Why die rich? Frugal Fascism
Bear with me on this one. It’ll make sense in a short while.
I’ve been doing a lot of reading of debt management and personal finance websites over the last couple of days. One of the recurring themes is that of frugality. All of the websites that I read offered great advice on how to cut down your spending and live frugally.
To me living frugally is one of the key components in any debt management plan. If you do not make the effort to live frugally then you will struggle to ever be clear of debt.
When do you stop?
Some of the websites that I read were quite zealous about their promotion of frugal living. I have to say that I admire their passion. The more frugal you can live the quicker you will payoff your debts. That is a simple fact.
But something struck me as not quite right. I began to wonder how do you cope long term?
If the goal is to pay off debts then what happens when you reach that goal and the debts are paid off? How do you live? Do you continue to live the frugal life? Do you allow yourself some small luxuries?
At what point do you stop being frugal?
Never?
I was afraid that you might say that. Living frugally forever seems to defeat the purpose. Ok you may have had a bad experience with debt and you never want to experience it again. I completely understand. At the same time do you want to live the life of a monk for the rest of your life? All the while you squirrel away your money into some savings account never to be touched?
On one of the websites I read the comment
“If you act poor and live poor then you may as well be poor”
I think the point the poster was trying to make is that there is very little difference between acting poor (in this case extreme frugality) and actually being poor. The fact that you may have massive savings means nothing; you are still living a restricted lifestyle.
Frugal Fascism
Don’t misinterpret what I am trying to point out here. I will say it again; in order to get out of debt you need to become more frugal. However there comes a point when extreme frugality borders on neurosis. Take the example of Hetty Green.
Taken from wikipedia
“Henrietta “Hetty” Howland Robinson Green (November 21, 1834 – July 3, 1916) was an American businesswoman, remarkable for her frugality during the Gilded Age, as well as for being the first American woman to make a substantial impact on Wall Street.”
“Green was mainly interested in business, and there are many tales (of various degrees of accuracy) about her stinginess. She never turned on the heat nor used hot water. She wore one old black dress and undergarments that she changed only after they had been worn out. She did not wash her hands and rode an old carriage. She ate mostly pies that cost fifteen cents. One tale claims that she spent a night looking around her home for a lost stamp worth two cents.”
When she died in 1916 ‘an estimate of her net worth was around $100 – $200 million (or $1.9 – $3.8 billion in 2006 dollars),’
I admit that Hetty Green is an extreme example but I am trying to point out that just because you have had a bad experience with debt doesn’t mean that you have to let it ruin the rest of your life. No I’m not saying that you should take more debt on to live a better life. What I am saying is that once you have repaid your debts then you need to co-ordinate your life goals with your financial goals and look for balance.
Balance is the key
If you want to retire with plenty of money then you will need to save hard while you are working but the does not mean that you have to live like a pauper. A balance needs to be struck between what you want to achieve financially – both now and in the future – and the other goals in your life that require money.
Getting out of debt is a huge financial goal and its one that I recommend that everyone pursues with vigour. That said once this goal is achieved it is time to look at your life from both a financially responsible point of view but also from the point of view of someone who is not afraid to go after what they really want in life.
A good dose of frugality in any financial situation is always recommended but what is to be avoided is the situation where the mentality has moved from one of frugality to one of simply being poor.
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Posted in How to be Frugal
September 24th, 2008 at 7:06 pm
“If you act poor and live poor then you may as well be poor”
I have to say that is an awesome quote. I agree. For me to become debt free, frugality was vital. Now I do struggle with balance as you’ve mentioned. Now, my goal is to aggressively build wealth without being a miser. I hope to have some fun along the way but maintain the tenets of frugality…. very interesting article.
Friendly Regards,
Shawn
September 24th, 2008 at 9:53 pm
Hi Mike
Firstly, thanks for dropping by on Liberta.
Secondly, regarding this article. I find it very insightful regarding my own life. But I’ve found that living frugally is great. It’s not what people make it out to be - boring and never getting to do anything. I’d say it’s the exact opposite. I get to do a lot of stuff most people just dream about.
I will tell you about my experience.
I’ve been free from debt for about 5 years now, and working hard for the next goal: financial freedom.
I’m still living frugally, but much less so than I used to.
In the very beginning, I was so determined to get out of the rat race, I even refused to buy a bed or mattress, and instead I slept on the floor for about six months. I drove an old dilapidated car, and hardly ever spent money on luxuries like alcohol or restaurants.
However… I had a lot of fun by doing things that didn’t cost a lot of money.
For one, I was a fitness freak. I was healthier and fitter than any of my friends. It was great to challenge some of my other buddies who were also into fitness and do challenging stuff together.
I bought an old offroad motorcycle (a 1984 Honda XR500 RE), which I worked on myself to repair every weekend, and I rode the living crap out it. It was awesome.
My life was everything but boring back then.
Nowadays, I’m a lot less frugal than back then, but I’m still far more frugal than most of the people I know. By choice.
I work for myself. I do a contract here and there, and only stuff that pays well, that I can do remotely, and that I like doing. There’s no pressure to make a certain amount. I can just focus on my goals, and choose what I want to do.
I live in a small flat in a smallish town at the coast. My rent is dirt-cheap, but for it I’m less than 500m from the beach and I’ve a beautiful sea view. I’ve got about 20 quality surf-spot within 5 minutes drive.
Some things I do spend money on. I’ve got a lot of quality sport gear, too many surfboards to count, a professional mountain bike, etc. etc. etc.
I’ve got top-of-the-range equipment for my work.
But other things, I still do frugally - mostly because I like it.
E.g. I drive a ‘99 Volvo S40 T4. I bought for about $10,000. It’s got plenty of power and everything that opens and closes. I couldn’t ask for more. As with my bike, I get to drive the living crap out of it. It’s so cheap, I don’t really have to care. I can just enjoy it.
If I owned a new BMW or something like that, I would never have so much fun as do I now.
I don’t want to ever stop living frugally. It really is just so much better.
Take care & God bless,
Francois
September 25th, 2008 at 12:49 am
Good points raised in this post. When you cross over from healthy frugality it’s called “hoarding” and though I don’t have nearly as much as Hetty Green, I do get accused of hoarding periodically. It is not easy finding that balance (well, not easy for me, at least)
September 25th, 2008 at 2:17 pm
[…] Debt Do Us Part asks "Why Die Rich?" Ahhh, yes, hoarding - I get accused of this frequently (It’s something I’m working […]
September 25th, 2008 at 3:10 pm
Shawn
Thanks for stopping by.
I agree with you that balance is the key. Like almost everything else in life it is finding that balance that is the hard part. Not only do you have to consider your own situation, comfort level, likes and dislikes but you also have to consider those of your friends and family and the people you interact with daily.
The reason is simple.
In today’s spend spend spend society a lot of people might find a frugal attitude hard to understand. I have no problem being frugal in my own company but when I am with friends and we meet up it can be hard to maintain frugality. That was the point in the article – finding that position that we are happy with where we are frugal but yet we are comfortable with spending when necessary.
Francois
You are most welcome and thanks for visiting here.
You seem to have a good attitude when it comes to being frugal. You realized that in order to achieve your financial goals you needed to work hard and be frugal but once you had achieved them you were able to loosen your grip and spend on things that meant a lot to you. This is the kind of balance that I spoke about in the article.
The danger is that had you become too obsessed with being frugal that you would never have allowed yourself to spend on the things you enjoy. Luckily for you, you knew what was important and spent accordingly. A lot of people get so caught up in the habit of being frugal and develop such a fear of losing money that they just simply over save.
Who would have thought that it was possible to over save and be too frugal? Well it is possible and it leads to a life of misery as a miser.
But I digress – well done again Francois you seem to know what you want and how to get it.
John.
Thanks for stopping by.
Hoarding is a double edged sword. On the one hand it is easy to think that you might need that money some day in the future for some important expenditure. This gives a nice sense of security. However on the other hand that day may never come because it can be hard to part with your hard earned cash – even if the situation warrants it. So it is possible to miss a good opportunity to do, buy or invest in something.
But that said you may just be saving a normal amount? Normal saving (i.e. at least 10% of income) might be interpreted as hoarding in today’s shopping and spending crazy world. Mind you since we have a negative savings rate it might be that any savings at all could be interpreted as hoarding
September 28th, 2008 at 12:08 am
My wife often tells me that there is a difference between living frugal and living poor. That is why every budget needs to have some spending money that is intended to be spent. When you are spending that money you are not to think about how much food that can buy or what bills can be paid with that money, just spend the money and enjoy life with the spending money. The rest of your budget should be used to pay off debt and keeping the lights on.