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In the comments on a recent post about peer pressure, I mentioned a quote that I’d edited from the original draft. (I write a lot of stuff that doesn’t make it into final articles. It’s as if there should be “bonus features” for GRS, like on DVDs.)
Anyhow, I re-read John T. Reed’s Succeeding recently, and was struck by this passage, which does an excellent job of encapsulating my current philosophy on frugality. Reed writes:
[Frugality] is a necessary evil early in your adult life — like getting an education. Most people are never frugal and, as a result, never rich either. A few people are rich as a result of frugality, but they never stop being frugal, so what’s the point? They live like poor people their whole lives.
The correct approach is to start out frugal when you first go out on your own, then gradually shift to an enjoy-life mode where you live up to your means.
Note that Reed never says to live beyond your means. You live below them until you’re established. Once things are running smoothly, it’s okay to spend on the things and experiences that make you happy.
I’m reminded of my own love of comic books. I used to buy comics, even when I couldn’t afford them. I went into debt and was unhappy. As I worked to overcome my debt, I cut my comic book habit. Now that I’m out of debt and building wealth, I’ve allowed myself to begin buying comic books again. This makes me happy — and as long as I’m not spending beyond my means, everything’s okay.
What do you think? Is frugality a means to an end? Or is it an end in and of itself? Is frugality a necessary evil — or is it a way of life?
Note: By coincidence, Trent at The Simple Dollar just posted an article breaking down the numbers on why frugality works. And just to be clear: I think frugality is an important part of personal finance, not matter which stage you’re in. But as I’ll discuss on Monday, balance is important.
This article is about Frugality, Gurus Friday, 4th December 2009 (by J.D. Roth)
December 4th, 2009 at 5:22 am
It’s definitely a way of life to me, but I could see myself moving away from that in the future. I would definitely “grow into” the ability to spend more and not worry about saving every little penny here and there.
But I still think it’s a mindset: it’s kind of like being funny. You are or you aren’t.
December 4th, 2009 at 5:23 am
It’s about happiness. If money in the bank makes you happy, or the things you might spend money on don’t make you happy, then frugality isn’t an evil.
December 4th, 2009 at 5:43 am
To me, a certain degree of a frugality is a way of life. Ramit’s “cut costs mercilessly on things you don’t care about” sums it up well. If something isn’t important to you, then it makes sense to me to cut the related costs as much as possible, no matter how wealthy you are.
That said, when you’re young (or in debt at any age), then there’s certainly a need for frugality even on the things you do care about. And that frugality, IMO, is what tends to become less necessary as you build wealth/income.
December 4th, 2009 at 5:45 am
I don’t think you “stop” being frugal if you’re spending is within your means and you’re hitting your long range goals. I tend to think that you reach a point of saturation. You’ve got the house, the cars, the furniture, etc. for the most part, especially if you’ve been careful in your purchases. Also, hopefully you’re earning a lot more if your career has advanced. So you’ve reached a point of stability and can now direct additional funds to those things you enjoy, which was the whole point in the first place. I think the biggest problem for most people who treat frugality as an “evil” or something they’re “tired of” is they’ve never learned to curb their appetites. That can be really hard to do, especially if you’ve always lived a certain way and a sudden job loss or cut in pay hits you. A lot of folks are “frugal” at their current salaries, its when bad things happen that they can’t or won’t adjust and that’s when it hits the fan. I think it’s a lot easier to be frugal when things are stable in your life.
December 4th, 2009 at 5:59 am
Frugality isn’t necessary at all.
Having the right SYSTEM and work ethic is. All you have to do is make more than you earn, and you’ll be rich, some day.
It’s so simple, I don’t know we ever question it. Seriously.
Besides, why be frugal when it’s a raging bull market? Some of you just bailed out Bank of America again with $19 billion in funds to pay back TARP, so they can pay themselves BILLIONS in bonuses right before the year end!
Yihaw!
December 4th, 2009 at 6:04 am
For heaven’s sake, getting an education isn’t a necessary evil. Having a job is a necessary evil.
Frugality is a means to the end of financial security, which is merely a means to the end of being happy and fulfilling your calling in life.
December 4th, 2009 at 6:07 am
I think this is a false choice.
That said, to answer the question directly - for me, it’s a way of life. I don’t want to buy into consumerism and frugality fits that.
December 4th, 2009 at 6:19 am
I have a somewhat different take on this. I think that in the U.S. we have inflated expectations, and feel sorry for ourselves too easily. A little-known fact is that happiness peaked in the U.S. at a time of much less affluence than now: http://www.diamondcutlife.org/the-peak-of-happiness-and-its-causes/
Our ‘frugal’ is much of the world’s ‘affluent’, and moreover, the earth’s resources are limited. In short, I don’t see frugality as a necessary evil. I suggest that putting people ahead of ’stuff’ and money, and using resources carefully and thoughtfully are the right way to live whatever our incomes are. I also think we should take to heart some of the recent GRS posts on gratitude, giving back and passing our blessings on to others.
December 4th, 2009 at 6:20 am
I find that in some areas, frugality is simply trading your time for money. When you’re young and on the lower side of the income scale, you need the money more than the time. So you eat in instead of out, clean your house and do yard work instead of hiring a service to do it, DIY repairs, etc. As you get older and your income increases, you need time more than money and so you can outsource certain tasks in accordance with your income.
Consumerism aside, of course… I’m only speaking of the aspects of frugality that are time/money tradeoffs.
December 4th, 2009 at 6:45 am
Being frugal is certainly a means to an end, but if frugality is achieved in a practical way, it doesn’t necessarily ever need to come to an end. While it’s certainly true that those with a lower disposable income have a greater need to live in a frugal way to avoid overspending and incurring debt, those with larger incomes can benefit too. Simply, the best approach to frugality is to do a little bit of research to find simple ways to enjoy the same quality of life for less money and to implement them early on and stick with them. For all but the highest income earners among us, some level of frugality will always be necessary.
December 4th, 2009 at 6:51 am
We’ve always been frugal. It’s a way of life. On a 110,000 combined income we eat out maybe twice a month. We do all our own home maintenance, cleaning, yard work, and remodeling projects. 2 years ago we took the first vacation we had taken in over 10 years. We’ve been saving 20-30% of our gross income ever since we paid off our house (after 5 1/2 years) 15 years ago. We would like to start loosening up a bit and to this end we consulted a financial planner recently to see if we’re in line to retire in about 10 years. Unfortunately, even though we rank in the upper 10% of our age and income group in net worth, we’re being told that we need to “step up our saving” if we want to retire with 80% of our current income. We’re starting to wonder, “What’s the point?” Why don’t we just spend like most people do and not worry about the future at all? We’re very frustrated at this point. Frugality is not all it’s cracked up to be.
December 4th, 2009 at 6:52 am
It depends on your definition of frugal, doesn’t it? If frugal means watching every penny, all of the time, then it is a necessary evil.
But if frugal means planning out your purchases and being thoughtful with your money, then it is a way of life - one that most of us need to embrace.
December 4th, 2009 at 6:56 am
Frugal, defined by dictionary.com is “economical in use or expenditure; prudently saving or sparing; not wasteful.” Being wise with your money should never stop. People think of frugaity as spending nothing, but it reay spending thoughtfully
December 4th, 2009 at 7:08 am
I agree with Abby@12. It probably depends on your interpretation of the word. If you think of frugal as negative then it’s an “evil” but if your reflection of being frugal is positive then it probably feels pretty good to be that way. I think some people see frugality as being miserly which is a word very close to misery.
December 4th, 2009 at 7:13 am
There are some aspects of frugality that are necessary evils. Living with roommates. Taking the bus, if you live in a place where the buses only run every 30 minutes and stop by 8:00 p.m. Never going out to eat.
But even if you get to a point in your life where you can buy a boat, or you can blow $2000 on a new computer without batting an eyelash, it’s always worth considering whether you’re getting real value out of what you buy, whether your purchases are part of the life you want to live or just a way to keep up with the Joneses.
December 4th, 2009 at 7:14 am
Frugality is a tool, as some have suggested. BUT! What to do when you’ve “arrived”? We have friends with tremendous income and assets, whose children have almost never had to think about the cost of things - and now the family is stuck in a cycle of parents providing everything for the kids. Strangely enough, the parents always ‘feel’ broke and the kids complain about being poor.
I think frugality, even when not required (or maybe especially when not required) by circumstances, gives you choices. Choices about giving to others, about taking time off or traveling, even about the type of job you can accept. The ability to make choices is my definition of wealth.
December 4th, 2009 at 7:14 am
Frugality is a way of life for me. Partly because it’s necessary, and partly because I feel that it’s the smart thing. However, we aren’t needlessly frugal and spend large amounts of money on appropriate things (like car repairs, home repairs and the occasional ‘treat’ for the family)
But I’m also with the 3 posters above me. I’ve always viewed frugality as something positive thanks to my depression era grandmother who not only had so much cool knowledge (baking from scratch, sewing, making stuff like soap and jelly) and who’s cooking was wonderous. But she and my grandfather also always had nice vehicles, their house was fully paid for, and their furniture always reflected them, but not in a showy way. Grandpa was also a math teacher - heh. So I had very good examples is positive frugality.
December 4th, 2009 at 7:14 am
Defining frugal seems to be the key here. Once you’ve achieved debt freedom and a comfortable lifestyle, is it ethical to continue to pile up the wealth, or do we have an obligation to share with others? As always, it’s hard to know where to draw the line. How much is too much?
December 4th, 2009 at 7:16 am
I don’t consider it “evil”, but I absolutely agree with switching to “enjoy-life mode” when you are established and able to afford it.
As part of our effort to get out of debt, I promised my wife a vacation anywhere in the world soon after we pay off our debt. It’s not only a bribe/reward, but a celebration.
December 4th, 2009 at 7:21 am
I have to disagree with numerous parts of that quote.
1. Education is not a necessary evil.
2. Just because people are frugal does not imply that they live like “poor” people.
3. How is a “correct” approach to frugality defined? Perhaps, my own “correct” approach is to learn to be more frugal as I grow older, which is quite the opposite of what’s stated.
4. It is assumed that someone cannot enjoy his life living frugally.
December 4th, 2009 at 7:26 am
Yes, being frugal is a way of life..forever + regardless of income. You must be vigilant and continue to live below your means regardless of income. The frugal celebrities pay for their houses in cash and have money leftover to maintain them. But many multi-millionaires also go bankrupt…ehem mchammer.
A higher income brings a false sense of security. I almost think one has to be a more vigilant saver with a higher income. You’re likely to have bigger, more expensive stuff to maintain. Higher taxes, etc.
I do think there is a limit to how frugal you get can be at higher income levels because safety+security becomes a concern.
You’re not going to live in the hood anymore, even if that’s where you came from…because you instantly become a target. I grew up in a poor neighborhood with no car and really very little trouble. When you have nothing, you have nothing to lose. You’re just like all the other poor folks struggling to survive. As soon as I got a little nicer car than the beaters around me, our house got robbed, twice in one month. It’s also a necessity for most celebrities to live in gated communities for their own safety.
It’s one thing to have an upper-middle class income and live in a middle class neighborhood. It’s a totally different thing to live in the projects when people know you earn above the poverty level.
Frugality has it’s limits, but it’s always necessary at any stage in life.
December 4th, 2009 at 7:37 am
I do not see frugality as a negative, so I don’t think it’s an evil at all. To me, you can be frugal regardless of your income level or stage in life. It is simply the state of being financially responsible and spending less than you make.
And I think contentment is the real key. You shouldn’t feel like you are suffering and wasting your life even when you don’t have a lot of money to spend. Life is about much more than the money.
December 4th, 2009 at 7:40 am
Unfortunately, that is something I have always struggled with. I am on the second side of that coin… being overly frugal, and not gradually allowing myself to enjoy the rewards. One thing that has really helped me though was to set aside a specific amount of money each month that I can use for whatever. So, now I won’t feel guilty about wanting a new computer game, movie, etc. Of course, now I am finding myself thinking about ways to invest my “fun money” to optimize my return on that too… I guess like everything else, frugality can be nearly as bad as its opposite when not applied in moderation.
December 4th, 2009 at 7:47 am
i’m always amazed how people define frugality and happiness…as if there is no happiness until you are established because of living frugally. that makes no sense to me. you can and should live happily during the course of your life even if you are not established. you can fit happiness within your budget and within your means. it will probably require you, though, to redefine the things that make you happy and to find happiness in other things.
you also have to come to realization that something that you simply cannot afford is not going to make you happy. i think people have misplaced notions of what will make them happy.
if you “gradually shift to an enjoy-life mode where you live up to your means”, it seems you are putting undue expectations on what it really means to enjoy life or be happy.
December 4th, 2009 at 7:48 am
I use frugality like a scalpel. I see it as a method to maximize enjoyment while staying out of trouble.
Now that I’m out of debt and have savings, I remain frugal on things I don’t care much about, such as having cable television, a phone with internet, a big house, or a new car, and that allows me the leeway to *not* be frugal on things that really make me happy.
December 4th, 2009 at 7:53 am
I was pondering this yesterday.
If you wish to remain financially secure, it will always be a necessity to balance income and spending. It will always be a necessity to make choices, because you can’t buy everything and still maintain your financial security. And that’s what frugality is, isn’t it?
Even for those of us who’ve been fortunate to pass the point of “scraping by” it is necessary to re-evaluate our situation and priorities regularly too. Should I spend $100 to replace some worn clothing, or use it to pay down the mortgage a bit faster?
And as for amy’s comment about the kids… from an early age my kids learned to make choices… they can go out to eat regularly or we can eat at home and go on vacation. They can get one big toy from their wish list, or a bunch of smaller toys. It is possible to give your kids balance.
December 4th, 2009 at 7:55 am
Spend money on what you value. Don’t spend money on what you don’t value. Put savings priorities (fully funded emergency fund, retirement, big goals like a house or car or education) first before spending.
I don’t know if that’s frugality or just being sensible. We definitely did live poorly until we had paid off student loans and developed a sizeable safety cushion (and grown-up size incomes), and now we don’t spend up to our income, but we do spend on what we value. For me that means not ever having to worry about or stress out about money, which has been a goal since childhood.
December 4th, 2009 at 7:58 am
I’m with Abby, Emily, and Holly. I don’t think frugality means spending as little as possible; I think it means spending wisely. It means not wasting your money on things you don’t really want, it means finding cheaper ways to accomplish what you want to accomplish. It is not about depriving yourself; it’s about reducing spending in areas you don’t care about so that you don’t have to deprive yourself of things you do care about, prioritizing your spending to match your actual priorities.
I think Reed is talking about depriving yourself or delaying your gratification if you don’t have enough money to get what you want. I think his point is that if you deprive yourself enough in the beginning to not only keep from spending more than you have but to also add to your savings, then in the long term you will have more money. This leaves you free to satisfy more of your desires.
It also leaves you free to satisfy some of your desires in more expensive ways. I think this is the question you’re asking—once we have more money, will we allow ourselves to go for more expensive options or not. In my case, I’ve decided that some expensive things are worth it if I have the money. So I’ve been to Disney World (perhaps the most expensive amusement park). I sometimes see plays instead of movies. I sometimes go to a concert instead of just buying a CD. I will usually pay extra to be able to tour the inside of a historical building instead of just hanging around the outside for free. And I am willing to pay extra for a fast internet connection. These are all luxuries to me that I buy only when I can afford them.
But I’m not going to start buying new cars instead of used cars—that will never be worth the extra money to me (unless used cars start getting a lot more expensive). I’m not going to start shopping for clothes in malls instead of thrift stores.
And some things I started trying because they were cheaper have turned out to be better. I make my favorite spaghetti and it’s a lot healthier than spaghetti at most restaurants, so I will never eat out when I’m in the mood for spaghetti.
And here’s another issue. My goal for saving money isn’t to become rich—it’s to be able to stop going to work. So in that sense, I will never be one of those people who have a lot of money but refuse to spend it because they’re stuck in their miserly ways. As soon as I have just a little more than I think I need, I’m going to stop going to work. And my continuing to spend less than average is going to let me do that a lot sooner than if I have a goal of being able to spend like a rich person.
Unlike princewally, I’m always in an “enjoy life” mode. But then I’ve been lucky enough to be at my poorest when all my friends were poor, too, so I had plenty of fun people to share my low-cost lifestyle with.
Seth, that’s a good idea to budget for fun. You might even make a rule for yourself that you HAVE to spend a certain amount of it each month and/or each year or season. I love having a big pile of money around for things that come up suddenly, like a friend gets a postdoc in a foreign country and wants me to visit. A friend of mine once had a “stress-reduction” budget—sometimes it went for massages, sometimes for parking garage use. I’d rather have an “annoyances” budget and pay attention to what’s annoying me, like how the bottom sheets are too small and keep pulling out from under the mattress.
December 4th, 2009 at 8:23 am
I think of it a different way. I think it’s a mindset and a way of thinking about things. After years or decades of frugality, it should have allowed your income to improve, by increasing your assets, and having money that is working for you. This adds to your means, and allows you to relax with the knowledge that you’re financially secure. In this state, you probably have defined ideas of what you can do with extra income, and you have more income since you’ve saved for a rainy day already. So really, in my mind, frugality sets the stage for enjoying the money you’re saving, in a calculated and meaningful way.
December 4th, 2009 at 8:27 am
Hey J.D.,
Frugality is always useful, even if only at first, but it can become an effective way of life.
Since frugality means to cut out and spend/focus only on the essentials and what’s important to you, you are enjoying life when you’re frugal. You’re being frugal, not cheap.
So when your income increases, you can continue to be frugal, simply spending more on those few things that are important to you, while saving and investing the money you save from not splurging on the unessential.
Which, in turn, gives you even MORE resources to enjoy what’s important to you.
So, not only does being frugal help out in the early stages when money is tight, but it can set a standard to actually enjoy life MORE.
Great question. Here’s to being frugal as an effective lifestyle choice (and not falling into the cheapness trap),
Oleg
December 4th, 2009 at 8:35 am
For us frugal means not spending our money on things first. Instead, first we save our money, second we pay our bills, third we spend.
Savings comes first, some of that savings will later go to things, like right now we are saving up for a killer couch. Our planned couch purchase will run us $5000, not very frugal to some people, but frugal to us as we’ve been in our home for 5 years now and we are saving up so we can pay cash for the couch. We also save up for super nice travel and vacations. But we skimp on other things like cars, we both drive paid for cars and Mr. Sam’s is a 1997 (mine is nice - 2006).
We also keep to our frugalness by managing our spending by sticking to a spending plan. Sometimes we spend lots of money on eating out or a show, but we limit ourselves to a certain amount of spending every two weeks so we have a built in system for stopping our spending.
We also budgt for fun, $50 every two weeks into our ING fun account and then when a big fun expense comes up (something that we can’t cover with our biweekly spending money) we raid our fun account.
December 4th, 2009 at 9:00 am
Debi, if you’re already living on 70% of your current income (by saving up to 30%), why are you using a model that requires 80% of your current income in retirement? You’re already used to living on 70%, and that amount will likely be lower if you enjoy less taxation with your decreased, post-retirement earnings. It sounds to me like your financial advisor may be attempting to scare you into funneling more assets his way, for obvious and unfortunately all-too-common reasons
December 4th, 2009 at 9:01 am
This is such a timely topic for me. I actually wrote about true frugality vs. conscious spending earlier this week on my own blog. My conclusion was that, as long as our money is first going towards savings and the last of our consumer debt, my husband and I are comfortable with some un-frugal spending from time to time, within limits. I was also able to identify some situations in which I would make a choice to be more frugal, such as working part time instead of full time, having children, or saving for a big goal.
December 4th, 2009 at 9:07 am
To me, living like a “poor” person means living in fear about money. Most of the time, frugality can fix that.
December 4th, 2009 at 9:17 am
For me, frugality is about
* independence (I need less than I used to think I needed)
* creativity (I can do more with less, solve problems that I used to throw money at, cook/make/do/repair things myself)
* good stewardship for the planet (even if global warning turns out to be false, isn’t it wise to use fewer resources, generate less pollution, and fill fewer landfills?)
December 4th, 2009 at 9:18 am
I know what book I WON’T be reading anytime soon - so many things wrong with the passage you quoted.
1) Education is a necessary evil? I guess there’s no benefit to learning to read, write, feed and clothe yourself?
2) I don’t like the dismissive nature when he discusses frugality. Frugality does not equal living like a poor person.
3) “The correct approach” - wow, can you say ego?
4) Live frugal, then enjoy life - huh? I don’t think spending more money = having more fun.
5) Living “up to your means” is usually never a good idea. Sounds like living paycheck to paycheck to me.
December 4th, 2009 at 9:26 am
Oh, and I forgot to add that to me it seems DEMENTED to call education a necessary evil.
Education shapes your mind and introduces you to new places and people and ideas.
It gives you skills, which help you earn money and can be a way to “escape” temporarily during tough times (through reading or woodworking or dancing or whatever).
It teaches resilience, as you learn to work with people and intellectual disciplines that you dislike or fear.
If recent scientific research is true, the more educated you are and the more extensive your vocabulary is, the more able you are to resist Alzheimer’s disease.
There are hundreds of millions of people who would love to receive an education and cannot. So step off, John T. Reed.
December 4th, 2009 at 9:29 am
Think Kevin M is missing the point here. The point of this article is to highlight the fact that in normal Western society there is this tendency to “live life now” when you’re young! Which equates to traveling; partying; etc (and these things cost money)! But the article is discussing a paradigm shift here! The idea that when you’re young you need to build a solid financial foundation upon which you can rely on when you are “established”.
P.S., it’s easy to get caught up in the particulars of an article but let’s look at the top level view.
December 4th, 2009 at 9:31 am
Frugality can be key but everyone’s situation is different. I try to be frugal but still enjoy a few vices I have and love things that are for experiences so its difficult to balance especially being younger with less income.
December 4th, 2009 at 9:31 am
It seems there are only two options presented here:
1. Be frugal (and miserable) now, because you will finally “make it” someday, and then, and only then, will you allow yourself in good conscious to spend freely.
2. Spend freely as you wish now now, before you “make it”, but you will never truly be wealthy and you will most certainly regret your past decisions.
I choose the third option, or the Middle Path.
3. Enjoy life TODAY, because tomorrow may never come. Spend time and money on experiences, instead of Stuff. Spend time and money on people that enrich your life. Earn more than you spend. The rest is just noise.
December 4th, 2009 at 9:32 am
@KM; not everyone loves education, there are hundreds of millions of people who hate learning or the educational process. This is simply the expression of that view. I think we understand that from the article.
December 4th, 2009 at 9:45 am
I agree with the poster that says the author is introducing a false dichotomy. There are good habits, and bad habits. The good habits can help you get to where you want to go, and they also allow you to stay there. If you see frugality as a deprivation that you will be released from once you have “made it” then you are doing it wrong. It goes without saying that the amount of money I spend has changed as I have gotten older, but so has my earning potential, my household, and my family composition. But I still consider myself frugal because I spend below my means and try to be aware whether what I am spending on is “worth it”.
December 4th, 2009 at 9:58 am
If you replace the word “frugality” with something like “self-deprivation” or “scarcity” then Mr. Reed’s comments make a lot more sense. That’s something that might be a necessary evil early in life. Sometimes to live within your means you may have to make hard choices between things that you really want or even need.
On the other hand, “frugal” means “avoiding waste” and that applies to everyone. Spending money is not wasting it - but spending too much for something, or spending on things that you don’t value IS wasting it.
Also, some of us would like to retire early. Being very careful with our money may allow that to happen earlier and be more successful.
December 4th, 2009 at 10:00 am
I can think of many, who are frugal. They have plenty of money.
Now they’re at the end of their life.
….and the money is good for what? It doesn’t take hundreds of thousands for most of us to exit this world. I don’t believe we are beholden to our heirs to leave them money. (I certainly don’t expect any from my parents)
I say live within your means, plan for the future, but by all means you need to enjoy today.
That may require that you spend money.
December 4th, 2009 at 10:03 am
Frugality isn’t evil, although it may be overly conservative for some people.
It’s also not necessary. As long as you’re not spending more than you earn, you can do just fine without being particularly frugal. The only necessity is keeping your expenses below your income, and even that can be ignored for years on end before it catches up to you.
It’s a funny idea, that anything we, as the followers of personal finance blogs, do is “necessary”. Look at all the people around you living in perpetual debt and still, being generally satisfied with their lives. You *can* live like that. Millions do. Financially responsibility is not required to feed, clothe or house yourself and your family. American Express is perfectly happy to pay for it all for you, hoping that you’ll pay it back sometime in the future. Plenty of people really don’t care that the numbers on their balance sheet are constantly red instead of black.
And you know what, these people still live better live than much of the world. Go find the average Ugandan or Chinese farmer — someone with no debt, and compare his life to the one we’re all trying so desperately to avoid — the one where giant corporations give you flatscreen TVs and new cars for free and say “eh, pay us for it later”.
90% of the american lifestyle is simply excess — very little is actually necessary. For perspective, watch a longtime friend who you’d always considered “rich” go through chemotherapy. It will make you think about your values. Both consumerism and frugality seem irrelevant.
December 4th, 2009 at 10:05 am
“The correct approach is to start out frugal when you first go out on your own, then gradually shift to an enjoy-life mode where you live up to your means.”
Wow. I don’t know what his problem is, but I’m frugal and I DEFINITELY enjoy life. I don’t have to spend lots of money to enjoy it, either. Imho, if you’re not enjoying life while being frugal then you’re doing it wrong.
Frugality isn’t just about money. It’s about spending resources wisely to best meet your goals. Those goals might change throughout your life, but frugality can and should be a lifelong lifestyle of *conscious* spending so that you stay focused on what is important *to you*.
Frugality is also, therefore, about reducing waste. And why should we suddenly become wasteful if/when we become rich? There are enough people out there trashing the planet with their extravagant lifestyles. I’d rather enjoy the planet than destroy it.
December 4th, 2009 at 10:15 am
G. K. Chesterton talks about the “romance of thrift” and I think he was right on. I got some chairs a few years ago from a friend of my mother, they had been in her attic for years, I took them and reupholtered them very inexpensively. Even though I could afford new chairs the ones I have are very good quality and reflect my style exactly, I have no intention of giving that up. I love experimenting with new recipes and taking care of my family and my home. Many of the things we have were inexpensive but they are meaningful to us. I take pride in the things I have put work into — much more so than any store-bought things. I also know that if the kids wreck something its not the end of the world, I can replace things inexpensively or re-do them. For me the frugal lifestyle has lead to a joy and connection with the things around me that otherwise wouldn’t be there. I don’t think frugality is a necessary evil — I think it is a positive good in my life.
December 4th, 2009 at 10:26 am
@KM — As a former high school teacher, I can certainly say that education is a necessary evil for many students! Not everyone loves learning, and the school system doesn’t work for many personalities and learning styles. Besides, too many students go on to get a university degree just for the sake of having one — and wind up in a lot of debt to do so.
December 4th, 2009 at 10:50 am
Well, as far as how I manage my money goes, I don’t spend a lot, because I prefer to save and make myself more secure. But I’m certainly looking forward to enjoying the wealth that I’m in the process of building, and spending more when I can do so responsibly. Not on random ’stuff’, but on the things that really matter to me, like music equipment and a beautiful living environment. So I’m happy to be frugal now, but I’ve no desire to always live like a poor person just for the sake of it out of some misplaced sense of virtue - frugality is a tool to help get me to where I want to be, financially (it’s not the only tool though - I see increasing my income as being more important.)
But I take issue with the idea of deferring enjoyment until I’m financially free. I could be dead by then! In fact I think that the whole ’spend your life working and then do what you want when you can afford to retire’ mentality, which is so pervasive in this society, really sucks. Which is why I’ve decided to focus on what I love doing most right now - no endlessly delayed gratification for me! But I don’t need to spend a ton of money to do that either.
I agree with the posters who are advocating a middle way - getting the frugality balance right in such a way that we can enjoy life now and live well later too.
December 4th, 2009 at 10:56 am
The author is perpetuating the myth that spending money will lead to greater happiness. While we may get temporary pleasure from spending money on “stuff” or experiences, I don’t believe that true happiness is a function of financial or material wealth. Just ask Tiger Woods, the world’s richest professional athlete, how happy he is at the moment!
JS
December 4th, 2009 at 10:57 am
All of you folks talking about balance are anticipating Monday’s post. See how clever I am at setting things up?
December 4th, 2009 at 11:40 am
I am currently reading Stop Acting Rich, by Thomas Stanley. I find it frustrating to hear about self made millionaires who are still living like broke college students. You have to live a little! I agree that frugality is necessary while building your financial foundation. But at some point you must learn how to enjoy your money while still living within your means. For most the goal is freedom, and living frugally forever doesn’t seem like freedom to me.
December 4th, 2009 at 11:48 am
I have to agree that frugality is not just a means to an end. As many have said, spending money does not equal happiness. If frugality truly is about appreciating what you have and valuing quality, then I don’t think it’s a good thing to ever give that up. Frugality ultimately benefits your health, the environment, your community and society in general.
Maybe the problem here is a definition. When you’re starting out, you’re forced to be cheap and eventually you can spend your money on things that are important to you that you couldn’t afford before. If you equate the two then yes, cheapness is a necessary evil. Frugality is a common-sense way of life and way of appreciating everything around you. I would never want to lose that, though one day I may find clipping coupons not worth the effort.
December 4th, 2009 at 11:49 am
@Debi #11
You read “Your Money or Your Life”? Seems like that would be better than most financial planners.
If you’re saving 20-30% of your income now, you’re spending only 70-80% today. And you’re paying higher taxes.
Paying off your home in 5 years is frugal, but to be brutally honest, I’m not sure living on $80k would be considered frugal. The money may be going to great places like private schools, etc, and that’s great, but trying to have passive income bringing in $80k a year takes some time.
December 4th, 2009 at 12:35 pm
Whatever floats your boats I guess.
I don’t believe in frugality as much as I believe in expanding your means. What’s the point of being comfortable and living poor? You’re still poor.
It’s a habitual paradox, as some people mentioned - you need it at first for sure to get your foot in the door, but I think once you’re on the right track you can start expanding your means to live the life you want. There is no one-size-fits-all.
IE: You earn 2k net a month, that warrants frugality, but if you can figure out how to bump up that to 5k net (and especially passively, so you don’t have to keep going to work to punch that clock) then you don’t HAVE to scrimp pennies.
I would rather spend my time learning to convert earned income into passive income, instead of clipping coupons, and sending a check to my retirement fund all my life. You don’t learn anything by doing that.
All you have to do is expand your means.
BTW JD, first time poster but have followed your blog for a while. I’m here in Portland also, but I have a different approach to building financial security/independence. Maybe we can chat sometime.
December 4th, 2009 at 12:36 pm
@Financial Samurai, the “raging bull market” is 100% irrelevant to 99% of people who work for a living earning a wage or salary. Most people do not earn their income by trading stocks. (News flash, professional traders are paid salaries.) And of those who own stocks as investments, a bull market is only relevant if they plan to sell their stocks and if the stocks they sell are “up”. The stock market has very little to do with most people’s personal economy, and absolutely nothing to do with frugality.
And as to frugality … I wouldn’t call it a necessary evil. I would call it a habit of mindfulness, just like the habit of reading food labels, or correcting your posture, or updating your checkbook register when you use a debit card, or checking your rear-view mirrors.
The single biggest “frugal” change DH & I made was to stop eating out/ordering in (used to be to the tune of $800+/mo! Can you believe that??). It was much easier than we feared and now we are spoiled; the cooking we do is so much more satisfying, and so much cheaper. Why pay $35 for a steak at a restaurant when I can broil a really good one at home for $8?
December 4th, 2009 at 12:37 pm
Perfect!!! JD, you, sir, rock.
Point in case — I’m in the midst of a frugal frenzy. Basically, we’re sacrificing short term to accomplish a goal, for us that was engine swapping my 240SX. It wasn’t cheap, but we’ll be pulling it off and will recover by February. (Not fully, but to a point where I won’t be so nervous about diminished savings. Part of this is because I’m earning next to no interest on the money anyhow, so opportunity costs are low at this point in time.)
I use frugality to free up money that I need to pursue my other hobbies. “Money can’t buy happiness” isn’t entirely correct… It sure can, because not having enough money can lead to a wholly unhappy life. There comes a time in which we need to be honest and say, “Well, if that’s what I feel I truly want in my life, that’s what I’m going to get. Money be damned.” No, I don’t think it’s materialistic, and I don’t think it’s right either to limit ourselves to certain parameters. If you want something bad enough, you’ll find a way to get it.
I have $600 in an investment account, nicknamed “Saving for my Ferrari.” What are the rest of you doing towards your most lofty goal? (And that’s not my retirement savings.)
December 4th, 2009 at 12:43 pm
@Josh in DC - re-read my points #2 and #4 in post 36. My main issue with the passage is that he thinks living frugally and enjoying life are not harmonious.
I enjoy my life just fine and I don’t have to spend up to my means to do so.
December 4th, 2009 at 1:47 pm
How do you ever KNOW, though? This is what my husband and I struggle with. How can you say “Okay, I know exactly when I’m going to retire, and what my benefits will be for the rest of my life, and that I’ll never be desperately ill, so this is enough in savings and I can have fun now”?
December 4th, 2009 at 2:00 pm
I wish my parents would have taught me how to be frugal when I was just starting out, so that it wouldn’t have been so much harder once I started making pretty decent money. Without that core *skill*, I — like most Americans — over spent to the point that frugality was necessitated rather than being a choice.
Debt is a bit*h. Learning how to avoid it with frugal, thoughtful spending would have saved me a lot of heart ache.
December 4th, 2009 at 2:32 pm
@CarsxGirl
I was at one point obsessed with that car sort of thing, at one point I had a boosted s13 and s14. The day I became financially conscious though my car high died. I wrote a little bit about that in my blog.
Prudence/frugality and car mods don’t mix. Why spend a couple grand+ for a engine swap when you can get 2 beaters for that and run it into the ground. This way you save yourself the aggravation and worry from wondering if your badass car will blow up tomorrow.
Once I get out of this corporate slavery, I should be able to get any toys I want, as long as my assets are paying for them. Never again will I throw away my hard earned money on cars.
The way I see it is that I’ll save and put my dollar to work today, so that it can make offspring dollars I can reap tomorrow.
The method you’re using is what I used to do, and I realized I was doing it backwards. Unfortunately with that kind of hobby it’s never enough.
December 4th, 2009 at 2:42 pm
@Marie
> this is enough in savings I can have fun now?
First, you can and should have fun while being frugal. Ideally frugality should not be about depravation but about creativity. Do the things you love, but find lower cost ways of doing them. Say you love interacting with friends – you could substitute having friends over for a pot luck dinner for going out for dinner. The critical part, interacting with friends, is the same, but the bill should be a LOT less!
> I know exactly when I’m going to retire, and what my benefits will be for the rest of my life, and that >I’ll never be desperately ill, so this is enough in savings
You can never really KNOW exactly without seeing the future. You can make some conservative estimates, adopt a healthy lifestyle, and purchase insurance against catastrophes like long term nursing home care.
-Rick Francis
December 4th, 2009 at 2:43 pm
I cannot comprehend why people think spending more will make them happier. Studies have shown that once you have enough money that you can pay for necessities with a bit left over, additional funds won’t increase your happiness and may actually decrease it.
So, let’s say Mr. Frugal Millionaire would reach maximum happiness making $45k per year. He is 20 years old making $22k and has not yet reached his optimal happiness level. He gets by, but would prefer more. Through good decisions, thrift, and hard work he increases his income to $50k by the time he is 35. Great, now he is happy and has some left over to give. But he has developed the skill of hard work and has learned to enjoy it. He finds personal value in his accomplishments. Rather than sit back and coast, he continues to increase his income, but still only needs $45 to be optimally happy. The rest goes to savings and charity. When he retires, he has plenty of money to spare, but doesn’t need it because he is optimally happy.
Why waste money if it won’t bring additional happiness?
Or, think of it this way: You have some orange trees in your back yard. You *could* eat all the oranges, but would you really enjoy the 50th orange? Or was the 49th orange sufficient to satisfy you? If 49 was sufficient, why waste the 50th by eating it just because you can? It won’t make you happy or satisfied.
Or, another example: do you pick up every penny you see on the ground? Or, is the benefit you would gain not enough to waste your time? The benefit in happiness this person would gain from spending extraneous money doesn’t outweigh the benefits gained from other potential uses of the money. Its not always a matter of “can I afford it.” Sometimes its a matter of good stewardship.
December 4th, 2009 at 2:45 pm
I agree with Kevin and Anthony, there are some baseless assumptions in that quote. Frugality is not evil, and spending does not make you happy. In fact, the opposite is true. Nothing eases my piece of mind like money in the bank.
December 4th, 2009 at 3:00 pm
To me, frugality is a tool; something I use to get or do what I need.
I’d also like to say a great big THANK YOU!! to Get Rich Slowly - the stories here, and you, especially, J.D., have inspired me and encouraged me during my struggle.
I want to say that after nearly three years of scratching and scraping by, and living mostly on bagels for the duration, I have PAID OFF my consumer debt! My credit card is PAID! OFF!
Now to put something in my bank account …
(*Yes, I know there’s cheaper ways to eat, but I’m not in a position to cook.)
December 4th, 2009 at 3:18 pm
For me frugality is part of my religious life, although generally I refer to it as simplicity. I find that I am much happier and better able to serve others, by figuring out what is enough and stopping there. We live in a small apartment for two reasons one we are leaving more wild space for future generations and two we can donate more to charities if we have a smaller house payment.
I realize that this sounds sort of self-righteous and I don’t mean it that way, but frugality is a core part of my value set and I see it as a way to achieve more hapiness not less.
December 4th, 2009 at 3:25 pm
Frugality is a way of life. Frugality to me means simple. It does not matter how much money I have, I will keep my life simple and devoid of unnecessary crap.
Also, I do not agree that one should stop being frugal once a person becomes successful. Frugality is a habit, you keep thins simple and clean at all times - no matter rich or broke.
What does frugality mean to me? It does not mean living a poor life style, it means only obtaining things that I need.
Now, what I need changes does not change that much: I like to travel, I like to learn, I like to work out, I like to experience things in life, I like to help people. I am always going to spend only as much as necessary to achieve those goals.
Houses, cars, etc..that is secondary to me. I will only spend money and time on things that are primary to me - that is what frugality means to me.
Best,
Tomas
December 4th, 2009 at 3:33 pm
This is akin to asking a thin person “Why do you keep eating vegetables even though you are thin. Live a little! Eat more cake and drink more beer!”
December 4th, 2009 at 3:40 pm
I’m frugal so I can reduce my stress level and spend money on the things I truly enjoy. It’s as simple as that. I want to be happy and enjoy life, I can’t do that if I’m stressed out about debt. Running a business is more than enough stress in my life, I don’t want to add more by having extra bills and debt.
As an example: I just bought a used 32 inch CRT television. I could have spent far more for a new HD TV but I have terrible vision so the increased resolution isn’t very noticeable to me from the distance I watch TV. I can take the $200 or so that I saved and spend it on something I care about more like saving for a trip I really want to to take next July
December 4th, 2009 at 4:37 pm
Frugal people have more savings than spendthrifts.
December 4th, 2009 at 4:49 pm
I certainly don’t view frugality as an end in itself.
But I don’t think of it as a means to a single end either.
I think that one should be frugal when young to achieve the Life Goals that one wants to achieve when young. And then be frugal when older to achieve the Life Goals that one wants to achieve when older.
I would as a general rule ease up on spending as I brought in more money. But not in all circumstances. If some new goal appeared that I wanted to achieve quickly, I might spend even less when making more to get to my goal as soon as possible.
My wife and I were saving just about everything in the years just before we had our first child because we wanted to save enough for her to be able to stay home with the kids. We were both earning decent incomes and spending just about nothing. So our savings was at about 80 percent of post-tax income (we had already paid off the mortgage at this point).
That’s an unusual situtation. But we all face unusual circumstances from time to time.
For me it’s the saving goal that determines how frugal I am at any given time.
Rob
December 4th, 2009 at 5:01 pm
I hate to say it but frugality freaking sucks. It would be much better if I could have everything I wanted without working at all, but that’s just not possible.
To Rob.
I’m really curious. How did you accomplish paying off the mortgage before you had children? I assume you had the children when you were in your thirties at the latest. Was it a very cheap house that you renovated yourself or did you just pay off an enormous amout of money every month?
December 4th, 2009 at 5:13 pm
I found the premise==frugality and education as “evil,” necessary or not–so dispiriting that I am just speechless.
December 4th, 2009 at 6:45 pm
Its a necessary evil if you want to prosper as much as possible, as I see it
December 5th, 2009 at 1:56 am
I honestly get tired of the “frugality” buzzword. For some, frugality simply means stopping their daily latte. They pat themselves on the back at how smart they are, start a website to convince others to be frugal, and meanwhile live a very unfrugal life.
Then there are those who wouldn’t call themselves frugal but REALLY are: the people who can’t afford NOT to be. The ones of us who laugh at the no-more-latte’s crowd because we’ve got special needs kids who need meds and treatment, and we can’t afford our $40 copays 3-5 times a week for therapy. We work two jobs and bust it to make ends meet, and there’s always too much month at the end of the money.
There’s the set of people who think coupon clipping ans shopping CVS deals are being frugal, but all they’re doing is spending MORE money. It feels like saving, but really, its just spending money they might not have spent otherwise.
And then, there’s the older generation. The smart ones. The ones who bought ONE house after they got married and lived there forever, content with it and happy. They didn’t need to flip houses to upgrade their investment as such young whippersnappers today feel the need to do every couple of years. They didn’t care if they didn’t have marble countertops. They made a home out of what they had.
Maybe it’s because it is 3:30 am and I’m up sick with pneumonia that I’m feeling so snarky. I don’t know.
But I am just so tired of the buzzword. I’d like to say to those who THINK they’re frugal, live someone else’s life for awhile and you might get a new perspective.
December 5th, 2009 at 2:49 am
The easiest thing to do is to always live a couple of years’ behind your income. Instead of ramping up your expenditure when you get a pay rise in 2010, ramp it up - but to the pay rise you got in 2007, say. (You don’t have to be pernickity about it - rough figures will do). Save the rest, and retire rich.
December 5th, 2009 at 3:03 am
It’s all about being able to prioritize. It’s about taking the ‘middle path’..
Having a budget that works makes a lot of sense.
December 5th, 2009 at 4:00 am
To the frugal person, frugality is not denial as presupposed by Reed; it likely *appears* to be denial to the non-frugal person. The frugal person has what he/she needs, but with the caveat that anything above this is waste. Waste is the unnecessary evil.
December 5th, 2009 at 5:18 am
To say “spending doesn’t make you happier” depends on an assumption that you’re already at a certain level, that you’re spending money on fast cars and bling and big TVs.
One of the causes of happiness is sleeping.
My roommate got home at 1:00 last night slamming doors, giggling and yelling. She got up at 7:00 this morning and put on a Western.
I would be a damn sight happier if I could spend the money to rent an apartment on my own.
Twice in the past couple of years I’ve had to go into the ER for a broken bone, and both times I’ve taken public transportation. Yes, I would have been happier spending the money for a taxi!
December 5th, 2009 at 6:05 am
When I first started dating my boyfriend it seems that he was a big spender and it was a little frustrating since I’m quite a frugalist. (I spend my money on travel… and my mortgage?!) However, as we continued to talk and talk a little more about money, he had quite an extensive budget system. He was very aware of how much he spent and how much he had available. He didn’t have any debt except a 0% credit card. He had arranged his budget so it was in his means and made him happy. That is the biggest thing… that balance.
December 5th, 2009 at 6:50 am
Living frugal does not mean living poorly, it means living within your means, opting for things you need, looking for quality not quantity, One well made item will out last multiple make do ones.
My husband always ask me when I purchase something is it a want or need, he does not ask what I paid I tend to purchase less but better items with this method.
We both appreciate what we have more this way.
December 5th, 2009 at 6:56 am
Great article. Frugality is often caused by a poverty mentality and this can be very difficult to break out of.
December 5th, 2009 at 7:01 am
Spending in moderation, cutting back on expenses, and being frugal are key behaviors that allow folks to save money. In turn, saving money then turns into building wealth.
I also think that your financial behaviors should align with your life goals. Your personal finances, your career plans, and your personal development are all tied together so when making decisions for one, you should take into consideration how the others will be affected.
Look forward to reading the balance post.
December 5th, 2009 at 7:12 am
Having not read the rest of “Succeeding” I cannot be certain but this writer seems a prime example of what is wrong in today’s US culture. Living up to your means - I concur with the response above that this sounds like paycheck to paycheck. As a lifelong learner I am appalled at the idea that education is a “necessary evil” and agree with many of your responders that frugality is simply a method by which one judges what is and is not worth the costs (including opportunity costs). I personally spend a good deal more than many on food and travel and much less on clothing which is simply less important to me. I feel no deprivation in this, only a sense of accomplishment when I look back on a trip or dinner out with pleasure and feel it was well worth it. And it IS entirely personal. There is a great comment in the film Food, Inc. about people who are horrified to pay $3 a dozen for good eggs as they sip their $1.50 soft drink. What is the relative value TO YOU?
December 5th, 2009 at 7:38 am
Frugal is not a bad word. It leads to financial strength and wisdom. I think a lot of people look at frugality as a stingy, Grinchy, way to live and it leads to the complete opposite.
December 5th, 2009 at 9:11 am
I think it is a way of life. I’m not sure why it would be considered “evil”. We’re turned around if we think so. We should think of “excessive spending” as evil and not frugality.
Why should we live in luxury while many live in terrible circumstances just because we happen to have been born in the US? I know that with a little education about the status of the world, we can be frugal because we WANT to be, and not because it is evil.
When we are frugal, it frees up our resources to make life easier for others, whether it is by helping others directly with gifts, or frees us up to help others because we don’t have to spend so much time working and can help others.
Maybe this just reflects my own personal philosophy, but I have no use for people who constantly flaunt their luxuries to show off because they happen to be “lucky enough” to have been born in the right family with no concern or even “heart” for those less fortunate.
So, I live my life in a frugal way. I don’t LIKE to spend money that is my own, so it isn’t fun. I have no desire to have rich things just to “look rich”. I guess I’m grateful. I really don’t understand those who think that way.
December 5th, 2009 at 10:03 am
Regarding John Reed’s Succeeding, JD, have you considered doing a mini review blog post about this book?
At 30 dollars, it more expensive than my usual ‘buy a used copy/visit the library’ approach. The reviews I have seen suggest it has some good ideas but that it is hidden in autobiographical material. One suggested that it would be better just to get one of his real estate books…..
He likes “The Millionaire Mind” and neither of us is thrilled by “Rich Dad, Poor Dad” so I’m guessing we’re on the same page.
December 5th, 2009 at 10:24 am
I don’t think frugality is really about money at all. Instead I think it’s a way of being full of care for the things we have and use, and being a good steward of the earth’s resources. How can caring, avoiding waste, and being considerate possibly be a “necessary evil”?
I think people often confuse frugality with cost-cutting or desperation. Cost-cutting measures often CAN be frugal, but not always. It’s cheaper to eat off the dollar menu 3 times a day, but that’s not frugal in the least.
December 5th, 2009 at 10:37 am
Frugality an evil? Frugality is fun. It’s a game. The better you get at the game, the better off your finances, your financial security, and your life will be. Once you have all your basics covered - a dwelling, food, clean water, utilities, clothing, transportation - nothing else beyond experiences and financial independence will make you ’successful’ in life. Frugality is a means to that end.
December 5th, 2009 at 11:02 am
Admittedly, I have not read all of the comments to this posting…but I know what has worked for me…and I also know that there is a “struggle” to adopt an attitude of “spending life well”.
It goes beyond saving or spending — it’s choosing to do the right thing - for yourself and for others - with the blessings that life brings all of us.
December 5th, 2009 at 11:42 am
As with everything in life, it’s all about reaching a balance. We are trying to simply our lives and reevaluate what is really important to us. Like so many others, we are finding that those things that are at the top of the list do not include money or possessions. We can’t/won’t/shouldn’t complain about what we do not have … the rest of the world and so many here in the States have aren’t as fortunate as we have been.
December 5th, 2009 at 12:02 pm
I think I look at it somewhat differently. Once I stood back and really assessed my consumerist mindset, I chose stability, simplicity and life experiences over spending with abandon. I don’t know that this values-based shift is ever going to change, regardless of how much I have saved in the bank. I may have slightly more to spend on vacations and nice dinners out, but those are my same “treat myself” priorities now. I’m starting off and planning to stay frugal, by which I mean I will continue to make thoughtful choices about expenditures.
December 5th, 2009 at 12:29 pm
Of course fugality is being wise about money.
I think I’m quite frugal, but doesn’t mean I give up on good food, a good computer or good cashmere sweaters (I can’t wear synthetics nor hitchy wool). Which means: going to the farmers’ market where food is local and cheap and less processed stuff, not buying the latest electronic gadgets but using my computer for years, and buying just one sweater every year - or none at all. Just my examples.
December 5th, 2009 at 12:50 pm
Man, we have it sooo good. So, I don’t mind not buying the biggest and best and giving some to those who have little, especially in countries where they have little choice. For those that can work, then work. For those born into a country where they can hardly find food… let me lend a helping hand by saving a little on my own lifestyle so you can have a life at all.
December 5th, 2009 at 12:56 pm
Frugality can lead one to the following:
1. Paid Off Home
2. No Credit Card Debt at all
3. All the frills of opening new credit cards and getting BIG benefits (like one free round trip ticket for opening a credit card and closing it in 3 months)
4. Have money to buy anything I NEED for me or my family
5. Make SAVING MONEY a goal rather than a by product
6. Gain more freedom than a ‘person with a anchor on their neck’ who get everything on impulse
7. Give money to kids when they need it (for college, wedding, home-buying etc).
By just putting $250 towards my kids accounts every month, I totaled up $16900 (after the market crash of 2008) in their accounts without even know about it.
Frugality or whatever you want to call it is what leads to the above. The only other way is to be a CEO of a big company or have inheritance. If you do not have this situation, you BETTER BE FRUGAL to achieve the above, or else you do NOT achieve it.
Decide and Do.
Kenny
ps: My apologies if you find this too Assertive, but it is as Black and White as above. So, don’t have to choose a path, but will not get the results if you do not choose the Frugality path either.
December 5th, 2009 at 1:10 pm
I think a lot of this comes down to personalities and preferences. Friends of ours consider themselves frugal because for the two of them, going on vacation always means camping. Yet they buy brand new cars every couple of years. My wife and I would never spend a night in a tent–our vacations involve staying in hotels and exploring cities we haven’t seen–but we consider ourselves frugal because we always buy used cars. And pay cash for them.
December 5th, 2009 at 2:03 pm
I’m really curious. How did you accomplish paying off the mortgage before you had children? I assume you had the children when you were in your thirties at the latest. Was it a very cheap house that you renovated yourself or did you just pay off an enormous amout of money every month?
It was a townhouse In Arlington, Va. My wife and I paid $186,000 for it in 1991, when we were married. We put down $36,000, so the mortgage amount was $150,000.
Our first child was born in 1999, when I was 43 and my wife was 40 (I don’t recommend this, but we cannot go back and change what we did). We had no savings other than the amount used to make the down-payment on the house when we were married.
It was shortly after we were married that we developed our first budget together. We put all our savings into paying off the mortgage (nothing went into stocks except for amounts that we were required to put into employer plans to obtain employer matches). I don’t have precise recollection, but I believe that we paid off the mortgage in early 1996. So it took a little less than five years.
We were saving like mad in those days. We both were working and we had no kids and we were frugality zealots. Once we got the mortgage paid off, we were able to put the savings into hyper-drive.
Our circumstances were unusual. Most people would not be able to do what we did. But I think that most can do more than they realize they can do. The key is motivation. We had zero motivation in earlier days. Then we both became highly motivated not too long after we took on the mortgage (for reasons I won’t go into here).
Rob
December 5th, 2009 at 5:51 pm
I have to somewhat agree with Reed’s point about education, especially when it comes to college. Yes, more education almost always looks better on your resume. Let’s set that aside for a moment.
Let’s assume a person gets a decent education, enough to cover all the basics and a bit more. In my scenario, I set this as a high school diploma or 2 year community college degree.
Is 4 years of college worth it for this person? If it broadens his/her horizons and/or point of view, then sure. If it awakens the person to a passion or field of study, sure.
However, what if the person merely uses college because a BA/BS is required for what they want to do? What if all they learn in college is how to pass tests by memorizing information, then forgetting it all a week later?
What has the person learned? How to think? Or how to manipulate?
Don’t get me wrong. I support the idea of everyone being able to attend college if they want to, and graduate without a huge financial burden. But I do NOT believe that it is the best, nor even a good choice, for everyone.
December 5th, 2009 at 7:08 pm
Frugality is “evil”? Time to change your attitude, if that’s what you think. It’s kind of like saying common sense is evil.
December 5th, 2009 at 11:28 pm
This is akin to asking a thin person “Why do you keep eating vegetables even though you are thin. Live a little! Eat more cake and drink more beer!”
Des (#68) I was thinking the same thing! It seems like someone who works out everyday saying, I’m doing this now so that once I’m fit I can stop exercising.