Living Frugally and Loving It

I’ve talked before about how important it is to live frugally. A lot of people probably brush it off because it sounds like too great of a sacrifice or not relevant to them, but I think that’s a mistake. It is possible to live frugally and to love it at the same time.

In general, that’s a key to how I live my life. I try to figure out what the empirically “correct” thing for me to do is, and then I convince myself to love it.

How much money you should be saving is hard to determine. It depends on your age, your earning ability, and your goals. I will say this, though… there is some way for you to save more than 50% of your income.

That number is probably shocking, as most millenials have a negative savings rate. I’m not saying that you will do it, or even that you should, only that you can. It’s worth considering poor immigrants, many of whom work minimum wage jobs and still manage to send significant amounts of money back home. Some people are doing it.

You will never be frugal unless you have a good reason to be, as sacrifice requires an end goal. But the problem with saving money is that the whole point is that you don’t know what you’ll want or need the money for in the future. The universal benefit of saving money, though, is that it maximizes freedom. Saving money will open up options in the future that you can’t even think about now.

I think a lot about what I “deserve”. It’s a totally arbitrary because I could make the case that I deserve absolutely nothing or that I deserve everything and could convince myself of either. Instead I take a middle road. When I was working on Sett 12+ hours per day, I mostly ate a stew I made that cost $1-2 per serving. I told myself that I hadn’t reached the financial goals I set for myself, so I didn’t deserve to eat anything else.

I wasn’t totally strict with that, but it defined my overriding mindset. I was always baffled by twenty-somethings that were out at clubs blowing money and partying like they had acheived something. What were they celebrating? Even if I enjoyed activities like that, I would have had a tough time justifying it.

The point is, you should recalibrate to believe that you deserve very little. Not because you actually do, but because it’s expedient to believe that you should suffer a little bit. Media and advertisements push the idea that you deserve everything, but that’s because they benefit from convincing you of that.

Being frugal means that you will be spending less money than all or most of your peers. At first this will mean that you feel a little bad because they are all having more “fun” lives than you are. To survive this, you must take pride in the fact that you are taking extraordinary steps for your future self that few people will take.

Eventually you will hit an equilibrium where your investments provide you with income, and their debt starts to bog them down. Those trends will probably continue.

In practical terms, you need to look at your biggest expenses and reduce them as much as you can without making your life too stressful. For example, if you decide to sleep in a tent in the park to avoid paying rent, the stress overhead of that will blunt your ability to earn more money, thus negating the benefit.

I lived in an RV for many years. Eight or nine, I think. In some ways it was a sacrifice, as I had to go out of my way to dump the tanks and get fresh water, but I saved more than a hundred thousand dollars by doing it. For many years I paid nothing in rent. Other times I paid $500 a month for a parking spot (in a city where rent was $3000+).

You could live in an RV if the idea appeals to you (I loved it), or you could get a roommate, live with a family member for free, or live in a much cheaper location. It blows my mind when people live paycheck to paycheck in an expensive city. In that situation, I would tell myself that I have not earned the right to be in that city yet.

By living in the cheapest place possible, you are simultaneously maximizing your ability to live in a much better place in the future and acclimatizing yourself to live simply. That means that you’ll enjoy the better place even more in the future.

If you are not willing to economize on your living space, you probably aren’t serious enough about living frugally that you will do so in a meaningful way.

The next area I would look at is food. Eating out all the time is a real convenience, but it’s much more expensive than cooking for yourself. Lentils, quinoa, veggies, greens, and a bit of protein is a really inexpensive and easy to cook meal that you can make any time. Most of your friends will be eating out, but you can save a lot of money by cooking for yourself. And if you make a lot of money already, another option is to ditch fancy meals and just eat chipotle or other healthy and inexpensive restaurants.

Buy a Buick Regal or a minivan or some other cheap car. Don’t use the excuse that you need to project a certain image. Don’t finance a car. Share a car with your friend if you can. I did that for several years, far beyond when it was a financial imperative.

Don’t scale all of your expenses up evenly. Think about your needs and which upgrades will actually benefit you, not about goes with what. I live in one of the cheapest condos in all of Las Vegas, but I park my Bentley out front. I still eat at Chipotle for just about every meal.

Also, don’t scale up expenses linearly with income. If you are making $2000 and spending $1000, try to stay at $1000-$1500 when your income increases to $4000. By the time you get to $10,000, maybe you’ll still be around $2500-3000. That’s a lot of savings.

Be proud of being frugal. Your life is going to be very stressful if you care so much about what other people think that you are embarrassed to save money and make your future much better. Anyone who criticizes you for it is probably just insecure because they’re spending more than they should.

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Photo is from an incredible hike in Bryce canyon. It’s one of the coolest hikes I’ve ever been on.

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