Sat 23 Dec 2006
Final Post on Frugalism vs. Capitalism
Posted by RichSlick under Money Management
[11] Comments
I received some comments and emails on this topic and evidently it stirs up emotions in a lot of people so I’m going to frame this arguement in a context I hope everyone can understand but this will be the end of it. I’ve spent too much time on this topic already and I need to focus on investment opportunities.
If you are a die hard frugalist and you won $10,000 in a lottery would your lifestyle change?
I’m sure almost all of you will say, of course not I’d live exactly the same way.
If, however, you won $1,000,000 in a lottery would your lifestyle change?
For some of you, if you’re honest, would acknowledge a slight change in your lifestyle and pinching the last penny wouldn’t be as big a deal.
If, however, you won $100,000,000 in a lottery would your lifestyle change?
For anyone who says they wouldn’t change a thing in their life, I think you’re being disingenuous. Upon winning 100 million dollars I bet you wouldn’t give a damn about saving 10% off using a coupon or spend two hours on Fatwallet.com or Slickdeals.net looking for a discount item. I doubt you’d waste your time buying refurbished items or shopping at a second hand store.
I’m sure someone will post a comment saying, “oh that wouldn’t be me, I’d still be a frugal guy/gal” but we all know that it’ll be pure bull.
I’ll say that Moom posted an interesting comment on my blog here writing, “…But many of these PF bloggers seem trapped in the penny-pinching mode. They regard debt or spending as sinful. There is a huge divide between investing blogs and PF blogs.”
Trapped in penny-pinching mode is exactly the issue I concerned myself when this whole debate began and the issue still exists and seems like it will continue to exist with pinchers creating all sorts of rationalizations for pursuing their methods.
The fundamental problem with American’s debt isn’t that they overspend it’s that they under earn. If people constantly want or need things they can’t afford then they need to make more income to fill the gap but EVERY PF BLOGGER out there is telling people to cut back and spend less than you earn -this is the EASIEST, LAZIEST cop out advice for someone. “Spend less than you earn” -Gee whiz, did it take you all night to think up that great advice?
When someone asks me what I think they should do if they’re not making ends meet, my response always varies based on their situation:
1. Go get a college degree
2. Go get some certifications CPA, CFA, CCIE, RN, etc
3. Change your career path
4. Start a business
5. Learn a new skill or trade
6. Learn to trade stocks / options / commodities / whatever
If they refuse to do any of the above things then the advice turns into “live within your means” and “spend less than you earn” but only after I’ve exhausted trying to give them resources, ideas, and advice to help them achieve their goals and lifestyle comfort levels.
WHY IS LIVING FRUGALLY CONSIDERED SUPERIOR TO LIVING WHATEVER LIFESTYLE SOMEONE WANTS?
I’m not advocating materialism or unlimited consumption so please don’t go there I’m just arguing that we are living in the greatest free market capital market in the world to achieve unlimited wealth and PF Bloggers are advocating discount coupons as a way to financial success.
11 Responses to “ Final Post on Frugalism vs. Capitalism ”
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Here’s the deal – until I had kids, I lived very frugally, even though I was making the most money I was making in my entire career. I saved a ton, then after having kids, I started spending. Like crazy. And you are right, from this point on, I’m concentrating my efforts on making more money rather than saving it. It’s hard to save and be truly frugal when you’re raising a family and need a bigger house, vehicle, great school, fun family trips, stuff, etc. And don’t forget the extended family that grows with each generation so you need to remember them on holidays too! The budget grows after kids and we need other ways to feed it. But I try, truly I do, to watch what I spend. I’m still frugal at heart but I have to be realistic.
I wouldn’t mind your comments on frugality if consumption wasn’t costing the earth.
IF ONLY we could just consume as much as any of us wanted on an endless gravy train if all we had to do was afford it from our personal pockets. But the wealthier we are the more we are using up the earth’s limited resources of air, water, minerals, biomatter.
IF ONLY it wasn’t so.
Digerati. I agree 100% with your perspective. I quickly realized after my first born that money would be a perpetual issue (healthcare, college, etc) so I changed from frugal to capitalist soon after.
Alcemena12. I have an entire post simmering on the whole “the world is dying because of consumption” theory. I will eventually write that post but my argument flows along the lines of “should we all sit in the forest naked eating grass” to avoid any change to the planet?
A single eruption from a large volcano will pollute the atmosphere more than 2000 years of man made car emissions so I’m not entirely convinced of many arguments about consumption=pollution but I’m all for debate on the issue and quite honestly capitalism will likely solve the problem vs. thrift solving the problem because people still consume whether it’s $1000 for a roll of perfumed toilet paper or $0.50 Wal-mart variety toliet paper -humans will consume no matter what.
Well done. I think it’s hard to give people advice to earn more income. For many, there income is pretty much what it is. Take a nurse for example. He/she can work more hours, but typically with an RN degree, there’s a limit.
Of your options above only #4 and #6 seem like viable options for income growth. It’s easy to tell an RN to start a business, but it requires that the RN have an idea. Learning to trade stock/options/etc. requires having extra liquid income – probably best accomplished by — being frugal. Both of these can work, but they aren’t without risk – great risk in many cases. In addition, I can’t imagine an America where everyone had a successful business – it just doesn’t seem like everyone would have the money to make everyone else’s business successful. I don’t think 100% of Americans can get rich trading options, commodities, etc. It doesn’t seem like the math works out.
On the other hand, it’s easier to talk about ways to save money. It’s not a way to get rich though. Instead it’s a way to guarantee a retirement – something that millions and millions of Americans won’t be able to do.
Should all the PF Bloggers be blogging about saving money? I would think not. However, perhaps those that are starting businesses are too busy to keep a blog. I personally try funnel my savings into investments. So if I can save a couple of hundred extra dollars at the end of the month, that’s more I have to apply to #6. In the meantime of all this, I’m working on starting a business.
In the end, I believe in the 80/20 rule that you hear so often. Being as Lazy as I am, getting the low-lying fruit has always worked for me.
Rich,
Merry Christmas to you and your family.
Thanks C. You have one too.
Lazy,
At one point in America, I would argue that MOST of the people were free wheeling capitalists. Most people were farmers that grew their own food, built their own housing and raised their own children and sold/traded any excess production. That spirit is quickly being replaced by people that want either government or corporation to take care of them from cradle to grave.
Over the past decade we’ve seen Corporate America essentially say, “No Thanks” in the form of under funded pensions, moving jobs offshore, reducing or eliminating pensions, decreasing health insurance coverage (or passing on higher costs), providing meager salary growth, lobbying government to shield itself from lawsuits and on and on.
It’s a free market and I don’t hold corporations responsible because I hold the INDIVIDUAL responsible for letting himself become reliant on Big Corp or government to take care of him.
I never said it would be easy but I think it’s always worth a try.
You are right. Life isn’t easy. I am a capitalist (the free market libertarian type). I also tend to be frugal. I want to maximize my earnings while also living below my means ( it’s hard to live below your means if you don’t make decent money though). I would say I am frugal, but deep down I really wish I made more money.
While earning more money isn’t always “easy,” I do agree it’s probably “better.” While a lot of people are wasteful spenders, I think a large % of people are severe “under-earners.” You can only cut back so much if you want to have an acceptable standard of living.
With the example LazyMan gave, well a nurse can always choose something else to do. And IMO, there are some very high paid nurses, s that might not be the best example. Some people simply choose low paying jobs, for whatever reason. People who go to school to be a nurse or a teacher or ( fill in profession here)do so with an understanding ( I hope) of their earning potential and what their life will be like. I think there are many poor people who probably are “stuck” to an extent. However, most intelligent educated folks can choose other career paths but choose not to.
For example, I read a blog from a link here ( the debate on if debt is ever acceptable). That guy (seems intelligent enough to me and I assume educated, without holding grammar against him too much) says he makes $19k a year. To me that is an obvious example of not making enough money to live. I understand people who are not very bright or disabled being OK wth that kind of life, but most people can do better. I have made more than that doing low skill seasonal work( cooking,unloadng trucks, moving furniture, low level sales,etc) while going to school. I have relatives who never went to college who make close to six figures in labor trades. In some ways it is difficult to make a very low wage unless you are really complacent.
But NO, it isn’t easy. Sometimes you have to move, go back to school, go into debt, whatever, and make your life better. If you live some place where your job pays $7/hr and your apt is $800, move to where you can make $9/hr and pay $500. Or get 2-3 roommates, work 2-3 jobs, go back to school, whatever.
It’s certainly easier said than done, but I will never buy the argument that everyone is stuck in some job making what he makes and has to penny pinch to live any kind of life. I think it is possible for most people to earn at least a decent middle class income and combine that with a degree of frugality, while maxing out retirement, investing, having heatlhcare,etc.
RichSlick I agree that frugality will only get you so far. Earning more is the other part.
Frugality and cutting spending is something that most (not all) people can do, right now. They can brew their own coffee instead of picking one up on the way to work and increase their bottom line, right now.
Earning more is the more fruitful solution, but folks can’t get a college degree right now, or learn a new skill, right now. It takes time. If people need to pay bills or save money for some expense in the next two months, cutting back is about all that’s available to them right then.
As for changing career paths, that’s a medium- to long-term investment. I’ve spent well over $1,000 taking required classes for becoming an auctioneer (I’m a scientist) and I’m still not licensed yet!
Anyway, nice material you have over here! Sorry it took so long for me to visit!
mbhunter Welcome.
You’re right it does take time and people, in my opinion, are spending too much of it doing “frugalist” activities vs those other things that take time.
I know too many people that spend their sundays doing the following:
1. drive out to buy the sunday paper
2. look through paper for sales, coupons, garage sales, etc
3. spend 30 minutes clipping coupons
THEN WHAT DO THEY DO?
1. drive over to garage sale and buy something
2. drive over to grocery store to buy something with coupon.
3. drive over to the mall to buy something because it’s on sale
It’s the same for people who do this type of stuff over the web.
Instead of wasting two or more hours doing the above I think they should go read some investment books, certification books, go to a local college (instead of garage sale) or a hundred other investment things that can be done.
Heck, you can even visit (sorry for the shameless plug) my website http://www.etfcoveredcalls.com to get some investment ideas.
I couldn’t agree with you more on your comments on #6 and #9. People spend way too much time on the small stuff. Corporate America is getting harder and harder to make a living – for all the reasons you cited and the fact that two incomes are general required to get by now.
On the other side of things, I do spend 10 minutes to find a good rewards credit card that will give 5% off of groceries. Since I never a carry a balance it’s easy. I spent another 3 minutes going on Ebay and buying razor blades at less than half of what I’d typically pay (even after shipping). That’s one trip to the store that I won’t have to make. Often times, I’ll stay home and cook, not entirely to save money, but because there is a enjoyment level in it for me.
These are the things that I sometimes blog about that are “frugal.” In general these things allow me to do things cheaper AND easier (or with an added benefit). In general, if I’m driving around to buy something on a Sunday, it’s largely an excuse I use to get out of the house and drive around to clear my head of the distractions in my home. That’s really the beauty behind the Lazy side of being frugal.