Live well without going into debt

By Donna Freedman

I know someone who won't answer the phone until after 9 p.m. because that's when collection agencies stop calling.

What kind of life is it when you can't even answer the phone without fear? To me, this sounds like deprivation: letting your mom bounce to voice mail because you're afraid you'll hear from creditors demanding money you can't pay.

Compared with that, eating at home and wearing hand-me-downs seems like an indulgence.

There's no greater luxury than peace of mind. That's why frugality isn't a punishment and why choice doesn't always mean denial. Choosing to be frugal simply means living mindfully and staying true to your financial values and goals.

What I'd like this column to emphasize is that being frugal doesn't mean you can never spend money. What it does mean is that you should spend on the right things for the right reasons.

A habit formed early

I grew up this way. We planted gardens, dried laundry outdoors and saved scrap lumber for other projects. Potatoes were the underpinning of almost every meal. We mowed the doctor's lawn to help pay our medical bills.

Firsthand knowledge of living with less came in handy when times got tough in midlife. I wrote an article about my situation, "Surviving (and thriving) on $12,000 a year," and the outpouring of reader reaction surprised the MSN Money editors.

Eventually I was asked to co-edit the Smart Spending personal-finance blog, along with Karen Datko, another journalist who knows a lot about coping with hard times.

Anyone who's read my stuff knows how I feel about overspending. Yet I believe some people aren't completely to blame for their financial woes.

The fact that they're "underwater" on their mortgages or "upside down" on their car loans is their own doing. But it's not necessarily their fault.

If you grew up hearing that the mark of success is a big house and a big car, you likely carried that message into your own adulthood. Or suppose every adult in your life spent, spent and spent, then paid only the monthly minimum? That's probably how you're handling money, too.

A different way to live

It's not that I don't understand the gratification to be had by living beyond your income.

You have the latest of everything and tons of shoes. You don't have to cook a meal, clean a bathroom or drive last year's model -- that's why God invented restaurants, housekeepers and automobile leasing. And credit cards.

Then reality comes knocking: job loss, illness, divorce or an economic downturn. Suddenly you can't make even minimum payments on all the stuff you just had to have.

• Tell us: Got great tips for frugal living?

That's not to say that everyone with money troubles got there through careless or riotous living. Some jobless or underemployed folks scrape by from check to check, with no savings for emergencies. They can't even think about retirement; they're too busy just trying to pay the rent. And more and more young people are graduating with tens of thousands in student loans and no clear idea of how they'll pay their debts.

Now that our collective house of (credit) cards is collapsing, we need to come up with a different way to live. Rather than dump on the people who are lip-deep and sinking, why not offer advice and encouragement?

That's where this column comes in -- and, I hope, where you come in.

Tell us what you know

Yes, you. Chances are you have advice to share, especially if you keep in mind that what's obvious to you is brand-new to others. Your tip could be as elementary as "how to build a better brown-bag lunch."

For example, one reader suggested putting mustard or mayo between the meat and cheese slices to avoid soggy sandwiches. Simple. Smart. I never would have thought of that.

• Talk back: How much could you save by packing lunches?

Don't underestimate the power of a PBJ. A Smart Spending reader who calls herself "Pepperdoo" had hit financial bottom last year when she read one of my stories on MSN Money, "Take the brown-bag challenge." She and her husband carried their lunches the next day, combed the MSN Money message boards for savings tips and within seven months were debt-free.

"And to think it all started to turn around with homemade lunches," she says now.

I'm updating the brown-bag challenge for next month; see this thread on the Smart Spending message board to contribute ideas.

Continued: Your money and your life

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