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Big or little, it’s the thought that counts
Posted on February 27th, 2009 13 commentsRecently, 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.
He says:
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?
13 responses to “Big or little, it’s the thought that counts”
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Amen, saver queen!
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I agree that combining the two methods is probably most effective; and that one method is not superior to the other.
I do have to stick up for Ramit in this way though: His target audience is different from this one, and from Trent’s at the Simple Dollar. His tips are for people that are in a different place in their life, and who DO have lots of disposable income but aren’t making the right choices. It’s not really for people who are truly struggling to make ends meet, more for the stupid kids who have had their parents pay for everything up until now (My impression, after years of reading).
I think that’s an important distinction that needs to be made.
I also think that no one should be (or is) following one single blogger’s take on frugality and saving. If they’re anything like me, they’re reading ALL of these blogs and taking the best tips from each and fitting the appropriate ones into their lifestyle.
There may be only one mountain to climb, but there are lots of paths to the top!
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I love what you wrote, “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.”
More and more I don’t think of being Frugal as being as cheap as possible. It is more about quality of life - making decisions that increase our happiness both today and tomorrow and in 50 years. I see it more as a mindset of not being wasteful, about considering every purchase and making wise choices.
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I’ve been using a very simplified Gail system. I don’t have separate jars or envelopes, I have one. $100 a week has to cover everything: transportation, food (groceries or going out), etc.
I’ve found it forces me to make some “hard” choices about where the money’s going. I could buy my lunch at work every day, but I don’t anymore, because that leaves me with next to nothing for other things during the week. I could grab a cab home from work when I’m tired, or I could save 15.50 and stick to taking the bus. I don’t miss either of those “little” things, and yet the savings from those allows me to do the things I want to do, including a) paying off the debt, and b) putting money away in the “planned spending” account so we can travel.
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Love the idea of being more “mindful” of your money. It amazes me how many people have no idea where their money goes.
As for the Latte - I just happen to have my library copy of Automatic Millionaire beside me. David Bach wrote it and introduced us to the Latte Factor. According to his numbers - $5/day invested for 20ys at 10% (I WISH!!) = $113,905.
Just sitting down and looking at what my little bits saved could turn into is enough to motivate me! I realized after reading his book that I have been doing this without knowing it when it came to paying off my debt. Now I just need to figure out where I can make 10% on my investments!
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His name is Ramit not Rabit.
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See, the problem is that once you’ve tackled the big stuff, what does that leave you? I’m not a big spender, and never have been, but yet I manage to spend more than I would like. And how? It’s the little stuff, the extra $5 I spend at the grocery store on a whim, the $15 bottle of flax seed oil that goes unopened. Like you said, it adds up. If you seriously want to reduce what you spend, you really need to consider everything. To (very badly) paraphrase Dr. Seuss, “Money is money, no matter how small.”
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Saver Queen February 27th, 2009 at 17:58
Sarah -oops, thanks for the correction. fixed now!
Ginger - however, I do think that mindfulness can be useful to anyone, no matter how much money they have. the art of becoming more consciously aware of your actions, including spending, and the effects that they have (on your life, the environment, and your wallet) is something everyone can practice. being mindful doesn’t need to be restricted to those who need every penny to get by.
Amber - i love that flax seed oil is your kind of splurge! reminds me of myself hehe. you’re so right though, the little things add up so easily.
Sally - thanks for the compound interest! if you find out how to make 10% interest let us know, haha
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All fabulous advice…especially saving on little stuff helps you with the big…so true.
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The little purchases did add up for me when I was going to Starbucks on a daily basis. It became a habit and a kind of addiction spending over $2,300 a year. I now brew my own coffee and save thousands.
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Michelle March 1st, 2009 at 21:30
I think that frugality has gotten a bad reputation over the years. I read Tightwad Gazette long before it was ‘cool’, but just couldn’t bring myself to do the home haircuts and such…I think that everyone has their latte factor than can be cut, but there IS a huge difference between being frugal and being cheap. When it comes to getting a new job/contract, I don’t mind looking frugal with my home-made lunches and such, but I do mind looking cheap with homemade haircuts and ratty hand-me-down clothing.
It takes effort to save money and spend where one needs to in order to reduce spending but still present a professional face to society…and I think that frugality often tends to overlook the need to look well-heeled but to be able to do so on a budget…personally I’d like to see more latte factor look with Walmart (yes, my nemesis) spending.
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Erran March 1st, 2009 at 23:28
Another fine post SQ. You and I have the same philosophy on many things, so it’s always a pleasure to read. Go green and frugal!
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I’m kind of conflicted right now - do I raise all my deductibles on insurance to $1000, in order to save $250 a year? I’m debating if that’s really worth it. It’s small, not miniscule, but is it enough to offset having to pay $1000 out of pocket (which I don’t really have) on the off chance I have a loss? Any thoughts?
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