I just made my final contribution to my Roth IRA for this year. So far this year, we’ve maxxed out our HSA ($5800) and my Roth ($5000), and my husband’s traditional IRA will be maxxed out by the end of the year (we have an automatic monthly contribution going into it, and it will hit $5000 in mid-December). This is the first time we’ve ever managed to max out all of our retirement savings accounts. It’s been a long journey from 2003 when we stopped putting any money at all into our IRAs (because we barely earned enough money to pay our mortgage). In 2004, we started contributing $100/month to each of our IRAs – and that was a pretty big stretch. But we made saving a priority, and as our income increased, we focused on putting more money aside each month. At the end of 2007, I posted about our financial goals for 2008. Max out the HSA, max out both of our IRAs, and pay off at least $5000 in principal on our HELOC. We have three months left to go in the year, and I’m optimistic that we’ll actually be able to get the HELOC payoff amount to $10,000 by the end of the year. It will take diligence, but we’re very motivated to get rid of the HELOC for good. In addition to meeting our savings goals, we’ve done a lot of home improvement this year. A remodeled kitchen, new floors in our upstairs, a new fence, a hydroponic garden that has been yielding tons of produce already, and new exterior paint. All for about $6000.
We didn’t take a fancy vacation this year. I’ve bought two thrift-store shirts in the last 5 months. We use cloth diapers and wipes that we made from old t-shirts and flannel sheets. All of the clothes our son has were gifts or hand me downs, with the occasional thrift store find thrown in. Although we’re saving for a new car (for the distant future), we’re still driving our old cars and riding our bikes or walking whenever possible. To be honest, I don’t feel like we’re sacrificing anything at all – we have a great life. But I know that some people would see our old cars and our lack of trips to the mall as a bummer. But if we had new cars and paid $60 for our jeans, we wouldn’t have a college fund for our son. We wouldn’t have been able to max out our retirement funds. We would be living on the edge. So I’d much rather keep wearing the clothes I already have (especially since I have far too many as it is) and be able to feel confident that we’re going to be ok financially.
The stock market sucks right now. (although I’m just about to spend the $5000 I put in my Roth this year on an ETF, so I’m looking at the bright side – now is a probably a pretty good time to be buying stocks). Nobody knows when things will get better for the economy. For us, this provides even more motivation to keep our expenses to a minimum. Growing our own food, making do with what we have, and saving everything we can – it all helps create a feeling of security in an uncertain economic environment. You can’t get that from a pair of pants, no matter how cute they are.
Obviously, I’m an advocate of frugal living. I think an ability to live on a small income will stand you in good stead, regardless of how big (or small) your income eventually becomes. The festival of frugality is up at Living Almost Large, and there are lots of great ideas to kick-start your frugal self:
The Iconoclast Investor has a post about living in tiny houses. If we were buying our house now, I think I’d go for something smaller (our house is about 1300 square feet, we have one child, and both work from home), but not much smaller. Given that we’re already here and love where we live, I doubt we’ll ever move. But I love to get books about tiny houses out of the library. They always inspire me to purge clutter, since the houses in the books are invariably clutter-free.
The Financial Wellness Project has a post about drying clothes outdoors. I dry everything on drying racks that are portable. I put them outdoors if it’s nice outside, and leave them inside if it’s not. The sun bleaches all the stains out of our son’s diapers, which is a huge bonus.
MoneyNing writes about his adventures living on as little as possible for a week. His total? $34.01 (not counting rent). If you’re looking for inspiration, here it is.