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Anya Kamenetz Generation Debt

Anya Kamenetz, Generation Debt

Staying Frugal in the Age of the iPhone

by Anya Kamenetz

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Posted on Tuesday, September 25, 2007, 12:00AM

In the last few weeks, three of my friends have showed off their new iPhones. This device is a beautiful, shiny, multifunctional object of techno-lust.

For me, it would fulfill the functions of an MP3 player, a digital camera, and a personal digital assistant, none of which I currently have. But I won't be getting an iPhone any time soon.

Count Me Out

It's not a straight-up question of affordability. I could probably dip into my savings and/or a credit card to come up with the approximately $2,000 to $6,000 (!) the new phone and a new contract cost over two years. (Even after the recent price drop, the monthly costs are far more than the phone).

The thing is, I got a new phone back in March that works just fine, so I can't justify getting a new one.

This got me thinking about the kinds of financial choices that can help or hurt Generation Debt.

Living on the Cheap

Those of us in this coveted 18-to-34 demographic are constantly bombarded with targeted ads. Like a lot of people, I want to wear trendy clothes, check out the latest bands and movies, and adopt the newest gadgets. But combined with a basic lack of financial knowledge, these temptations help lead 20-somethings to spend 16 percent more than they make and run up a household average of $4,538 in credit card debt.

I believe we can do better than that. My husband and I aren't frugal fanatics or obsessive budgeters, but we do make some simple choices that limit our spending while actually adding to our quality of life.

Here are some things I do in seven basic spending categories. Check them out and see if you can do the same. I've also added links from money-saving stars around the web, and I hope you can add some ideas of your own in the comments section:

1. Saving: Do It

Controlling spending starts with saving. I deposit 10 percent of each freelancing check into a savings account, on top of funding my IRA and setting aside money for taxes.

If you have credit card debt, pay it down out of your first paycheck of the month. When you pay yourself first, you don't have that money around to be tempted to spend on other things.

2. Food: Cook It

I started cooking for my family at age 11. These days, my husband and I cook dinner at home most nights. Two of my favorite cheap and easy meals since college are black beans and rice with an avocado and spaghetti with freshly made tomato sauce (both of which cost less than $2 a serving). Cook ahead on weekends and freeze it if you don't have time during the week.

Feel totally clueless about cooking? Try the fun, easy cookbook "Help! My Apartment Has a Kitchen."

3. Clothing: Buy Used

I have a blue, button-down Ann Taylor shirt, which I paid about $7 for at the Salvation Army, that I've worn on TV a number of times. That always gives me a laugh.

Another great way to get new looks for free is to hold a clothing swap with your friends. Also, in general, I stay out of name-brand boutiques and department stores unless it's a really big occasion. Instead, I browse in discount stores when I need a shopping fix.

I don't really see a terrific quality difference between the two -- my winter coat came from H&M and cost $100, and it's heading into its fourth winter. I also repair my clothes and hand-wash most things instead of sending them to a dry cleaner.

One of my friends, who's a shopping maven, paid down $12,000 in credit card debt. She browses catalogs, magazines like Lucky, and sites like Bluefly all month long, clipping, saving, or bookmarking stuff she likes. At the end of the month, she sifts through the list and buys maybe one item from it. It's still fun, but better prioritized and way cheaper.

4. Shelter: Live Cheap

We've always kept rent to the recommended 25 percent of our gross pay. At different times, that meant sharing a 3-bedroom apartment with 5 people and living for 2 years in a 275-square-foot walkup.

Depending on your circumstances, of course, affordable housing can be hard to find no matter what compromises you're willing to make.

5. Furniture: Salvage It

We only purchased two new items in our apartment for over $100: the bed and a floor-to-ceiling shelving system/desk.

My desk is from Target; the desk chair and kitchen table are from Ikea. Everything else we either bought used through craigslist or inherited, and several of my favorite items were scored from off the street.

6. Media: Just the Basics

Since January 2005, we've had cable Internet, Netflix, and cell phones. No land lines or cable TV. No television, in fact -- we watch movies on my husband's computer. When the Oscars or the Superbowl come on, we go to a bar or a friend's house to watch.

My husband also uses a service called LaLa that lets him find and legally trade CDs with people from all over the country for $1 a pop, plus 75 cents for shipping.

7. Entertainment: Go for Free

Looking at my calendar for this past summer, I see only one event (a party and live show on the Fourth of July) where the tickets cost over $20. We also paid $35 each to camp overnight and use some hot springs. The rest of the fun included free outdoor concerts, free outdoor dance parties, free house parties, and barbecues.

Summer makes it easier, but there are free events all year long. We caught a couple of movies, met friends at a bar (one or two drinks, $15 per person), had group dinners out (usually about $20 to 25 a person), and made dinner for friends a couple of times.

So when you're looking to save money on entertainment, abide by the budget of your most-broke friends. And if you're someone's most-broke friend, speak up! There's nothing worse than getting stuck splitting a big group check at Chez Expensive.

More Tips from the Masters

Here are some more saving tips I've found on the web. There's a whole galaxy of people our age out there who give advice and inspiration on living better for less:

• Don't buy stuff unless you initiate the transaction.

• Stop buying crap (written by, and for, 20-somethings)

• Before you buy, ask the right questions.

• Learn how to buy nothing.

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291 Comments

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  • j - Wednesday, October 10, 2007, 7:22PM ET  Report Abuse

    • Overall: 5/5

    Some of these comments are ridiculous. There's nothing dirty or depraved about living this way. I didn't even know what the Iphone was until the old guy at my office walked in with one and commenced to behave like a nine-year-old boy. This lifestyle is no problem. We already do most of the things she does, except we don't have cable internet or Netflix. Instead, we have a giant used TV and we buy old video cassette tapes from the local Salvation Army. She forgot to mention bike riding, the local library, free museum days as alternative entertainment. She also needs to mention something about health and exercise.

  • Jane Doe Poster - Tuesday, October 9, 2007, 1:29PM ET  Report Abuse

    • Overall: 5/5

    Great advice. WORSHIP COMPOUNDED INTEREST PEOPLE! I am calling it quits at 55 because of compunded interest. NOTE TO YAHOO! PLEASE GET RID OF PENELOPE AND SOME OF THE OTHER SCHLEPPS WAXING POETIC ABOUT SITUATIONS IN WHICH THEIR EXPERTISE IS QUESTIONABLE AND GET MORE PEOPLE LIKE THIS ONE! SHEEESH!

  • Yahoo! Finance User - Monday, October 8, 2007, 11:21AM ET  Report Abuse

    • Overall: 5/5

    This is an excellent article. Some one commented this is dirt cheap living. Nah. That person can not imagine to live so cheaply cause that person believe living so cheaply is impossible in this money world. I wish that person well who posted about 10 post ago. Like the saying go money make the world go round. Which need not to be true. I do not feel like eating a 30 $ meal at any fine place even with my family. Money should not be the object or should be the objection in life IN ORDER to live the good life. Make me sick to think why should I pay $30 for the meal when one can live cheaper without showing-off or flaunting his or her wealth.

  • Yahoo! Finance User - Sunday, October 7, 2007, 11:48PM ET  Report Abuse

    • Overall: 4/5

    The article is very good. Just to share some thoughts: I have a tube TV (very cheap, been used for 10 years) and take advantage of free channels over the air. For internet, there is a term called "dry loop DSL" or "naked DSL" which you can subscribe dsl without having to have a land line. Sometimes, it is cheaper than cable internet.

  • Yahoo! Finance User - Tuesday, October 2, 2007, 6:53PM ET  Report Abuse

    • Overall: 5/5

    Great article by Anya as usual - and of course she's also hot which always adds a couple of stars to the reviews!

  • RAJESH - Tuesday, October 2, 2007, 12:20PM ET  Report Abuse

    • Overall: 5/5

    ver excellent these things are not new to us but the fact is that you do not know when a word strikes a man.

  • michaelE - Tuesday, October 2, 2007, 1:02AM ET  Report Abuse

    • Overall: 3/5

    When will there be some balance in financial reporting. How about an expert who thinks cutting interest rates will cause massive inflation and hurts workers and savers while benefiting gamblers and skimmers. Our press is bought and paid for just like our government.

  • Yahoo! Finance User - Tuesday, October 2, 2007, 12:48AM ET  Report Abuse

    • Overall: 5/5

    Anya, Thanks for such a sound peice of advise. Owe you one. Best regards

  • Yahoo! Finance User - Tuesday, October 2, 2007, 12:42AM ET  Report Abuse

    • Overall: 4/5

    Very sound advise. I know because I have followed it since graduating 20 years ago. Remember, the market is out to separate you from your money by trying to convince you that you need certain things. I will admit that my neighbors and I pitch in on one cable internet account and one of us hosts the encrypted wireless hub. Four of us have internet access at 1/4 the cost.

  • Yahoo! Finance User - Monday, October 1, 2007, 5:46PM ET  Report Abuse

    • Overall: 5/5

    Work has been optional for me since I was 40. I've earned modest incomes doing work that has been more like a hobby than a job. I now work part-time and love it. I have every gadget that I want (purchased as a techno-laggard, but then again, I'm in the technology field, so know to wait a year to avoid beta-testing on behalf of the company), two nice properties (paid for), and lots of wonderful friends, none of whom care about materialistic lifestyles. Potlucks are our form of entertainment because we get to enjoy the company of our friends in our comfortable homes. Most of you over-spenders probably don't even know what a potluck is, nevertheless how to cook good food for friends, that is if you even know what real friends are. Am I frugal? Of course. Are you stupid for living for the moment and having non-investment grade debt? You sure are! Have fun eating dog food when you are in your thirties and forties because you have run out of rope and out of credit. Bankruptcy laws are now tougher than ever and you won't get any sympathy from me when you complain that your life is so tough! :)

  • charlotteboy - Monday, October 1, 2007, 4:27PM ET  Report Abuse

    • Overall: 3/5

    fair article. i am pretty good when it comes to saving/investing. however, i disagree with the furniture and clothes. i buy quality furniture, which usually is expensive. i don't buy cheap. when i was 30, i got married, bought a house and finally bought some furniture (still had furniture mom bought me out of college - ugly stuff)... 6 years later, every piece i bought is still like brand new. i took care of it and it (furniture) took care of me... DON'T GO CHEAP.. i bought pieces at a time in CASH ONLY... 2nd, don't go cheap on clothes. you feel as good as you look. i don't feel i look good in cheap clothes, so i buy nice stuff... its pays dividends at my job and when i am out. i just feel good.. and i need that. outside of that, i brown bag it, drive a older paid for car, live below my means...

  • Steve - Monday, October 1, 2007, 2:14PM ET  Report Abuse

    • Overall: 2/5

    Nothing wrong with the article but at the same time there's nothing new here either. The bottomline is that you must live within your means and if at all possible live below your means. Unfortunately, this really is the iPod/iPhone generation. How many people in serious debt own more than one iPod? Personally, I think most people under 30 years old are just so spoiled that they have no idea of what things actually cost. It's the instant-gratification, out with the old in with the new, everything-is-disposable societal views that have led to this situation. The parents of these 20-somethings are the root cause but at some point they have to wake-up and take responsibility for their lives. This generation is addicted to spending as if spending is a drug. It doesn't seem to matter what they spend their (or their parents') money on, it's the act of buying something that gives them the rush. Maybe it's a feeling of entitlement, I don't know. I don't really think it's as widespread as the media makes it out to be, I'm sure there are more savers than spenders in this generation, but it's the out-of-control spenders that grab the headlines. They deserve no sympathy or pity. Grow-up and take responsibility.

  • J - Monday, October 1, 2007, 12:46PM ET  Report Abuse

    • Overall: 4/5

    Great article - my dad gave me similar advice back when I was in my teens; now that I'm in my 40's I thank my lucky stars he did. I've no debt at all despite having my PhD, I have plenty of money in the bank and in various investments to the point that I could retire in 10 years and live comfortably even with 4-5% inflation the rest of my life, all of which never earning more than 65K per year. Most of all I can spend time doing what I enjoy like teaching, reading, spending time with my wife and kids, etc, which makes for a happy existence. My students believe I'm some rich professor who lives this glamorous lifestyle, which makes me laugh because I buy heavily discounted clothes, drive a used car, etc., but somehow dont appear to give the impression that I'm "cheap." I have to say this, though: Having travelled for extensive periods of time due to research projects in various "third world countries," I find it offensive that some posters have compared the suffering these people face to those of frugal Americans. The poorest American lives like a roman emperor compared to those desperately trying to feed their children on less than $2/day. The economies of scale separating us (Americans) from, say, Bangladesh are extraordinary - I've seen parents watch their kids die in unspeakable agony because they could not afford only $20 in medicine - what American has dealt with that in the past century? Anyway, kudos to the author for trying to bring the message of frugal living to the next generation - in 20 years when they're like me they'll thank you for it.

  • Idiot - Monday, October 1, 2007, 10:37AM ET  Report Abuse

    • Overall: 2/5

    The author forgot to mention how much money she saves by not getting her hair professionally styled. As for television, go ahead and make the splurge on a $99 small color TV. Then you won't have to drive to bars (or hitchhike) and spend money on drinks to watch the Oscars and the Super Bowl. But I suppose you just order water (tap, of course), thus endearing yourselves to the bartenders...

  • Richard - Monday, October 1, 2007, 8:28AM ET  Report Abuse

    • Overall: 3/5

    I was a bit spoiled in my twenties, but learned to be frugal anyway. Saving a little money early in life almost always beats saving a lot later on. Some good tips here, and the author is pretty cute!

  • Yahoo! Finance User - Monday, October 1, 2007, 6:11AM ET  Report Abuse

    • Overall: 4/5

    I especially loved this advice column. Too bad I didn't read this or something like it about 5 years ago. My debt is huge! Trying to climb out of the deep hole is tough but it can be done. This frugal way of living will not only discipline the young, it will save you a lot of dough in the long run. If I had used this advice, I'd be traveling across the world instead of stuck at home buried in debt.

  • Yahoo! Finance User - Monday, October 1, 2007, 2:46AM ET  Report Abuse

    • Overall: 4/5

    You know what's wrong with people that compare frugal living to poverty? They don't know the true meaning of happiness. Some say that it keeps you from having friends, well the way I see it a TRUE friend would never judge you based upon your level of material ownership. In other words, buying an iPod to fit in is simply an act of buying your friends, which will probably not work entirely because of how much you have in common and even then what else do you have to buy just to fit in? After awhile you become a slave to materialism and go into debt just because of the lengths you went to get something. And in the end you have to ask yourself, did you ever need this to begin with? No you don't. The reason why you think you need something unnecessary is always going to be a wrong reason. If you think you need an expensive treadmill to lose weight, then you are willing to waste $300 or more dollars on something that will provide no difference in activity level than what you could get from a nice walk or jog considering that you were motivated in the first place. What you are supposed to do is save your money to afford something in the future, not necessarily luxury but for what is important, things like food or health care, items that you need to live on. These days, those things are becoming so expensive that you have to have the money ready for the unexpected, no one wants to be injured but sometimes it just happens. But when it does and you can't pay for it, well then it's like a wound that will never heal.

  • BECCA - Monday, October 1, 2007, 2:29AM ET  Report Abuse

    • Overall: 4/5

    Pretty good- I'm not sure I could apply all of them being that I'm at the older end of ths age group. In my college years more of it applied- and fresh out of school. Most of us grew up expecting to have everything and to have it NOW- you can see that from one of the fellow commenters. Paying yourself first, cooking more at home or with friends, and spending less on entertainment are all great advice for saving moola.

  • Yahoo! Finance User - Monday, October 1, 2007, 1:01AM ET  Report Abuse

    • Overall: 5/5

    Very smart people! Too bad more young (And older) folks don't think like this.

  • Richard - Monday, October 1, 2007, 12:18AM ET  Report Abuse

    • Overall: 3/5

    I was unable to e-mail this to my son and none of the contents would print! Not a good day!

  • mango - Monday, October 1, 2007, 12:08AM ET  Report Abuse

    • Overall: 4/5

    Good advice regarding how to enjoy freebies. Happiness has little to do with how much brand name stuff one own. My circle of friends are high income individuals and they are well off, many of them are born into money. Buying stuff become a competition among friends. The one with 2 sports cars is envious of the one with 7. Every season the girls are going to fashion shows or private sale for designer clothings. It is OK to spend it if you can afford it, it is not healthy when one is enslaved to such lifestyle. Greed is never a good thing. Buying out of insecurity is even worst.

  • Yahoo! Finance User - Sunday, September 30, 2007, 11:52PM ET  Report Abuse

    • Overall: 1/5

    This article is terrible, while it tells you how to leave cheap it also tells you how to live DIRTY and DEPRIVED. You live like you're in a third world country. #1. YOU DON'T HAVE A CAMERA??? Are you against photographs?? #2. YOU BUY MOST ALL YOUR CLOTHING USED?? That's nasty, but still not gross yet. #3. YOU LIVED IN A 275 SQUARE FOOT AREA? Now that is GROSS and DIRTY. #4. YOU DON'T HAVE A TELEVISION!?! That's DEPRIVED...and moronic by most standards. To suggest this to anyone reading this is pretty senseless. Much less to suggest not having cable television. How sad is it that you have to go bum off of your friends just to sit in front of a television, or that you are going to a bar...probably not spending any money there because you're so cheap, and taking up space watching tv there. That's just sad. I will say, I am VERY happy that you have a guy in your life that can put up with it and does it with you....because guys like him are extraordinarily rare as are woman like yourself...and i don't consider either a good thing, but to his/her their own :)

  • Yahoo! Finance User - Sunday, September 30, 2007, 11:36PM ET  Report Abuse

    • Overall: 5/5

    Good information! It's funny that the a lot of people that have or want the latest always end up being the ones in debt. Remember, I said a lot not all. I have some family members that always like to have the latest fashion, gadgets and anything else trendy. The thing is that they pay the price by having to kill themselves working and hoping they will make ends meet. I retired at the age of 31. Not from a rich uncle or family member, but just from a lot of hard work and learning how to save. I don't have cable TV, but I don't rely on anyone for entertainment. There are sites where you can watch movies for free. As for TV, I have an antenna that I bought $20 that gets me 25 channels. That's more than enough. May I recommend a book... "Rich Dad Poor Dad". Excellent read. Read it and apply it. It works.

  • anyone - Sunday, September 30, 2007, 11:26PM ET  Report Abuse

    • Overall: 1/5

    There is nothing wrong with saving after you live a decent life. What this lady is proposing will make you feel miserable, your self estime will be low, soon enough you will be on drugs.

  • DonnaK - Sunday, September 30, 2007, 11:23PM ET  Report Abuse

    • Overall: 5/5

    I am 49 and wish I had done this years ago. I just lost my million $ home and all my savings because my husband and I didn't know limits. We started a business on credit cards and when the business went so did everything else. I hope all young people learn from this. I can say that I am much happier with no debt and living simply. I did have to file for bankruptcy and my marriage of 30 years did not survive so the loss is not worth the spending that is for sure. You will become a slave to your debt don't do it.

  • nene - Sunday, September 30, 2007, 11:14PM ET  Report Abuse

    • Overall: 5/5

    Awesome...my fiance is and i are always looking to cut corners here and there and this was a fabulous resource! Thank you!

  • Yahoo! Finance User - Sunday, September 30, 2007, 11:14PM ET  Report Abuse

    • Overall: 5/5

    It does seem impossible at first to be cheaper and figure out what you don't need. It does get better. I gave up cable tv two years ago. My gf and I watch regular tv or rent a DVD. I cook and she cooks. I take her out for dinner twice per month. She's very flexible about it and we have a lot of fun, as it leaves more room for 1 on 1 time *wink*

  • Yahoo! Finance User - Sunday, September 30, 2007, 11:08PM ET  Report Abuse

    • Overall: 5/5

    Excellent advice!!! It's interesting that those who are opposing are doing so with the very thinking the article is challenging. To the ones who was thought that the advice was to go mooch off friends' cable, please note that the couple frequently have friends over for home cooked meals. Not only skip the ipod, but skip anything that has just come out, wait a year or two or you will pay the most anyone will ever pay for it and probably have to buy the one the rest of us will buy once the bugs are worked out and supply forces the prices down. Another good place to look is on freecycle.com - it's especially great for saving non biodegradables from landfills. Most cities and communites are online. I have given away things that I would have just thrown or would have sat herding dust bunnies in my garage. I have also gotten good reusable stuff and saved myself money. I helped someone, someone helped me - and it didn't cost eithr one of us a dime. A novel concept in this "me-only" day and age, but it still works. Yes, you could die tomorrow, but you could also live a long time, which is actually, more likely. What's the use of living large now and then like a pauper for the last of your years when quality of life really counts? Frugality rocks!!!

  • Michael - Sunday, September 30, 2007, 11:04PM ET  Report Abuse

    • Overall: 5/5

    Impressive coments on how other folks handle the massive ad campaigns flowing from the media presentations of all sorts. Congratulations and thanks for sharing your ideas. Like you, I too swerve away from the tempting - suck you in ads. I stopped watching TV in 1982 and currently don't listen to news or read the papers. Freedom is just a choice away. Sretlaw

  • sandy - Sunday, September 30, 2007, 10:52PM ET  Report Abuse

    • Overall: 3/5

    in my community garage sales are a wonderful way to find most anything that you need or even wany

Showing comments 6-35 of 291<< PreviousNext >>

More from Anya Kamenetz

Read the Generation Debt Book

According to economics professor Laurence J. Kotlikoff, Generation Debt offers "a truly gripping account of how young Americans are being ground down by low wages, high taxes, huge student loans, sky-high housing prices, not to mention the impending retirement of their baby boomer parents." Generation Debt will inspire you to take charge of your financial future.

Read more from Anya Kamenetz here and here.

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