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Originally Posted by BCHGRL
I have a totally different perspective on being frugal than most folks on this board. I don't understand the point of being frugal when so much of your financial situation is luck. Right place at the right time. I would agree that success is when luck meets preparation when it comes to your career. However, much of your financial situation is due to luck. My friend, who makes the same salary that I do, bought a home in 2003. It was the exact same floor plan and builder as mine. Her price? $125,000. I bought a home in 2005. My price? $220,000. The market changed so drastically between 2003 and 2005 that I have to pay $100,000 more for my home. BTW, I would have bought a home sooner but my identity was stolen, and it took a year to straighten out.
So what is does it matter if I save $100/week more on daily living than my friend when my mortgage is $700 higher than hers? Am I really getting ahead or just offsetting my bad luck?
That is why I would agree with Eric. There is only so much that you can cut back on without being miserable (yes, you can be happy with very little but the last time I checked housing is a necessity). Therefore, my earning potential must be increased to offset my bad luck, not my extravagent lifestyle.
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I believe that if you plan your spending properly, which should include retirement (at least 10% especially at a young age), you're doing yourself an immense amount of good. And FWIW, retirement savings doesn't always require stocks/funds. The way I look at it, is that if I can be taxed at a lower rate, I can/will do it. Presently my wife and I are at a federal tax rate of about 2%. No, that's not a mistype. Our income is in the 25% bracket, but because of deductions (including 4 children), we paid 2.1% in federal tax last year. Next tax year (2007's taxes), we should be even lower, since I'm now investing in a 401K at work (and getting a 50% match from them).
Real estate is often a factor of getting there before other folks do. Our house was purchased 6 years ago for $200,000. It could easily sell for $380,000 today, because the area was not built up before we got there yet (although we saw that there was A LOT of development getting started).