Why be frugal???

[pearlieq]

Re: Why be frugal???

I don't understand the point of being frugal when so much of your financial situation is luck.

I think I have the completely opposite perspective. I would consider luck a fairly minor part of anyone's financial situation. I think at least 90% of our situation is due to our choices.

Did you apply yourself in school or did you just slide by? Did you get a job as a teen and save the money or did you focus on hanging out? Did you use any means necessary to go to college/vocational training or did you take "no" for an answer? Did you pick a field where you could make a living or did you pursue a degree in basket-weaving? Did you plan your family responsibly or did you have kids before you were secure? Did you marry a partner who considers financial security important or did you ignore that when choosing a spouse? Did you pick a home and lifestyle within your means or did you get caught up in "wants"?

And on and on...

I'm not directing those questions specifically at the poster I quoted. They're rhetorical questions that illustrate my perspective, which is that life is a series of decision points and our choices are primarily responsible for our situation.

I agree, BCHGRL, that housing is a necessity, but I doubt that choosing the particular house you have was a necessity. I'm not saying it was the wrong choice at all, but it was a choice, not luck.

[simpleyme]

Re: Why be frugal???

I think it was Mark Twain that said "the harder Iwork the luckier I get"

[MonkeyMama]

Re: Why be frugal???

I think it was Mark Twain that said "the harder Iwork the luckier I get"

Good quote. I truly believe people make their own luck.

Actually, I personally value having more time for my family vs. pushing forward to the top of my career. Since making more money is not an obvious choice (I don't want to work more since I already barely have enough time for my family) than my other option is being frugal.

My husband can slave away at a full-time job that he hates and we can all leave a miserable existence. OR he can stay home and we can figure out how to make the extra couple hundred per month he would truly bring home after the expenses of working, taxes, and childcare. So we will scrimp to find a little more, and we will spend a little less. So be it.

To me it comes down to quality of life. It is much better, for us, having less money and being more frugal. Plus being frugal for us means more money in the bank - more to fall back on. We are much happier than our friends endlessly in debt, always buying more. SO it goes... IT seems when you work more to make more and buy more, you are less likely to be satisfied overall. IT could be an endless cycle. The more you have the more you want. We try to step back and say we have it all and we don't need anything more. Now THAT is a good place to be!

[Thrif-t]

Re: Why be frugal???

Good quote. I truly believe people make their own luck.

Actually, I personally value having more time for my family vs. pushing forward to the top of my career. Since making more money is not an obvious choice (I don't want to work more since I already barely have enough time for my family) than my other option is being frugal.

My husband can slave away at a full-time job that he hates and we can all leave a miserable existence. OR he can stay home and we can figure out how to make the extra couple hundred per month he would truly bring home after the expenses of working, taxes, and childcare. So we will scrimp to find a little more, and we will spend a little less. So be it.

To me it comes down to quality of life. It is much better, for us, having less money and being more frugal. Plus being frugal for us means more money in the bank - more to fall back on. We are much happier than our friends endlessly in debt, always buying more. SO it goes... IT seems when you work more to make more and buy more, you are less likely to be satisfied overall. IT could be an endless cycle. The more you have the more you want. We try to step back and say we have it all and we don't need anything more. Now THAT is a good place to be!

Very good post Monkeymama and exactly how we feel. I know my boss makes 6 figures and I a quarter of that, yet I am the one who has a higher net worth, go figure.

[vsjhoc]

Re: Why be frugal???

Lots of food for thought on this thread.

I had a high-paying job that consumed all my time and energy, and I hated it. I saved 1/3 of my gross pay and most people considered me to be frugal. I had (and still have) no debt other than a mortgage on a house that doubled in value in 4 years.

A year ago, I left for a job I love which pays 75% less. Yes, that's right, I earn 25% of what I used to make. However, I think I've gone from one extreme to the other. Being frugal just isn't fun. Cutting my expenses further isn't a realistic option, so now I'm looking for the happy medium: the job that's OK but pays more.

Someone asked me recently what my Plan B was if I don't find the Happy Medium Job. I said I don't have a Plan B. I always get Plan A. Always. I just work hard enough until I get it. And I've had a lot of different Plan As in my lifetime. So I love the quote below about making your own luck. Wish me luck!

[Ima saver]

Re: Why be frugal???

We have built houses for people with extremely high incomes and like someone said, our net worth is much higher than the people with the high paying jobs. I just put $400,000 in the bank the other day. I am not living life any differently this week as I did last week. I still have the heat down low and the hot water turned off.

[MonkeyMama]

Re: Why be frugal???

I had more time to read this giant thread and DisneySteve said what I had very succintly in 1 sentence - I have to remember that quote!

[MonkeyMama]

Re: Why be frugal???

Lots of food for thought on this thread.

I had a high-paying job that consumed all my time and energy, and I hated it. I saved 1/3 of my gross pay and most people considered me to be frugal. I had (and still have) no debt other than a mortgage on a house that doubled in value in 4 years.

A year ago, I left for a job I love which pays 75% less. Yes, that's right, I earn 25% of what I used to make. However, I think I've gone from one extreme to the other. Being frugal just isn't fun. Cutting my expenses further isn't a realistic option, so now I'm looking for the happy medium: the job that's OK but pays more.

Someone asked me recently what my Plan B was if I don't find the Happy Medium Job. I said I don't have a Plan B. I always get Plan A. Always. I just work hard enough until I get it. And I've had a lot of different Plan As in my lifetime. So I love the quote below about making your own luck. Wish me luck!

Good Luck! I think that is just it. Finding the right balance. Any extreme isn't really going to work. I hope you find that right balance!

[disneysteve]

Re: Why be frugal???

We have built houses for people with extremely high incomes and like someone said, our net worth is much higher than the people with the high paying jobs.

I do earn a relatively high income, but we don't live as if we do. We drive modest cars, both bought used. We shop at thrift shops and yard sales. We do a lot of our own cooking. Our only paid household help is a guy to mow the lawn (and that's it - no landscaping or fertilizing or anything else - just mow). We stay in low end accomodations when we travel. Etc.

Many of my colleagues who earn similar incomes "look" richer - drive a luxury car, take more exotic vacations, send their kids to private school, have a housekeeper, etc. I don't know for sure, but since we earn similar incomes, I can't help but assume that I've got a larger portfolio than them. We're perfectly happy the way we are. And I'm sure when retirement comes along, we'll be much happier with the lifestyle we will be able to afford (and the age at which I'll be able to retire).

[Ima saver]

Re: Why be frugal???

Steve, we built a house for a surgeon. The house was 7500 sq feet. They children had every toy available, about 12 riding toys for each kid. He leased 7 new cars the year we built the house. When we finished, we had a retaining wall put up. The doctor did not have the cash to pay for it, so we had to. we never got paid back. It was $1440 and he did not have it.

[LuxLiving]

Re: Why be frugal???

This has been in my mind since this thread started.

If you were raised frugal and then tried to get away from it, could you?

I was raised in the Frugal Cult and have the Frugalicious Gene (TM) deeply implanted I guess. I don't know how to NOT be frugal. It's like seriously ingrained and those infinitely small frugal decisions are just already made before I ever give it much serious thought. I just AM frugal. It's not necessarily a concious choice I make at each and every decision point, it already seems a done deal.

Anyone else care to voice any thoughts??

[Ima saver]

Re: Why be frugal???

Well, I was just plain poor when I was a kid. My father died and finally my mother found work. We had to live (3 of us) on about $20 a week in the 50's. So I have always been pretty frugal.

[MonkeyMama]

Re: Why be frugal???

I wouldn't know how not to be frugal. My dad grew up dirt poor, his parents did not even finish elementary school they were too busy surviving. HE had to be terribly frugal to survive and he taught me well - I Wouldn't know how to do different.

On the flip side we live in a wealthy area and make a good wage. My parents scrimped and scrounged every penny and rethought this when they started doing well financially and a young relative died very suddenly and unexpectedly. THey kind of let go a little and decided to live a little too - since life could be so unexpectedly short - so I think they brought me up with a really good balance I struggle to keep. But the thing is we pick a couple of things to splurge and enjoy on, and then we are frugal with everything else to afford it well within our means. Works out well. I could not drop a bunch of money on something big or carry debt - I just couldn't. I rather work a couple of jobs to work for something and pay cash. I Rather put money in the bank than spend it.

[LivingAlmostLarge]

Re: Why be frugal???

Most doctors are poor money managers. They have expetitis. They expect to graduate from medical school making big bucks and start spending like they do. They forget about their medical school loans, start fee for a private practice, etc. Instead they drive fancy cars, wives stay at home, send kids to private school etc. Classic example two doctors from the millionaires next door. One was a PAW the other a UAW.

My mom drives me nuts with this, she thinks that people who drive fancy cars and big houses have a ton of money. She's like "all the doctor's your age have this and this and this." I say to her, gee "wish I were driving a BMW, benz, etc" and a huge home too but too bad I have to save my money. SHE doesn't get that people don't miraculously have money to spend once they start earning it.

[myself]

Re: Why be frugal???

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.

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).