Learn the stock market in 7 easy steps. Get spreadsheets & eBook with your free subscription!

Financial Independence Isn’t Hard – It Starts with Knowing How to be Frugal!

I recently had a friend ask me how to be frugal and I didn’t know how to feel about it…I knew that they were asking me because we really focus on spending way less than we make and maxing out our savings rate but there’s just this natural connotation around the word “frugal” that isn’t great.

Now, I will say that frugal is a much better alternative than being called cheap, but it’s still tough to hear it. I’ve tried to get my mindset to be proud of being called frugal but it’s still something that’s extremely hard to do. In reality, being frugal is actually a great thing.

The definition of frugal is, “sparing or economical with regard to money or food.” Isn’t that the exact thing that I preach about on some of my blogs? Why would anyone take being called frugal as an insult? They shouldn’t!

In fact, you should take that as a major complement. Be frugal and be financially independent or be broke and never get out of debt – your choice!

No lie, I was at the bank today and when I was inside I overheard the bank teller that attends to the drive thru customers say, “Ma’am, we cannot cash this entire check because your account is negative.”

My heart broke for her just going back to some of my college days where I felt that exact pain. Then I looked out the window (being nosey) and noticed that she was driving what looked to be a brand new Cadillac Escalade. I no longer felt bad.

Sure, maybe she’s a billionaire that accidentally just overdrafted an account, but I am going to guess that’s not the case. I’m not going to go so far to say she’s bad at managing her money, but an overdraft fee is definitely not a great sign.

It might seem like I’m preaching again, and I am, but this time it’s at myself and just using this post as a medium. Hopefully you can get some meaning from it too. I’m vowing to myself that by the end of this post, I will enjoy being called frugal. Will you take that vow with me?

Ok – we’re on the same page, now. But how can you actually be frugal?


Personally, I think the biggest thing comes down to mindset. Mindset is something that is likely going to take many years to actually have properly aligned with your goals.

I used to work for a pretty large company (Fortune 100) in a very small town and there was this consensus that if you worked for that company, you had a lot of money. And if you have money, then you must flaunt it and have a super nice car and a super nice house right?

For example, many people that work at this company live in one of two neighborhoods, and those houses are a minimum of $450K. Anything below that is just embarrassing!


My wife and I moved to this town from Chicago and I’ll be honest, we spent a freaking ton of money on nothing but experiences and having fun. While that was great and I don’t regret a second of it, our finances definitely took a hit during those two years and now we needed to play catchup, per se.

When we moved to this town we had this frugal mindset nailed down. We bought a home that was under $200K, well below that minimum home value that most employees owned. I needed to purchase a car so I literally looked for the cheapest car that had great gas mileage, a 2015 or newer, under 50K miles, and a sunroof (yes, this is my one thing I personally have to have lol). That ended up being a 2015 Nissan Sentra for $12K and guess what, I definitely had one of the “less impressive” cars in the parking lot at my employer.

But do you know what? We didn’t care. Not one bit. Literally zero.

Honestly, I don’t know the reason why we didn’t care. I actually grew up in this town so I had a sense of pride in showing that I “made it” but for some reason it just didn’t matter to me. Maybe it was because we knew we needed to catch up from our years in Chicago, or maybe it was because we knew eventually we’d leave this company and move back near my wife’s family in Indianapolis.

This is one situation where I don’t necessarily think a “why” is needed in your mindset, but you need to have that mindset that it’s ok to be frugal and not be ashamed of it.

I had a “frugal” coworker ask me one day how our coworkers afforded these massive homes, to which I answered with some rhetorical questions:

“Do you max out your 401k? Do you max out your HSA and pay for all healthy expenses out of pocket? Do you max out your IRA? Are you paying off your 30-year mortgage in 10 years?”

I knew all of these answers were a ‘yes’ and by the time I was done asking them, he understood. Simply by maxing out the HSA for a single person, the IRA and his 401k, that was $29,100 that he was saving for his future, before paying extra on the mortgage.

He is a frugal person and having that frugal mindset will allow him to accomplish so many goals later in life, earlier than his peers, because he’s living well below his means.

Sounds great, right? We’re all amazing – go us!

Well, flash forward to today…I recently started a new job in Indianapolis in the construction world and now I am driving my Nissan Sentra to the office where people all have super nice cars, job sites where people are driving $75K trucks, and bought a home that is in the “affordable” part of our city.

And the judgment, that likely isn’t even actually there, is definitely getting to me. Chances are nobody is judging me, but I have this strong feeling to really fit in with the Jones’ right now and upgrade. I literally was looking at used Mercedes SUVs this morning – something that I would never buy and never even thought about until this past week for work.

It’s a cancerous feeling and mindset trap to get stuck in, and it’s a very, very real feeling for people.

I keep having to constantly remind myself that even if people are judging us, it doesn’t matter. The frugal mindset is one that’s going to allow us to do amazing things in the future. We’re aiming to reach Coast FI by age 45 and hopefully then be able to travel and spend a lot of time on the water somewhere.

Unnecessary Mercedes SUV now for years of travel later in life?

Yeah, not worth it! I’ll stick with the Sentra 🙂

Big 3 Areas of Focus

The three biggest expenses that people have in their life are housing, transportation and food, and those are the same three areas that I want to key in on.

For housing, ask yourself these questions:

  • Are you living in a way that your lifestyle can comfortably afford?

This question is obviously #1 because it really is the end all, be all of the questions. If you can afford the area that you’re living in, maybe you don’t need to make any changes at all. On the other hand, just because you can afford your current living situation doesn’t mean that you still can’t potentially consider the other options. If you have a $2K mortgage payment but can cut that down to $1K/month, you just freed up $12K over the course of a year.

$12K means that you could potentially go from not investing in an IRA at all to being able to max it out for yourself and your partner that year. That’s a significant change and the mindset that I want you to be in!

  • Have you properly aligned yourself to buy/rent?

Normally I would say that buying is generally better for most people but that’s not always the case. Sometimes it makes sense to rent if you’ll move quickly or in a short-term life situation. The key is that you understand the pros and cons to both and your lifestyle is properly aligned.

  • Do you have the ability to bring on a roommate/rent part of the home such as a basement?

This is one that I hear about from one of my favorite podcasts, Bigger Pockets, a lot as they talk about the value of having a roommate so that you can split costs. Honestly, I think that this is a genius move and one that I had considered earlier.

I have a friend that purchased a home and he took the basement, renting the other two rooms to two of our friends. Those friends paid $650 each, below the market average, and he was able to get $650 from rent for his $1100 mortgage.

He was literally making $200/month and living for free! He saved like crazy for many years and now is in the market for another property as a rental.

While I admit this is not for everyone, it definitely should be considered if you have a separate area of the house that can be locked off like you’ll see in a duplex or in a basement.

  • Can you relocate to a cheaper location, whether in the same city or to a completely different state?

Now that remote working is becoming so popular, do you have to live where you live now? Maybe you don’t want to leave the city you’re in but do you have to live 10 minutes from the office if you’re only going in once/week?

We are in the process of moving to a new city and my wife and I both have jobs that require a 30+ minute commute but it’s in an area with a cheaper cost of living. We don’t mind the commute because I only have to make it 2-3 days/week and she only has to go into the office once/week.

If you have the flexibility to move, it might be worth considering!

Housing is by far the largest expense for people as you can see below from howmuch.net and it’s important to get this under control!

Another major area of focus that we can key in on is the Transportation which makes up nearly 16% of the average annual expenditures as you can see from that chart above.

The questions that I would be asking myself are:

  • Do I need this car at all/can we get away with one less car?

Do I have to have this car? Do I have public transportation instead or maybe I work from home and can get away with just using a rental or Uber on the weekends?

Maybe my spouse has a car and we can get rid of mine if she takes me to work in the morning. This is all about brainstorming and seeing if you can find a way to get down to one car from two or even down to zero cars. You’ll save the massive monthly payment, the insurance, and the depreciation that the car is going to have!

  • Do we need to have these specific cars?

Many people will buy cars that are unnecessary for their everyday lives just as I mentioned previously how I was stupidly looking at a Mercedes SUV. I don’t need that car and neither do a lot of people that buy these crazy cars that are quite simply just unnecessary.

Can you buy a cheaper car and have lesser payments or potentially even just pay cash for it? Maybe you trade in your car that’s worth $30K but you have $20K of equity on it and then you buy that $12K NIssan Sentra that I have. Then you’d only have $8K left that you owe and maybe you’ll buy a car with a bit better gas mileage!

  • Are there ways that I can use these cars for money to offset the cost?

If you determine that you have to have a car and you cannot purchase a lesser car, maybe you can flip the script and try to use your car to increase income.

Can you take your car and drive Uber/Lyft to make a few extra bucks each day? Maybe just two hours for two different days each week can get you another $50/week. $50/week for 4 weeks in a month is $200 and that likely is anywhere from half to your entire car payment!

Another way that some people make money are with the personal car rental services like Turo. I personally haven’t used this but I know that some people do and have had great success with it. It’s very cool because you can input your city and car type and it’ll tell you exactly what you can earn on a daily basis.

For instance, if I owned a Nissan Sentra (I do) and lived in Miami, FL (I don’t) then I could make $25/day and have my car booked out an average of 23.7 days/month, meaning nearly $592/month in earnings:

Now I obviously will likely need to use my car some that month so maybe 23.7 days isn’t realistic, but $25/day seems like a solid deal for not doing a whole lot!

The last area that we really need to focus on is the Food area of our life, making up 12.6% of the average American household budget.

Food is an area that is much larger in my family, closer to 20%, and that’s for a few reasons.

1 – We group all things together with food that we purchase at the grocery store, so that would include cleaning materials, alcohol and pet items. They don’t necessarily all go together but I buy them from the same location and I don’t want to break down each receipt that in depth, so I group them together knowing those items should all theoretically be similar from month to month!

2 – We put a high value on spending time with friends and trying new restaurants. I know that we likely overspend on food but we underspend on housing and transportation. In fact, our entire transportation bill including gas and insurance is under 5% of our monthly spending while food is closer to 20%.

3 – We only buy very high quality foods for our family and those unfortunately cost more. We’re willing to sacrifice in other areas to not have to sacrifice the quality of ingredients but everyone might not feel this way.

My advice to anyone just getting started is to really focus on grocery store purchases and eating out separately. You can combine them after they’re broken out in your budget individually, but eating out is most likely going to be significantly more than eating in.

You can cook a really nice burger for two people for under $10 and that’s likely a $10 meal, each, at a restaurant plus $5 for tip. You’re looking at a minimum of $25 for that burger while you made a great one at home for $10.

Throw in a couple beers that were $1 at the grocery store or $5 each at the restaurant and the spread between eating at home and going out to eat just keeps growing.

The more that you can eat at home, the more you’re going to save money.

And you can eat at home really cheap, too. I have a list of ways to grocery shop on a budget and also some great meal plans for people that want to save money and they can help kick start this journey.

Another tip that my wife and I have done is we will have a “cheap week” where we will challenge each other to spend as little as possible that week on food. It’s fun and only a one-time savings but we can cut our normal grocery bill of $150/week down to $75 or $100, a savings of $50-$75!

Might not seem like a big deal but we do this once a month and the total savings are $600-$900. That’s 10-15% of an IRA!

You see how my mind works with making some of these decisions? Always focused on taking savings and cramming them into those retirement accounts!


Hopefully you’re feeling motivated and ready to dive into your budget right now and see where you can cut and start living more frugally. If you don’t know how to do this post-audit of your spending, take a look at Doctor Budget that walks you through the process in an easy-to-navigate method of downloading previous purchases to be able to identify trends in your spending so you can find where your money pit is located.

Once you do that, you’re off on your path to cut down that spending!

Once you get your mindset keyed in, the rest will really fall into line. And as soon as you start to save some of that cash…invest it! Don’t go out and blow it on other things. Take it and invest it in a retirement account because even if it’s a super small amount, those small amounts add up!