Fabulously Frugal: Living Well on Less Money

Photo: Lizzari Photographic, istockphoto

Tight times are hitting older Americans directly in their wallets. With the nation’s jobless rate spiking at 8.1 percent and likely to continue rising, nearly 5.6 percent of workers 55 and older are unemployed, and many are struggling to find jobs. Those on fixed incomes have seen their retirement savings shrink by 30 to 40 percent in the market meltdown. No wonder the country is in a belt-tightening mood, with consumer spending down to the lowest levels in decades.

But people like Sky Yardley and his wife, Jane Dwinell, aren’t panicking about today’s tough economic times—they learned long ago to live well on less. A few years ago, the Montpelier, Vt., couple saved enough to quit their jobs, volunteer on projects that interest them, and cruise the canals of France on their 28-foot houseboat for several months each year.

To achieve this lifestyle, the couple followed the nine-step program outlined in Your Money or Your Life: Transforming Your Relationship With Money and Achieving Financial Independence, a New York Times bestseller written by Vicki Robin and Joe Dominguez in 1992 and updated in 2008.

Dominguez, who died in 1997, left his Wall Street job as a technical analyst in 1969, when he was 31, and began living off the investment income from a $70,000 nest egg—about $6,000 to $9,000 a year. He and Robin devoted their lives to teaching people how to change the relationship they have with money and live well on less. Many of those who followed the program saw their spending go down 20 to 25 percent in six months, says Robin, while some “super-savers” cut expenses 60 to 80 percent.

Your Money or Your Life became the bible of the so-called voluntary simplicity movement, which had started in the 1960s and has roots in frugality, environmentalism, social justice and spirituality. Today an estimated 10 percent of American adults follow some aspect of simple living.

Voluntary simplicity is not about deprivation or sacrifice but about discovering what is enough—money, stuff and time—for things that matter, says Carol Holst of Glendale, Calif., the codirector of the advocacy group Simple Living America.

“Each person has to decide how to find the satisfaction of enough,” she says. “Everybody does it differently.”

Spending in Seattle

Helen Gabel, 58, and her husband, Phil Notermann, 59, still live like graduate students. The couple and three housemates rent a rambling eight-bedroom, three-bath 1920s bungalow in Seattle and share grocery shopping and cooking. “It cuts down on rent, utilities and meals,” says Gabel, a part-time nurse-midwife. “Plus you never get lonely.”

Home-sharing arrangements are on the rise, including family members rooming together or groups of people organizing in so-called intentional communities, says Charles Durrett, an architect in Northern California who designs senior cohousing that combines private areas with common spaces. “We estimate you can save from $1,000 to $3,000 a month on housing, food, utilities and transportation in cohousing communities,” he says.

An AARP Bulletin survey found that 32 percent of people over age 50 are living with their parents, their adult children or both. Another 15 percent say it’s “likely” that they’ll begin living with parents or children in the next year.

Each month Gabel and Notermann pay $170 for utilities, $250 to $275 for food and $780 in rent—half the cost of two-bedroom apartments in the area. The couple’s health insurance, which has a $1,500 deductible, runs $1,350 per quarter.

“Underwear and socks are the only new clothes we’ve bought in years,” says Gabel, who hosts regular clothes-swapping parties with friends. “We bring armloads of stuff and leave with half an armload—the rest goes to Goodwill,” she says. For entertainment, she and Notermann enjoy dance workshops and car camping in the mountains.

Early adopters of voluntary simplicity, the couple attended a Vicki Robin workshop in the 1980s and started economizing and investing, including the purchase of a small apartment building. “Financial independence was a major goal,” says Notermann, who quit his job as a social worker in 1997 and now volunteers for a nonprofit dance organization.

Over the years, they’ve learned that shared housing is most harmonious when there’s a common vision and a desire for true community, rather than just for financial convenience. “There are a million decisions to work out when you live together—one person thinks the kitchen is clean, the other doesn’t,” says Gabel. “You have to be willing to talk it out and set up systems to handle the differences.”

The rewards, she adds, are there: “For Phil’s birthday, we had eight people at the table without any planning. It was great.”

Thrifty in Vermont

Sky Yardley, 58, and Jane Dwinell, 55, live with their son and daughter in a 1,400-square-foot, mortgage-free, energy-efficient house within walking distance of downtown Montpelier. A wood-burning cookstove provides heat. Modern conveniences include a refrigerator, freezer, washing machine and high-speed Internet connection for three laptop computers, but the family does without a TV, dishwasher, microwave or clothes dryer. “I’d rather hang my laundry on a rack by the stove and spend a couple of months in France every year,” says Dwinell. “Financial downturns don’t affect us at all. It’s a great feeling.”

So, how did they do it? First, they tracked their income and expenses to learn how and why they spent money. Then they devised ways to economize and invested their savings in tax-free Vermont bonds. “We’ve always paid cash and never carried debt,” says Dwinell. “I still track every penny spent on a piece of scrap paper.”

The couple’s annual income is less than $25,000, mainly dividends from state municipal bonds purchased over the years. Household expenses (about $150 per person a month) and food costs ($200 each) are divided equally with their daughter, Dana, 22, a graphic designer, and son, Sayer, 18, a carpenter. They also split the costs of gasoline and car repairs for a 2002 Toyota Prius and a 2003 Toyota RAV4, which they use for long trips. The public library, a movie theater and shops are a short walk away.

“We don’t eat out, but do all our cooking from scratch, including baking bread and pastries,” says Dwinell. “We buy our dry goods in bulk, have a garden, and supplement the garden with a CSA share [community-supported agriculture program, at www.localharvest.org/csa/], which provides a weekly box of produce in the summer.” Want more details? Check out the Yardley-Dwinell blog at www.vtcommons.org/blog/common-sense.

A few years ago, the two were able to quit their jobs—Yardley was a family mediator and Dwinell was a consultant to small churches. In addition to stacking firewood and tending their garden, they care for Dwinell’s 92-year-old mother, who lives nearby, and volunteer to weatherize houses. That still leaves time to ski midweek, when lift tickets are cheaper.

The family has chosen to go without health insurance, preferring to pay cash for care—as they did when Dana fell off a ladder and needed elbow surgery. “The hospital gave us a 20 percent discount” because they paid in cash, says Dwinell, a former nurse.

They also swap carpentry, knitting and graphic design projects for haircuts, dog-sitting and rides to the airport through a local Time Bank (www.timebanks.org), where they earn credits to redeem services from others. To attend concerts or plays, they sell tickets or sweep the floor.

“Basically, we decide what we want to do, then figure out how to do it for free,” says Dwinell.

Doing well in Denver

There’s more to simple living than just living cheaply, says Travis Thrower, 50, a Denver tax accountant. “Voluntary simplicity means being aware of the world around you and how you want to live your life,” he says.

When he was in his 30s, Thrower became disenchanted with the American dream—the pressure to buy the big house filled with fancy furniture. “I’d see this dead look in people’s eyes from working the 9-to-5 grind,” he says. “Keeping up with the Joneses will only drive you nuts.”

In the mid-1990s, Thrower went into debt trying to start his own business, so he started economizing—working extra jobs, driving a junker and downsizing from a $900-a-month duplex to a $325-a-month apartment. He’s out of debt now, but those thrifty habits continue.

“Apart from my mattress and my futon, all my furniture comes from Goodwill or secondhand stores,” he says. “I own one suit and wear jeans, a sweater and Timberland boots.”

His Blue Cross/Blue Shield health insurance runs about $376 a month. “That’s a lot, but it’s better to have it and not need it than the other way around,” he says.

Thrower now works part time for an oil and gas company while building his private practice. “It’s all about freedom for me,” he says. “I want control over my time.”

These days, he rents a small house with a home office for $1,100 in a quiet neighborhood and doesn’t stint on socializing with friends or road trips to San Francisco. “As I get older, there are some things I don’t mind paying a little more for,” he says. “I opt for quality of life.”

Elizabeth Pope writes about work and retirement. She lives in Portland, Maine.