Gift of Thrift

THE GIFT OF THRIFT:
The 7^th KEY TO AN AFFORDABLE HOME

After you buy a home, you'll want to keep it. During the recent foreclosure crisis, millions of families lost their homes to foreclosure. Many could not keep up with budget-busting rate resets on interest-only mortgages, while others lost their jobs and fell hopelessly behind on their payments. Some just up and left their homes after values plunged so far, the odds of a quick price recovery dropped to nil.

No one can guarantee hard luck or adversity won’t prevent you from losing your home. But you can improve your odds of holding on. To buy a home without bleeding dry your personal finances, pay attention to what I call the Seven Keys to Home Affordability: 

    
                                                           1. Down Payment

                                                           2. Income and Debt

                                                           3. Credit History

                                                           4. Mortgage                                    
                                                           5. Taxes and Insurance

                                                           6. Emergency Fund

                                                           7. The Gift of Thrift

Among these Seven Keys to Home Affordability you won’t find price. How much home you can afford flows from, and is a direct consequence of the Seven Keys working in tandem. My book for home buyers, How to Buy a Home and Keep Your Sanity: 12 Simple Rules in Any Market, shows you how to unlock the Seven Keys to Home Affordability to help you buy the best home for you and your family without breaking your budget.

One of the Seven Keys to Home Affordability that has helped me save the money I need to buy and keep my homes is The Gift of Thrift. Never underestimate the benefits of frugality. So important is the Gift of Thrift to saving for a home and paying the costs of keeping it once you buy, I share with you below the section of my book where I discuss this vital Key to Home Affordability.

After you read this excerpt, I invite you to share with HomeDingo's readers the tips, hints, and advice that have helped you live within your means and save money toward a down payment without surrendering your quality of life. Each month I will print your strategies for conserving income so that HomeDingo's readers can learn new ways to live smaller and stay happy. To submit your ideas for frugal living to help you buy and keep an affordable home, contact HomeDingo. 

            The Gift of Thrift is in my opinion the most important of the Seven Keys to Home Affordability. Use this key wisely, and the other six will fall into place. Some people are born with the knack to squeeze every ounce of value from a dollar. Others develop the trait from necessity. If you read the first chapter, you have an inkling why I fall into the second class. Living on a Social Security check and savings from a summer job while attending college with no parents to fall back on, taught me financial prudence. I learned to savor Spam and Spaghetti-O’s, how to re-use kitchen garbage bags, and how to turn off the lights when I left a room. After my wife and I bought our first home, our thrift enabled us to save money at a rapid rate. Four years later we had socked away $60,000 to buy something bigger.

            Every frugal homeowner I know has a different take on pinching pennies, but all wish to live within their means. The habits and practices that make me economically-minded may not be yours, but chances are we both believe a fool spends more than he earns. So what do my wife and I do around our homes to promote thrift?

        -- Drive no more than 5 miles over the speed limit to conserve gas.

        -- Limit eating out to special occasions.

        -- Bring home half our restaurant portions to squeeze out another meal.

        -- Don’t buy new electronic gadgets unless they’ve been in stores at least a year.

        -- Buy slightly used cars or demo models.

        -- Buy fuel-efficient cars that provide good, basic transportation.

        -- Choose gifts for loved ones that reflect thought, not price.

        -- Buy generic, not name brand.

        -- Stitch my pants and darn my socks.

        -- Shop at yard sales, but buy only what we need.

        -- Wear the same pair of good quality sneakers for five years.

        -- Do my own minor home repairs.

        -- Clip coupons, but only for items we use.

        -- And I still re-use kitchen garbage bags. 

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GIFT OF THRIFT 
 

Dear HomeDingo,

The cold weather is coming and it’s time to start worrying about paying the heating bill every month.  We heat our house with oil, and I’ve got some ideas to tell you that help me and my family save money on our oil bill.  Some of these ideas could help people who heat their homes using natural gas, propane or electric heat.

Set the thermostat as low as you can without getting too uncomfortable.  When you are home, wear sweatshirts and layers.  We keep the heat at 68 degrees during the day when someone is home, and turn it down to 62 before we go to bed or when no one will be home.

Go around your house and check all windows and doors.  Make sure that all windows are closed and latched.  If you close a window, and forget to latch it, cold air can still seep through.  With outside doors, make sure the weather-stripping on the bottom of the door is keeping drafts from getting inside.

Change your furnace filter regularly.  How often depends on how quickly it gets dirty.  In our house, I change the furnace filter once every 6 – 8 weeks.  Check the filter at least once a month until you get to know how often you need to change it in your house.  Once you find out, change that filter religiously.  Believe me, it does make a difference in how efficiently your furnace runs.

Frank

Albany, NY

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Hey Frank,

These are all great ideas for conserving energy and cutting the cost of heating during the cold northern winters.  Here are a few others:

•  Turn off ventilating fans in kitchens and bathrooms when they are not needed.  Ventilating fans can suck warm air out of a house quickly.

•  In addition to doors and windows, other vulnerable air penetration points include places where wiring, ductwork, and plumbing come through floors, ceilings, exterior walls, and soffits over cabinets.  Check these penetration points for air leaks, then caulk and seal as necessary.

•  Related to the tip just above, I have found that you can reduce cold air penetration by installing rubber gaskets behind electric switch and outlet plates on exterior walls.

•  If you have a fireplace, make sure the flue damper is closed tightly when the fireplace is not in use.

•  Keep shades and drapes on south and east-facing windows open during the day to let in heat, and close them at night to keep out the cold.  During the coldest months, try to keep shades and drapes closed on north and west-facing windows.

Thanks, Frank, for sharing your Gift of Thrift,

Sal at HomeDingo      

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To share your own ideas for thrifty living, contact HomeDingo.

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