Recently, Ramit from “I Will Teach You To be Rich” challenged Trent, from The Simple Dollar, to prove whose money saving tips were more effective. Ramit argued that many of Trent’s frugal tips are erroneous, since putting time into frugal living will not yeild any significant savings worthy of your time.
Focus on big wins that matter… By reducing the number of things to focus on — and picking major, important items — you don’t need to worry about that one-off latte or extra $20 you spent on shoes. If you’re handling your major goals, the minor details fall out of that. Whether it’s spending $21,000/year going out or going out to a nice restaurant, you can handle your goals and use your money without feeling guilty.
The “major, important” items might be reducing the interest rate on your credit card or negotiating rates for a cheaper cable, internet or cell phone rates. Ramit makes some good points, but after some consideration I have to say I disagree with his over-simplified approach. I’ve never believed that there is a one-size-fits-all solution to making or saving money, partly because we all lead lives with different complexities, and party because we have different values, and values are intricately connected to our financial decisions.
Frankly, I think his challenge is irrelevant and he is using aggressive language to sell his money saving tips on the internet. He provides a list of 30 tips that will save you $1000 in 30 days. Some are so obvious that any frugal person would already be doing them, like packing lunches or turning down the thermostat. Others are just silly. For example he recommends changing the date of Christmas AND abstaining from buying ANY gifts for Christmas. I think the readers on Saver Queen have proven that Christmas can be frugal, fun AND held on December 25th. (I also don’t see why you would change the date of Christmas if you aren’t buying any gifts, nor how that tip would help you save money in the middle of February.)
But I digress. Mainly I am taking issue with his point that most frugality tips are useless, or in his words, “make me want to vomit”.
Reasons why I think focusing only on the “big wins” is a mistake:
1. Why choose an either/or strategy when you can do both and save even more?
2. What constitutes as “big stuff” might surprise you. Ramit says not to worry about the latte factor, but it adds up. A latte at Starbucks costs $4. If you buy a latte every day for one year, that’s $1540 annually. (Anyone want to calculate the compound interest on this for 20 years? I started but got lazy).
3. Not everyone is in the same financial position. Ramit assumes that everyone has “big items” they can cut back on, like gym memberships, cars and cell phones. Not everyone is in such a position; some do not have these items to cut back on, and others need to save every penny they can. In fact, the savings of $100 or $200 per year might mean little to Ramit, but could be valuable to someone who is unemployed or struggling to keep food on the table.
4. Being frugal can be deeply satisfying. Learning to be happy with what you have and who you are without the constant barrage of new “stuff” is tremendously fulfilling. Furthermore, learning how to cook, repair your own clothes or perform maintenance on your car can be both fun and empowering.
5. Being frugal often coincides with being environmentally friendly. Both blogs poke fun at those who re-wash their Ziplock bags but these little steps are important if we are going to take responsibility for the impact our daily choices have on the environment.
6. Saving on the little stuff means you can save on the big stuff. For example, by being frugal and saving up for a down-payment on a home will mean that you can avoid the premiums and additional interest that you would otherwise pay with a small down-payment. It’s true that negotiating the interest on your credit card will save you money, and is a great first step to take, but paying down that credit card faster will save you even more.
7. People value different things. Ramit assumes that a new pair of shoes and a latte are pleasures that shouldn’t be sacrificed. Maybe in some cases that’s true. Personally, I tend to focus on saving in areas that are less important to me, so I can afford what really matters. For example, I buy generic foods. I rarely buy coffees from coffee shops but make my own instead. I turn the lights off when I’m not using them. I wear handmedowns and buy clothes from funky thrift stores or stock up on year-end sales. These don’t really feel like big sacrifices to me, but they add up to savings that can be spent on something really important to me, like traveling to Sweden to see my best friend get married, which I will be doing this July.
I guess what bothers me most about the whole debate is that it’s not really just about how much you can save. It’s about mindfulness. Frugality is about paying closer attention to what we have, recognizing all of the vast resources that we have within our reach besides money. Being frugal means you value everything you own and take little for granted. It also means recognizing the resources you have within yourself, to learn new skills, to be more creative, to try new things. The frugal philosophy also encourages sharing and community-building.
Unfortunately, our societies have become rather wasteful and self-serving. Now we frequently look outward instead of inward for solutions. Why are we asking questions like, ”why bother reusing that bag“? Shouldn’t we ask, “why not reuse that bag?” Why do we assume that throwing away is naturally the best course of action? This kind of wastefulness has led to environmental destruction, financial debts, and in my opinion, much unneeded stress and focus away from things that matter and/or bring great joy.
The bottom line: It’s not really about how much money you save by washing that plastic bag, as it is about the consideration that goes into looking at that bag and seeing a purpose beyond it’s immediate use. It’s about recognizing our potential as well as our responsibility in the million different choices we make each day. This kind of mindfulness will not only help reduce our financial baggage but will be also a mandatory change of course if we are to build a sustainable life on this planet.
What small frugal steps do you take that add up to significant savings, reduced environmental footprint, or a more fulfilling life?