It’s been a while since I highlighted an individual reader comment, but I wanted to draw attention to some advice that Kenny left for Sara in Friday’s “ask the readers”. You’ll recall that 24-year-old Sara feels overwhelmed because although she’s making the “right” decisions, she doesn’t seem to be getting anywhere. Here is Kenny’s response, reproduced verbatim. (Well, I’ve done some formatting, but the text is completely Kenny’s.)
I have the BEST answer for you since I have been there, done that, and now at a different (but better place).
I have done everything you are saying in your bulleted list above.
I have done a bit less (you can say), but lived in a very ‘controlled’ (read it as non-impulsive) environment by using self-control and discipline since I wanted to make it big.
I DID. I HAVE. I WILL NEVER GIVE THAT UP EVEN WITH ALL OF THE MARKET TURMOIL.
Here is why:
- Have saved money every penny at a time, but yet enjoyed what I wanted and lived a good 20 years years from the days of my college.
- I maximized on using company events to save money.
- I traveled with company folks instead of using my car.
- I jumped jobs and got ‘overtime pay’ and volunteered for any jobs that would give me overtime.
- By doing overtime, I did not have time to spend.
- I saved in the highest yielding Money Market accounts.
- I got credit cards, used their money for 30-45 days, NEVER paid $1 in interest EVER, and paid off at end of month (still do the same).
- I used ALL promotions, free gifts, free money offers as I could, going out of my way to do it.
- I have opened and closed 25 credit cards in 10 years, and 8 bank accounts in 11 years. Each of them offered free Digital Camera, Free iPod Shuffle, Free GPS, Free $25 or $50 or $100 or $125 etc. You get the picture.
- Got 2 for 1 coupons. Sold stuff on eBay (total sales approx $500-$600).
- Joined ‘recycling groups’ all over the US.
- Bought stuff online, after intensely doing comparison shopping (late nights).
- Always negotiated my way for every purchase that was more than $50.
- Did Dollar-Cost Averaging into 401(k) and non-tax-deferred accounts, and sold with some profits every 2-3 years.
- Took a financial hit in 2000-2002. Taking another financial hit in 2008-2010. But, will be patient and wait it out.
- Sold house by myself in 2003 (FSBOwner) and saved $14500 and got $5000 more on the house than what the real-estate agent promised to list for.
- Using a car that I bought in 1992, and still using it. Using a van that I bought in 1996 and still using it. Bought a Lexus from Dealer auction (contacts) for cash in 2005. And, work from home 1-2 days a week to save on mileage, clothes, etc
- Teaching kids to drink water from 1992 until now at restaurants. It used to be sacrifice, and now its ‘cool’ to do so!!!!!!
- Will bring home food from restaurant to not do impulse buying (2 out of 5 times). It is good to be served every so often. BUT, will rarely go to restaurants where I do not have an online coupon or a deal.
- Will always have parties at home with people bringing appetizers and dessert, with us cooking the main meal at home. No buying wonderfully decorated plates from grocery stores.
- Buy everything in bulk as much as possible…..Walgreens had Dr Pepper, Fanta, 7-Up bottles for $0.50 with a buy 1 get one free. Loaded it up for 2 years by buying 30 bottles (2 liter). Who gives 2 liter for 25c each.
- Just today I found General Mills Chex-Chocolate Cereal for $0.99 with a 50c coupon. It is 14.5oz box, and therefore loaded up by buying 6 boxes.
It takes a LIFETIME of doing the right thing, but this is NOT WORK and should not be EXHAUSTING, since this is called ‘SAVINGS’ and you will eventually get a KICK out of it.
Bottom-line is ‘Not what I did’…..’Not I much I saved’……But, WHAT DID I KEEP IN MY BANK!!!!!!!!!!
I can say that even though my ways are aggressive, parallel Japanese/Chinese/Indian ways of saving-first, they all lead to one conclusion: Am I a Millionaire with my own efforts.
YES…..Multi-Millionaire coming from an environment where at age 21, I had $3000 in my bank account given to me by my Dad as a ‘starting point’, and living in an apartment.
I am NOT a show-off (can’t be with a 17 year car that I drive), and I am NOT showing off here. I am just sharing the fact, that:
Where there is a Will There is a Way.
If you Work Hard and Sacrifice, You Achieve
Don’t lets the Joneses stop you EVER
Do what is Right For YOU & YOUR Family
Good luck……No offense to anyone, since I am just doing what I think is right for me based on my experiences, background and culture. This is just an open share, SINCE, you asked!
I’ve said it before and I’ll say it again: Get Rich Slowly readers rock. I love to hear your stories, and I love the way that each of you is willing to share what you’ve learned with others. I truly believe that the value of this site comes from the supportive community that has developed here. Keep on sharing!
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Excellant snippet for a look at one of your readers.
Being frugal and saving is fun, it jumpstarts my creativity and challenges me at the same time.
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I absolutely love how ‘aggressive’ this post is. It’s not agressive in a negative way but just so incredibly ambitious! I thought I was a pretty good money saver having tracked every penny since I was 16 and saved over £10,000 aged 20 but my god I can learn an immense amount from this guy.
I really enjoyed reading the summary at the end. It’s also great how much emphasis is placed on the continual actions to save. It’s true that over time you become wealthier. If you’re just handed the money can you really feel satisfied? I swear it’s the striving for the best that makes life worth living.
Thanks for sharing that JD.
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J.D, I started reading your site last summer, after seeing it mentioned on LifeHacker a few times. When I started reading your site, I was making 8% more than I am now (pay cuts at work), and still had little to show for it month after month.
My debts included State and Federal back taxes (bad advice when I was doing 1099 work), a Student Loan, Car payment, Visa, a Signature Line of Credit (which I got to help pay the cost of school since my credit union stopped doing Educational Loans), and a large hospital bill from when I didn’t have insurance 3 years ago. And I was always behind on paying my bills.
In December I moved closer to work, doubling my living expenses. In February the company cut everyone’s pay.
Using the things I’ve learned from reading your site, I’ve paid off 2 debts, one was incurred when I moved, and the State Taxes. Stopped living pay check to pay check, caught up on all my bills, actually started to have money to put in my emergency fund, found a way to cut my rent in half (teaching at the apartment complex), and for the first time in years (this pay check) actually had more than $100.00 to live on for two weeks (until I had to travel for work and spend that on parts, which I will be getting reimbursed for this week).
While I haven’t graduated to the pay your credit card off in full every month level. I do by year end expect to have 2 more debts paid off, hospital and student loans. I should have the feds paid down pretty well too.
I know some would say to pay down the Visa and the Sig Line, but those are lower debts than the others, even with the higher interest rate on them, I’m paying more in interest on the Taxes, Student Loan and hospital bill.
Thanks for a great site, with lots of useful information. Wish I would have found it sooner.
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Thanks a lot, J.D, for posting Kenny’s response. We need this kind of inspiration all the time to keep us focused on our goals. Last year, I was REALLY AGGRESSIVE, so much that this year I was shocked at how low-cost but fun my life could be. All I can say to Sara is, “Stay focused and plan for some fun as well”. We only live once. That said, may all the readers keep on getting rich. Life is better when you have no money worries.
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Sorry but I am not impressed at all. The reason people want to become millionaires is so they can have fast cars, beautiful women, and fancy apartments, not so they can drink water when they go out to eat. If you are ‘frugal’, you don’t need anywhere close to millions of dollars. If have millions of dollars, you don’t have to be frugal. I see the lifestyle being described here as taking the worst of both worlds; what is the point of drinking water when you eat out, just so you can spend the rest of your life doing the same?
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@Frugal Bachelor (#5)
I can see your point, FB, but at the same time, I think there’s a lot to be said for frugal millionaires. Remember, one of the premises of The Millionaire Next Door is that millionaires are “frugal, frugal, frugal”. (They’re also entrepreneurial, too.) I’ve written before about one of my neighbors, who is a real millionaire next door. He’s a great guy, has built wealth through a lifetime of frugality, and still practices frugality in order to maintain his wealth.
But you do have a point: Too much frugality is just as bad as not enough.
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Good for him, I guess. It’s not the kind of lifestyle I want for myself. Being the cheapest mofo on the planet for… what reason exactly?
A millionaire with the lifestyle of a scrimping college kid and proud of it.
Er, okay. To what purpose this wealth? Obviously as an end in and of itself, which is the worst kind of financial goal.
All things in moderation, including frugality.
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Agree with the FrugalBachelor 100% – people forget that saving money is NOT the end, it’s a means to the end. This guy obviously has the two completely mixed up – there is no point in saving money for the sake of saving money.
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“parallel Japanese/Chinese/Indian ways of saving-first”
Was the racist stereotype necessary?
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I see a fantastic end to this sort of aggressive frugality, which ties in to the previous post, not having to work.
The more you save the earlier you can retire (or partially retire, or whatever) and spend your time doing what you want without worrying what the future will bring. If you want to retire at 50 you’ll probably need a few million in the bank if you want to live comfortably (but frugally) for the rest of your life. (a 4% draw on $2m is $80k a year… no too shabby but certainly not lifestyles of the rich and famous)
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I’m really happy to read posts like this one…frugality is a lifetime decision, I think. Being disciplined and thinking ahead consistantly is what gets one ahead. If you are consistant like Kenny is, those blows in the stock market will hurt, but not kill you.
It’s more interesting to me than reading about someone who just recently discovered you can save money by eating at home…I mean, what HAVE those people been doing all their lives?
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RE: “Do what is Right For YOU & YOUR Family”
My favorite piece of advice. Goes along with defining YOUR priorities, without worrying about everyone else.
My husband’s cousin is a well-to-do doctor. He and his wife have a Lexus SUV, a house in a pricey neighborhood, and the latest electronic stuff. Yet they were talking about how to take trips like my husband and I have taken–to Europe, and other places. Totally floored me because I don’t see us as big world travelers, but our trips are possible because we don’t care about new cars or cable TV or iPhones or huge houses. We make a modest income, and we prioritize.
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You know what, I gave up living a fantastic lifestyle like you see on TV a long time ago. I doubt it would make me happy anyway.
I just want to stop worrying so much. I will happily save money for the sake of saving money if I ever get the chance.
I liked the post.
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@Sandy–A lot of people were never taught about finances, myself included. My parents never learned about it from their parents, either, so they had no advice to pass down.
What seems very obvious to someone raised in a frugal household is not as obvious to someone who was not. Many people muddle through finances their entire lives, making little headway and trying to avoid big hits.
I was one of the ones muddling through, paying off cards only to charge them up, constantly paying on auto loans, and doing the things our consumer culture tells us is “normal” and what “we deserve.”
PF blogs and books are what made me stop and question what I was doing. Before those resources, I honestly didn’t know there was another way.
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Seriously… is opening and closing 25 credit cards and 8 bank accounts in eleven years really a good idea? I would think that would damage one’s credit score and any benefits that customer loyalty might present when trying to get a loan at the bank.
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@Beth: How often do you think this guy takes out loans from the bank? He doesn’t need a good credit score.
More power to him for what he’s done, but it doesn’t appeal to me *at all*. I don’t know exactly how much this guy’s saved, but for the sake of argument, say its $2,000,000. You could probably eliminate all but the top five items in this list and still have $1,750,000.
I don’t think all that sacrifice (and hassle) is worth the extra money.
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I think the people criticizing Kenny are missing the point of frugality for him. He gets a “kick” out of it. He wanted to be rich. He’s achieved his dreams.
He’s enjoyed his twenty years since college. That’s more than a lot of people spending it up can say.
Like JD I can see FB’s point about enjoying the benefits of being rich but for some people those things aren’t just that big a draw.
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I didn’t appreciate the infomemercial-like SHOUTING tone of this post, but I appreciate the message.
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@Beth & @Tyler:
Yes, opening and closing all those credit cards and bank accounts will *definitely* hurt his credit.
The two times when he might want to take out a loan are for a car and a house. In both cases, credit score has a huge impact on interest rate, payment, and ability to get the loan.
He might have done better to get two or three good freebies from credit cards and bank accounts, left the accounts open and active and showing a good payment history.
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I love the post. My parents have taught me frugal ways since birth and that is why my husband and I have NO debt at the age of 30.
We still have fun and are not religious about using coupons, but gosh darn it, we are trying and we are doing well!!!
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Personally I think that post ROCKED.
We are older (49 and 51) and our house is paid off (as of late 2007). If we had to buy it today, we couldn’t afford the front door.
We have been using PART of our old mortgage payment to upgrade. Our younger, MUCH richer friends came over for dinner last night, they wanted to see our new bathroom (which is not yet finished).
They oohed and aahed (sincerely, not being polite), and asked how much it cost. I said, 5600. They said but that’s a FORTUNE! How on earth can you afford that?!
Um. We earn 80K. He earns 260K. HE HAS NOT SAVED A BEAN. They are behind in taxes. They wanted to go to Florida last year to celebrate her 40th BD, and their DD’s 10th BD. They decided they couldn’t afford it. Instead, they rented a castle (I’m in France) and had a catered event for 100 people, imported a band over from London, and bought the wife a new VW SUV to “cheer her up” about not being able to go to Florida. I’m sure the fact that 100 people were watching when he gave her the new car had something to do with it too.
We really like them, we have a lot in common, we are both Jewish-Christian families, and our kids are best friends. But obviously there is some cognitive dissonance there.
It’s all about PRIORITIES.
Lastly, we too could only go out without ordering drinks for a while (we have four kids). After some time, we decided we would rather go out less, and order what we wanted. So that’s what we did. We go out once a month now (I would definitely prefer to go out more often) but when we go out, we order what we want.
Like I said, PRIORITIES. And everybody has different ones.
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Sorry, not 80K, 75K, and that’s gross, not net.
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Isn’t that encouraging to all of us? Thanks for the information.
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“Get Rich Slowly readers rock. I love to hear your stories, and I love the way that each of you is willing to share what you’ve learned with others.”
It’s great when you get users to write content on your site for you. Takes a lot of the work out of it.
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I love this post! We need more posts like this and fewer from Ramit.
I would like to know about the dealer auction he mentioned where he bought a Lexus. What is that? Sounds like a good way for those of us who save the cash for vehicles to get a great deal!
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@ Shannon,
He said he had contacts. What that likely means is that he has a friend who is a dealer who got it at a dealer auction for wholesale (you need a dealer’s license to buy at these). It was one that Kenny had picked out. Then the dealer sold him the vehicle either at cost or perhaps $1K or $2K extra for his trouble, but still less than retail, even between private parties.
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Sounds like the commenters here are using different definitions of “millionaire.”
To some, a millionaire is someone with at least a million dollars’ worth of assets, i.e. income-generating capital.
To others, a millionaire is someone with at least a million dollars’ worth of income, i.e. spending money.
The income generated from a million-dollar portfolio might be modest, but it can sure buy you time — the time you’ll have available because you don’t need to work for an employer anymore.
I’d rather have the time to call my own, and a frugal lifestyle to go with it if necessary, than lots and lots of spending money.
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Why do people find the need to criticize him for writing about how he lives? I loved his write-up and appreciated J.D. highlighting it for all of us, and wished I had stopped there. Some of these comments made me so angry. There are so many unhappy people out there who think they need to berate one person’s way to boost their own.
Thank you Kenny for giving common sense advice for everyday people.
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To me, practicing good personal finance means continually positioning one’s self to have three things: flexibility, peace of mind, and enjoyment out of life.
As simple as that. The challenge is striking that perfect chord and there is no exact way of doing it.
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I’m being cynical now, but I’ve noticed this post is mostly “I… I… I…”
It sounds like this is a whole-family effort. Just to give credit where credit is due.
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I don’t agree with everything here, but I love hearing stories from readers.
This blog has been a big part of my financial growth over the past year. I got a handle on my credit cards awhile ago, but when I look back on myself a year ago…
1. I had no emergency fund
2. I was paying the minimum on my mortgage
3. I had a car payment that was not scheduled to end until 2010
Now…
1. I have $12K in an emergency fund at ING
2. I am paying extra principal on my mortgage every month
3. My car is paid off
I made sacrifices, but overall I don’t feel like my lifestyle is much different now than it was a year ago. It was just by paying more attention and prioritizing my spending that I was able to stop “leaking” money in so many places.
It’s an ongoing process but it feels good to know I’m achieving these goals. I realize now that so much of this stuff is about mind over matter. So reading this blog is a way to give myself the mental reinforcement to stay on track. Thanks J.D.! I honestly believe I would not be where I am now if I had not started reading this blog.
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What a great post – straight from the heart, honest, to the point.
Twenty years ago I would have dismissed Kenny as boring. Good god, why are you so focused on money, spending so little and saving so much?!?!
But now I think Kenny is smart (and I rue the twenty years that *I* spent being foolish). I make somewhat similar decisions to his – many, but not all.
What changed? My priorities. I have aged, matured, and I have experienced debt (oh, and how). As I dig myself out of my hole (and I am mostly out by now) my priorities have changed.
And I see a different abundance around me. I don’t need to BUY everything around me. I take walks in the forest. I take walks along a beach. I visit with friends. All pleasures don’t need to involve money — dining with friends in their homes or my home is infinitely more delightful than spending in some fancy restaurant.
That is my point – I wonder what age group the ‘dissenters’ to Kenny are in. My parents were frugal, and I certainly was not when I was in my 20s and 30s. But now I am careful about money and debt (and reducing the latter while increasing the former).
Kenny – good work, good thoughts, and thank you for sharing your successes with JD and with all of us.
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This is dumb. Do you save to live, or live to save ?
“I consistently took ALL the overtime I could possibly get” sounds like a recipe for the latter.
Saving is supposed to serve some goal. Never forget that we all inevitably break even in the end — we leave this world exactly as we arrived: without any posessions.
Honestly, this “answer” sounds like a joke: “By doing overtime, I did not have time to spend” and then claims “this is not work”.
No, surely, voluntaring for all the overtime you can /possibly/ get, to the point that you have little time to actually enjoy your life isn’t work. We’re supposed to take this seriously?
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Nice write up! I wanted to comment on two points made in the comments.
Why drink water when you go out? Besides the fact it is better for you than anything else except maybe a protein shake after a work out, restaurants nearly always mark up drinks more than a 100%. Why pay so much more when you don’t need to? What I think he is saying is that he avoids mark ups, Not that he doesn’t enjoy life.
Although the person does not explicitly state it, I believe he can afford to get just about anything his heart desires with-in reason and not only that, if he plans for it will not even hurt him financially. The reason I say this is that I do a lot of things on the list myself and live a very fulfilling life.. I’m no millionaire but I’m only 28.
In my own experience you must balance saving with quality of life. There comes a point where going a bit more out of your way to get a deal isn’t worth it, and you must always keep in mind the value of your time, body (doing hard labor to save money), and convenience.
Regarding “Saving is supposed to serve some goal”, What if the goal is to save. In my case the reason I save is so I don’t have to worry about money in the future. I don’t have a lot of lofty desires, most of them are simple and because of this I don’t need a millions, I live a very fulfilled life on a good paying job.
But the way I see it is you always need money or someone you love does. I’m single and 28. Although I’m not engaged nor do I have kids, I figure there is a pretty good chance I will need a good chuck of change for a wedding and supporting kids, then what about retirement when I no longer have any income from a job. You always need money, and saving just to save is not a bad Idea, in my case I’ll figure out what I need it for later.
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To paraphase Dave Ramsey, “If you are making broke people mad, you’re probably doing something right.”
Way to go on your successes! Hard work pays off
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Every time I read a post of this kind, I get inspired, i desire more, I want to control my finances. That’s why i read this blog daily. Because i get motivated and inspired. great post
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I’ve been reading GRS for two years now and I think this is the first time I’ve left a comment – keep up the good work JD!
I feel pretty strongly on this one… of course I don’t know anything about your exact family situation and i don’t want to seem too judgemental but this kind of lifestyle seems too far at the other end of the spectrum!
As #33 said, doing overtime just to save more and leave you with no time to spend may be ‘fun’ for you but most people would want to spend that extra time with their children. You don’t have to spend money for them to have a good time.
Even though you are doing it to save and presumably so you can all have a secure life you risk showing them that money (and the accumulation of) is the most important thing to you.
My father didn’t really do the overtime (ebay selling as a 2nd job later on) but he was frugal to the same degree as the OP. Even though he wanted the best for us there wasn’t much flexiblity. As a kid I was taught that saving money on anything was everything, sometimes more important than enjoying what we were saving for!
Now I’m 23 and pretty cheap – I learnt to be scared of spending money and that wants were not worth wasting it on. I read about PF to help me budget properly (I use the 50:30:20 one) so I know that I have enough money for my goals and don’t have to feel like I’m wasting my money buying non-essential clothes or having dessert when i eat out every so often.
as its been said before frugality shouldn’t mean cheap – this guy seems to be further on the cheap side than some of us would like for ourselves!
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The only thing lacking from this post is why, why did he work hard and live frugally. Money is a means to an end, not the end itself. Now that he is a multi millionaire, what does he plan to do? Did he want to retire early, start a business, give it all to charity?
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I have to ask: do all the people who write “drink water at restaurants” live downstream from Evian, or what? The tap water in my area is like sucking on pennies immersed in a pool. You can smell the chlorine coming out of the faucet.
I see that comment so often that I’m starting to think its rare for public water to be so awful.
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Nice post Kenny… I agree with you that to own your life is the hallmark of success in my book.
That said, I also agree with the critiques some have made about opening and closing credit card/bank accounts. It will ding your FICO score.
In my case, I had to go the route of a consumer proposal to get out from under my debts, and that will hurt me for some time to come, but my FICO was in the dumper anyway from all may over-limit credit cards, and late payments.
I like all his advice except 1)opening and closing cars as noted above and 2)having & using the credit cards, a suggestion which may be good for some, but in my case I will never trust myself with a credit card again. I’ll live on cash only, thank you very much.
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i live in a similar fashion, but am in my late twenties, so have only six or seven years of this lifestyle behind me.
i can already sense a difference between myself and my peers. i do not have to worry about credit card bills or if i will be able to afford vacations, as so many of them do.
this post was incredibly encouraging. it is awesome to see how far kenny’s lifestyle has brought him and makes me want to work harder and harder to achieve the same goal.
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My husband and I have also been frugal and saving for 18 years (we’re 45/46), and have become financially secure, but we’ve made some very different choices from those listed by Kenny. Tailoring your choices to your goals and desires is an important key to financial success.
Our choices have revolved around family, and our goal is to work less, not more. I’ve stayed home with our 4 kids and my self-employed husband works from his home office 32 hours per week, taking Fridays off completely. He’s never worked more than 40 hours/week. Our income has been 65K-75K before taxes most years – not huge, but our frugal ways have made all the difference.
We do all the frugal things everyone’s heard before – eat at home, buy second-hand, pay cash for cars and drive them forever, no cable tv, etc. By far the single biggest factor in our success has been all the things we choose not to buy at all – fancy clothes, jewelry, restaurant meals, game systems, etc. But because we do spend money where it matters to us, we have lived a very rich life while accumulating wealth.
We have traveled extensively with our kids (in the car, not planes, eating bagels in our inexpensive hotel rooms and going to natural wonders, not theme parks) to 42 states, 5 Canadian provinces and China, to adopt our youngest child (OK, that was in a plane). We have paid off the mortgage on our large colonial home, have no debt at all, are putting our kids through (local) college without debt to us or them, and have substantial savings. We’re not millionnaires, but that’s never been our goal – we would like to retire within 10 years and live frugally doing the things we love.
I would like to mention to all the young people just beginning their financial journeys, that frugality has a snowball effect – very significant, but not commonly mentioned in the media. At first, you save enough to pay off debt or build an emergency fund. Then, if you continue to save, you have new options – starting a business, buying in bulk, raising deductibles, which allows you to save even more. As your savings grow, they start to produce more income, even if it’s just earnings on a money market. If you’re really thrifty at heart, then the thrill of frugality takes on a life of its own, and then you challenge yourself to delve deep for the pure joy of it. I once made a pair of pants for my daughter from the arms of my husband’s old sweatshirt, just for the satisfaction of creative frugality! Frugality is a vehicle to financial security, and it’s also a worthy lifestyle in itself.
At the risk of making some waves here, I must mention that we are very conservative with our carefully-saved money. Over 18 years of investing, we have yet to make any substantial money in the stock market, even though we’ve made wise choices there (index funds, etc.). The latest market has taken over 30,000 from our savings – thankfully, most of our money was in safe bank CD’s and money markets, the little savings vehicles that keep chugging along. Don’t count on the stock market to make you wealthy, do it yourself. Markets go up and down, but frugality is forever.
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This is a good post and a great website. The story is inspiring that Kenny saved a lot of money, but as others have mentioned, what are his goals? I am 25, and like Sara I do all the right things: 401k, mortgage, savings, old car, ect…However, my goal is not to work excessively and live like I am in college. I try to live moderately (not cheap or excessively frugal).
My goals are different then Kenny. I want to live comfortable and securely by increasing my cash flow. I know a lot of people do not like Rich Dad Poor Dad, but it is one of the best financial books I have ever read (and I have read a lot of them). The goal for everyone should be to work smarter, not harder. My opinion is that the best recipe for financial success is to live modestly, but also make smart investments that will create constant cash flow in your future. There are many options, but using leverage to purchase rental properties is a great way to secure your future income. The mortgage gets paid by someone else, and often results in a monthly cash flow surplus, but the real reward comes once you own it outright. All the rent is monthly income!
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Kenny’s comment was written as an answer to Sara’s previous one on why she was feeling like she was getting no where even although she was practicing frugality. His intention was to show her what the consequences are 20yrs later in order to give her hope and the inspiration to keep on going. His millionaire status means he never has to worry about his future financial needs – he has peace of mind – and that is the goal of frugality. He doesn’t need a good credit score, because when you’re careful with money, you don’t need a loan. This leaves him free to play the system in the way he has. The goal of a frugal lifestyle is to reach a point where you have the freedom to choose how you want to live. Thanks for showing Sara and the rest of us that making smart choices at an early age can lead to financial freedom.
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You made my day. You did all the right things.
And you won! Kudos to you and thanks for sharing.
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@SC, property ownership and management isn’t quite as cut and dried as RDPD and others make it out to be. It is like having a second job, unless you want to spend serious money on a property manager. Some people luck out and get a good tenant that sticks around for years, but most don’t, and some have really bad experiences. I have owned and managed a rental property for three years and while I’m glad I did it most of the reason is for non-monetary reasons. I have learned a lot about myself, how to be more assertive, manage my time better, and a TON about taxes.
Kenny can live his life how he sees fit, but I hope his post didn’t scare poor Sara. He had some really good points, but for him there is no light at the end of the tunnel because he’s enjoying the tunnel just fine.
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This sounds like a really *grim* way to live. It appears from this post that this person’s money *is* his life, rather than that it *supports* his life.
I’m a big believer in balance – isn’t there a Middle Way?
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@Shara, I totally agree that property ownership and management is challenging. However, creating financial security isn’t easy. To get ahead you have to take some calculated risks and put in effort.
Most of my family has done well for themselves, but some of done VERY well. They all started off with the same education, financial disposition, ect but my relatives who invested in properties 25 years ago are now very wealthy, and those who focused on frugality alone are just somewhat wealthy. I have watched as many of my family members did just as Kenny has done and become wealthy, but they worked a lot harder to get there and once they retire their income will only come from interest and draining their 401k.
My family members who used leverage to invest in real estate now have multiple sources of income from rental properties, and now they make so much that they can afford to pay for property managers and still end up with substantial profits. In addition, if they decide they no longer want to deal with a property they can sell it and walk away with a huge lump sum of money. Even with the downturn in the economy real estate purchased 25 years ago has increased in value so dramatically that the profit from a sale is unreal. I am not the type who needs fancy cars and all the other things associated with being wealthy. However, I want to create financial security without having to sacrifice so much.
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This post reminds me of my uncle. He still works very hard although he doesn’t have to anymore…he has tons in the bank, no debt at all, has a home and two cars paid for in cash, yet still only orders water at restaurants and is so frugal that it seems like it hurts him to part with a single penny. When I ask him why he works so hard and lives so frugally he replies “I want to be the richest guy in the cemetary”. He knows it’s all for nothing because he can’t take it with him. Yet it’s so ingrained that he can’t stop.
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This poster is basically living the original Frugal Gazette type livestyle that was circulated 20 or so years ago.
What I want to know:
1. How he can keep 2 liter bottles from going bad over 2 years of storage?
2. Where he keeps the money he saves- IRA, CDs, savings account, etc?
I also echo #48 SC’s comments that you really have to get some passive income going. Real estate is not for everyone though deals like this blog and ad money from it are a good example of other avenues.
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