Don’t be the awkward cat lady.

You know who I’m talking about. It’s the 103 year old woman that lives down the street. In a very tiny one bedroom house. She keeps mostly to herself and has 18 cats. Yeah, 18 cats.

What you DO know about the “cat lady” is that she uses a garbage bag as a rain jacket. She hangs her clothes out to dry on a clothesline. She has had the same haircut for the last 50 years. And she never wears jewelry. What you DON’T know about the cat lady is this… She has $12 million in the bank.

Okay, maybe I’m stretching the truth a little, but if you google “millionaire leaves money to pet” at least a half dozen news stories turn up. It leaves me thinking, “What kind of person would leave millions to their animal?” The answer… a freakin’ frugal fruitcake.

I’m not sure if you read this story, but last week an uber-frugal woman left her $4.5MM fortune to her hometown of Long Beach, WA. Here’s a snippet…

Verna Oller was a very simple, but very kind and giving woman, a friend said. She rarely spent money and when she did, she was frugal. With no formal education, Oller spent much of her time at the library learning how to invest. From this, she made a fortune and before she died at 98 years old, made sure that $4.5 Million was left to the town of Long Beach, Wash. Her wish was for the money to go towards building a swimming pool for children, scholarships for students and grants for teachers.

Homegirl was so frugal she used pieces of cloth as shoelaces!!!. Her kindness is admirable and it sounds like that money will do a lot of good, but I think this story teaches a life lesson far more valuable than frugality or generosity: You have to have a plan when it comes to your money.

A friend of mine is debt free with a decent chunk of change in his savings account (over $20K). Lately, he has been asking me for my opinion on whether or not he should buy an iPad, a Kindle, a Macbook, or nothing. His struggle is not in trying to determine which device will best suit his needs, but in his inability to cope with spending money. He feels like his purchase is excessive. He’s unknowingly becoming the awkward cat lady.

This is why I think everyone needs a plan when it comes to managing their savings. When you budget each month, you probably assign every dollar of income a category (food, car maintenance, rent, etc). Maybe you have $500/month earmarked for savings. While it’s good that you are dedicated to saving money, you need to consider getting specific. What EXACTLY are you going to be doing with that $500/month?

This is my tentative game-plan….

Pay off my student loans (almost check) and then….

Save $10,000 for my emergency fund (check) and then….

Save $5,000 for wedding expenses (check) and then…

Save $1,000-$3,000 a year for vacations (ongoing) and finally….

Accumulate $100,000 in savings for down payment, furniture, and a SUV (not even close)

Every dollar I make, that I didn’t spend, now has a purpose. Having a defined plan not only helps keep me focused on my goals, but also allows me the freedom to spend my money, guilt free! I don’t have to wonder “Should I take a vacation this year?” since I will have saved money for that specific purpose. Once I accomplish all of these goals, I will make new ones. I imagine things like “Build emergency fund up to 2 years of income” and “Save for kids first car” will come in the picture down the road, but right now, those things aren’t a priority.

Before I turn the mic over to you, let me clear one thing up, my savings plan has nothing to do with investing. It’s strictly discretionary savings, i.e. leftover money after I’ve done things like contribute to retirement, kids college, etc. And one other thing. If your life goal is to save as much as possible so you can give it all away when you die, more power to you, but I personally think their is nothing wrong with enjoying some of the finer things in life.

So reader, Do you have a defined savings plan? If so what are some of the things on your agenda? If not, how do manage the money in your savings? Anyone ever know someone that was so frugal it was frustrating?

20 thoughts on “Don’t be the awkward cat lady.”

  1. I know what your friend is going through. Once you get a chunk of cash built up there are a million things that will compete for it like “an iPad, a Kindle, a Macbook, or nothing.” He is trying to keep steady on the slippery slope of lifestyle inflation (weird how I combined slope with inflation). I think that is why us frugal people save too much. I find it difficult to find that balance and that is one of the main reasons I read PF blogs to get more insight to this “problem” I have.

    • That said, and re-reading your post, I do agree with you that goals make the difference. I guess it’s kind of difficult to set goals when there are so many possibilities and distractions that can delay them (goals). Thanks for the tip Ninja 🙂

  2. 1) Pay off student loans (check)
    2) Pay for a wedding in cash- no cash, no wedding (check)
    3) Put a 100k downpayment on a house (check).
    4) Pay for home renovations in cash (in progress, should be a check by August)
    5) Build a sizable emergency fund in case my health goes south (currently saving)
    6) Save enough (we’ve budgeted it out at about 30k) so hubby and I can both take 6 months off work and do a round-the-world (or round-many-continents) trip (currently low-key saving but not REALLY committing to it yet)

  3. I think you can overdo it, trying to earmark each dollar that comes your way. As for me, I keep a percentage of my income “unallocated,” so that if an interesting restaurant, play, concert, or whatever comes along, I can go to it without worrying if I’m throwing away my entire financial future.

    • It’s sounds like you have earmarked each dollar. For you, however, some of that earmark is a “10% of do whatever the heck I want to” money 🙂

      I think that’s a great savings category

  4. I’m so glad to see that someone else has a lot of their savings earmarked for travel. I always felt a little anti-frugal for saving so much in that category.

    Since I already have over 10K in my emergency fund, and no serious debt, I divide my savings into three parts — Misc savings (for things that are not in my budget but I decide to buy one month, like a new comforter set or a gift for a friend), travel savings and investment savings, which I put into stocks.

  5. Right now the majority of our extra income is going towards the Mr’s MBA. We are going to pay that baby in full by the time he graduates next September!
    -Kids’ savings/college accounts
    -New car for Mr.
    -Travel-that includes awesome travel (Turks and Caicos next month!) and the basic expenses of a family of 4 (almost 5) with all relatives living out of state…bummer
    -E-fund- I know many pf lovers would argue that this should be a definite number one, but we are fine with working on this at the same time as the other goals
    I can not wait til school is over and we can allocate MBA money to something more fun…it is a big chunk of change!

  6. We have a zero-based budget that includes entertainment and fun money, but we still have extra some months due to hobby jobs and extra paychecks. That extra is split up – 50% to house debt, 25% to vacation account, 12.5% to each of our individual fun money accounts. This works well for us. 🙂

  7. I have a hard time spending money frivolously too, especially right now as I save and live frugally for our big goals – being out of debt and paying cash for a home. My birthday is coming up this week, and it’s hard for me to even spend the money I’ve received from relatives on “fun” stuff. I did ask for a zoo membership though, so I guess that’s a pretty frivolous gift. I’m beginning to realize if I don’t come up with an actual gift for someone to buy I’m very unlikely to use a cash gift for anything but debt repayment.

  8. Our income is somewhat variable in that our monthly expenses are covered each month, but then we get bonuses 2 times a year. Since the bonus is tied to about a million different factors, you never know what it is going to be. So our monthly income is pretty well budgeted, but it is that ‘extra’ money that comes that gets confusing. (I never want to count on a bonus to cover our expenses.)

    There are many things I cannot ‘check off’ because I don’t think we will ever have enough saved to cover the expenses. For instance, college. There is no way I will have 3 college educations fully funded before they go to graduate high school. I would get depressed if I focused on that too much. So, I focus on the progress we have made toward paying off our house and the fact we have 0 debt outside of our mortgage.

    If I had a ton of extra money, I might consider and Ipad. However, I don’t have any desire for a kindle as I love to read a real book. Everyone has different priorities and what I view as a want is a need to someone else.

  9. i dont have a plan for the savings that i make each month, but im not really too worried about it. I budget for all my bills and reuglar monthly expenses and then just funnel the leftovers into my savigns account. From there, I can use it however I want, but given my extreme frugalness i tend to not touch it and just watch the number at the bottom continue to go up =) It helps that both my parents taught me how to save starting with my first allowance years ago!

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  10. This reminds me of the fear of spending my emergency fund on an actual emergency…when you have all that money saved up and it took you such a while to save, i have to admit its hard to part with.

  11. being frugal is a good thing. over spending or being cheap is not good. life is all about balance and if you are on a budget you really have to learn to be balanced and patient..

  12. In defense of Verna, she did have a plan for her money. She lived by herself, and didn’t have any remaining family. Her goal was to bequeath a swimming pool to her town. She met with contractors, found out what it would cost and saved up to make it happen. How awesome is that? I think when you come from a small town that town is your family and she wanted to do something nice. More power to her.

  13. Kinda disagree about your friend there. If he’s not sure if he wants a Macbook or a Kindle, that tells me that he doesn’t really need either. The 2 are SO different, it sounds to me like he’s in the mood for a toy but would get bored with it soon. Hesitating before you buy junk that you’ll never use isn’t being excessively careful with your spending; that’s just being smart.

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