years.
Going to one car instead of two (assuming ten years of car payments, gasoline, and average maintenance costs)? A staggering $143,360.00 given what I have been paying to this point.
Why do all of this? Well, for one, these ultimately aren't big sacrifices. They do, however, add up to big gains if you have the discipline to leverage savings with compounding. I've thought a lot lately about the one big concept I missed in my first 40 years of life and I think this is it: think like a producer and not (just) a consumer. Investments in lieu of consumption are the very essence of producing, since you are creating instead of just consuming wealth.
OK, so the decisions I made last week didn't actually save $214,292 right now, but they will over the next ten years, as long as I stick to them!
What are you going to give up or downsize to increase your wealth creation? Just think: giving up a $5 cup of coffee every day for the next ten years can actually translate to $26,880 in accrued wealth. (<-- Click here to Tweet this).
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I would be remiss if I didn't refer you off-site to Mr. Money Mustache, my new source for all things frugal living. From my foxhole, he is absolutely the standard bearer for the frugal lifestyle and is the inspiration for my new, incessant 10-year calculations.
I'm experiencing a bit of a mustachelanche thanks to @mrmoneymustache! Thanks! Money Mustache fans welcome and I hope you enjoy your stay! Please check out some of my other posts and feel free to leave a comment! Most of all, stop back again soon!