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Consciously Frugal: 2009 Smells Like Financial Freedom


Ok, so I'm not exactly sure what financial freedom smells like. However, I am quite familiar with the funk of debt and global economic psychosis, and more than likely, you're pretty familiar with that stench as well. But dammit, this is a New Year! Despite the endless doom and gloom of the economic news, gorgeous things are on the 2009 horizon. A nation that built its wealth on the backs of slaves has elected a Black man to run the show. Unregulated corporate greed imploded and took a few heartless bastards down with it. Pulpits, both religious and secular, are hosting folks who preach about the reemergence of healthy communities, green and durable economies, and the importance of building a sustainable economic future. Call me Pollyanna, but the funk is starting to dissipate.

Despite the good news of the New Year, you may find yourself in a personal financial mess. Plenty of us are still paying the price for stupid financial choices and the greed of corporate giants. But fear not! The sweet smell of financial freedom can filter into your little universe this year as well.

If you're mired in debt, want to increase savings, have little job security or simply want to build a solid financial foundation rooted in social justice, let me offer a few suggestions to get you started on the path.

1. Track spending. It's the antidote to zombie spending. Although I'd like for each of you to write down every purchase as you make it (yes, even that 75 cent vending machine treat) because it will force you to wake up, find a method that works best for you. Just keep in mind that holding onto receipts to write down later will result in some lost spending. The parking meter doesn't offer a receipt nor does that vending machine. The more diligent you are about tracking spending the more able you will be to find where you can stop the bleeding.

2. Develop replacement behavior for zombie shopping. Ideally, you'll replace mindless, temporary fix behavior with something more meaningful—volunteering at a local charity, learning a new craft, etc. But before you can alter behavior, you've got to become aware of it. Before you purchase anything, ask yourself the following questions-

• Why am I here (in the store, on Ebay, etc.)? Yep, you guessed it. This question helps us to connect to our emotions. Are you buying flour to make bread or buying new shoes because your boss is an ass and hurt your feelings?
• Is this item a need or a want?
• How will I pay for it? (If you have to use credit, ask yourself "Is this worth going into debt?")
• What will happen if I walk away or wait to buy it?
• Where will I put it?

3. After tracking spending, develop a budget/spending plan based on reality, not some fictional percentages you read about in a book (i.e., no more than 30% of your gross pay should go to housing). Percentages are a good guide, but may not reflect reality given your location or life situation.

4. Stop using credit cards (unless you pay them off in full each month), and learn to live on what you actually earn. Use your spending plan to find areas where you can cut back. Make small changes and build on them. For instance, you can reduce your cell phone plan, bring coffee from home instead of coughing up $4 each day to IndependentCoffeeHouseKillerBucks one day a week and build to five, cut back to basic cable or get rid of it all together, etc. My personal favorite trick: Reduce spending by 1% each month. After a year, your spending will be cut by 12%, allowing for a hefty savings.

5. Develop a list of goals and place it where you will see it every day. Want to get out of debt and build a fat emergency fund? Write it down. Want to visit Italy and have a torrid affair? Write it down. Want to give a fat donation to your favorite charity? Write it down. Because let's be honest, budgeting and cutting back can be fun at first but after awhile, you're going to want to fall back into old zombie spending patterns. Keeping a daily reminder of why you are making these changes and the glory they will eventually bring (hot sex in Italy!) will help keep you on track.

6. Get out of debt. Bankrate.com has a fabulous Strategically Accelerated Debt Payment Plan tool that I highly recommend. It gathers all your debts and creates a plan that makes the impossible seem possible. Once your debt is dead, transfer all that glorious money into a savings vehicle.

7. Build an emergency fund. With the current job market, some folks suggest we build emergency savings based on 8 to 12 months of expenses. The easiest way to do this is to get out of debt and transfer debt payments into a savings vehicle. Or use the cutting back method and list five things you could do without if you lost your job. Still have your job? Great. Get rid of your five things anyway and stash the money into emergency savings.

The above provides the basics for building a solid financial foundation. There are other tricks like increasing your income, refusing to upgrade to new gadgets (yes, even if everyone else is doing it), finding free entertainment, etc. Books, my blog and the thousands like it offer endless tips for living within your means and increasing savings. But let me offer a few suggestions we don't often hear that not only help you build a solid financial foundation but also help your community strengthen its foundations.

1. Develop a values-based budget/spending plan. Is that shirt made by a 13 year-old living in slave labor conditions in Indonesia really a great deal? Can you cut back in one area to afford the same product made by folks receiving a living wage? If not, do you really want to lay your dollars down to support a system of oppression and exploitation? Do you really want that damned shirt at all? Maybe what you'd really like is a home with a yard. Allow your spending to reflect what you truly value.

2. Tell the big banks receiving bail out bucks to suck it. Transfer your funds to a community reinvestment bank or local credit union (check out my previous article for information about Socially Responsible Banking).

3. Do your retirement investments reflect your values? Check out Calvert Funds' Know What You Own tool to see if your 401k is coughing up cash to fund genocide in Darfur or alternative energy. If you don't like what you see, find a better fund through Green America's (formerly Co-op America) socially responsible investment index.

4. Make giving to charity and volunteering a priority. (Yes, I work in the non-profit sector.) Each year, government funds to social programs are cut. Charities are on the front lines feeding, housing and fighting for the poor; ensuring arts programs aren't eliminated, building schools in war torn countries, and a million other beautiful miracles. Building a culture of care is crucial to healthy communities. Be a part of it.

5. Shop locally and support sustainably produced items. Support your local Farmer's Market instead of the huge chain store. Use Green America's Responsible Shopper and National Green Pages to learn how companies operate and which merchants genuinely deserve your support.

Finally (and most importantly), learn to forgive yourself and accept that progress is the goal, not perfection. Small changes will result in tremendous rewards. Don't let the fear mongers get you down. It's a New Year, hope is still alive and well, and the scent on the wind is changing. May 2009 bring you health, a thriving community and all the financial bliss your heart desires.

Read more tips and topics that address living frugally in a socially conscious manner, respecting community, the environment and our global human family at:


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