Matching Spending to Bigger Goals

The creator of Budget Savvy promotes a new kind of frugal philosophy.

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About a decade ago, Melissa Tosetti worked in public relations. She was surrounded by people who dressed stylishly, but she felt like she could barely afford to pay rent, let alone keep up with the latest fashion trends. "I couldn't figure out how everybody looked so great and still paid bills," she says. She started learning to find clothes at thrift stores and other secrets to looking good without spending a lot of money.

She realized she wasn't the only one who struggled to live the luxe life on a budget. When she was laid off, she used the opportunity to start a magazine about how to live well without going broke. Now, that publication has taken the form of Budget Savvy, an online magazine.

I interviewed Melissa for an upcoming Alpha Consumer podcast. Here is a glimpse into her perspective:

How would you describe your overall philosophy?

My philosophy is to save money on things that aren't important to you so you can afford to spend money on things that are. The whole premise is focused spending. For example, my husband and I love to travel, and in order to do that, we buy used cars and pay cash for them so we have no car payment. The money that would have gone into that, we shovel into travel. Is that hard to do?

The hardest thing is figuring out what's important to you and really focusing on your spending. It's the same with dieting. You focus on your calories—do you want to eat an old Chips Ahoy cookie or save it for a Mrs. Fields fresh cookie at the mall? It's picking and choosing. I came to the conclusion that one reason people are so frustrated with the economy is that, for the first time, they are forced to think before pulling out their wallet. I think they're frustrated by that and a little scared, when that's how it should be every day.

What's the difference between your magazine and other personal finance websites?

We offer hope where a lot of frugal websites just offer tips. We're not saying you can never spend a dime, but you can do what you want and you just have to pay attention. What are some of your favorite savings tips?

On payday, I pay all my bills before spending anything. I go to the grocery store and put gas in my car, so I have my bases covered if something comes up. It's one of the greatest habits I've adopted. When I don't do that, I end up tapping my savings. Another thing is, I balance my checkbook every day, or at least that's the plan. I can't keep running a balance in my head.

What do you like to splurge on besides traveling?

For me, it's dining out. My husband, Paul, and I cook most of our meals at home, but when we do go out, instead of going out a couple of times a week to a mediocre chain restaurant, we wait and then go to our favorite high-end restaurant and spent $150. We don't go every week or month; when we do go out, it's a meal I remember.