Agree wholeheartedly but I worry some will read this and go all in the opposite. The key point is that humility helps make you free. Couple that with not being a slave to frugality and you can live without as much guilt and without a much restraint.
Though sometimes you may have to choose between being a slave to something less enabling than frugality :\
It really gets bad for those who can't even afford to reach as high as a truly frugal contemporary.
IOW below-frugal becomes a constant element regardless of its current value at any one time, and that leaves the only variable as whether or not any adaptability can be attempted at all, and how much might not be too much to ask :(
I was so frugal that I didn't refinance my (admittedly already low) interest rate during Covid because "we were planning on selling the house in a year or so". Oh well :)
Most people in the US are pulled into living on credit straight out of school. You get a student loan, then a car loan, then a credit card, then a mortgage. You finance vacations, appliances, kitchen remodels, smartphones - mostly to keep up with friends and coworkers who finance their lifestyles too. A lot of people are in non-stop debt from the age of 18 to 55, if not longer. By most estimates, only about 10-20% of US households are debt-free.
Spending and getting into debt are useful tools. But I don't have any friends in tech who need to be told "hey dude, you should be spending more". I have quite a few friends who would be better off spending less.
For sure it's more common for people not to save enough. But for people who are frugal and save diligently for most of their lives, there often comes a point where they cross a threshold where they have met all of their financial goals, and the "problem" is no longer how save money but to enjoy spending it. And this can be a real challenge for people who have built up deeply ingrained saving habits.
My mother, for example, refuses to replace her iPhone SE with something with a larger screen despite 1) having failing vision and difficulty reading the screen, 2) using her iPhone every day, 3) easily being able to afford it. The idea of spending $1,000 on a phone is just something she is unable to bring herself to do, even though I think it would help alleviate a real source of frustration in her life.
My father, when he started shopping for his most recent car (and probably his final car), set out with the intent to buy a luxury car. But again, despite being able to easily afford one, all he was able to bring himself to buy was a well-equipped Toyota. Don't get me wrong - it's a great car and has served him incredibly well. But it makes me a little sad that he wasn't able to bring himself to finally treat himself to a luxury car after a lifetime of hard work and saving. They did a lot of long road trips together in that car in retirement, and I think they would have enjoyed something a bit more luxurious (though on the other hand, the reliability of the Toyota is not to be discounted).
Are you sure they were deciding only or even primarily based on cost? I often find myself choosing cheaper options over more expensive ones, because I find them easier or more enjoyable to use. I think with expensive/luxury products, there tends to be more "curation" and opinionation, which can work well if your preferences line up but is a detriment if not. I also think a lot of times more expensive products are just "luxury-hacking," having focused on "building a brand" to the point where they are able to charge more for worse products. Example: Beats headphones adding weights inside just so that they "feel more premium" https://www.news.com.au/technology/home-entertainment/audio/...
> The idea of spending $1,000 on a phone is just something she is unable to bring herself to do
Your parents are smart. 1000 dollars for a phone is absolute nonsense. A luxury car is something you should be sure you will thoroughly enjoy, because they are a good way to set money on fire. If you do want one, buy it second hand, for it will cost hundreds of dollars per km for the first kilometers.
Having a credit card is like having a video game passive that makes everything permanently 2% cheaper. Everything should be put on a credit card for that discount as well as fraud protection provided you are disciplined enough to never ever ever ever ever ever carry a balance.
Debt is also a way of normalizing, essentially, wage theft. You're encouraged to use credit to bridge gaps when what you're paid doesn't cover your necessities, let alone other expenses that you're expected to take on. When you can't pay back the debt you took out to live what is considered a normal or even frugal lifestyle, the justice system is used as a cudgel against you, often in the form of professional debt collectors and their attorneys suing you in small claims court (a venue which was established for laymen), where they abuse the lax rules to extricate full payment on a debt they bought for pennies on the dollar.
Somewhat related, here is a video from a guy trying to avoid just this sort of scenario by refusing to put his company's business expenses on his personal credit; follow-ups show the price he's paying.
If society expects you to consume, you should be paid enough to support it. A system that leverages greater and greater amounts of its future to pay for the present eventually reaches a point where it is statistically unlikely that the debt will ever be paid back. That's when all hell breaks loose.
Heavy debt is a part of the US culture. You can probably imagine the responses folks would have when they found out I was 40, a tenured professor with a family, and didn't own a house. Nobody had a heart attack but I'm sure some were close. I was just violating cultural norms too much by not going into debt to buy a house as anyone in my position was supposed to do. Then they'd find out I drove an old vehicle and didn't take expensive vacations...sometimes you have to go with the math rather than cultural norms.
This really struck me when I bought a new car and my mother asked me how much it cost. I told her what we'd paid, and she said, but how much is it per month? The idea of just buying a car didn't compute.
At least I finally got her off the lease treadmill. Toyota helped a lot by not making anything she particularly liked. When I suggested she buy out her lease instead of getting a new one, it was a revelation.
> By most estimates, only about 10-20% of US households are debt-free.
This needs to be qualified with the fact that it doesn't make sense for many people to be debt-free if they are financially literate. I know many people, myself included, who carry debt they could easily pay off because it would be irrational to do so. Being debt-free would actually make them poorer.
This often holds true even when ignoring obvious cases like debt interest well below the Treasury rates.
For years I did this with the thermostat - something I learned from my father who always kept the house under 65F (18C) in Winter. I'm somewhat ashamed to admit it even led to arguments with my spouse early in our marriage when I would enter a room and find the thermostat set to a balmy 70F.
Eventually I just sat down, looked at how much it costs keep the house a few degrees warmer in winter, and realized we could afford to be comfortable. And if I were really hell bent on saving money, there were other lower-priority expenses I could cut back on first. But I don't even think it was even necessarily about the money - it was more that saving energy and toughing it out felt virtuous to me. Which is all fine, but not something that should be imposed on your partner if they don't share the same beliefs (or if they just get cold easier than you).
I love the winter for this. My thermostat is set to 16C at night. I prefer if the heat never even kicks on, it’s noisy and disruptive to have air blowing through the vents. I wish there was AC that could make my house that cold at night while making no noise!
Funny, I went the other way round in the Bay Area. PG&E bills were so high so it was the choice of putting on a jacket or paying $1k extra over the winter months. And my reasoning was "I can afford a jacket".
I’m always colder in my mother’s house in Scotland (-5°C on cold days) than I am at my MIL’s house in the frozen Canadian wastelands (-40°C/F on cold days), because my mother will play games with thermostat to save money, where my MIL would simply die of exposure if the heating wasn’t on consistently for 6 months of the year.
I had a home battery put in recently and switched over to wholesale power...and the most shocking thing has been how little power our reverse cycle air conditioners actually use. Like, we bought them for efficiency, but between solar panels and a battery I can actually just have them on all night and we might just barely run out if we had good sun that day.
Basically a bunch of technology has just crossed over to make being comfortable not just affordable, but visibly so (which would've been great when I was a kid - it made a huge difference when I hooked the power monitoring up for my dad and proved to him that he should just set the AC to a target temperature and the fastest fan speed he could stand the sound of and it would use less power...and he actually did it!)
I think if you want to keep it on the cold side, you can still do that. Builds character, isn't dangerous, and saves a couple of bucks. You can also keep it warm when you feel like being warm. There's something in human psychology about being able to endure discomfort and then come back to "safety".
And some of us literally have no choice. I need my home office to be under 18℃ in order to not imitate a drowned rat. Anything over 28℃ and I am dripping with sweat even completely naked. And no, I am not obese.
A wife is a useful thing to have in this respect, not because they tend to profligacy, but because this kind of thing is much easier to detect and fix in someone close to you than in yourself. Both my wife and I have lived frugal lives at various times[0] and I feel much happier with the degree of spending we have now.
I'm reminded of the intelligent corvids in Adrian Tchaikovsky's Children of Memory where the sum of the two birds forms a being with intelligence in a way that the individual segments do not. The frugality is a deeply embedded piece of our being and undoing it seems hard, but together we financially operate in a place that leaves us both feeling comfortable.
0: In the US sense of the term, not in the sense of the term as known in Taiwan or India.
For some, I think there’s that satisfaction that comes with saving money (like you’re somehow “cheating the system”, even when it’s just a coupon that gets you to buy something you wouldn’t otherwise). In some cases, that satisfaction grows with the amount of time or effort expended to save the money in the first place, which is ironic because that money-value-of-time probably far exceeds the actual amount saved. Practically every engineer here probably has a story about spending a ton of time or effort to optimize something by a tiny amount; saving money can be like that too. It’s a little joy in life, and so long as it doesn’t outright prevent you from spending money when you should (or impose excessive optimization costs), I think it’s fine.
The maladaptive part is when you start regretting not saving money, because it has two knock-on effects: it makes the decision to spend much more emotional (which negatively impacts rational decision-making) and it can negatively impact the enjoyment of the thing itself. For example, the maladaptive part might take the form of being reminded of the cost every time you look at the repaired phone.
> I plan to have fun spending my money in the future, so it’s time to start practicing now.
The most optimal thing to do in our world is to pick an age, say, 60, and until your 60th birthday, maximize your suffering via frugality to just under the tolerable limit so as to maximize your potential for compound interest. This leaves you with the most freedom and opportunity during the most fun part of your life, when you no longer have to sell your labor and can do whatever you want.
Within our current model, trying to slip in bits of fun through spending money before that age is getting a poor return: you're trading vacation time, which you could instead barter for more money on retirement, and you're carrying with you a bit of suffering because you have to worry about going back to work. The best thing to do is just push it all until retirement.
The limit of human suffering before suicide frequently happens is apparently quite high, so, you can really stretch yourself out here. Live in your car in the Walmart parking lot, eat beans and rice. You maybe trade a bit of the compound earnings to establish certain time constrained things you want to cash in on at 60 like having a partner or kids, but beyond that, maximize that compound interest!
I hope it's obvious that this is a criticism. It's just, the more I think about it, the more this seems the selective pressure and incentives in our society are set up. Mostly I think it's insane that we both have an idea of "retirement" and also that we set it at an age where a significant portion of the population won't make it, and for those that do, a significant portion will get to enjoy five years of it, and for the remainder, health is bad enough that maximum enjoyment isn't possible anyway.
This is very culture-specific. I've seen this in Poland. Under USSR rule frugality has been necessary to survive, but it left a lot of people forever stuck in that mindset, long after things got better. I know people who have a fortune in the bank, but live like they're broke, because they're afraid to spend anything from a "rainy day fund" even on rainy days.
I read this article 10 years ago by a guy named Ricky Yean who went to Stanford as an economically disadvantaged admit and couldn’t shake his poverty mindset and it cost him when he was running a startup.
Why “few successful startup founders grew up desperately poor”
Poverty mindset is maladaptive because it teaches you only money is worth anything, so you hoard it. But in truth time is also worth a lot and sometimes it’s wise to use money to buy time.
I do something kinda similar, I guess it counts as maladaptive frugality?
Whenever I have something a little extra in my fridge, most often Italian prosciutto, I refrain from eating it, instead saving it for a "special occasion" even though it is, like, my favourite thing in the whole world. Eventually I have to throw the mouldy prosciutto away because I was too frugal to eat it.
I'm practicing though, learning to eat it. I don't know why it's so hard, I mean it's delicious! Should be easy!
Agreed - I find I spend almost the same time on small decisions as large, and let the default (subscriptions, extra cars, storage) ride. That's turning the decision into a drama that befalls you (and avoiding those that don't). Or you find yourself down or up become cheap or profligate.
So, what big spending is adaptive? Better to drive decisions objectively based on future value.
Some scenarios:
- It lasts a long time, and you'll need to do it anyway. Best to get it early and enjoy it longer - for iPhones, cars, houses, marriage...
- It lasts a long time and you use it daily. Always pay for what you'll be glad to have: good socks, a powerful computer, a nice view.
- Your beloveds needs to know if you care more about money or them. Choose them.
- Something expresses your values: you appreciate an artist's work, so you pay good money for it. Some panhandler is stoic, so you give him a hand. (Just be careful about posturing.)
Another mindset is to think of your money as family (writ large) money, and invest in the future of family or friends. It's as much a vote of confidence as an injection of cash, and it helps you detach from the needy instrumentality of the money to consider what's best for their future. That's the weirder phenomenon: trillions held by baby boomers until they die (just in case), while their progeny waste time in terrible jobs and narrow circumstances for lack of investment. That's maladaptive hoarding.
>> I have a hard time spending, to the point where I would often procrastinate on buying things that I know I’ll need in the future.
Well, what I noticed is that I go to great efforts to avoid buying me some stuff that would make my life easier (say an electric bike or a better computer). Month starts, I get my paycheck and every day I fend off the desire to buy the stuff I want/need. And then come the bills. Like some surprise "regularization" gas or electricity bill that costs more than the item I didn't buy. If it's not that, some darn thing breaks and needs repairs. And if it's not that, kid has to go in some school trip, there's some birthday or wedding we have to attend, someone asks me to lend them some money (coze they know I save) or some other event happens and requires a ca$h infusion.
By the end of the month, money's gone and I haven't got nothing. At some point working just to pay bills and expenses makes Jack a dull boy. So funk it, I buy that stuff AT THE BEGINNING OF THE MONTH. And when shit arrives demanding money I can truthfully say: "I don't have any money left". But at least I got the thing, opposed to neither money, nor item.
The most helpful tool here, I've found, is maintaining a personal finances spreadsheet.
It's one thing, without a spreadsheet, to have the emotion of "I'm not going to have enough and I need to save more to make sure I have enough." I'd argue it's even evolutionary; we want to make sure we have enough to get through the winter we know is coming.
It's quite another when your spreadsheet shows you saved X, your monthly cost of living is Y, and therefore you have enough money saved, even if your income went to zero and you made no changes to your lifestyle, to last you for Z years. Being able to take YouTube University rule-of-thumb advice like "of your take-home pay, use 65% for necessities, 15% for long-term savings, 20% for enjoyment" and seeing how much money that is per month for you in your personal circumstances, along with rules of thumb on things like what ratio you should have achieved by which age on net worth-to-income ratio (1x by 30, 2x by 35, 3x by 40, etc.) and seeing what your personal actual ratio is, to get a sense of benchmarking yourself.
I mean, the influencers could be totally full of shit, but it doesn't matter. Getting actual numbers for where you are, plus getting "generic" advice that you know wasn't directed at you personally, and seeing how those numbers make you feel, can do a lot to either tell you "you don't need to be so frugal anymore" or "yep, your emotions are totally justified, keep saving".
Fellow frugalite here, and man, is it hard to break the habit of agonising over every purchase. Took me nearly 20 years in tech before I convinced myself I could justify just buying a new laptop every 5 years, and not sit around waiting for things to compile on the old one - and thats an item that is both essential to my work and also tax deductible. The agonising is even worse with items that are technically non-essential (but would make life better)
There is frugality and there is taking inflation into account when deciding on save vs loan. For the last many years it was net profit to take loans, spend and pay them back later because inflation meant you got more goods/services that way. On the other hand keeping cash/savings over some smallish buffer where opportunity costs dominate is/was always net loss. That not touching US-specific stuff like insane student loans, credit card terms or healthcare.
65 comments
[ 3.8 ms ] story [ 59.7 ms ] threadThough sometimes you may have to choose between being a slave to something less enabling than frugality :\
It really gets bad for those who can't even afford to reach as high as a truly frugal contemporary.
IOW below-frugal becomes a constant element regardless of its current value at any one time, and that leaves the only variable as whether or not any adaptability can be attempted at all, and how much might not be too much to ask :(
Spending and getting into debt are useful tools. But I don't have any friends in tech who need to be told "hey dude, you should be spending more". I have quite a few friends who would be better off spending less.
Otoh, have a few friends in tech (and high finance) who need to be told "dude, we'd be better off if you worked less hard"
(Sorry.. I grew up deprived of data teaching me that "Schlep quickly compounds into Interesting Times")
My mother, for example, refuses to replace her iPhone SE with something with a larger screen despite 1) having failing vision and difficulty reading the screen, 2) using her iPhone every day, 3) easily being able to afford it. The idea of spending $1,000 on a phone is just something she is unable to bring herself to do, even though I think it would help alleviate a real source of frustration in her life.
My father, when he started shopping for his most recent car (and probably his final car), set out with the intent to buy a luxury car. But again, despite being able to easily afford one, all he was able to bring himself to buy was a well-equipped Toyota. Don't get me wrong - it's a great car and has served him incredibly well. But it makes me a little sad that he wasn't able to bring himself to finally treat himself to a luxury car after a lifetime of hard work and saving. They did a lot of long road trips together in that car in retirement, and I think they would have enjoyed something a bit more luxurious (though on the other hand, the reliability of the Toyota is not to be discounted).
Somewhat related, here is a video from a guy trying to avoid just this sort of scenario by refusing to put his company's business expenses on his personal credit; follow-ups show the price he's paying.
https://www.youtube.com/watch?v=EFZIxJyKgE8
If society expects you to consume, you should be paid enough to support it. A system that leverages greater and greater amounts of its future to pay for the present eventually reaches a point where it is statistically unlikely that the debt will ever be paid back. That's when all hell breaks loose.
At least I finally got her off the lease treadmill. Toyota helped a lot by not making anything she particularly liked. When I suggested she buy out her lease instead of getting a new one, it was a revelation.
This needs to be qualified with the fact that it doesn't make sense for many people to be debt-free if they are financially literate. I know many people, myself included, who carry debt they could easily pay off because it would be irrational to do so. Being debt-free would actually make them poorer.
This often holds true even when ignoring obvious cases like debt interest well below the Treasury rates.
Eventually I just sat down, looked at how much it costs keep the house a few degrees warmer in winter, and realized we could afford to be comfortable. And if I were really hell bent on saving money, there were other lower-priority expenses I could cut back on first. But I don't even think it was even necessarily about the money - it was more that saving energy and toughing it out felt virtuous to me. Which is all fine, but not something that should be imposed on your partner if they don't share the same beliefs (or if they just get cold easier than you).
Basically a bunch of technology has just crossed over to make being comfortable not just affordable, but visibly so (which would've been great when I was a kid - it made a huge difference when I hooked the power monitoring up for my dad and proved to him that he should just set the AC to a target temperature and the fastest fan speed he could stand the sound of and it would use less power...and he actually did it!)
And some of us literally have no choice. I need my home office to be under 18℃ in order to not imitate a drowned rat. Anything over 28℃ and I am dripping with sweat even completely naked. And no, I am not obese.
Maybe your dad is the same?
I'm reminded of the intelligent corvids in Adrian Tchaikovsky's Children of Memory where the sum of the two birds forms a being with intelligence in a way that the individual segments do not. The frugality is a deeply embedded piece of our being and undoing it seems hard, but together we financially operate in a place that leaves us both feeling comfortable.
0: In the US sense of the term, not in the sense of the term as known in Taiwan or India.
The maladaptive part is when you start regretting not saving money, because it has two knock-on effects: it makes the decision to spend much more emotional (which negatively impacts rational decision-making) and it can negatively impact the enjoyment of the thing itself. For example, the maladaptive part might take the form of being reminded of the cost every time you look at the repaired phone.
The most optimal thing to do in our world is to pick an age, say, 60, and until your 60th birthday, maximize your suffering via frugality to just under the tolerable limit so as to maximize your potential for compound interest. This leaves you with the most freedom and opportunity during the most fun part of your life, when you no longer have to sell your labor and can do whatever you want.
Within our current model, trying to slip in bits of fun through spending money before that age is getting a poor return: you're trading vacation time, which you could instead barter for more money on retirement, and you're carrying with you a bit of suffering because you have to worry about going back to work. The best thing to do is just push it all until retirement.
The limit of human suffering before suicide frequently happens is apparently quite high, so, you can really stretch yourself out here. Live in your car in the Walmart parking lot, eat beans and rice. You maybe trade a bit of the compound earnings to establish certain time constrained things you want to cash in on at 60 like having a partner or kids, but beyond that, maximize that compound interest!
I hope it's obvious that this is a criticism. It's just, the more I think about it, the more this seems the selective pressure and incentives in our society are set up. Mostly I think it's insane that we both have an idea of "retirement" and also that we set it at an age where a significant portion of the population won't make it, and for those that do, a significant portion will get to enjoy five years of it, and for the remainder, health is bad enough that maximum enjoyment isn't possible anyway.
Why “few successful startup founders grew up desperately poor”
https://rickyyean.com/2016/01/22/privilege-and-inequality-in...
Poverty mindset is maladaptive because it teaches you only money is worth anything, so you hoard it. But in truth time is also worth a lot and sometimes it’s wise to use money to buy time.
Whenever I have something a little extra in my fridge, most often Italian prosciutto, I refrain from eating it, instead saving it for a "special occasion" even though it is, like, my favourite thing in the whole world. Eventually I have to throw the mouldy prosciutto away because I was too frugal to eat it.
I'm practicing though, learning to eat it. I don't know why it's so hard, I mean it's delicious! Should be easy!
So, what big spending is adaptive? Better to drive decisions objectively based on future value.
Some scenarios:
- It lasts a long time, and you'll need to do it anyway. Best to get it early and enjoy it longer - for iPhones, cars, houses, marriage...
- It lasts a long time and you use it daily. Always pay for what you'll be glad to have: good socks, a powerful computer, a nice view.
- Your beloveds needs to know if you care more about money or them. Choose them.
- Something expresses your values: you appreciate an artist's work, so you pay good money for it. Some panhandler is stoic, so you give him a hand. (Just be careful about posturing.)
Another mindset is to think of your money as family (writ large) money, and invest in the future of family or friends. It's as much a vote of confidence as an injection of cash, and it helps you detach from the needy instrumentality of the money to consider what's best for their future. That's the weirder phenomenon: trillions held by baby boomers until they die (just in case), while their progeny waste time in terrible jobs and narrow circumstances for lack of investment. That's maladaptive hoarding.
Well, what I noticed is that I go to great efforts to avoid buying me some stuff that would make my life easier (say an electric bike or a better computer). Month starts, I get my paycheck and every day I fend off the desire to buy the stuff I want/need. And then come the bills. Like some surprise "regularization" gas or electricity bill that costs more than the item I didn't buy. If it's not that, some darn thing breaks and needs repairs. And if it's not that, kid has to go in some school trip, there's some birthday or wedding we have to attend, someone asks me to lend them some money (coze they know I save) or some other event happens and requires a ca$h infusion.
By the end of the month, money's gone and I haven't got nothing. At some point working just to pay bills and expenses makes Jack a dull boy. So funk it, I buy that stuff AT THE BEGINNING OF THE MONTH. And when shit arrives demanding money I can truthfully say: "I don't have any money left". But at least I got the thing, opposed to neither money, nor item.
It's one thing, without a spreadsheet, to have the emotion of "I'm not going to have enough and I need to save more to make sure I have enough." I'd argue it's even evolutionary; we want to make sure we have enough to get through the winter we know is coming.
It's quite another when your spreadsheet shows you saved X, your monthly cost of living is Y, and therefore you have enough money saved, even if your income went to zero and you made no changes to your lifestyle, to last you for Z years. Being able to take YouTube University rule-of-thumb advice like "of your take-home pay, use 65% for necessities, 15% for long-term savings, 20% for enjoyment" and seeing how much money that is per month for you in your personal circumstances, along with rules of thumb on things like what ratio you should have achieved by which age on net worth-to-income ratio (1x by 30, 2x by 35, 3x by 40, etc.) and seeing what your personal actual ratio is, to get a sense of benchmarking yourself.
I mean, the influencers could be totally full of shit, but it doesn't matter. Getting actual numbers for where you are, plus getting "generic" advice that you know wasn't directed at you personally, and seeing how those numbers make you feel, can do a lot to either tell you "you don't need to be so frugal anymore" or "yep, your emotions are totally justified, keep saving".
Any sort of morality like framing around it is likely to lead to issues imo.
The closer you can get to an analytical approach the better I think - can I afford it, is it good value for money, is it useful/furthers my goals etc
this would he true if the wages kept up with inflation and of course that as we know well has not even remotely been the case