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Tuesday, November 21, 2006

Being a Cheapscate in Silicon Valley

One of the refrains on many personal-finance blogs is that one should move "Somewhere Cheap" if one intends to do well financially. The problem for us is that "Somewhere Cheap" is usually somewhere with awful weather, a bad economy, and a generally uninteresting cultural environment. And as a rare Silicon Valley native, much of my extended family is here, so it's unlikely that we'll move anytime soon.

So, we "live below our means" by doing Other Things:

1. We pay cash for cars and drive them until they disintegrate. One nice thing about the mild weather in this area is cars last forever - no rust, excessive heat or cold, sand, or other nastiness. So a reasonably maintained car should run at least 10 years or more - ours all have.

2. We do lots of day trips and adventures in nearby areas. Yosemite is only three hours away, and Lake Tahoe is about 4 hours away, so a tank of gas and $75 in winter makes for a nice weekend of Yosemite hiking. Add another $100 for Lake Tahoe and we can have a nice dinner and see a show at one of the casinos. We also go on at least one multi-day backpacking trip each year. Good museums are everywhere, and there's plenty of good city walks, from Cliff Drive in Santa Cruz to The Embarcadero in San Francisco - as well as numerous hiking trails in the Santa Cruz Mountains.

3. Utility rates here are not low, but total utility costs are relatively cheap, due to smallish house sizes and mild weather. Our gas, electric, and water costs are rarely over $100/month total, except for a couple months in midwinter. In months when we don't run the furnace, the total is rarely above $70. We don't have AC, and miss not having it for about one week per year.

4. We shop carefully. My wife is extremely good at figuring out where the deals are for particular types of food: she buys spices at a Korean grocery, a few other things at an Indian grocery, many other items at the Chinese supermarket (she's Chinese), bulk stuff at Costco, and loss leaders at Albertsons and Safeway.

5. We make do. Unless we get obscenely rich, we aren't likely to live in a place much bigger than 1500 square feet or so. Our current house is on a lot that's about 4000 square feet. So, we have learned to live "small and well", making full use of our living space and being careful about avoiding clutter.

6. I frequently telecommute, which saves quite a bit on gas and wear&tear.

7. We both take our lunches to work. This saves at least $10-$15 per workday.

8. Other LBYM standbys work just as well here as they do anywhere else: we don't run up credit card debt, fully leverage our 401Ks and Roth IRAs, and generally don't throw money around.

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