Saving Money

A penny saved is a penny available for something else. It’s almost free money. And unlike writing grant proposals or convincing Congress to give all citizens free money, saving money is something you can do now. And for those of you who will need to live off the universal stipend without getting a job, mastery of the art of scrimping is key. For those of us trying to affect public policy, studying the art of scrimping helps us determine how much money the government needs to dole out to prevent poverty.

Once upon a time, I was pretty good at living off a low income; I was a graduate student for six years. While I am way out of practice in the art of living cheap (and do not want to get back in practice!), I do remember the key disciplines.

  1. Share a home. Whether it be house or apartment, two or more can live cheaper under one housing unit. The kitchen is the most expensive room in the house; it pays to share. If you share with people of similar tastes, then luxuries like cable television can also be shared. Warning: this strategy can backfire if you share a home with a parasite or a barbarian. Vet your potential housemates carefully! Also, he who is on record for the rent should not be on the record for the utilities. Make sure whoever doesn’t pay their share of the bills gets to deal with creditors.
  2. Cook. When you eat out, you are paying for expensive First World labor. This is not a bad thing if your finances are overflowing, but a serious error if you are scrimping.
  3. Entertain at home. The markup on booze and other party items at bars and restaurants is astronomical.
  4. Drive a well-used car. For the interest alone on a new car, you can pay for quite a few extra repairs and come out ahead. You can also forgo collision insurance. It doesn’t take many years for the money saved on insurance to add up to another old car.
  5. Buy used other stuff. Furniture and appliances can be had at incredible discounts used. When I was an undergrad I made many a trip to the Salvation Army thrift store as I was one of the few people at my university to drive a pickup truck. (There was a time I wondered if it was taking from the poor for middle class people to buy from thrift stores. I stopped wondering after trying to donate some of my used furniture; I had to pay the charity to take some of it.) Used textbooks can be incredibly cheap after a new edition comes out. While problematic for taking a class since the problems and page numbers can change, these can be excellent for self-study. I have quite a few 90+% off textbooks on my bookshelves to this day.
  6. Make use of public facilities. Parks, libraries, and even more are free for you to work out your body and brain. (This goes triple if you are a student.)

This list is not complete. I may throw in some more posts on the subject if there is interest. If you want to really live cheap, check out the Early Retirement Extreme blog, and its associated network of blogs. Continue to live like a grad student after graduating and you can retire young. Or you can use the same techniques to live the good life without going to college at all. (Early Retirement Extreme is dormant today, but most of the posts are timeless. Read the archives.)