Book Review

I've been reading the Frugalwoods blog for quite a while now and pre-ordered her book back in October last year.  The book arrived yesterday and I sat down with a coffee and read it in one day.  I'm not a big reader however when it's something that interests me I'll read it pretty quickly.  Yesterday it rained most of the day so I felt very indulgent sitting out the back with a coffee reading and eventually came inside as it was a bit windy as well as rain and sat on the couch and read the book from start to finish.  As I've been reading her blog for a while I knew a lot of the story however it was really interesting hearing the rest of the story.  I would recommend reading it and perhaps get your local library to get a copy.

One thing that came across in the book was that they never do anything without thorough research. I'm like that as well however these two take research to the next level and fully paid off when purchasing their first house and their subsequent 66 acre property in Vermont. This is a story about how they retired to the country at age 32 and are financially independent.  Both Elizabeth and her husband work part time from their property because they enjoy what they do.  Don't need to work from a money perspective however, enjoy the stimulation and creative outlet along with living on their 66 acre property.  They have just welcomed their second baby to their household at the same time her book was launching so they have been very busy. 

One of the other things that she talks about in terms of budgeting is reducing line items in your budget from fixed and discretionary.  The only fixed line item they had was their mortgage.  She said even food, electricity, phones etc. are all discretionary as in you can always do better, use less electricity and have somewhat control over even reducing these numbers a little bit.

One paragraph in her book is a great example really assessing and thinking long term.  Here is what she says:-

Would you rather watch TV or have $91,000.  Lets say you spend $75 a month on cable.  It doesn't sound like a huge amount of money on it's own.  But multiplied by twelve months, that's $900 a year on television.  Now, lets say you instead invested that $900 in a low-fee index funds and realized a 7% return, which is considered an average annual market return over the long term.  Imagine you kept that same $900 invested for decades, which is the wisest way to invest, and added $900 to your investments every year instead of paying for cable.  In 30 years, your annual investments of $900 would've grown to $91,865.74.  Yeah, you read that right $91,865.74.  Now ask yourself again: Would you rather have $91K or watch television.

Her book is how they did it and talks about graduating from college getting her first internship in New York City that paid $10,000 and living in an unsavoury neighbourhood right up to moving to Vermont and having their first baby.

Years ago I helped a friend do a budget when she had maxed out her credit cards and didn't know what to do.  I love doing numbers and spread sheets and helping her.  Budgeting is all about doing things differently and one of the simple things that I got her to change was to stop buying her soft drink with her lunch each day.  Sometimes taking baby steps is the first part and so I got her to buy a box of soft drink from the supermarket and take a can to work every day instead of buying it.  A soft drink at $2.50 per drink x 30 days = $75 whereas she could buy a box of 30 cans on sale for about $20 from the supermarket.  So straight way she is $50 better off without giving up her soft drink.  If you were being extremely frugal you could give it up altogether however I like to try and do things differently so you don't feel deprived and can stick to it.  She could also make lunch and take it to work thereby saving another $80-$100 per month however just with the one little tweak of the soft drink you can find more money.

Frugalwoods went all out and gave up most things haircuts, make up, dining out however they had a long term goal to own acreage and live in the woods and so to them it was totally worth it.