Can you be more frugal in town or in the country?

Local pastry shop--one of the temptations of city life.

If you’ve read my recent guest post at Well-Heeled Blog, then you know that DH and I have decided to settle in a much more rural area here in France.  Our decision to skip out of the biggest population centers pivoted largely on the fact that the cost of housing there seemed to negate the added monetary benefit of my career potential in a larger city.  But we’ve still got a fairly big decision to make: do we live in a small city (about 50,000 people) or do we live in small town or village (around 1000 people).

Financial considerations of city versus country living.

Why living in a city is frugal:

• You may be able to park the car and save on gas and maintenance. . .you may even be able to live without a car!  (The city we’re looking at has free bus service).
• You’re close to most services and shopping–which can make it easier to find savings and comparison shop.  Some of the villages around here don’t even have a single shop–not a bakery, not a grocery stop, nothing!  In such small areas, you can easily find yourself subject to a ‘convenience’ tax when you are forced to do your errands close to home.
• You may find more jobs.  I wouldn’t exactly say that the small city we’re considering is a mecca of career opportunities for me, but at the same time, it looks like I’d have quite a few more options for work than if we lived out in the boonies.

Why living in the country is frugal:

• You can (usually) afford a better home for your money.  In our case, this would mean a 3-bedroom house rather than a 3-bedroom apartment.
• If you have land around your home or are close to some land you can use, you can start your own garden–a frugal exploit in it’s own right.
  

  Raw milk for sale in a small village.

• You may be able to have a shed or workshop allowing you to work on projects you wouldn’t work on in an apartment (repairs, soap-making . . .)
• You avoid the constant temptations to spend that you find in the city.  I certainly noticed this when living in our village recently–there were no shops to window-gaze, and you can only go to the same café so many times before it gets old.
• You can occasionally buy products like vegetables, meat, milk and cheese directly from the producers.
• You are (usually) closer to nature and hence free entertainment.  We love to hike and bike, so finding a location where you can do so without ‘leaving town’ appeals to us a great deal.
• Property taxes are far lower (if the township has its act together!!).

City or country, which makes the best money sense?

What do you think makes more sense money-wise?  Did you ultimately make your decisions based on being smart with money or did other factors come into play when you chose your home?

Do you need a financial makeover?

When do you know it’s time for a change financially?  It’s not like you suddenly look in the mirror and see that your haircut has grown out or put on a pair of pants and find that they now struggle to contain your new (ahem) curves.  As I was reading Health and Dollars: A challenge at Funny about Money, I realized:  It’s hard not to see the signs of neglect to your body, but financial problems?  Easier to miss, if not willfully ignore. And ‘flabby finances’ can make it difficult to pinch pennies should the need suddenly arise–much like poor physical condition can make it all but impossible to join into an pickup game or go for a jog. . .

Lately, I’ve been thinking I need a financial makeover of sorts.  It’s taken a long time to notice because bank accounts don’t come with noticeably pale cheeks and retirement accounts don’t have bellies that hang over their jeans.  Still, my finances are a bit sloppy lately.  How about you?  Are your finances in good shape, or could they use a gym membership. . .or a diet?

Five ways to tell if you need a financial makeover:

I’m guilty of at least three of these lately.   Maybe you have some other tell-tale signs of a need for serious financial change.  Please feel free to share them below.

1.  Emergency fund issues!

I’d argue the emergency fund is one of the most important parts of the financial picture.  There could be lots of problems with an emergency fund.  It could be underfunded (or non-existent).  It could also be saved in an inappropriate form. . . which is our case.  Right now, a large part of our ‘emergency fund,’ roughly 17% of our net worth is sitting in checking accounts.  Not too smart.  The money we have in the US would be better off in laddered CD’s–here in France, we’re better off putting it into a variety of savings options offered by banks.  A little interest would be nice, eh?

2. Unorganized Accounts, account holders and beneficiaries:

DH and I are on most of our accounts together, however, since his car accident, we realized that there were a few accounts on which I was not even named.  This meant that when one of the accounts ran out of money and DH was in the hospital, I actually couldn’t make a transfer to bring up the balance.  Now there’s  a mess waiting to happen!  In recent weeks, we’ve been trying to right this and have taken the following steps:

• Making sure both of us are on all accounts in case of another health emergency.
  
• Making sure beneficiaries of accounts (especially retirement accounts) are updated.
  
• Making sure all account records are accessible to both of us in the same place!  Since we’re an international couple and since we married once many of these accounts were already in place, we’re still getting our act together on this.
  

3. Investments/placement of money that doesn’t make sense:

Do your finances have any of the following mistakes?   (Once again, I’m guilty of a few of these myself!)

• Money you intend to spend soon in a high-risk investment.
• Money you intend to invest long term in an investment with returns that are too low (yes, perhaps also too low of risk).  Yes, I actually recently discovered that some of my retirement savings are set to earn 2%. . .probably not a wise way to guard against inflation for the next 30-40 years!
• Large amounts of money placed in accounts that charge a fee and aren’t paying  interest!
• Too much of the emergency fund stored in the wrong currency.  Um, this may be a personal problem and to an extent it’s intentional, but the last thing we need is to be forced to put our funds through a currency exchange at an inopportune time–and is it just me, or do emergencies always seem to happen at inopportune times?
• Excessive non-emergency savings stored at low interest while you have higher interest debt in another place.

4.  More money going out than coming in (or worse, you don’t actually know!)

Seeing as DH and I enjoy the challenge of being cheapskates much of the time, we don’t currently have this problem;) But in my humble opinion, spending more than you earn each month (or just plain old not knowing!) is a recipe for disaster.  I may be busy right now, but I am still keeping tabs of our cash flow by tracking our expenses.

5.  Unbridled and unexamined accumulation of debt:

Ever been in this situation? you don’t have the money, you need something, you cringe and slap it on your credit card. . .and then you don’t even want to look at the card later!  I mention this because I’ve seen it happen (and frankly, I’ve lived through periods like this myself).  I can remember thinking, “Oh, it’s bad, ok!  I’m not going to look.” But frankly, being familiar with your debt, how fast it is growing and your options for repayment is essential to recovery.

Do you have any financial makeover plans?

I’d be curious to hear if anyone else is working on getting his/her financial house in order–or if you’re simply much more organized than I am.  Feel free to add any of your own goals or tips! I intend to work on our account organization and documentation, while also making sure that our different funds (emergency, down payment, retirement) are invested in the right place.  What are your financial plans?