Frugal Confessions’ Amanda Grossman Tells All
Personal Finance Luminary Series
Do you wonder how some people just seem more “money smart” than others?
Do you know people who don’t make any more money than you do, but seem to live without money stress?
There are those who seem to have the key to smart money management, living well, avoiding debt, and knowing the ways to avoid common money pitfalls.
Amanda Grossman of the popular website, Frugal Confessions explains her “frugal decadence” money strategy. If you don’t learn something and become inspired by this interview, you may have your money back.
For more success stories and inspiration, with a money and investing kick, check out all of our Personal Finance Luminary’s Series.
1. What is your background and money/financial influences?
I grew up on a family dairy farm in the heart of Amish country, PA. Talk about a ripe location to pick up conservative money principles!
On top of that my grandfather, who owned the farm, was deeply affected by the Great Depression. He was just a young boy when it happened, and he remembers that our family did just fine because we were able to eat food off of our land. He even said that we would take in random strangers, give them a meal, and let them sleep in our barn.
Despite these money principles deeply ingrained in the culture of where I came from as well as in our family patriarch, both sets of my parents went through bankruptcy within 10 years of one another while I was growing up. This deeply affected me as well.
So much so, that I spent my early 20s being overly frugal and cheap with my money and my life. It took me awhile to break free from the ultra-conservative money examples I had been given. But going through the process of figuring out how to authentically mesh with these money principles gave birth to my philosophy of “Frugal Decadence”. It’s getting the things and experiences that you want in life without ever paying full price, because life is too short to always say “no”, and too long to not save a ton of money.
2. What prompted you to begin Frugal Confessions’?
I always wanted to be a writer. Hands down. It’s been my answer to the question people start to ask you around second grade: “what do you want to be when you grow up?” An equally important and passionate subject in my life has been money. Managing it, making more of it, and mostly stretching the living daylights out of each dollar so that I get the things and experiences that I want out of life without paying much for them.
I was laid off for the second time in 2008, and I decided to take some time for myself (thanks to having saved up an emergency fund of $10,000). I took a month off where I did not look for employment, and instead took advantage of a free trial yoga membership, read books that sat too long on my shelf, visited family, and got up the guts to attempt a newspaper column. I got a book out of the library to teach me about pitching newspapers, created six sample columns called “Frugal Confessions”, and sent it into several newspapers across the U.S.
While no one took my column on, I did receive an encouraging letter from an editor saying that I was on the right track. At the same time, I had started my new career as an environmental investigator for the state of Texas. There, I met a woman (now a great friend of mine) who suggested I try to blog at the Houston Chronicle. So I became a featured blogger at the Houston Chronicle, as well as opened up FrugalConfessions.com (I didn’t know which one would work out better…to this day I still have both).
3. Tell us about Frugal Confessions? What is the Mission?
Frugal Confessions is how I teach others to live their lives with no regrets. I feel that finances should run beautifully and smoothly in the background of people’s lives, and in full support of their goals. Sound money principles with sacrifices that make sense can lead to complete financial independence, stability, and the realization of your dreams.
4. How did you come up with the concept for The Drugstore Games books?
I used to buy the cheapest, crappiest toiletries on the market to save money. Or worse than buying scab-inducing razors — I would simply not buy some toiletries at all.
This was in my early 20s before I figured out that I didn’t want to be a miser like my grandfather; instead I wanted to live my life to the fullest and have lots of money in the bank (I mean, why should they be mutually exclusive?). So when I was laid off in 2008, I also took the time to learn how those people go into a store and walk out with a cartful of items having paid just pennies on the dollar.
Over several years I honed the craft of doing this, using a combination of sales-timing, coupons, and store credits (like the ExtraCare Buck at CVS). I’ve saved my family over $3,000 since 2008 doing so (and that’s just for a family of two! Savings would be much higher for larger families). Not only that, but I have about a six-month supply of the finest toiletries you can get, I donate to a women’s shelter about once a year, and I also help supplement my grandparents’ fixed income by loading them up with their toiletry choices.
There are bits and pieces of the drugstore game concept around the web, but no one had taken the time to really pull together all of the strategies in an easy-to-understand, way. So I decided to write The CVS Drugstore Game and follow it up with The Walgreens Drugstore Game. The response has been amazing! People all over the U.S. write to tell me how much money they’ve saved since reading my book.
5. You and your husband have both been laid off multiple times. How did you survive and prosper doing those times?
Amazingly, my husband and I have survived 4 layoffs between the two of us (evenly spread out as well–two each). It seems we don’t have a lot of luck where jobs are concerned. Each time our companies were either bought out, no longer had a grant for our position, or some other random occurrence that did not reflect our job performance.
We had an emergency fund each time that this occurred, and we also immediately slashed our spending to bare bones (other than doing some travelling, as it turns out that when you’re unemployed with a good bit of money in the bank you can treat the time as a mini-retirement instead of as the end of the world). My husband served as a cryptologist in the Navy, so we had access to USAA for health insurance needs, which served us well as COBRA can be egregiously expensive. During this last 5-month stint of unemployment, my husband had started college on his GI bill, so we were given a tax-free housing stipend each month that supplemented unemployment insurance well. With my income on Frugal Confessions, we were able to survive + thrive without dipping into savings.
Probably the best thing we did to financially survive unemployment was to pay off all of our debt (except for our mortgage). We had $25,000 remaining from student loans, a car note, and an engagement ring when we got engaged in June 2009, and paid it off by September 2010. Since then, we have not taken out another loan. In fact, I wrote an article this year about how I think our debt load would have sunk us this time around.
Finally, when we purchased our home, we did not take conventional wisdom that bankers like to dish out. Instead, we ensured that the mortgage could be paid on one person’s income (plus there was enough left for food, gas, etc. on that same income). This really helped us proactively plan for an unknown future.
6. You have managed to save a large percent of your salaries while working? How much exactly and how did you do it? Do you live like a monk?
I love to track our Personal Savings Rate (PSR) each year, and so far it’s been 29.8% (2010), 38% (2011), 40% (2012), 28% (2013). This is after-tax income to permanent savings accounts (meaning I count money that goes into our retirement and emergency fund–which we treat like the black hole–but not savings we set aside for planned spending like travel and house repairs).
Thanks to Frugal Decadence, we don’t live like monks at all. In fact, my blog is full of fun adventures we’ve been on and how we saved money/got around paying full price like credit card bonuses, mystery shopping (we haven’t paid for an oil change in over two years), free movie ticket perks from our electricity provider, free movie screenings, low-cost smart phone market, free Nike sneakers from MyCokeReward points, etc.
We are also lifelong traveling companions–we met one another in Japan. Since getting married we’ve gone on an 11-day trip to Austria, an 11-day cruise/trip to Alaska, an annual holiday trip to PA for 11-14 days each, Colorado, Michigan, Louisiana, Arkansas, etc. This has been achieved through frequent flyer miles, credit card bonuses, sponsored trips from companies that I either worked at or through my blog, and just prioritizing travelling over other things (like paying full price for toiletries).
I think my best tip about how we’ve saved so much darn money is that we pay ourselves a certain amount first, and then we live off of the rest (not the other way around where people pay/spend through the month and then save what’s left over). This means we’ve had to come up with some creative solutions…which is something I specialize + get fired up about!
7. What are your best money management tips?
- Work backwards with your savings: Let’s say you want to save $10,000 this year. Divide $10,000 by 12 and then figure out how to save $833.33 per month.
- Get creative. Don’t always throw money at a situation. Be patient and wait until next month, as that means you can set aside more money from your paycheck this month.
- Get your money working for you as early as possible.
- Never accept the first offer or first price of anything. I haven’t, and I have found some really great ways around paying full price.
- Treat your savings accounts (not your planned spending accounts, which are different) as black holes. Money goes in, but it doesn’t come out. You’d be amazed at the solutions you can come up with instead of taking it out of savings when you take that option off of the table.
8. What do you think is the difference between you and your millennial peers? How are you able to live so financially smart?
I have found that I am quite different from most people when it comes to money. To me, money = independence, something I have strongly craved since my late teens. When you put that kind of a value to money, you suddenly stop spending so much of it. My consumer biological clock ticks slower than others’, that’s for sure, but I enjoy such an immensely blessed life that I just have to share with others what it can feel like when they get to a truly independent state by managing their money in a way that’s a win-win (win for now + win for the future).
9. How would you teach better money habits?
I think people need to know that the buck stops with them. Sure, everyone has down periods (you’re talking to someone who has four stints of unemployment under their belt), but ultimately, you’re responsible for your future happiness and survival. If people truly felt this, and truly knew what it meant — that saving money today could very well mean that you get to eat a year from now, and that you don’t have to ask your parents for money or move in with someone and all of the crap that can come along with that — then I feel like consumer spending levels would go down and savings levels would go up. Honestly, I’m not sure how most of America sleeps at night knowing the abysmal PSR rate in this country (which, shockingly, includes retirement savings).
10. How do you and your spouse handle your finances? Do you have any particular rules or strategies?
It should come as no surprise that I’m a finely tuned instrument when it comes to finances. The good news is that my husband and I share some very important values, such as abhorring debt. This doesn’t meant that our money management system came easily, and we also experienced financial friction in our marriage.
The way that we deal with finances is that we have fully combined everything–all accounts, credit cards, and even access to each others’ retirement accounts. I’m in charge on a day-to-day basis, which I just love doing, and we discuss things as they come up. At the end of the month, I let him in on the profit I’ve made in my business (since it varies), as well as any unexpected expenses that have come up. While he can access our accounts at any time, he generally doesn’t. We also each agreed on a “mad money” allowance that both of us gets to spend each week with complete autonomy. This helps us continue to feel and function as adults no matter who is managing the money.
11. Can you tell us your family investment portfolio asset allocation? (ie what percent in each of various types of financial assets such as 50% U.S. stock mutual funds, 20% in International Stock funds, 30% Bond mutual funds.
Oh boy–I had to look this one up. In our investment accounts, looks like we’re 8.44% bonds, 23.22% international stocks, 59.32% US stocks, 2.7% alternatives, and 6.32% cash.
12. What are your personal thoughts about investing risk?
I have a healthy aversion to investment risk (read: I’m more on the conservative side of the equation). However, it hasn’t held me back from investing; I opened my first Roth IRA when I was 24. The way that I get around feeling that investing is too risky is I made absolutely certain that I am not investing money I am going to need any time in the next several years. This means I have an emergency fund that would last us a year, on top of our retirement accounts and investments outside of retirement. What can I say, it helps me sleep at night because I’m not risking inflation eating away from our money by keeping it in savings only, but I also can cover our bills in the near future in case the inevitable happens (we’re a poster child for life being thrown at you).
13. You offer several money related products and courses. Tell us about them and why one would buy your offerings in lieu of picking up a book or two?
I see my product offerings as dynamic, whereas books can be flat (I’m a book reader myself, but when you’re dealing with fixing and polishing up your finances, often you need interactive solutions). For example, The Debt Manipulator 3.0 has bite-sized lessons as well as an excel workbook where you plug in your personal debts once, then update as you go along to reveal your new debt release date. It’s so exciting to see the progress, as well as to order your debts in a priority list that makes sense for you. With my course Save Beyond Your Means: Transform an Average Paycheck into a VIP Life (you can get on the waiting list), I offer two live group coaching calls where people can talk to me about their money issues and questions, as well as access to my VIP Facebook group.
Personal Finance Luminaries is a series highlighting individuals in the money education and information sphere who offer information and services to improve the financial lives of individuals in the U.S. and worldwide.
Please check out the list of former personal finance luminaries, they include authors, personal finance website publishers, and well known podcasters. Each one of the luminaries offers a peak into what makes them tic and how they are working to improve the financial lives of others.
What are your best money lessons?