Frugal Living Tips - Simple and Easy Way

One of the first principles of frugal living is to live under your means. If followed this principle can be a foundation on which to build other principles. The problem is that most people are not sure how to actually do it, they need a specific plan.

To achieve this goal a family or individual can use the 70/30 Rule as their plan. The 70/30 Rule simply stated says that you will live on 70% of your total monthly income after tithing and taxes. The remaining 30% will be divided up into three categories (10% each) to achieve self-reliance.

The three categories will be 10% to savings (you should always pay yourself first), 10% to charity (because “you receive through the hole you give”), and 10% to food storage (because food storage is a fundamental principles of self-reliance).

Once a years supply of food storage is achieved one can then begin to allocate that 10% to paying off your house. Once your house is paid off you can then begin to allocate that 10% to different investing goals.

Debt

Now a few words on debt. Consumer debt is the biggest hindrance to being frugal, one cannot be self-reliant and frugal while indebted to another. If a person has consumer debt, you need to eliminate it as quickly as possible. In order to achieve this objective while using the 70/30 rule you can use the 30% towards debt, using the snowball technique, until all consumer debt is eliminated. Once debt is eliminated and you’re free from that bondage you can again allocate your funds to each 10% category.

Following this plan will not be easy or without sacrifice, but if followed you will be freed from bondage (debt) and well on your way to being self-reliant and frugal for household finance. Now let’s put it all together in a 5 Step Plan:

1. Step one is to do the math and come up with a budget using your new 70/30 Rule or more specifically to develop a budget and make the sacrifices necessary to live on 70% of your income.

2. Step two is to use the remaining 30% of your income combined to establish an immediate emergency fund of $1000 (most minor emergencies can be handle with a thousand dollars i.e. car breaks down, stitches, washing machine breaks, etc…). If you don’t have this immediate buffer than most likely you will go into debt to deal with those emergencies.

3. Step three is after you have established an emergency fund to begin immediately paying off all consumer debt using 30% and the snowball technique of debt elimination. Note: If you have no consumer debt you may skip step three.

4. Step four is after all consumer debt elimination and the establishment of an emergency fund, you now begin to fully fund each of your 10% categories (10% Savings, 10% Charity, 10% Food Storage).

5. Step five is after you have achieved 3 to 6 months salary in savings and a year supply of food and commodities, you then begin to save in the savings category for various expenses such as, college and replacement of vehicles, etc. In the food storage category you will now use that 10% to help pay off the house and later invest.