The single greatest problem with frugal living


“It’s the intelligent thing to be frugal”

Chuck Feeney


frugal1

There are lots of frugal communities on the internet. There are discussion boards, groups, blogs, tweets and websites.

There is nothing wrong with frugality, but one of the themes that I see is poor people remaining the working poor because of frugality and I find this very sad.

I’ll illustrate by telling you about my sister in law.

She and her husband don’t have a lot of money.

They both work hard and are outstanding people, but their jobs are never going to make them millionaires. They have a largish house with a mega mortgage and two young daughters with lots of hobbies and interests.

Consequently they have developed an amazing ability to find the greatest deal imaginable.

I mean it.

In fact they are so good that if I ever need to buy something I will get them to source it for me and mostly I will get an unbelievable deal.

So what’s wrong with this?

Nothing, except that they have absolutely no savings and they are not making any progress with their mortgage.

So here’s how it works.

Everything that they buy is the cheapest version available and that doesn’t mean the quality is always so good.

They find such good deals that they buy stuff they never use. To them the deal is so good that they need to make the buy rather than leaving money in the bank.

Together they are so effective at finding specials that they can easily spend their entire income every period.

That’s the wrong goal though right?

If the choice is:

1. Buy something high price/high quality (buy it for life)
2. Buy something that is the minimum viable and cheapest product
3. Save the money and don’t buy anything

Our family takes option 3 and gets creative to solve the problem without buying something (often we can).

Their family goes for option 2 even when they don’t need the thing that they are getting a deal on.

Also the stuff they buy isn’t very good quality.

If I am going to buy something I am happy to part with money to get the absolute lightest, strongest, most functional and best item (option 1).

I want to buy it now and use it for the rest of my life. If I can get a deal like that I am happy to pay $400 as opposed to the $12 item that will break in a year.

That said I mostly don’t buy anything. Option 3 baby!

Unfortunately, I see a lot of frugal people out there that are like my sister in law.

They are frugal because they want to have more money, but without a saving/investing habit they are always going to be terrible with their money no matter how much they ramp up frugal in their lifestyle.

Worse, a lot of these frugal guru’s are really just spammy internet marketer types that make their living spamming channels with affiliate links that they are paid.

There can be a gigantic chasm between being frugal and being a saver. Don’t let a frugal focus distract you.

Saving is King, Queen, Prince and Princess!

What can be learnt from Daffodils and Pineapples in our journey to save money and work less?


“We don’t need bigger cars or fancier clothes. We need self-respect, identity, community, love, variety, beauty, challenge and a purpose in living that is greater than material accumulation”

Donella Meadows

 

 

Mostly we place high value on stuff that somebody important to us doesn’t have or can’t afford. Isn’t that so? At one point in history people went nuts over Daffodils. Then Daffodils became common place and now most people are too busy to notice flowers of any sort.

At another point folks went bonkers over pineapples. Some were so inspired by the Pineapples in their lives that the fashioned castles and buildings into Pineapple shaped monuments. At that point everyone that was someone had pineapples and the richest people deliberately had pineapples rotting in a prominent place in their living rooms to demonstrate exactly how important there were to any visitor. Now pineapples are available in every grocery store year round and nobody gives a toss about the other yellow fruit (unless you are an orgy type – google it if you dare).

There are moments where we care immensely about ordinary items that everyone has, but not many.

I still consider it a weird world when we panic if our phone falls, but laugh when our friends do.

A meaningful self understanding is that we shop and consume mainly to improve how other people view us. While we conceive of our shopping as enriching our existence, making life more convenient or improving the quality of life (and they may be all true), the ultimate reason is to attain something material that someone else does not have. Thus we propel ourselves in front of them. Why did you buy the 50 inch TV over the 32 inch? Was it your failing eyesight or was it to impress your mates on the next big game day? That self knowledge of who we buy for is sufficient insight to change your own inefficient consumption behaviour. By voicing the question ‘exactly who am I buying this for?’ at point of sale you can nip wasteful expenditure in the bud.

On a deeper level, when your body is fertile soil, will you care for your material possessions? The answer is no as there will be no body and no mind to care. You will not. If you believe in reincarnation then perhaps your experience is important, but your possessions certainly not. If you believe in ‘this is all their is materialism then again when you are dust what you own or don’t own doesn’t matter whatsoever.

Instead of chasing new toys seek out means and ways to become truly intoxicated on life.

Envelope yourself in the experience. Enrich the lives of everyone that crosses your path.

Pay heed to the old advice that who you are matters more what you own.

You can have a more profound impact with an unsolicited act of kindness than adding two more inches to your TV screen.

Is socially responsible investing impossible?


“Successful people have a social responsibility to make the world a better place and not just take from it”
Carrie Underwood



I’d love to hear your thoughts on whether it’s possible to invest ethically.

If you have a portfoliio you may want to invest in companies that are good to people or good to animals or good for the environment or all three. Trouble is socially responsible investing is much harder than you think. In practice my experience has been that it’s virtually impossible.

When you are investing you need a good return. That return has got to be better than the interest rates of a term deposit or why bother taking the risk? Then how ethical are we talking?

Most companies are a mixed bag. They make planes that help you to get around, but they pollute and another arm of the company makes military planes. Some are sold for peace keeping to one group while another group buys them for genocide. All from the same company. Meanwhile the commercial plane plant is taken off shore to the lowest bidder. People work hard for very little money and there are a lot of people out of work in the town where the plant used to be. Conditions of work in the new factory might be terrible and child laborers might be a major part of the workforce.

My view is that ethical investing is noble, but impossible without compromise. No company is the perfect mix of profitable and socially responsible. However, the act of simply considering who you are going into business with is a massive step forward from where we are now. Caring is key. Investing with a completely decoupled view solely focused on making money is never going to help change the world for the better.

What are your thoughts? Is it possible to invest in a socially responsible way?

Multiple streams of passive income

“Success is doing
what you want
when you want
where you want
with whom you want
as much as you want”

Tony Robbins

Everyone wants passive income, but, sorry there is no such thing. Income automation exists and it is relatively easy to achieve, but the creation of income streams with no effort or work is a total myth. Income automation takes massive effort and every single stream will have a lifetime maintenance consequence.

Instead of passive income I like to think income automation or the decoupling of your time from how you earn money. This is at the root junction of simple living, because simple lifestyle or not you are going to have to earn some loot to fund your life.

Start with the simplest income automation. Earnings from dividends, stocks, bonds or bank accounts. It takes a massive effort, usually no less than a lifetime of work, to create the money to invest. Then after you invest you better watch it or one day you might wake up to a surprise. The more intelligent you are as an investor the less likely you’ll lose the house. So the maintenance on this type of income automation takes an ongoing effort of monitoring, researching, trading and learning about strategic investment.

Some people want to make passive income online by creating some form of knowledge product and sitting back while their bank fills up. The truth is this type of income automation is possible. But the creation of the product requires a massive amount of effort to deliver the kind of value that leads to rock-star sales. And besides, behind the curtain there is an ever shifting internet landscape of technology, culture and marketing methods that the seller needs to stay up to speed with to ensure ongoing sales. Again the effort to achieve automation is massive and there is maintenance work required.

Unfortunately there are a lot of young people getting seduced by internet marketers that are selling how to get rich information that tells people to sell how to get rich information on to other people. Basically, a pyramid selling scheme where the guy at the top is probably doing great, but most other people driving trucks and doing it part-time are losing all their spare money down a rabbit hole.

A lot of people blog in hopes of a 7 figure internet income. Its just another money making venture and after a couple of years they give up when the loot fails to reward the effort. We don’t make a dime off this blog. Never have and never expect to. This blog is about living better by spending less so there is no point plugging products because the type of people I’m trying to reach shouldn’t be wasting capital on e-products! Even the ads you see below some of my posts were forced in here by WordPress inc because the traffic was okay and I wasn’t greeding it out on advertising dollars. I’m okay they littered that junk on my pages since I use their technology free after all.

So let’s summarize: passive income isn’t passive. Or if it is it might be stupid behaviour spun up in a marketing narrative. For example I heard this one podcast of a get rich passive income guy where he talked about property. I actually own property and I’m a landlord and since I had the time I gave it a listen. Property is complicated there is a lot of risk and owing the wrong property can be a nightmare, but this guy says he drives around with his wife, takes a picture, flips it to a property manager and asks how much he can rent it for. If the answer is good he buys it and turns it over to the guy to manage for him. No inspections, no hassle, no knowledge required. Anyone who is a landlord can tell you how stupid that sounds. This guy is going to find out, if he hasn’t already (or perhaps he’s actually never owned a property) that failing to inspect can cost you hundreds or thousands or hunderdeds of thousands of dollars. There could be any sort of weathertightness issue or structural issue. Just flat out terrible advice from this ‘internet get rich expert’.

But, let me pivot to another train of thought and away from online hype merchants. If success is as defined in the lead in to this post, like if that is success then we made it already baby! No scammy schemes, no complex internet marketing, no get rich quick junk and most importantly no life time of corporate mortgage slavery. Whoop de whoop.

Right now I can mostly do what I want and I mainly like to spend time with my family. However, I guess I wish more of my friends weren’t so addicted to work and could come out and play. That aside I’ve automated some of my income a while ago, but I still enjoy working. Pretty much only free to help someone or on the odd paid caper that appeals to me. I think financial independence gives you a healthy agnostic view of work life balance. Like if you feel like sleeping in you do and if you get fired for being late – no sweat. Something will come up and there will still be vegetables in the garden for tea tonight.

The point of this post is that I’d like you to transform your thinking from millionaire get rich earning thinking and start living like a millionaire right away. You can live free whenever you choose and it doesn’t take multiple streams of passive income or millions of dollars, or junky property strategies to be free. All you have to do is to make freedom your priority. Once you do you’ll love life again. It becomes easier everyday you live freer than the last. Just free time to earn the minimum you need in the shortest time then spend the rest of the day doing things you love with all of the people that you love.

Only two things will survive the apocalypse: are you one of them?

“I’m convinced my cockroaches have military training, I set off a roach bomb – they diffused it”
Jay London

“There are only two things that will survive the apocalypse” my friend Sam said to me the other day, “hairy men and cockroaches”.

It was his humorous barb at my appearance. His comment on my hair farming venture and my bushy beard is that they make me look like some type of redneck survivalist.

I guess I am, but seriously what simple living gent can be bothered with the cost and hassle of face shaving everyday? I’m a survivalist in as much as I know the market will go up, but it will go down too. If you are saving a good proportion of whatever income you make you will have more money to invest when the market is climbing. The returns ought to be pretty good too. If it falls and your income is affected your lifestyle probably won’t have to change much because through simple living you’ll have savings and skills to solve most of life’s problems.

Simple living is an all weather strategy so I don’t mind being lumped in with the cockroaches.

Breaking down the fundamental myth

“Are these things really better than the things I already have? Or am I just trained to be dissatisfied with what I have now?”
Chuck Palahniuk

The fundamental myth of our way of living is that we improve the quality of our lives through excess consumption.

This entirely unsound ideology is driving our planet to collapse. At the same time it has caused massive wealth and social inequality and is leading to the disappearance of the middle class.

We are led to believe that life can only be this way. The economy, money and our lives can only be lived as we experience it breath by breath. We are discouraged from believing that there are any other ways to share the resources of the planet more fairly. This perfect system we find ourselves born into is natural. Of course the narcissistic, greedy warmonger families that have designed everything (over successive generations long before we were a glint in the eye of our Granddad) use their absolute power to ensure the media, schools and the government reinforce such belief systems. The are not devine, inevitable or natural ideas. It is all a human construct. The designers and owners of the system spread fear and lies when there is talk of change. They generate war for profit and use crisis for social reform that enhances their grip on the power structures. They pedal a cultural narrative that suits a small few at the expense of every single other person, animal, thing, idea, concern, piece of soil, droplet of ocean,  or star in the heavens. These myths aren’t enforced with pens or guns. Mostly they are enforced by your neighbour next door that expects you to act just like them and will make you feel uncomfortable when you don’t.  They’ve been trained how to think, how to feel and how to react their whole lives. Not they run their programme like good little robots. To some degree we all allow ourselves to remain prisoners in a self enforced system of social ties and self conscious conformity, but we both know it’s your life and you are breaking free (or just about to).

The dollar an hour trick

“Life is pretty simple: You do some stuff. Most fails. Some works. You do more of what works. If it works big, others quickly copy it. Then you do something else. The trick is the doing something else”
Tom Peters

We all get bombarded with so much advertising that it’s pretty easy to fall victim to the impulse buy. A few of those a day add up. Go out shopping for produce come home with a bigger TV and you’ve quickly lost the investment opportunity that earned cash brings.

One of the ways to prevent random overspending is to implement a strict dollar per hour policy. Say I go ‘hey I need a can opener!’ the impulsive me rushes out, but he doesn’t buy the $4 option. He buys the $25 electronic option with the built in juicer. This is why my default setting is to body check this behaviour by saying ‘$4 = a 4 hour wait and then if I still want that can opener I go get it’.

The only time I deviate from this personal policy are for real emergencies. In my experience it is best to pay for that medicine right when you need it. I also get stuff when on a couple of consecutive days (usually 3-5) I have wanted to get the thing.

Tricks like this keep $ in your wallet and $ in your wallet eventually get into your call account where they are put to work making you some more lazy income. I particularly like lazy income because I feel less guilty about being idle myself!