Philosophies of frugality.

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closetoreality
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Philosophies of frugality.

Post by closetoreality » Sun May 10, 2015 9:32 am

I'm thinking out loud here, but enjoying ourselves [for example] in our 30's may be more enjoying than in our 50's.

What I'm getting at with this, is what do you guys believe is a good balance? A lot of the books we read seem pretty redundant on pinching every spare penny into your savings, or portfolio. Vehicles with interest rates are frowned upon, credit cards are the devil, and life as we know it is all one big mission to save.

But when are we suppose to let it "slip" a little and enjoy some of it? Perhaps I'm clouded because I'm 29, which is why I'm putting this thought out there for feedback.

Is it wrong to hold a vehicle loan?

Is it wrong to buy the "wants" and enjoy life?

Of course, the stipulation here is that one could have proper control over turning on and off these expenses without falling into uncontrollable expenditures and debt.
I don't want to be 50, have all this money, but no memories in life. I don't mean big memories either, even the small enjoyments that I give example of in this thread... Now that may seem extreme, and I worded it that way intentionally, but it's to see the point.

Thoughts? Be a cheap ass who cooks leftovers on a Friday night to penny pinch, or bring your significant other out to diner? etc etc. Buy that Harley? Or no don't NEED it. Never have a Harley, never enjoy that...it's a ripoff.

Things like that I guess? Hope my point is coming across.

I thing financing is a way for people to have things they can't afford in cash, and I don't always agree with the mentality that it should be frowned at. Balanced, controlled? Yes.

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backpacker
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Re: Philosophies of frugality.

Post by backpacker » Sun May 10, 2015 9:40 am

These questions always depend on the specifics. There's no way to answer them in the abstract. What are your long-term goals? How much have you saved already and what is your current savings rate? What would you like to splurge on, what would it cost, and why is it important to you?
Last edited by backpacker on Sun May 10, 2015 9:45 am, edited 1 time in total.

KlangFool
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Re: Philosophies of frugality.

Post by KlangFool » Sun May 10, 2015 9:42 am

TS,

My goal in life is not frugality. It is to be value conscious. Know what is important to me and spend in the way that I get maximum value of my time and money.

I like good coffee. Hence, I do not skip on good coffee. But, I shop around to get good coffee and the best deal that I can get. I do not buy and spend on all my "wants". I know what is important to me and I shop and wait for the best deal before I buy it.

KlangFool

closetoreality
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Re: Philosophies of frugality.

Post by closetoreality » Sun May 10, 2015 9:45 am

Maybe I'm not seeing things correctly,

From what I have read both in here and in a few books is that it's not about how much money you have, because thats a never ending mission.

It's about the principles behind what you buy, even if you have the money. It's about the fact financing is a rip-off and credit cards are horrible. So theoretically even if you have money...financing is still frowned upon because your giving money to the bank through interest. Going out to eat is still a bad idea because the leftovers in your fridge are still good.

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watchnerd
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Re: Philosophies of frugality.

Post by watchnerd » Sun May 10, 2015 9:50 am

There have been a couple of behavioral economics studies that show that spending on experiences provides more long term enjoyment than spending on 'things'.

In other words, a nice vacation with someone you care about creates fond memories and enrichment that keep giving pleasure many years later. While shiny new luxury goods, like cars, have diminishing satisfaction over time (i.e. we get used to having the nicer car and after a while it's just the norm).

I try to keep this utilitarian concept as the core of my spending philosophy (which is not the same as my saving/investing philosophy).
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backpacker
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Re: Philosophies of frugality.

Post by backpacker » Sun May 10, 2015 9:52 am

KlangFool wrote: I like good coffee. Hence, I do not skip on good coffee.
Coffee is a nice example. I've been doing blind taste tests with several different brands lately. Walmart coffee is about $3 a pound. It really does taste terrible, even when I don't know that that's what I'm drinking. 8 O'Clock coffee is about $6 a pound. It tastes much better and is IMO clearly worth the extra money. On the other hand, I haven't been able to tell the difference between 8 O'Clock coffee and coffee selling for two or three times as much. So I see no point in paying much more than $6 a pound.

closetoreality
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Re: Philosophies of frugality.

Post by closetoreality » Sun May 10, 2015 9:54 am

Thats a good example, albeit on the lower side of "needs" but....for instance I dropped using K-CUPS because of their price...I felt guilty when I could just buy a normal coffee pot and brew cheap folgers which is horrible....

Am I being too extreme with my frugality?

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watchnerd
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Re: Philosophies of frugality.

Post by watchnerd » Sun May 10, 2015 9:58 am

closetoreality wrote:Thats a good example, albeit on the lower side of "needs" but....for instance I dropped using K-CUPS because of their price...I felt guilty when I could just buy a normal coffee pot and brew cheap folgers which is horrible....

Am I being too extreme with my frugality?
Is making such a small change really moving the financial needle in a meaningful way?

Aside: I think K-CUPS are pretty horrible tasting, too. I think the real answer may be to get a French press and learn how to make good coffee for real.
Last edited by watchnerd on Sun May 10, 2015 10:00 am, edited 1 time in total.
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closetoreality
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Re: Philosophies of frugality.

Post by closetoreality » Sun May 10, 2015 10:00 am

No, but the small things add up?

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watchnerd
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Re: Philosophies of frugality.

Post by watchnerd » Sun May 10, 2015 10:01 am

closetoreality wrote:No, but the small things add up?
Get a French press and learn to make real coffee. Best of both worlds.
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Broken Man 1999
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Re: Philosophies of frugality.

Post by Broken Man 1999 » Sun May 10, 2015 10:11 am

I believe one can become too frugal. People save, scrimp like crazy when young, and find themselves unable to enjoy the fruits of their labor, and past sacrifices when they are older.

And, even if you make it to the point you want to "loosen up" on your spending, your health might prevent you from doing so.

My philosophy on this subject has always been pay yourself first, that is, take care of your savings from your first dollar on, and then enjoy what is left, all during life. When young, and very healthy, there are great opportunities to enjoy life with minimum spending. A day at a park, or beach, a cookout with friends and neighbors, etc. As you age, you will see larger savings amounts, if you step up your savings as you get raises, but your leisure dollars will grow as well.

For 44 years wife and I have lived "paycheck to paycheck". But, that's OK. We pay our bills, we set aside our planned expenditures, and our income sources are secure.

When we were both working, we set up our 401K plans to at the very minimum capture 100% of the matching funds, and most often more. Set them, and left them alone.

Once our bills are paid, we know we can spend every nickel left, if we desire.

We have held mortgages on our homes, we had loans on our cars, and occasionally held balances on credit cards for a few months. We have never had an "emergency fund" per se, as I have always preferred to keep any excess funds in the market, where they had a chance to grow.

We are now at age where we can purchase vehicles for cash (though with 0% loans I probably wouldn't), mortgages are generally paid off (though, again, some of the rates available recently would cause me pause, before paying off), and no real reason to carry credit card balances unless we have some "interest free/no payments for xx months" deal.

The best advice I can give is to set aside your savings first, then pay your bills, and if you want to, blow every nickel you have left with NO regrets.

But, make sure you have some activities you enjoy, as there is so much more to life than work. See aside a good savings rate, and suffer no guilt with enjoying life!

Broken Man 1999
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closetoreality
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Re: Philosophies of frugality.

Post by closetoreality » Sun May 10, 2015 10:13 am

Broken Man 1999 wrote:I believe one can become too frugal. People save, scrimp like crazy when young, and find themselves unable to enjoy the fruits of their labor, and past sacrifices when they are older.

And, even if you make it to the point you want to "loosen up" on your spending, your health might prevent you from doing so.

My philosophy on this subject has always been pay yourself first, that is, take care of your savings from your first dollar on, and then enjoy what is left, all during life. When young, and very healthy, there are great opportunities to enjoy life with minimum spending. A day at a park, or beach, a cookout with friends and neighbors, etc. As you age, you will see larger savings amounts, if you step up your savings as you get raises, but your leisure dollars will grow as well.

For 44 years wife and I have lived "paycheck to paycheck". But, that's OK. We pay our bills, we set aside our planned expenditures, and our income sources are secure.

When we were both working, we set up our 401K plans to at the very minimum capture 100% of the matching funds, and most often more. Set them, and left them alone.

Once our bills are paid, we know we can spend every nickel left, if we desire.

We have held mortgages on our homes, we had loans on our cars, and occasionally held balances on credit cards for a few months. We have never had an "emergency fund" per se, as I have always preferred to keep any excess funds in the market, where they had a chance to grow.

We are now at age where we can purchase vehicles for cash (though with 0% loans I probably wouldn't), mortgages are generally paid off (though, again, some of the rates available recently would cause me pause, before paying off), and no real reason to carry credit card balances unless we have some "interest free/no payments for xx months" deal.

The best advice I can give is to set aside your savings first, then pay your bills, and if you want to, blow every nickel you have left with NO regrets.

But, make sure you have some activities you enjoy, as there is so much more to life than work. See aside a good savings rate, and suffer no guilt with enjoying life!

Broken Man 1999
interesting point of view, thanks for the feedback.

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midareff
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Re: Philosophies of frugality.

Post by midareff » Sun May 10, 2015 10:27 am

Just my 2 cents here.... other opinions will vary.
But when are we suppose to let it "slip" a little and enjoy some of it? Perhaps I'm clouded because I'm 29, which is why I'm putting this thought out there for feedback.

I think you are well ahead of the "game" in that you are already thinking of these things. My advantage was my upbringing and dad listening to the stock market report weekday evenings at dinner in the kitchen. That would be some 60 + years ago but the seeds were set then. They had been through the great depression and knew the value of money, work and education and passed that to me.
Everyone needs a budget and the budget should provide for some enjoyment of life. You are starting out and if you can dedicate a % to savings/investments and stay with that you should feel free to enjoy the rest. Toys and vacations are not an evil.

Is it wrong to hold a vehicle loan?

Not wrong and everything needs to be put in perspective. As long as the vehicle you are buying is appropriate for your life and your place in it, and you don't endanger your savings %, and you are able to obtain favorable terms I can't see a problem with financing. 2.5 years ago I bought a new car and financed it at 1.49% for 5 years. I could have written a check but at 1.49% I have to ask myself if I can generate (a very conservative) 1.49% a year return on the money in the market? 3.99% would very likely have gotten a different answer.

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bengal22
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Re: Philosophies of frugality.

Post by bengal22 » Sun May 10, 2015 10:37 am

I think the boglehead philosophy actually unlocks one to spend more money. After we have earned it. By investing wisely, and being "value-conscious"(prior post), we can actually enjoy the finer things in life(like good coffee). But we have to realize that we need to invest early in life and invest a significant amount(significant depends upon one's income). Yes we have to be smart in how we invest and yes we have to be smart in how we spend. Once one has created that "habit of saving" and making investments the second thing one draws from his paycheck one is on their way. So no we are not called to be the guy that lived monk-like frugal with a death bed worth of millions but we should save and spend accordingly.
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BL
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Re: Philosophies of frugality.

Post by BL » Sun May 10, 2015 10:45 am

Is your income greater than your expenditures?
Do you pay yourself first (emergency fund, savings in 401k, IRA, saving for fun events)?
Are you paying >5% interest anywhere?

If yes, yes, no, then go ahead and enjoy the rest. Decide what gives you good pleasure value and spend on that. If you have spare money, you can choose to spend that on what you want the most, you just can't afford to spend on all your wants. Whatever you are paying interest on costs that much more and eats into future ability to meet other wants. Be sure to calculate the total cost of items you are paying interest on and decide if it is worth that much to buy now rather than saving up money for paying cash.

I like the handy "rule of 72" and using an example of 6%/year which means your money (owned or owed) would about double in 12 years, that would about double in the next 12 years, etc. This is one reason investing early is so helpful; the doubling gets going early, then it becomes 4 times original amount, then 8 times, etc. If you paid 18% interest on something (or made that kind of money) it would about double in cost (value) in 4+ years. For more accurate details see Wikipedia reference:
http://en.wikipedia.org/wiki/Rule_of_72
Last edited by BL on Sun May 10, 2015 11:01 am, edited 1 time in total.

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Re: Philosophies of frugality.

Post by nbseer » Sun May 10, 2015 10:54 am

We went on many great trips during my working years (now 63 and retired) and are glad we spent the money back then for some memorable experiences. At the same time was putting about 10% of salary into 401k. Never bought a ' McMansion" or luxury vehicles.. now drive 12 and 15 year old cars. Actually enjoy living frugal lifestyle, using cash-back credit card for almost all purchases, no-contract cellphones, only buy store brand or sale items at supermarket, etc. Maybe eat out 2 or 3 times a week, but never dinner, lunch is cheaper and usually bring half of it home for dinner. It's surprising how little you can spend if you make a game out of frugality.

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Re: Philosophies of frugality.

Post by KlangFool » Sun May 10, 2015 10:55 am

closetoreality wrote:Thats a good example, albeit on the lower side of "needs" but....for instance I dropped using K-CUPS because of their price...I felt guilty when I could just buy a normal coffee pot and brew cheap folgers which is horrible....

Am I being too extreme with my frugality?
closetoreality,

Why do you have to drop K-CUPS??

1) You could buy the adapter and / or find a cheaper source for K-CUPS coffee.

Or

2) Drink less frequently and you will enjoy more.

<<I felt guilty when I could just buy a normal coffee pot and brew cheap folgers which is horrible....>>

Folgers is not cheaper than most of the gourmet coffee that I bought. I can get gourmet freshly roasted coffee with shipping around $9 to $10 per pound. Given that I drink less than 5 pounds of coffee per month, it is only at most $50 per month. But, it gives me plenty of happiness..

There is always a better way...

KlangFool
Last edited by KlangFool on Sun May 10, 2015 11:05 am, edited 1 time in total.

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Re: Philosophies of frugality.

Post by KlangFool » Sun May 10, 2015 11:03 am

backpacker wrote:
KlangFool wrote: I like good coffee. Hence, I do not skip on good coffee.
Coffee is a nice example. I've been doing blind taste tests with several different brands lately. Walmart coffee is about $3 a pound. It really does taste terrible, even when I don't know that that's what I'm drinking. 8 O'Clock coffee is about $6 a pound. It tastes much better and is IMO clearly worth the extra money. On the other hand, I haven't been able to tell the difference between 8 O'Clock coffee and coffee selling for two or three times as much. So I see no point in paying much more than $6 a pound.
backpacker,

http://www.coffeeam.com/gourmet-coffee.html

If you are willing to buy 5 pounds at a time and shipping is $5.95, you can get many 5 pounds of gourmet coffee between $40 to $50 from this web site.

KlangFool
Last edited by KlangFool on Sun May 10, 2015 11:10 am, edited 1 time in total.

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midareff
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Re: Philosophies of frugality.

Post by midareff » Sun May 10, 2015 11:07 am

Another 8 o'clock liker here.. especially when Publix has it on bogo.

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BolderBoy
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Re: Philosophies of frugality.

Post by BolderBoy » Sun May 10, 2015 11:21 am

closetoreality wrote:Things like that I guess? Hope my point is coming across.
I think it did.

How about this: make a plan for where you want to be in retirement. The plan has to include what your mandatory expenses are and that you would pull that from your retirement plan (then add on an amount to cover taxes). For many people this is the hardest part - coming up with what their real expenses are month-over-month. Then use a guesstimator such as FIREcalc.com or cFIREsim.com and start plugging in some numbers until you get a scenario in which all (or almost all) of the forecasts show you above the -0- line.

If the amount of savings required to accomplish that is less than what you earn, then you might have come up with what I would call "disposable income" that you can spend as you wish.

The two websites I referenced require some serious study in order to understand what they can (and cannot) do for you. When using these sites, be pessimistic (assume inflation is higher and returns are lower, that you'll live to 99 y/o, etc). As forecasters, these two websites are very good, I but caution you that future-telling is magic to a large extent so this is just a guide, but when it comes to retirement planning from so far out (age 29, right?) there is little else to try.

PS - nothing wrong with taking out loans for things so long as the loan components are figured into your expense/disposable income plan. Keep an eye on your net worth (you should know your net worth in an ongoing way). So long as your net worth in increasing, you are likely on a right track.

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Re: Philosophies of frugality.

Post by Ron Ronnerson » Sun May 10, 2015 11:27 am

The way I see it, a couple of paths can be taken to get to the end goal:
1) Sacrifice a little early on (by saving maybe 15% of your income) and enjoy vastly later on (by having a good chunk of money saved and possibly retiring early)
2) Enjoy a little early on (don't save that 15% and instead enjoy yourself as much as possible in the present), and sacrifice vastly later on (by possibly having to greatly increase your savings rate later or continuing to work to a later age than you had hoped)

The reason for this is compounding. This concept has been illustrated time and again through comparisons of people who saved early vs. those who waited. Personally, it seems to me that choice 1 is far better but many people lack the discipline to not spend everything they earn, especially when they are young.

If you're able to save a good percentage of what you earn so that it will allow you to reach your goals, it's totally fine to use the rest to enjoy yourself. However, keep in mind that the more you can save early on, the better it will be in the long run. That being said, life is a marathon and if you make yourself absolutely miserable in your 30s, it'll be hard for you to continue that way for an extended amount of time.

Just a quick personal story. I started saving around the age of 30. I had a negative net worth at the time and things weren't looking so great. I'm 40 now and the situation is vastly improved due to being value-conscious and saving what I could in my 30s. I'm allowing myself to ease up at this point because I'm in a place where I can do that now, though frugality can be habit-forming. The 40 year old me is glad the 30 year old me chose option 1. Rather than having to run faster when I'm middle aged, I'm able to jog the rest of the way. That's a nice feeling. For what it's worth, I'm enjoying life experiences at 40 just as much as I did 10 years ago. Actually, I may even enjoy life more now because how much things cost don't weigh so heavily in the back of my mind. I know I'm on a good trajectory because of the path I chose the previous decade.

In the end, one must seek balance. However, this is a bit tricky because of the effect of compounding. That means, in general, the time for sacrifice is early on, up to a reasonable point. That's the way I see it, anyhow.

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Nicolas
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Re: Philosophies of frugality.

Post by Nicolas » Sun May 10, 2015 11:30 am

KlangFool wrote:
backpacker wrote:
KlangFool wrote: I like good coffee. Hence, I do not skip on good coffee.
Coffee is a nice example. I've been doing blind taste tests with several different brands lately. Walmart coffee is about $3 a pound. It really does taste terrible, even when I don't know that that's what I'm drinking. 8 O'Clock coffee is about $6 a pound. It tastes much better and is IMO clearly worth the extra money. On the other hand, I haven't been able to tell the difference between 8 O'Clock coffee and coffee selling for two or three times as much. So I see no point in paying much more than $6 a pound.
backpacker,

http://www.coffeeam.com/gourmet-coffee.html

If you are willing to buy 5 pounds at a time and shipping is $5.95, you can get many 5 pounds of gourmet coffee between $40 to $50 from this web site.

KlangFool
Even that's too much. Why pay so much when you can roast your own green beans? I pay $3.50 -$4.00 per pound for green and roast about once a week. It's easy to do. My coffee is always fresh and tastes great.

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William4u
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Re: Philosophies of frugality.

Post by William4u » Sun May 10, 2015 11:42 am

I try to avoid spending significant resources (time, effort, money) on gaining marginal utility. For example, we have a modest house and modest cars relative to our income and social circle. We could spend more and get a BMW instead of a Toyota, but why? 99% of the value of a car for us is that it safely gets us from A to B. Why spend thousands more to eek out that last 1% of value, when we can spend those same thousands on things we value far, far more?

So there is a point at which spending more achieves little. However, more importantly, there is evidence that consumption of material things makes people less happy (and not even marginally more happy). Research shows that buying things makes people less happy, and buying experiences and activities makes people more happy.

Active experiences, like touring a national park with family and friends, are meaningful. Watches and cars and clothes and houses are not. According to the research, the kind of person who tends to maximize the former while minimizing the latter is more happy and satisfied with life.

See the excellent journal article "If Money Doesn't Make You Happy Then You Probably Aren't Spending It Right"...
ABSTRACT
The relationship between money and happiness is surprisingly weak, which may stem in part from the way people spend it. Drawing on empirical research, we propose eight principles designed to help consumers get more happiness for their money. Specifically, we suggest that consumers should (1) buy more experiences and fewer material goods; (2) use their money to benefit others rather than themselves; (3) buy many small pleasures rather than fewer large ones; (4) eschew extended warranties and other forms of overpriced insurance; (5) delay consumption; (6) consider how peripheral features of their purchases may affect their day-to-day lives; (7) beware of comparison shopping; and (8) pay close attention to the happiness of others.

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Re: Philosophies of frugality.

Post by harmony » Sun May 10, 2015 11:53 am

Unless your career is so demanding that your younger self needs an affordable, luxurious vacation once in a while, I offer this:

Expand on the idea of experiences building better memories than things; there may be times in life when certain experiences may provide a greater bang for your buck, times when you might enjoy going without luxuries. We converse on this forum about diversifying our investments and diversifying our taxes across years so that we can take full advantage of savings within brackets. Take that a step further and look for benefits of diversifying luxuries across years. Experience as much as your youthful self can take in, i.e. hiking, bike touring, camping. Try not to spend money on a luxury if there is an equal or greater benefit to enjoying the experience frugally. When you are younger it might be easier to take in a wider range of quality experiences that you may be hindered from when you are older. Your aging self may be thankful that you have managed your luxury allocation so wisely.

Now that I am older, the memories I cherish the most are the ones where I recollect my youthful self doing things that I can no longer enjoy. I biked, camped and stayed in hostels in Europe. I took a 3-month camping tour through the Near East. I took ferries to remote islands. This was all done on a shoe-string budget. It was enjoyable because I was young and strong enough not be deterred by roughing it. Now that I am older, I don't consider doing it this way any more because my body would scream back at me. I don't camp anymore, I stay in a hotel; though I might take a hike instead of a bus tour. Nature is still a gift at any age.

No offense intended to any seniors here who are biking, hiking and camping; and still enjoying it. Keep it up as long as you can.

Full disclosure: I didn't swim across the Atlantic, I flew, and the airfare at that time used up almost all of my life's savings.

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Re: Philosophies of frugality.

Post by sesq » Sun May 10, 2015 12:31 pm

I do question why I spend so much time worrying about relatively small re-occuring expenses and optimizing them. Things like the cable/phone bills or the house cleaners my wife hires. I am mid-career and doing well that none of these expenses matter in the big picture. My instinct though is to think that if I fail to control small expenses I somehow won't hit my savings goals.

To further confess my sins, I buy my cars intending to keep them 10+ years but my track record is closer to 7-8. This has been driven by circumstance (wanted more room for kid hauling), nuisance problems (electrical problems meant a lot of trips to the shop), or outside stuff (being issued a company car, then later having the chance to take cash instead).

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Re: Philosophies of frugality.

Post by TomatoTomahto » Sun May 10, 2015 12:52 pm

Re coffee: I don't even drink the K-cups at my car dealer, where it's free. I use a local roaster, and pay crazy amounts for my coffee. Coffee is important to me. I use a Remington iCoffee, and have put my expensive Espresso machine, French Presses, drip machines, etc in storage. Highly recommended if you like strong but smooth coffee.

To the original question: We were never frugal in the BH sense, but we are more frugal than most around us. We buy our cars outright; many neighbors lease cars that they probably can't afford. Our house is furnished well enough, but not in a way that would freak us out if a dog chewed on a table leg. We vacationed well, Galapagos, Safari, etc., until we couldn't get everyone's schedules in sync -- I expect we will start vacationing well again shortly as an empty nest couple. We have happily paid and continue to pay for private educations.

But, we didn't spend freely until we were sure that we would never become a financial burden to our children.

We recently came to the realization that for every dollar we make now, we can spend it or decide whether to give it to our heirs/charity. We are trying to determine what amount of money inherited by a young adult is more of a problem than helpful. We haven't come to a number, but after meeting with our attorney to re-do our wills, my wife said to me: "let's spend more."

One can be overly frugal, where it is regarded as a virtue regardless of any necessity. That is a condition frequently found on BH. Otoh, spending money you might need 30 years in the future in order to try to fill a "hole in your soul," mindless of the consequences it might have for your loved ones in the future is not a good thing. Everyone should try to find the happy middle ground.

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Re: Philosophies of frugality.

Post by Johno » Sun May 10, 2015 1:12 pm

sesq wrote:I do question why I spend so much time worrying about relatively small re-occuring expenses and optimizing them. Things like the cable/phone bills or the house cleaners my wife hires. I am mid-career and doing well that none of these expenses matter in the big picture. My instinct though is to think that if I fail to control small expenses I somehow won't hit my savings goals.

To further confess my sins, I buy my cars intending to keep them 10+ years but my track record is closer to 7-8.
As backpacker said above, this question is all about specifics. For some people small recurring expenses add up eventually to something significant. For others they just don't. I would agree speaking for myself and observation of others that attention to small expenses is mainly a psychological thing for a lot of people for whom it's really not that significant long or short run. That's not to say it's bad thing to be conscious of small costs, subject to reason and balance which is the only general answer to the frugality question anyway.

Likewise if you asked me I'd say I keep cars for 10 yrs but the actual average is shorter: wrecks, real maintenance nuisances, sales to kids, etc.

As for 'experiences are valuable, nice watches and cars are not', this is fine to express as an opinion, which is what it is. When 'studies' are trotted out to prove it's a 'fact' is when my eyes start rolling. Social science is largely nonsense (IMO, note, opinion :D ) and that's a great example. I guess there's some value in knowing that some portion of the population (who might have very different worldview, values and opinions than you) subject to a study by social scientists (extremely likely to have a different worldview, values and opinions that I do) with all the subtle biases that sneak into social science, say they value eg trips more than watches. It tells you what other people think, subject to the inherent biases of the study. It doesn't tell you what you think. You have to learn that for yourself I believe. And again it's almost infinitely dependent on circumstances. You might be able to afford all the trips and watches you want, no tradeoff, but just like one more than the other, no right or wrong there. Also the quote above mixed in 'spending on others' which is a whole different ball of wax than the general assumption of frugality discussions that you spend more now (on yourself) or save more now (to spend later, on yourself). And spending on your family isn't the same as giving money anonymously to strangers, so 'spending on others' is again a whole different thing, which others?

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Re: Philosophies of frugality.

Post by yellowgirl » Sun May 10, 2015 1:22 pm

harmony wrote:Unless your career is so demanding that your younger self needs an affordable, luxurious vacation once in a while, I offer this:

Expand on the idea of experiences building better memories than things; there may be times in life when certain experiences may provide a greater bang for your buck, times when you might enjoy going without luxuries. We converse on this forum about diversifying our investments and diversifying our taxes across years so that we can take full advantage of savings within brackets. Take that a step further and look for benefits of diversifying luxuries across years. Experience as much as your youthful self can take in, i.e. hiking, bike touring, camping. Try not to spend money on a luxury if there is an equal or greater benefit to enjoying the experience frugally. When you are younger it might be easier to take in a wider range of quality experiences that you may be hindered from when you are older. Your aging self may be thankful that you have managed your luxury allocation so wisely.

Now that I am older, the memories I cherish the most are the ones where I recollect my youthful self doing things that I can no longer enjoy. I biked, camped and stayed in hostels in Europe. I took a 3-month camping tour through the Near East. I took ferries to remote islands. This was all done on a shoe-string budget. It was enjoyable because I was young and strong enough not be deterred by roughing it. Now that I am older, I don't consider doing it this way any more because my body would scream back at me. I don't camp anymore, I stay in a hotel; though I might take a hike instead of a bus tour. Nature is still a gift at any age.

No offense intended to any seniors here who are biking, hiking and camping; and still enjoying it. Keep it up as long as you can.

Full disclosure: I didn't swim across the Atlantic, I flew, and the airfare at that time used up almost all of my life's savings.

Why experience is better than things? I see so many saying that here. We don't like to travel but we like nice things (house, cars, shoes, clothes). Why spending money on experience such as travel is better the others?

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Re: Philosophies of frugality.

Post by goodenyou » Sun May 10, 2015 1:47 pm

Being frugal is essential during the accumulation phase of wealth. It allows one to more rapidly extinguish debt and accumulate assets. Delayed gratification has been shown to be one of the most important qualities for success in life. See Mischel's famous Marshmallow study at Stanford from the 1960's. Having a balance of spending and saving is important. Living debt free is much more rewarding than any material item, IMO.
Last edited by goodenyou on Sun May 10, 2015 4:02 pm, edited 1 time in total.
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Re: Philosophies of frugality.

Post by TomatoTomahto » Sun May 10, 2015 1:54 pm

yellowgirl wrote:Why experience is better than things? I see so many saying that here. We don't like to travel but we like nice things (house, cars, shoes, clothes). Why spending money on experience such as travel is better the others?
I guess I'm a hedonist. I like to travel, and have memories and shared experiences to enjoy for years afterwards. I also like some things, and every time I turn on my OLED TV I enjoy the fact that finally "black is black" on it.

That said, if I had to choose one, I would say that experiences can be life changing, but most "things" are not. Our family trip to the Galapagos informed my kids' sense of biology, for example, while my TV doesn't come close to doing anything other than providing a nice picture.

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Re: Philosophies of frugality.

Post by yellowgirl » Sun May 10, 2015 2:08 pm

TomatoTomahto wrote:
yellowgirl wrote:Why experience is better than things? I see so many saying that here. We don't like to travel but we like nice things (house, cars, shoes, clothes). Why spending money on experience such as travel is better the others?
I guess I'm a hedonist. I like to travel, and have memories and shared experiences to enjoy for years afterwards. I also like some things, and every time I turn on my OLED TV I enjoy the fact that finally "black is black" on it.

That said, if I had to choose one, I would say that experiences can be life changing, but most "things" are not. Our family trip to the Galapagos informed my kids' sense of biology, for example, while my TV doesn't come close to doing anything other than providing a nice picture.
There are many things that kids or adults can learn right at home like playing scrabble or clue or visiting a fire station, or volunteer at a library. All those things are just as good. In here it seems like you are not well rounded if you don't travel or something.

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Re: Philosophies of frugality.

Post by Louis Winthorpe III » Sun May 10, 2015 2:36 pm

Balance is the key. Many people in real life don't have balance -- they spend too much. I get the impression that some here may lack balance in the opposite direction. That being said, going into debt to fuel the lifestyle you want today but can't afford isn't about balance. That sounds like an excuse for someone who doesn't want to live within his/her means. But it goes without saying that the spend/save balance is a personal choice. Do whatever floats your boat.

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Re: Philosophies of frugality.

Post by LeisureLee » Sun May 10, 2015 2:53 pm

The book "Your Money or Your Life" talks through a philosophy of frugality you might like. Basically, think about how many hours of work you're trading when you buy something, and let that help you decide what's worthwhile. Is the nice coffee worth ten minutes of work? Maybe. Is the Harley worth six months? Maybe.The goal isn't to spend the minimum needed to live. It's to get the most satisfaction from your effort working and to figure out when you'd rather have more free time than more spending.

Another thing which helped me decide how much to spend and save is to have rough numbers about how long I need to work with different levels of saving. Roughly, you can save 5% and work 55 years, or 10% and work 45 years, or 20% and work 35 years, or 40% and work 25 years. For me, getting ten extra years of retirement in exchange for spending just 5% or 10% less is an easy choice. Somewhere in there is the right tradeoff for you.

HTH,
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Re: Philosophies of frugality.

Post by FredL » Sun May 10, 2015 3:20 pm

Long time ago, one article said you don't need to have a car loan for your second car if you save or invest each month the same amount of the monthly payment of your first car. Don't be fooled by the low interest rate of the car loan, if you pay cash you can bargain down the price.

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Re: Philosophies of frugality.

Post by basspond » Sun May 10, 2015 3:28 pm

I think if a person can give 10%, save at least 20% for retirement, and if it applies, save an additional 10% for college/house/etc, then spend away. It is nice when you get to a point when the only thing being financed is your credit card bill that you pay off monthly.

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Re: Philosophies of frugality.

Post by harmony » Sun May 10, 2015 4:58 pm

yellowgirl,

On one of your earlier posts I read that, admirably, you have crossed from one culture to another. Though you write that you don't like to travel, may I suggest (for you to verify) that you have already experienced some of the outcomes of cross-cultural experience which some of us are seeking with travel? Many of us in the U.S. don't ever see how people in a foreign country live and thrive. In a large country like the U.S., without exposure to life and economy of other cultures, we are a bit insulated.

Most of us who have traveled abroad at a young age are forever changed by it. We come back to the U.S., never to forget what was painted on the canvases of our young minds in those distant lands. These experiences benefit us in various ways. They inform the choices we make regarding what we feel is important in life. In my view foreign travel has made me a more integrated human being, living closer to the heartbeat of the planet. While I received great pleasure from foreign travel, the greater benefit was educational. The travel did not increase my paycheck, but it did make me a more compassionate person with a wider world view.

In the time that I lived so frugally while travelling, I did not need to maintain a home or car. I did not need an extensive wardrobe. Now that I have those things, but no energy left to travel, I can still make time to volunteer for a worthy cause, or play scrabble. Only a memory disease could take my foreign travel experiences from me, something I pray never happens.

There is probably an article somewhere by sociologists comparing values first-generation immigrants hold to the values their children hold. It is understandable that an older generation may value material things more. U.S. citizens who have traveled abroad may be better able to understand the challenges of those like yourself who are in the process of transitioning to a new culture.

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Re: Philosophies of frugality.

Post by cherijoh » Sun May 10, 2015 7:12 pm

yellowgirl wrote:
TomatoTomahto wrote:
yellowgirl wrote:Why experience is better than things? I see so many saying that here. We don't like to travel but we like nice things (house, cars, shoes, clothes). Why spending money on experience such as travel is better the others?
I guess I'm a hedonist. I like to travel, and have memories and shared experiences to enjoy for years afterwards. I also like some things, and every time I turn on my OLED TV I enjoy the fact that finally "black is black" on it.

That said, if I had to choose one, I would say that experiences can be life changing, but most "things" are not. Our family trip to the Galapagos informed my kids' sense of biology, for example, while my TV doesn't come close to doing anything other than providing a nice picture.
There are many things that kids or adults can learn right at home like playing scrabble or clue or visiting a fire station, or volunteer at a library. All those things are just as good. In here it seems like you are not well rounded if you don't travel or something.
All those things are also experiences. :wink: Travel doesn't have to be the experience that you spend on - it could be a visit to a museum or a concert or taking a loved one out to dinner on their birthday. The point was that many people get more lasting enjoyment from experiences than buying things.

I think the article made some valid points, but generalized some other things. Everyone is different and will find pleasure in different ways to spend their discretionary money. The important thing is to figure out where you get the most bang for your buck. I do think that once you buy something that is a luxury, your level of enjoyment can wane as the luxury becomes the new normal. I don't think this happens as readily with experiences.

I view my car as a method to get me from point A to point B safely and in reasonable comfort. Buying an expensive luxury car would be wasted on me. I kept my previous car for 15 years since it was reliable and fuel efficient. On the other hand, I do like to travel, so not cutting any corners on a vacation is worth it to me. Since I won't always have my health, I have taken some really great trips over the years rather than postponing them for "someday...".

Even when you are spending money on things, this can come into play. I don't own any fancy jewelry, but I like to go with friends to arts & crafts shows. If I see something I really like - usually an unusual pair of earrings or a hand painted scarf - I will buy it. Personally, I get more enjoyment from wearing one of my "finds" (usually under $50) than I believe I would from a $5000 watch (which I'd probably just worry about loosing). YMMV.

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Re: Philosophies of frugality.

Post by joebh » Sun May 10, 2015 7:28 pm

closetoreality wrote:Is it wrong to buy the "wants" and enjoy life?
There's no right or wrong here. And life is nowhere near as black or white as you seem to believe.

Do whatever it is that will let you enjoy life to whatever extent you choose - just do it with your eyes open.

Go into debt to get all your 30-year-old wants satisfied if you choose. Buy those toys. Buy a bigger house than you can afford. Keep up with the Joneses, doing the same. Live for today, and don't worry about tomorrow. YOLO.

When you reach your 60s, maybe you won't be one of the many who haven't saved any money for retirement. Maybe you won't have to live on whatever is available to you in Social Security. Maybe someone will leave you a big inheritance. Maybe your income will grow so rapidly that it won't matter how much you have or haven't saved to that point in time.

Or maybe those things won't happen, but you'll enjoy being ultra frugal in your old age out of necessity. At least you'll have had fun in your 30s.

It all doesn't sound like a very good plan to me. But I've already lived my working life and enjoyed it along the way while being frugal enough to retire at 60. Your mileage may vary.
Last edited by joebh on Mon May 11, 2015 7:16 am, edited 2 times in total.

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Re: Philosophies of frugality.

Post by tj » Sun May 10, 2015 7:29 pm

FredL wrote:Long time ago, one article said you don't need to have a car loan for your second car if you save or invest each month the same amount of the monthly payment of your first car. Don't be fooled by the low interest rate of the car loan, if you pay cash you can bargain down the price.
Actually, you can't do that. Dealers often get kickbacks on the financing, so you can get a lower price if you finance it. Just pay off the loan 90 days later if you don't want the loan.

In regards to paying for things while young, my parents did some traveling with us kids were they were young-ish - early to mid 30s, specifically they did some cruises, and what they saw on those cruises were predominantly older people who struggled quite a bit with mobility. After witnessing that, they have strived to not wait until they are old/retired to travel and have seen quite a few places and done quite a lot of things in their time. Of course, my dad is pushing 60 and still works. I hope to be done working for $ well before then, but also have a significantly lower budget lifestyle. I've also done two "over one month" travel periods before the age of 30, something my parents never could have done because they had different spending priorities (not to mention two children to raise).


I don't think you should be frugal for the sake of being frugal, but if you are saving up for something in the near term, such as extended travel, or perhaps relocation (maybe you love canoeing and want to spend a couple years living in Hawaii), a new fun vehicle, then in that case, frugality makes some sense. Frugality works there because you have an endgame with a payoff in sight. Something so far off in the distance/ as open ended a retirement or "financial independence", then I think frugality for frugality sake is not a rewarding cycle and can be a very lonely experience.

Just my opinion. This of course as a single with no responsibilities. If you have a spouse or children to support, then frugality may be a necessity, but you still need to budget in the fun stuff as it were.

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Re: Philosophies of frugality.

Post by camptalcott » Sun May 10, 2015 8:51 pm

yellowgirl wrote:
harmony wrote:Unless your career is so demanding that your younger self needs an affordable, luxurious vacation once in a while, I offer this:

Expand on the idea of experiences building better memories than things; there may be times in life when certain experiences may provide a greater bang for your buck, times when you might enjoy going without luxuries. We converse on this forum about diversifying our investments and diversifying our taxes across years so that we can take full advantage of savings within brackets. Take that a step further and look for benefits of diversifying luxuries across years. Experience as much as your youthful self can take in, i.e. hiking, bike touring, camping. Try not to spend money on a luxury if there is an equal or greater benefit to enjoying the experience frugally. When you are younger it might be easier to take in a wider range of quality experiences that you may be hindered from when you are older. Your aging self may be thankful that you have managed your luxury allocation so wisely.

Now that I am older, the memories I cherish the most are the ones where I recollect my youthful self doing things that I can no longer enjoy. I biked, camped and stayed in hostels in Europe. I took a 3-month camping tour through the Near East. I took ferries to remote islands. This was all done on a shoe-string budget. It was enjoyable because I was young and strong enough not be deterred by roughing it. Now that I am older, I don't consider doing it this way any more because my body would scream back at me. I don't camp anymore, I stay in a hotel; though I might take a hike instead of a bus tour. Nature is still a gift at any age.

No offense intended to any seniors here who are biking, hiking and camping; and still enjoying it. Keep it up as long as you can.

Full disclosure: I didn't swim across the Atlantic, I flew, and the airfare at that time used up almost all of my life's savings.

Why experience is better than things? I see so many saying that here. We don't like to travel but we like nice things (house, cars, shoes, clothes). Why spending money on experience such as travel is better the others?


They are not. My dad was one of those people who HATED traveling. The man lived in NYC, loved NY, had no desire to leave it. He also loved cars and eating at fine restaurants.

That seems to be a "boglehead" requirement, lol
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Re: Philosophies of frugality.

Post by tj » Sun May 10, 2015 9:35 pm

camptalcott wrote:
yellowgirl wrote:
harmony wrote:Unless your career is so demanding that your younger self needs an affordable, luxurious vacation once in a while, I offer this:

Expand on the idea of experiences building better memories than things; there may be times in life when certain experiences may provide a greater bang for your buck, times when you might enjoy going without luxuries. We converse on this forum about diversifying our investments and diversifying our taxes across years so that we can take full advantage of savings within brackets. Take that a step further and look for benefits of diversifying luxuries across years. Experience as much as your youthful self can take in, i.e. hiking, bike touring, camping. Try not to spend money on a luxury if there is an equal or greater benefit to enjoying the experience frugally. When you are younger it might be easier to take in a wider range of quality experiences that you may be hindered from when you are older. Your aging self may be thankful that you have managed your luxury allocation so wisely.

Now that I am older, the memories I cherish the most are the ones where I recollect my youthful self doing things that I can no longer enjoy. I biked, camped and stayed in hostels in Europe. I took a 3-month camping tour through the Near East. I took ferries to remote islands. This was all done on a shoe-string budget. It was enjoyable because I was young and strong enough not be deterred by roughing it. Now that I am older, I don't consider doing it this way any more because my body would scream back at me. I don't camp anymore, I stay in a hotel; though I might take a hike instead of a bus tour. Nature is still a gift at any age.

No offense intended to any seniors here who are biking, hiking and camping; and still enjoying it. Keep it up as long as you can.

Full disclosure: I didn't swim across the Atlantic, I flew, and the airfare at that time used up almost all of my life's savings.

Why experience is better than things? I see so many saying that here. We don't like to travel but we like nice things (house, cars, shoes, clothes). Why spending money on experience such as travel is better the others?


They are not. My dad was one of those people who HATED traveling. The man lived in NYC, loved NY, had no desire to leave it. He also loved cars and eating at fine restaurants.

That seems to be a "boglehead" requirement, lol

it doesn't have to be traveling. It could be going to sporting events, concerts, cooking lessons, going out to eat, etc. The theory is that experiences bring you more enjoyment than accumulating physical items. Everybody's different though.

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Re: Philosophies of frugality.

Post by HomerJ » Sun May 10, 2015 11:19 pm

closetoreality wrote:enjoying ourselves [for example] in our 30's may be more enjoying than in our 50's.
It's not that hard... If you're saving a good amount, and still have some left over, you can spend it. You don't have to save every last cent.

I submit however, that spending money when you've got plenty of money is a lot more enjoyable than borrowing money, or even spending money that you feel guilty about spending.

I would suggest this... Keep your car and house purchases well below your means, and that will free up a ton of money for a bunch of little purchases.

Buying a $20,000 car instead of a $30,000 car lets you spend a lot of $10 and $20 purchases (and even a few $200 purchases) without guilt.

Get those two purchases (house and car) right and you've won 80% of the battle.

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Re: Philosophies of frugality.

Post by JimInIllinois » Sun May 10, 2015 11:23 pm

yellowgirl wrote:Why experience is better than things? I see so many saying that here. We don't like to travel but we like nice things (house, cars, shoes, clothes). Why spending money on experience such as travel is better the others?
The specific claim made by researchers is that buying novel, memorable experiences yields more long-term happiness than buying luxury goods. There are two explanations for this effect. First, superficial improvements in your day-to-day lifestyle are subject to the "hedonic treadmill" effect: they bring happiness when you first acquire them, but after time you get used to them and are about as happy as you were before. A few months after getting a new BMW you won't be much happier than you were with your old reliable Honda, and at some point you'll stop admiring your expensive artwork. Second, memorable experiences provide renewed happiness whenever you recall them, and actually tend to get better with age as you forget the less pleasurable aspects of travel while remembering a few peak moments.

If you think about the things you own that bring you the most happiness you will likely find that they do so by enabling pleasurable experiences. You bought them because you enjoy using them, not because you enjoy owning them. The "nice things" you list (house, cars, shoes, clothes) seem to facilitate the experience of socializing (hosting friends, going out on the town). This is likely a better use of your money than less useful "nice things" like fine art/antiques/jewelery/etc.

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Re: Philosophies of frugality.

Post by blueblock » Mon May 11, 2015 7:59 am

My spending/savings priorities changed as I got older.

When I was your age, I saved enough to get full match on my 401K but not much more than that, while financing car purchases and traveling. In those days, I told myself that I "needed" a winter vacation in Costa Rica at least every other year and that trips to NY and London, for theater, were important and life-enriching.

In my fifties, when I saw that I wasn't saving enough to retire when I wanted to, a Costa Rican vacation suddenly looked completely unnecessary. And I was repulsed by the idea of paying one cent to finance a car purchase. At the same time, I began exploring better wines than the grocery store offers, and I learned how to cook, and really enjoyed those educational journeys, which weren't free but weren't costly either. And I traveled for theater once in five years rather than every year or every other year.

I recently retired at 63. I have no interest in dining out any more, in part because I'm a good cook and in part because we live in a semi-rural area now where "fine" restaurants aren't really available. Which is fine; I quite enjoy the challenge of planning interesting meals with what's locally available (with occasional splurges, like ordering foie gras for fancy New Year's Eve hamburgers). Also, I know how to find decent wine that's a good value to enjoy with my meals. At the same time, I just shelled out several thousand bucks on a used pontoon boat for evening cocktail cruises on the lake, which wasn't a necessity by any means, but it was a priority. So I'm still doing everything that I want to do, but I've found cheaper ways to do most of them, or I do them less frequently.

So, based on my own experience, frugality and what it means and how you live that philosophy is going to change over time.

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Re: Philosophies of frugality.

Post by truenorth418 » Mon May 11, 2015 8:33 am

Yes the small things (like coffee) can add up. But I think a better route is to concentrate on the big buckets.

The 3 biggest expenditures most people have are taxes, home, and cars, in that order.

As for taxes, contribute to tax privileged retirement accounts, get whatever match is offered. There are not a lot of other options here for most people.

Live in the smallest residence you are comfortable with. This will save on real estate costs, real estate taxes, maintenance, furniture, etc etc. This is a huge area for savings that many people miss because they follow the horrible advice of the real estate industry to buy the biggest house you can afford.

As for cars, if you accept the reality that automobiles are primarily for transportation and not for showing off, and buy and keep a less expensive car accordingly, you save a lot of money over a life time.

Another area that is often missed is choice of spouse. If you consider financial implications and marry someone with good income potential and similar financial goals, maybe you can avoid an expensive divorce that can significantly impact finances.

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Re: Philosophies of frugality.

Post by Johno » Mon May 11, 2015 9:38 am

JimInIllinois wrote:
yellowgirl wrote:Why experience is better than things? I see so many saying that here. We don't like to travel but we like nice things (house, cars, shoes, clothes). Why spending money on experience such as travel is better the others?
The specific claim made by researchers is that buying novel, memorable experiences yields more long-term happiness than buying luxury goods. There are two explanations for this effect. First, superficial improvements in your day-to-day lifestyle are subject to the "hedonic treadmill" effect: they bring happiness when you first acquire them, but after time you get used to them and are about as happy as you were before. A few months after getting a new BMW you won't be much happier than you were with your old reliable Honda, and at some point you'll stop admiring your expensive artwork. Second, memorable experiences provide renewed happiness whenever you recall them, and actually tend to get better with age as you forget the less pleasurable aspects of travel while remembering a few peak moments.

If you think about the things you own that bring you the most happiness you will likely find that they do so by enabling pleasurable experiences. You bought them because you enjoy using them, not because you enjoy owning them. The "nice things" you list (house, cars, shoes, clothes) seem to facilitate the experience of socializing (hosting friends, going out on the town). This is likely a better use of your money than less useful "nice things" like fine art/antiques/jewelery/etc.
Again, putting this forth as opinion is fine, but putting it forth as 'science', in the context of a *personal* choice is IMO laughable. I'm not 'much' happier in my life overall that I have a BMW rather than a Honda. The core of my happiness is family relationships and off topic personal beliefs, not either things or 'experiences' money buys. But I'd still prefer the BMW. It puts a smile on my face whenever I drive it. If somebody else is indifferent, fine. Making categorical statements about it is just silly, IMO.

Likewise my wife loves her jewelry. It wouldn't make her life happy if we had a crummy relationship or some tragedy befell us, but all expenditures beyond those which physically support existence are the same that way. Again if someone else is focused on 'experiences' to the point they wouldn't bother to get expensive jewelry, fine.

Also the whole discussion always hinges on the implicit assumption about trade offs. I don't like to travel, like the poster's dad above, NYC is right nearby, I like it, traveled a lot for business when I was working, just don't care for distant travel much. And meals out and movies and such are nice but not the same league in budget as African safari's or trekking Patagonia or whatever else is supposed to deliver me to 'experience' nirvana. :D But we could afford all those things actually. A (certainly our modest) BMW is a trivial expense to us. Adding exotic vacations to every corner of the world would be feasible too, if we wanted to. If it's some average income 30-some couple leasing a BMW and putting retirement saving on the back burner, that's a different story. It's probably a more common story, I'd grant.

Any successful appeal to a mass of people, even a fairly small mass (MND, Money Moustache etc) has to be simplistic and play to people's biases. Even if the supposed message is to rebel against 'status', it just becomes a new way for people to express status; for some of the acolytes of the philosophy, not saying all of them. As was noted on recent MND thread, if you boil MND down to 'you'll have a higher NW relative to lifetime earnings if you save a higher % of income' it's axiomatic. The appeal has to stir some emotion beyond that to sell lots of books.
Last edited by Johno on Mon May 11, 2015 10:14 am, edited 1 time in total.

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vitaflo
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Re: Philosophies of frugality.

Post by vitaflo » Mon May 11, 2015 10:13 am

Personally I think the entire concept of frugality is about opportunity costs, and the tradeoff is almost always time for money. $10 you spend today = time you need to work in the future to generate a further $10 to replenish what you spent. If you save that $10 instead, that reduces the amount of time needed to work to replenish that $10 of spending in the future.

Thus there is nothing wrong with spending now on "wants" and enjoying life. But it comes at the cost of your future time and needing to work a job to replenish that spending. Is that worth it? Sometimes it is, sometimes it isn't. That's where the personal choice comes in.

Some people do not want to work at a job until they're 65 and like the idea of retiring when they are 45 instead. They will then need to not spend as much on "wants" (or reduce their expectations on what they want) in their life to do this. Others want to "enjoy life" (ie spend), but are ok with working a job for an extra 20 years if it means they can spend on various things throughout their life. Most people here probably fall somewhere in the middle.

There is nothing wrong with either approach, but you're almost always making a time based trade off on whatever you choose, as much as you're making a financial one.

kaudrey
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Re: Philosophies of frugality.

Post by kaudrey » Mon May 11, 2015 10:21 am

OP - life is always a balance. The way to "win" is to have a plan/budget, and stick to it. Save; and then spend, but don't overextend - don't run up credit card debt. There is a difference between enjoying life in a financially responsible way, and being reckless.

When I was in my 20s, I travelled, as I continue to do now, 20 years later. But back then, we stayed in hostels or we camped. Although we still occasionally camp, because we like to, we just got back from a week-long bike trip to Portugal. Saved for in advance....DH and I also go out to nice restaurants on a relatively regular basis, because we love good food experiences. On the flipside, I am not a buyer of "things". I hate to shop; I hate buying clothes or shoes or more stuff. That is just me. Nothing wrong with it if that is what you like to do - I pick and choose where to be frugal or save money based on what is important to me. Further, our credit card balance never exceeds what we can pay off that month.

And, back then and now, I/we max out our 401(k)s and our Roths, so that we are taking care of retirement AND enjoying life now.

There isn't anything inherently wrong with low cost loans, either. I have a 1.9% loan on the car we just bought in December. I might pay it off early if it starts to bother me, but right now I am OK with it.

IlliniDave
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Re: Philosophies of frugality.

Post by IlliniDave » Mon May 11, 2015 12:12 pm

Frugality is not a synonym for misery.

In a sense, frugality has its roots in self-respect--in general we give up part of our allotment in this life in exchange for money. So we should be careful to ensure that what we do with the money has a positive impact on our quality of life, so that our time previously spent earning money is not wasted.

I've found that at least so far, my capacity to enjoy myself now is not diminished from what it was 30 years ago. Due to staring at ~ 50/50 odds on a job loss this year, I'm not regretting that I've found inexpensive means to personal fulfillment and enjoyment in the past.

It's an individual thing. One one extreme some people get to the point of being pathological in their aversion to spending money. On the other, slogans like "you only live once" are repeated by compulsive spending addicts. Somewhere in the middle most people can find a good balance for themselves. It should be based on their own internal feedback, not what others are doing.
Don't do something. Just stand there!

MnD
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Re: Philosophies of frugality.

Post by MnD » Mon May 11, 2015 12:17 pm

For 30+ years we have alway first saved first an amount we thought adequate to meet our long-term goals (house, kids colleges, retirement etc.), paid our bills on time and spent the remainder on whatever we wanted to. Never budgeted and never relished in or sought to be frugal. But we both like to maximize value from our spending and definitely are tilting more and more on spending on experiences versus "stuff" in middle-age. We never restricted ourselves from purchasing things we really enjoyed and wanted, but never spent just for appearance sake to keep up with the Joneses.

It's looking like our financial standard of living in mid-50's retirement in a few years will be around 130% of our current non-frugal financial lifestyle so no regrets. I will definitely spend more money if I'm not working. That will also be a nice buffer if/when needed, but I don't feel like we "bet the farm" on funding retirement at the expense of our first three decades of post-college life.

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