Frugality is worth as much as wealth

[nun]

I think most folks on this forum understand that reducing expenses is just as important as wealth accumulation when it comes to ER, so what are your money saving tips.....

[Rustic23]

For us Number one was keeping our cars at least 15 years. I saw a article one time on how much this saved the average family that trades every three years. I believe there was a CNN report that said replacing your car every 15 years saves you $31,000.

Number two would be Pay Cash! We do this for everything but our home.

Number three would be similar to make a budget. We don't. We saved first, then paid bills, then spent everything that was left over. That allowed us to live in the present while saving for the future.

[youbet]

I disagree with your premise that reducing expenses is as important as accumulating wealth. Of course, being a smart spender is a good thing! But, now that I'm RE'd, I'm very, very glad I can afford some discretionary spending, driven by prior wealth accumulation, and not have to rely on reducing expenses to survive.

Again, don't get me wrong, I squeeze value out of every dollar I spend. But I think accumulating adequate dollars so as to not have to squeeze too hard is a very good thing. And it's possible to learn to spend less as you go along in RE, while it's too late to accumulate more wealth.

Having said that......... My tip would be to learn to be comfortable in modest living accomodations. No McMansions. A few hundred bux a month saved on lower property taxes, utilities, maintenance, etc., adds up over a lifetime.

[nun]

Quote:

Originally Posted by Rustic23 Number three would be similar to make a budget. We don't. We saved first, then paid bills, then spent everything that was left over. That allowed us to live in the present while saving for the future.

I think this is should be number one. Automatically save into your accounts and then learn to live within what's left.

Paying cash where you can is key too. I just scrapped a 1991 car and bought a new one this year, I paid cash and intend to keep it as long as it runs (10 or 15 years).

One thing I started doing was halving the amount of stuff like shampoo and laundry detergent I use, then I halved it again without seeing any difference. Now stuff like that lasts me 4 times as long.

Also with heating oil costing so much I have my thermostat set at 60 degs and keep a blanket on the sofa. This works ok if you are single, wouldn't be practical with a family.

[nun]

Quote:

Originally Posted by youbet I disagree with your premise that reducing expenses is as important as accumulating wealth. Of course, being a smart spender is a good thing! But, now that I'm RE'd, I'm very, very glad I can afford some discretionary spending, driven by prior wealth accumulation, and not have to rely on reducing expenses to survive.

I disagree with your disagreement

That dollar you save is one that you can invest. So being frugal enables wealth accumulation. Its sort of positive feedback.

[Rustic23]

We started setting the thermostat lower at night, 55! Now the house is well insulated and the heater has not run so far at night. (East Texas) Only two nights with outside temps below 40. Last year with the thermostat set at 68 the heater cycled at night. We have not noticed any difference in nights sleep.

In the long run, however, it does not make that much difference. We use about $900 in Propane a year. I doubt the savings will be enough to go out to eat.

[REWahoo]

Quote:

Originally Posted by Rustic23 We started setting the thermostat lower at night, 55! Now the house is well insulated and the heater has not run so far at night...

I suppose there isn't any possibility your hearing is going...

[Rambler]

Keep a modest home. Have a 15 year fixed mortgage. If the rates go lower, check out refinancing, but DO NOT cash out, and DO NOT take a full term mortgage...if you have 7 years left when you re-fi, keep the re-fi'd mortgage to 7 years. Pay it off sooner if you can and if it makes sense with your balance of investment objectives.

Drive a modest car, pay cash for it, maintain it well, keep it as long as possible. Shop for insurance and services...you can usually get these for less than the first offer.

Buy food in bulk, and repackage if you must. Eat at home more often...the savings will add up in your wallet rather than around your waistline. For the same reasons, pack a lunch rather than going out. Keep your tastes simple. Eat oatmeal rather than dry (processed and sugared) cereal. Drink more water or your favorite beverage at home rather than stopping at starbucks/other. Water can be from the cooler at the office, or refill your own clean bottle from the tap...won't usually hurt you...you can filter for taste if you like.

Turn the lights off in unused rooms. Use compact flourescents where possible. If you are building a house, consider zoned heating and A/C...don't heat or cool rooms that are not in use.

Think about everything you do/buy/use and how it impacts your savings and quality of life. Every choice we make has consequences, for better or worse. You don't necessarily need to be an uber-saver, just conscious not to waste your resources, so thy will be there for you when you want them, in ER...

R

[youbet]

Quote:

Originally Posted by nun I disagree with your disagreement That dollar you save is one that you can invest. So being frugal enables wealth accumulation. Its sort of positive feedback.

nun...... your premise is that reducing expenses and wealth accumulation are equally important to RE. NOT that reducing expenses helps accumulate wealth. We all agree with that.

If you wanted to talk about how to accumulate wealth, as opposed to whether accumulating wealth or reducing expenses being equally important to RE, you should have said that. Big difference.

In retirement, I'm done accumulating wealth. I've got it or I don't. As I go through retirement, I can adjust expenses up or down depending on how things go. But I can't adjust the amount of wealth I start RE with. Therefore, I give an edge to wealth accumulation as being more important. But, both are important.......

[nun]

Quote:

Originally Posted by Rustic23 In the long run, however, it does not make that much difference. We use about $900 in Propane a year. I doubt the savings will be enough to go out to eat.

In the NE it's costing $800 to fill a 275 gallon oil tank. Some households will go through 3 tanks in a winter......... I'm trying to get by on less than one tank

[FinanceDude]

Without frugality, you can't early retire, if you're making an average income these days........

[Rambler]

Quote:

Originally Posted by youbet In retirement, I'm done accumulating wealth. I've got it or I don't. As I go through retirement, I can adjust expenses up or down depending on how things go. But I can't adjust the amount of wealth I start RE with. Therefore, I give an edge to wealth accumulation as being more important. But, both are important.......

For those of us not yet FIREd, expense adjustment is critical to wealth accumulation. The earlier we realize that and actually accumulate, the earlier we can FIRE...and use whatever we want then.:

[retiringby50]

Quote:

Originally Posted by nun One thing I started doing was halving the amount of stuff like shampoo and laundry detergent I use, then I halved it again without seeing any difference.

You're sure now, right? You don't see people moving away from you? When my mom used to add water to the shampoo bottles to get the last part out, I'd be like, "Mom, you're so cheap!" OK fast forward 25 years, and I'm doing the same thing! With detergent, I fill up to the smallest load line, no matter how much laundry, and I rip the fabric softener in half, sometimes 1/3.

[Fireup2020]

In addition to the lowering of thermostats, automatic savings plans, selling/buying stuff on ebay, no cable bill, bank account that pays me to use ATM's, always ask for military discount or sale price, etc, I have a separate "vacation" fund - and then surf online for the best travel deals (or go with the local ski club!) I invest in a $30 "Entertainment Guide" and manage to get over $150 in "savings" out of it! CC's are used for all purchases to accrue frequent flyer miles. I do have "fun" budgeted, so this maximizes the quantity for the same quality. Restaurant.com also has saved BF $$$ when we go out (he pays, I provide the coupon! )

[RunningBum]

Quote:

Originally Posted by youbet nun...... your premise is that reducing expenses and wealth accumulation are equally important to RE. NOT that reducing expenses helps accumulate wealth. We all agree with that. If you wanted to talk about how to accumulate wealth, as opposed to whether accumulating wealth or reducing expenses being equally important to RE, you should have said that. Big difference. In retirement, I'm done accumulating wealth. I've got it or I don't. As I go through retirement, I can adjust expenses up or down depending on how things go. But I can't adjust the amount of wealth I start RE with. Therefore, I give an edge to wealth accumulation as being more important. But, both are important.......

I don't think it matters which is more important. There are virtually no tradeoffs between the two. You should do both as much as you can to a rational point (don't work yourself to death to accumulate, don't deprive yourself of things you need when you don't have to).

Perhaps the thread would stay on track if we read the original post this way:

Quote:

I think most folks on this forum understand that reducing expenses is just as important as wealth accumulation when it comes to ER, so what are your money saving tips.....

[RunningBum]

My suggestions to add to the list:

- craigslist and similar bargain places

- control impulse buying, no matter how good the sale is (even on craigslist, etc).

[SecondCor521]

Mine are a bit more philosophical but they'll pay off just the same if you apply them:

* Do your budget based on your gross paycheck, not your net. This will probably help you realize that taxes are one of your biggest expenses, which will help you realize that focusing on tax minimization strategies can be one of the most helpful things you do to achieve ER.

* Remember the difference between "need" and "want". I have everything I need, and some of the stuff I want. Decide if ER is a "need" or a "want" and prioritize you current spending appropriately.

* Figure out what your biggest category expenditures are and then focus on ways to reduce those.

2Cor521

[toofrugalformycat]

Cook from scratch. Cook 2 or more meals' worth when convenient, and freeze the extra. Then on nights when you just don't feel like cooking, you have a variety of dinners to select from in the freezer, and you're less tempted to go to a restaurant.

[nun]

Quote:

Originally Posted by toofrugalformycat Cook from scratch. Cook 2 or more meals' worth when convenient, and freeze the extra. Then on nights when you just don't feel like cooking, you have a variety of dinners to select from in the freezer, and you're less tempted to go to a restaurant.

Shop around the edge of the supermarket, that's where the fresh, unpackaged food is. The center isles have all the packaged and processed food. Stay away from the freezers!

My evening meal tonight,

Vietnamese"ish" soup

Rice noodles
one can chicken broth
spring onions
watercress/other greens from fridge
left over ham.

Dessert

Apple and fennel pie
I bought a big bag of apples as they are in season, ate half and made
pie with the rest

crust, 2 cups flour, 1 of stick butter, salt, water
filling, sliced apples, left over fennel sliced thin and cooked in apple juice, sugar, cinnamon, flour and a bit of butter to thicken the juices.

[donheff]

I wouldn't make it in the frugal club. I'm a pretty good cook but I just like to go to restaurants -- and there are so many within walking distance. And my house is drafty. Oh, well, I saved a few extra bucks to take care of that stuff. I guess I vote with youbet, wealth accumulation trumps frugality - at least for me.