13 Tips from guest author Josh Patoka:

Frugality gets a bad rap; it can be perceived that you don’t have fun, or just live on ramen noodles forever. (Mmmm, ramen noodles.) But frugality is simply using your money efficiently, without waste. Because of it, I was able to switch careers and improve my quality of life. Thanks frugality!

My old job was the proverbial “golden handcuffs”; I was working approximately 70-80 stressful hours a week, but it paid awfully well. I started getting the hint that my quality of life wasn’t going to improve when my bosses said they would have switched careers if they didn’t have families. (But they’d also told me they’d already missed much of their children’s lives…) Yikes. When my wife got pregnant, I knew my family was more important than a big paycheck, and…

I jumped. Yes, it was scary, and no I didn’t know for sure that it would work out. But I jumped. I took a 50% pay cut to switch careers, but not having the stress of long and unpredictable hours seemed like a worthy tradeoff. And, though my wife and I are self-employed now and make less money, we haven’t missed a meal or a bill payment yet.

So how could we afford to take a 50% pay cut literally overnight?

Simple: We pursued a frugal lifestyle and were intentional about not spending money whenever possible. Here’s an insider look at how we do it. It’s not American but it’s possible. Listen up.

1. Put at least 10% of our take-home pay in a savings account

2. Save for purchases instead of borrowing money

3. Shop on Craigslist, local thrift stores, or department store clearance racks first

4. Wait for items to completely wear out before replacing them

5. Don’t go on expensive vacations

6. Keep monthly expenses as low as possible

In a nutshell, avoid lifestyle inflation. Spend less than you earn. Not more than you earn. Simple. For us it means we don’t have to work long hours to earn a large paycheck just to pay our oversized monthly bills. You could also:

7. Pay cash for a car you can afford instead of borrowing money for one you can’t

8. Repay your loans as quickly as possible

9. Be diligent about saving any pay increases, bonuses, or windfalls you receive

10. Wait 48 hours before making ANY large purchase (you might change your mind)

11. Pay your bills in full, on-time, every month

12. Don’t buy something you don’t need just because your friend has one and you want to look cool

Being frugal requires short-term financial sacrifice, as you can see. But man it’s worth it! We do the things above: We don’t drive a vehicle worth more than $10,000. We don’t spend more than $1,000 a year on vacations. And we wait to buy items on clearance instead of having the latest tech or fashion. And one last, big thing we do:

13. We make extra payments on our mortgage so we can, in the long run, save thousands of dollars in interest payments. At our current rate, we’ll be debt-free in five years… and we never plan on going back!

You don’t have to make the same choices we do. The beauty of frugality is that, by making wise money decisions, you can spend more money in areas that are important to you. You might decide to buy a used vehicle so you CAN afford to take a fancy vacation (without borrowing money to do it). Or you might reduce your living expenses so you can max out your retirement savings to retire early.

Being frugal afforded me the opportunity to change careers and be home for my family. (Plus, I also get the fringe benefits of having a slimmer waistline due to less stress, and I’m able to sleep all night!) Frugality doesn’t mean you have to live like a college student or a pauper. With a few simple changes to your daily habits (and now you’ve got 13 of them to think on), you can maximize your paycheck… and your quality of life.

About the Author
Josh blogs about personal finance at Money Buffalo.