Frugality – 922

Perils of Plastic

Ever since I got a Credit Card (which took considerable effort to acquire despite my fancy MBA degree and long ~~illustrious~~ career), my relationship with money has changed.

Let me dive into history. Please indulge me.

There was a time not too long in past when every rupee I spent, I took from my ma. Even though I was gainfully employed, I liked asking her for money. I’d withdraw a chunk of cash and give her and then I’d ask her for money as and when I needed to spend. I loved it. And I think she liked it as well that I asked her for money. After all when I was still a student, she was the one who handed me my pocket money that was so so dear to me. Every rupee that I got from her was precious. It was hard earned and everytime I spent it, I could see the balance with me dwindling. I had to make tons of sacrifices to be able to ensure that the money I got from her lasted me some time before I spread my palms in front of her.

Now, that I am jobless and away from home (home is where ma and pa are, and some day #sgMS would be), I dont really keep a lot of cash handy. There is no incentive to make those trips to the ATM. There is no one to give money to. As a result I rely more and more on plastic money. My credit card. The one that took effort to acquire. Add on top of it the ubiquity and ease of swiping machines, even with courier companies. Everytime I spent more than a 100 bucks, I would use the card. Suddenly from the actual quantum of money going from my pocket, I was now merely swiping a plastic card through a machine and the transaction would happen. Gone was the need to run to ma or ATM. Convenience, I tell you.

And, and, ever since the proliferation of things like flipkart, cleartrip and amazon, I have this new shiny instrument. Online banking. Where I dont even touch plastic or coins or notes. Its amazing. All I do is enter a number and the transaction is done. Its fast, smooth and intuitive. In my sleep I can rattle the card numbers, security keys and passwords. And I can use it for large transactions. And unlike physical currency that went from my pocket or a mechanical swipe of the plastic, everything happens without a physical interface. What else could you ask for in life! The future of payments could be that I walk to a Starbucks counter, point at the coffee I want and just nod at the cash register. Money would automatically deduce from my profile that Starbucks has that is linked to the movement of my retina (indicating a yes for expense) enabled by a NFC between a kiosk at Starbucks and my phone.

Funny how fast this world of payments and transactions is changing!

So, to summarize, from spending money by hand to swiping a piece of plastic to merely disturbing a few electrons, I have changed the way I (and the world around me) spend(s) money.

Money, to me is now largely a number that rests in an account (which is yet another number). I cant see it. I cant touch it. I cant fathom how little or how much do I have. Its a damn number. And like all numbers, without context, it has no meaning. Maths is boring like that.

If I had 10 lakhs in coins, I am assuming it would be like a river of coins that Uncle Scrooge could take a dip in. If I had it in notes, the wad could be a thick like a book. But on a fuzzy webpage, it looks like a number to me. Every time I spend some money, say 10 bucks, since there is no physical contact involved, I dont realize that I’ve spent it. All I see is the number reducing from 1000000 to 999990. To me, this small reduction in number is not big. And before I know it, all these small reductions make a considerable dent in the stack. All without me realizing it. Without an inflow, the bucket could soon run dry with these small leaks!

The only way out is to go back to the dark ages of cash and budgets. Stop using the numbers and plastic and start handing notes and coins. Even if it means carrying a thick wallet around. At least I would know what I am spending on and I would know where is the money going.

Starting today, I am going to use lot more cash. A smallChange that would help me get frugal (until I become filthy rich).

P.S.: There are apparent advantages of using plastic. I dont have to lug around a lot of cash. I dont have to worry about running out of it and finding ATMs. I earn points that I could redeem to book free tickets to places that I want to visit. I get discounts at places where these credit card companies have tieups at. I get a monthly printed account statement that tells me where all I’ve spent my money at! And so on and so forth. But, but, I end up spending lot more than I ought to (or want to) spend. I have to control it. Somehow!

Notes to Self

Read the difference between “which” and “that”
Restart thinking / working on frugal life

Month 1, (of the Four months of frugal life)

Remember this post?

Of course I do. So I said I would reduce my spends and do so without compromising on my lifestyle / travel / hobbies. Its been a month now since I started thinking in terms of frugal lifestyle. And here is an update.

What has changed

The credit card bill reduced by 50%. May be because I had lost my card and I was forced to use cash. But it has come down and I am happy about it.
I did not buy any new garments. I have been guilty of buying truck loads of clothes that I would never wear. And especially when they are on sale, I indiscriminately buy clothes. I stopped that. Despite all the offers and everything, I did not buy anything. I used this cheat sheet by Vishal, before every purchase and it has helped me immensely. Thanks Vishal.
All the long phone conversations have died. Primarily because I dont have anyone left to talk to. Neo is in Mumbai and I meet him face to face. sgMS is now too busy to talk.

What did not change

I am still travelling like mad. As I write this, I have a trip planned to Goa and SFO. In the month of September. And I bought tickets for Diwali in advance. Apart from SFO trip, I can remove it as one time expense, I am not cutting down on my travel. And I am still using planes, rather than trains or some other mode of transportation to save on money. Like I said, I would save time, not money.
I am still well fed and do things at my whims. This includes travel, meeting people, buying gifts (more on this later), working out of coffee shops and all such things. I want to believe that my productivity has increased as well. I can now write for at least one hour on the stretch. And when I write, I no longer shuffle between multiple pieces. I dont know if being frugal and becoming a better writer is connected but I spend lot more time in the zone.
On coffee shops, I said I would work lot more at home. But I havent been able to do this. I still spend a lot of time at Starbucks and pay for overpriced coffee but I have realized that I work better when I am at a coffee shop. In fact two of my favorite writing spots are Starbucks in R City Mall and Starbucks at the Airport. In fact I am writing a letter to Starbucks. It should be on this blog soon.
August marks birthdays of a couple of good friends. Early September is birthday of one of the most important people in my life. Normally I would have bought something expensive that would be of no use to anyone and it would have made me happy. But this time, I am not. A plain old phone call shall do. I know these guys understand. They know that I am jobless and trying to manage money better.

What did I do different in last one month?

Rather than spending by cards, I used cash. Thing with cash is, you can see it depleting and you know how much is left. So when you are nearing the end, you can take corrective measures and reduce your spends. I like this bit. So as a matter of practice, I would start carrying more cash. I dont really like a heavy wallet but I will compromise on it.
Reduce the amount of times I eat out. Before this, I have been eating out a lot. A lot as in all three meals out. And its expensive to eat out in Mumbai. I have consciously reduced eating out. Now I try and scalp meals off friends. Dont have a lot but enough to keep me well fed. Especially, Neo, AS, NL. Thank you guys.
Thanks to this thought about gaming Mumbai, I have reduced my travel bill substantially. I am still paying a fortune to travel but its has come down. I now club my meetings so that I dont waste time or money in travel. I now travel at non-rush hours and that translates into less time (and thus less money) on the road. I have started to fuel the borrowed car with CNG. Like the Pune trip a couple of days back turned out dirt cheap, for I used CNG and ate at non-fancy restaurants. I still havent gotten around to using public transport and I dont think I would ever use it.

That’s it. In tangible terms, my cost of living has come down by 30%. I wish I could make charts and post them here but I dont think they are required. This post is primarily for my consumption. Next target is, reducing 30% from where I am.

The next month’s report would be interesting because I would have spent a large part of my time out of home and expenses would rise like crazy. Id mark the US expenses as an anomaly and extrapolate expenses of time spent in India to over a month. Lets see how it turns out.

So far, I am loving this idea of a frugal life. I know I love spending money and despite that, I love this new found power that I have over controlling my spends.

Four Months of Frugal Life

Credits: This Link

Update. This post that you are reading was made in end of July. Since then, here are the updates on how I fared on living a frugal life. Here is the update from August.

Now that I am probably the most expensive city in the country with no stable income, I need to somehow stop spending as much I used to once upon a time. In fact lot of my gurus in life (Warren Buffet, VS, VK etc) are proponents of Frugal Living. I never understood the importance of the same before this. Now that I am jobless I will try an experiment with it. It cant really hurt more than a bank balance of Rs. 3417. No?

So first things first.
At any given point in time, I have had just one stable job. And that has been my only source of income. So whatever I make from that job, I survive on it.

I have used buxfer and a custom made excel sheet (mail me if you need the sheet) in the past to track my spends. And the categories where I spend the most are petrol, travel, flights, eating out, gadgets and gifts. Apart from petrol, I could have avoided pretty much all other expenses. When I had a steady paycheck, it did not matter much, now they would. I would work on not spending money like I used to when I was earning.

My spending policy has been, its one life and rather than saving money to help you when you are old, save experiences that you can recall when you are old.

Second.
Thanks to my attempts at tracking where money goes, I can clearly see there are few areas where I could stop spending immediately. Gifts for example. I have always given expensive gifts, even when I couldn’t afford them) to friends, family and strangers. I was like the secret “secret Santa” that I even I wasn’t aware of and even the recipients did not realize that they have been on the receiving end of pseudo-largesse. I dont know why was I doing it. Now I will stop it all. Family and friends would understand. If they don’t, good, Id know who to avoid. Strangers wont care anyway.

I can completely avoid eating out. I can reduce it to bare minimum if nothing else. I would stop working out of coffee shops and make my desk my best friend. I would spend more time at home and thus reduce the cost of intra city travel.

I can live without buying any more gadgets. I have the best smartphone in the market and I think I dont need to change it for another year or so. I have a decent laptop that I am ideally supposed to return but I wont unless my office calls for it. And I dont really need anything else. I would want a large television and a playstation and all that but no. I would give it all to younger cousins etc and try and live a simpler life. More on it later.

Having said all this, I will not compromise on

Cost of living. I would continue to stay at my current place, expensive by all standards and continue to maintain the same lifestyle (food etc). I dont booze so that saves a lot of money and heartburn.
Travel. This is my biggest passion in life. I would not let travel opportunities go by. Even if they are expensive, I would take up loans if required.
Internet. Whatever I am and whatever I am not, is because of my excessive exposure to Internet. I would not stop it. But I would change the consumption pattern. More on this later.
Time. And finally, I will save time, rather than saving money. So if this means taking a flight to Delhi, rather than train, I would take a flight.

Baby steps to Simpler Life
I read somewhere that its better to err on the side of action. Its been a few months and I have taken it to my heart. So before I wrote about a frugal life, here are the things that I have actioned already

One of my two phone connections is a Blackberry. It translates into a fixed bill of Rs. 399 per month. I stopped using it. Although this is not a big number, its more of a symbolic thing. I am thus no longer connected on email 24 x 7. Also this would mean that I am no longer stuck in the rut of immediate replies that push emails demand.
No to long phone conversations that I am dearly fond of. I dont know of an alternative but maybe less talking would help me save money, energy and time that I could use on other pursuits.
Reduce the amounts I spend on coffee shops and eating out. I would ration em out. And Even when I am forced to wait a ta coffee shop, I shall do so by ordering the cheapest thing on the menu, without any add on. I am ok with facing the wrath of social proof but I wont spend money. In last three days, I have spend some 300 bucks on coffee. If I was not jobless, I would have spent atleast 5 times than this.
When traveling I would try and use public transport (read local trains) as much but I would not compromise too bad on this. Its expensive and I would live with it. I would thus walk a lot more and try and spend time close to home only. No more extravagant travel bills to meet random people. This also means that I handpick people that I meet and thus avoid all unhappy, depressed, sad people. I would ofcourse spend on meetings that can get me work et al. I would maintain a separate account for it. Last two days, I have walked lot more, compared to what I would have done in regular situations.
And no more expensive gifts. Period.
And no more gadgets, like I mentioned already. Except one. A music dock. I dont really need it (I evaluated it on this flowchart by Vishal). I WANT it. Dont know why. I am in that waiting period of ten days that Vishal recommends

On Internet and On living a simpler life.
When I say Simpler Life, I mean a life where I am completely free and I dont get emotionally attached to objects and hoard them in closets. Probably to never open them again. Us humans have that stupid tendency to attach ownership and names to stupif things like books, gadgets, objects. I have been guilty of that. I never give my books to anyone, not even to VG. Starting now, I will start parting with these lifeless objects. They would hopefully free my head of conversations about ownership et al and let me think of other things.

And on Internet, I have been the connected kinds. I have million updates all the time.
From facebook, twitter, foursquare, emails from five email accounts that
I have, membership to multiple groups (MDI Alumni, Mensa etc). When my phone doesnt ring, I tend to get jittery and am scared to know if the world was falling apart. I always wanted to be the first one to know about anything happening anywhere in the world. Now that I dont have a BB and I have disabled all push notifications, I select times when I login to Internet and check everything. This is keeping my mind at peace and I am not in that constant state of living multiple lives – one in present and other on the TL. Someone said on twitter, “life is what happens to you when you are refreshing your TL”. Its a brilliant insight. I would live in the moment lot more. With no notifications to drag me towards them, I would have only one thing to focus on. The present.

Plus I believe if there is something that I need to know, it would permeate through my network and reach me irrespective of my use of Internet or not. So, if the world does fall apart, I would get to know about it. Sooner or later.

Thats it.

What next?
I would spend these four months chasing frugality like its nobody’s business. I would try and write about it as well because I have realized that writing makes me structure my thoughts better, apart from helping me hone the craft. I would also continue to make changes in my lifestyle to help me get fitter, calmer and happier. Of course I want to get richer as well.

Do help me if you think I must know of something that would help me in this “project”.

The keywords for next four months are freedom, frugalily, life-hacking, simplicity and action. More on these in the next post. Dont know when, but soon.

Summary!
Yesterday I called up my mom and I have never been happier while talking to her. Its probably toughest to mask real feelings when we talk to our folks. My mom, despite all the distance between us, she could sense and see that I was happy. Happy as in the Pursuit of Happyness happy. And I was totally loving it. Never before I have been so relaxed and happy.

And, do pray for me. This time, for a change, I mean it.