A lot can change in a year. Things you never imagined happening somehow come to fruition, like new jobs or job losses, big moves, new houses, even babies.
Take
Krystal, for example, a 20-something who lives in Vancouver, one year a self-professed
shopaholic who partied every weekend, indebted to the tune of $20,000, and the
next, a personal finance and frugal living guru who is a great source of
inspiration not only for her peers but for people of all ages. If you’ve been
under the impression that you can’t teach an old dog new tricks, you’ve had it
all wrong. 
In just one year, Krystal paid off her debt, started contributing to RRSP’s, saving for an emergency fund and a down payment on a house by sticking to a budget, bringing her weekly food bills down from $100 to just $25 and limiting her shopping. This year, Krystal bought herself a perfectly-within-her-means townhouse in Vancouver.
“Paying back such a huge amount of debt in one year seemed like an impossible task,” Krystal said. “But I was desperate to change my life. I had spent the majority of my early 20’s in debt, and I knew I couldn’t move forward with so much debt holding me back. So I made huge changes in my spending habits by starting to count my pennies. It was really hard, but after calculating how much I owed, compared to how much I could live off of, I knew that if I sucked it up for just one year, I could erase over five years of damage to my finances. That seemed like an amazing plan to me!”
With all she had learned about personal finance and having proven that anyone, even people like herself who don’t make big salaries but live in arguably the priciest city in Canada, can adopt a frugal living lifestyle to achieve some seemingly impossible goals in 365 days, Krystal decided to share her story and her secrets with others and created the fun and candid yet oh-so-valuable personal finance and frugal living blog, Give Me Back My Five Bucks, or GMBMFB for short.
Enough people have taken notice of Krystal’s finance savvy that she has since started a second personal finance blog, 20-Something and Change, over at Moneyville.ca, a subsidiary of the Toronto Star newspaper. When you read her posts like, How I Saved for My Down Payment, My First Home: Breaking Down the Numbers and 25K RRSP Portfolio, it’s hard to believe that this is the same 20-something who was once borrowing money from a then boyfriend for bus fare because she was so broke.
Krystal’s two blogs have not only become an important source of motivation for her own personal finance and frugal living pursuits, but she also uses the extra money she earns from them, along with another side gig as a graphic design freelancer, to supplement the income she earns from her marketing and graphic design job.
It goes without saying that making such monumental changes in the way one lives their life would require a shift in mindset. Krystal, however, said it wasn’t soon after she started making these changes to her life that she realized she preferred her new approach with frugal living and sound money management over her old spending habits.
“Understanding that I could be in charge of my life was what made me click over into a completely different mindset,” Krystal explained. “As soon as I realized that money and budgeting wasn’t about deprivation, it was about empowerment – my entire life completely changed. Instead of ‘I can’t afford Item X,’ it became, ‘I am choosing not to buy Item X.’ Instead of being reactive and saying, ‘how did I spend $458 on clothing last month?,’ I became proactive by saying, ‘I know I have $100 to spend on clothing this month.’ Now, I decide where my money goes, and that’s a very liberating feeling.”
Still,
turning over a new leaf undoubtedly comes with its own set of unique challenges
and, for Krystal, this meant finding a way to resist the temptation to buy
whenever she sees something she wants. She said unlike before she now steps
back before making any purchases and takes the time to really think about what
it is that she wants to spend her money on, rather than giving in to her
impulses.
That need for instant gratification is what prevents so many of us from finding a balance or from ever being freed from the shackles of debt, and it seems that more and more young people, like Krystal, are burdening themselves with big debt before they even turn 30. What’s interesting is that having experienced both sides, Krystal said she felt more deprived back when she had debt than she does now with frugal living and all of the budgeting and saving that go with such a lifestyle.
“Since I’ve started budgeting and trying to live more frugally, I’ve probably cut my discretionary spending by more than half of what it used to be,” she said. “And you know what? I felt more deprived then – when I was spending money on whatever I wanted – than now. I take care to be frugal in my everyday life so that I have the money to spend on what I think is important – like owning my own home, saving for retirement, and traveling. So I choose to save as much money as I can on other things, like clothing (I’m currently on a shopping ban for the rest of the year), and groceries (my budget is around $150/month). It’s about finding the right balance for you and the life you want for yourself.”
If you’re wondering how it’s possible to find balance when you have a modest income, head over to GMBMFB and you will find loads of posts that will get you started on the right foot. A good example is that Krystal sets goals and regularly updates the status of those goals in her posts.
For 2011, she’s aiming to contribute a specific amount of money to her retirement fund, saving cash for all of the trips she plans to take this year, saving $5000 for her emergency fund and making three extra payments on her car loan--and that’s just naming a few of her 2011 goals. It’s easier to find and maintain a balance when you specify your priorities and make room for each in your budget.
When you start receiving your first paycheques from your first career, or you’re granted a student loan for college or university, it can be challenging to not get carried away and to resist buying everything you couldn’t afford when you were still in school or only making minimum wage.
For this reason, Krystal said she doesn’t think frugal living is a popular lifestyle choice among other people her age. As such, she said she found herself turning to the personal finance and frugal living blogosphere for support from like-minded individuals, because many of her friends didn’t understand why she wanted to change her spending habits and even gave her flack for her decision.
“Twenty-somethings like myself live in a society where we want everything quick, and fast, and now,” Krystal said. “And the reason why so many of us are struggling with debt is because debt repayment is slow and cumbersome, sometimes exhausting, and very difficult for most people. It’s all about instant gratification. And that’s the same thing when it comes to living a more frugal lifestyle. It can be so tempting to buy whatever you feel like buying, but the thing is, not even millionaires can afford everything they want.”
Krystal said that when she figured out what it was that she really wanted from life, everything started to come together and the cutting back and saving that she was doing seemed so much easier. Setting goals and putting money toward something that’s really important to you, after you’ve put money where it’s needed each month, is perhaps the most sure-fire way to guarantee you will meet your financial goals.
“I’m at a place in my life where I feel like I’ve struck a really good balance between my wants and my needs,” Krystal said. “I know what I value in my life, and that’s where I focus my money and my attention. So when I think about it that way, I never feel like I’m sacrificing, or that I’m depriving myself of anything.”
When you read at GMBMFB that this 20-something is paying the bills on her townhouse and car, saved enough money for renovations and still managed to pay for trips to New Orleans, New York City, Portland, Las Vegas, Seattle, San Francisco, Chicago and twice to Toronto, with cash this year, you realize that there is room for fun and what matters most to you when you take the right approach to frugal living. Once you find your balance, you start to look back on the things that you once thought were sacrifices and they seem like mere blips on the radar in terms of the financial decisions you have made and will make in the future.
“Because I love traveling so much, I know that I have to make sacrifices in other areas of my life,” Krystal explained. “I go out to eat less often, travel cheaply, and I like to entertain at home – instead of going out with friends. I recently bought my first home in the Vancouver area, and I had to make an extremely difficult decision between two properties. Even though both properties fell well within my price range, in the end, I chose the smaller, more affordable home, because it would give me more room in my budget to save.”
Looking ahead, Krystal said she wants to stay free from credit card debt, pay down her mortgage as fast as possible and even retire early. Ambitious young people like Krystal, who have already figured out that a life defined by debt is not one they want to live, give great hope for the economies of the future. Now we just need to get to the point where more young people know just as much about savings plans, emergency funds, frugal living and investing as they do about the cast of Jersey Shores.
“I really hope that readers take away a bit of hope from my blog,” Krystal said. “I’m a normal person, living a normal life. I have no background in personal finance, and I don’t make a ton of money. So if I can turn my financial life around, anyone can. I started my journey out of debt by reading personal finance blogs on the internet. Sometimes it just takes a little push or a bit of motivation to get started, and I’m really passionate about giving back to an online community that has helped me change my life.”
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