Monday, April 26, 2010

Frugal Living - Americas Cheapest Family

Do you know about the mirroring principle? It's used in different motivation techniques. If you want to achieve something, you have to find a role model and copy the aspects you want to get better in. Or in other words basically learn from the best :).

Who would be someone to learn frugality from? It's definitively not me, but maybe the already often quoted cheapest family of America is a good example. The (used to) live on barely 26000 € a year. I guess they are earning more money now because they sold their story to the media and they wrote a book about frugality. Back in 2007 they were living on 26000 € and they were 7 people.
Let's do the math 26k is the annual income which is ca. 2166€ per month, or 309€ per month per person.

Could you live on such a basis? Please keep in mind it's not pocket money it's everything you have!

The answer is probably a no and if you live in Germany you would be better of to use our social system and collect Harz 4 (a basic income for everyone who has not worked for a specific time, there are no preconditions you just need to fill out a form, if you don't have anything you will receive the money).

Just for you to compare the monthly income of an adult living on Harz 4 receives 359€ but the flat and other costs are paid from the system as well such as: the flat's rent, heating, and other costs if your argumentation is good. In addition to that, you are allowed to earn 100€ per month without risking to loose the Harz 4 money.
The conclusion of this example is that Harz 4 equips you with more money than this family had.

So how do they do it?
Based on their website they:

  • budget their income in advance
  • only buy things when they can afford them
  • do not use credit cards at all
  • spent ca. 259€ (350$) for food
  • go grocery shopping once a month
  • buy only used cars
  • buy clothes at a thrift store
The key seems to be proper planning and a lot of discipline to keep going. They really inspired me. Maybe it's as usually not the what that matters but the how. It's amazing how little they spent for food but I would be afraid that the meals do not contain a lot of fresh vegetables in winter if they really shop only once a month. If they do, my imagination is just not bright enough.
If you want to know more about how they are dealing with life and money, visit their website. They also answer questions in a blog. They are not frequent bloggers and they don't answer their request forms but maybe the site (if it works) will inspire you.