5 Tips to Go Frugal & Save Money

“Frugal” suddenly has much more positive ring to it, since the economic crash of 2008. The days of bragging about your $80,000, 13 MPG hulking SUV are over, as are the days of mcmansion real estate and other oversized purchases. If you’re finally ready to jump on the frugal bandwagon to set your finances in order, here are a few ways you can save money right now.

1. Sign a Rental Lease with a Roommate
Whether you’re a homeowner looking to slash your mortgage costs, or looking for a new apartment, look into bringing on a roommate. The ideal scenario for a roommate is finding a friend of a friend – someone who’s been vouched for by a trusted friend, but who’s not your own best friend. Short of that, you’ll want to make sure that the roommate is compatible with your work and sleep schedule, with your social dynamic, and who is both stably employed and has a history of paying bills on time. Lastly, be sure you actually sign a legitimate rental lease customized for your state, so that you can enforce it if your new roommate decides they don’t want to pay the rent anymore.

2. Sell Your Car
Drastic, isn’t it? You probably think of your car payment, when thinking about how much money your car costs you. But that’s not where the story ends; add in the amount you spend on gas (which for many people is $150/month), the amount your car costs in maintenance (for cars older than 5 years, $500-1,000/year), the amount you pay in insurance ($750-3,000/year), the amount you pay for parking, and the amount you pay in registration fees (roughly $100/year). All told, your “frugal” car that only has a $350 monthly payment might be costing you more than $700/month in actual costs. As an added bonus for people who lease a home within walking distance to local amenities, you’re likely to get in much better shape!

3. Lock Up the Credit Cards
Do not, I repeat, do not cancel your credit card accounts! Instead, cut up your cards, or lock them in a drawer somewhere you’ll never be tempted to use them. Paying with plastic is too abstract, it doesn’t make you feel the pain of spending. Still, you want those credit lines open, and paid off or at least down to a few hundred dollars each month, to keep the average age of your accounts long and the average ratio of credit used to credit available low.

4. Sign a Rental Lease on a Smaller Home
There are two points here; one is to move to a smaller home, which carries a host of benefits, and the other is to stay on a rental lease for a while instead of buying real estate. More square footage costs more, in rent (or mortgage payments), in utilities, in furnishing, in cleaning, in maintaining, in filling with expensive gadgets you won’t use more than twice/year. You don’t need more space, you need a more simple lifestyle. As for leasing instead of buying, it takes an average of seven years before you break even on buying a house, recovering in equity the amount you threw away on closing costs and interest. If you’re really serious about saving (and making) money, sign a rental lease on a nice (but not decadent) house or apartment, and invest the money you’re saving in the stock market, or even in rental investment properties, that actually earn you a cash flow each month.

5. Skip the Prestige
Brand prestige, latest-gadget prestige, opening night prestige, poshiest restaurant prestige… these are recipes for bankruptcy. Generic products are just as good as their brand name counterparts in 99% of cases, and it won’t kill you to wait six months before that gadget you’re dying for drops 30% in price. That posh new restaurant on the other side of town has a fine reputation (and even finer prices), but the food is no better than the neighborhood restaurant around the corner (which, incidentally, you can walk to!).

Living a pleasant life doesn’t have to break the bank, and the fact is you’d probably enjoy your life far more if you cut some of the complexities and rushing around in favor of a simpler, slower pace of life. Here’s a challenge for you: try to spend only 50% of your income over the next twelve months, and invest the other half in stocks, bonds, futures, real estate, or any other investment you like. At the end of the year, you’ll find yourself wealthier, healthier, and happier, and one step closer to being able to quit your high-paced job and sell lemonade on the beach.

In the years since the economic crash, Americans have finally started to spend less and save more, and in some cases even investing that money back into the markets again. If you're feeling behind the frugal curve, here are five tips to put you in gear immediately.

Brian Davis is a real estate investor and frugal advocate, who lives on a fraction of his (small) income and puts the rest into his rental properties. He also manages content for EZ Landlord Forms, a provider of state-specific rental lease agreements, a free rental application, and many other resources for landlords and property managers.

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