Because I was a spendthrift during most of my early years, I was in and out of debt during a lot of my life. This indebtedness changed when I purchased the book Life or Debt: A One-Week Plan for a Lifetime of Financial Freedom by Stacy Johnson. This book literally changed my life as I worked through the process of paying off my debt. This debt payoff occurred eighteen years ago and since then, I’ve been able to stay out of debt (except for a mortgage which I now have paid off, own the house outright, and use it as a rental). I do use a credit card for almost all purchases and pay off the balance in full every month. The credit card I use earns mileage with a major airline and I use those accrued miles to travel to see family for essentially no cost for airfare.
Once I had the debt paid off, I started looking for ways to be frugal so that I could save money towards my retirement housing. My deep-seated fear of ending up being a homeless bag lady really gave me the incentive to save. I started out my frugality path by reading financial blogs and information on the internet. At that time, couponing was becoming a big thing and I followed several of the extreme coupon bloggers and used their systems. What I came to find out was that most of the coupons were for name brand products and even with the coupons, it was less expensive for me to buy either store brands at the major grocery stores or buy in bulk at Costco and Sam’s Club.
I started cooking almost exclusively from scratch, which helped me save money by not buying expensive pre-made or processed foods. I’d read through cookbooks and write a list of items that I’d need to make the recipes that I’d chosen. I generally only shopped once per month for everything on my list, such as staples, then once a week went to the store and purchased the produce that I’d need for that week.
I still shop in this manner, though if I do see an excellent buy on something on sale that I definitely use, I’ll purchase as many of those items as I feel I’ll use. For example, almost a year ago I found thirteen 12- oz. bags of Starbucks coffee beans in the sale bin at one grocery store for $3.98 per bag and eleven 12-oz. bags of Starbucks ground coffee for $4.98 per bag at a different grocery store. I bought all of these bags of coffee and put them in my freezer. I’ve thoroughly enjoyed drinking this coffee and still have three bags remaining in the freezer. Getting Starbucks coffee for this price is the only way I’ll drink Starbucks; otherwise, I purchase Seattle’s Best Coffee for $5.98 for 12-oz. bags or the Kirkland brand coffee for the current price.
I worked for a state government organization for many years and the government benefits included a defined benefit plan and a supplemental annuity plan that took the place of social security (the state doesn’t pay into social security). I feel very fortunate that I started working for the state government when I did, because a little over a year later, the legislature changed the retirement plan from a defined benefit plan (a pension) to a defined contribution plan (which is like a 401(k) plan).
I ended up taking early retirement from state employment, which meant my monthly pension payment was cut 30% from what it would have been if I’d worked longer (I left employment after a little over fifteen years; it would have taken twenty years of work to receive the full pension amount). Because of my frugality, I’m able to live on the early retirement pension. And because I’d worked in non-state jobs in my earlier years, when I get older, I’ll also receive a monthly social security payment.
Nowadays, a defined benefit pension is no longer the norm and most organizations either have a 401(k) or nothing at all. This type of retirement plan puts the onus on the employee to fund their share of the plan. Some organizations will match the employee’s funds up to a certain amount or certain percentage.
I currently work a part-time job from home as an adjunct teaching university classes online. The university has a deferred compensation program for adjuncts which is 403(b) plan. Because of my frugality, I’m able to live on just my pension and rental income, so can defer almost the entire amount of the teaching income (for 2019, up to $19,000 can be deferred, plus an additional $6,000 if you’re over 50 years old as a “catch-up”).
I’ll write more later about retirement housing and how I frugally achieved my retirement housing dream. The takeaway from today’s post is to always look for ways to be frugal and stay out of debt.
Happy frugal dreams!