Is frugality for the rich?

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Farm_or
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Re: Is frugality for the rich?

Post by Farm_or » Wed May 02, 2018 7:27 am

@Clarice - thanks for the clarification.

Could be a nagging problem of my own? The powers of perception. Not just me, but the appearance projected on my loved ones.

Self esteem is very important. Although we may be at a different level, I worry about others being negatively impacted by outside influences. My grandma taught me very early that there is nothing wrong with being poor, but that was in no way excuse for being slovenly.

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Re: Is frugality for the rich?

Post by jennypenny » Wed May 02, 2018 8:04 am

@Farm_or -- Have you read Empire of Things ( discussed in this thread)? I think it ties back to whether frugality is for the rich. Consumer items were used as a way to improve one's station and standing. I don't think I appreciated the extent of that and the positive effect it had on poorer and marginalized groups until I read the book. Taking that into account, frugality is a luxury the rich have because they have already achieved status and acceptance in other ways.

I keep posting short answers here because I haven't had time to give it more consideration, but I'll try to soon. I think some of the points in Empire of Things are relevant. Again, I'm not implying that frugality/ERE can't be achieved by anyone, and many wealthy people struggle to understand the point of ERE (that whole 'eye of the needle' thing). I'm only saying that the wealthy have more flexibility including how early they can start the process. A poorer person might have to be a bit spendy to get themselves into a position where they have better options for achieving FI/ERE.

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Re: Is frugality for the rich?

Post by ffj » Wed May 02, 2018 10:12 am

I think what is important to remember is that the frugal woods have made their lives better, no matter their starting point. How many people in their situation (relative starting point) choose not to? A lot. Surely we can give them credit for maximizing their opportunities?

Another thing to consider is that many people in their situation will never have the desire or fortitude to do what they have done. Someone starting out at the bottom has every reason and many times non-choices to work their way up into a better station in life. These people could easily have maintained their status quo and never suffered the first character attack. And lived comfortably.

The irony is that most people with the "head starts" in life squander them. Kudos to them for recognizing their opportunities and capitalizing upon them.

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Re: Is frugality for the rich?

Post by Clarice » Wed May 02, 2018 11:21 am

jennypenny wrote:
Tue May 01, 2018 6:04 pm
Is the ability to choose the only difference between frugality and poverty?
The difference between frugality and poverty is analogous to the difference between strict avoidance of sugar and diabetes. :shock: The latter is a horrible beast that requires a lot of skills to live with and affects every single aspect of your life. The former affects a much more narrow set of circumstances, is quite forgiving to your occasional digressions, and easier on your mind. It is much more fun to drive a beat up Toyota Celica if you, in fact, CAN shell out $200K+ on a Bentley and remain solvent. It is very inconsequential begrudgingly succumb to your aunt's pressure and nibble on a piece of cake at your cousin's wedding, UNLESS you have a diabetes. From a true poverty to FI is a rare journey and very few, if any, people on this forum are experts on this one. If you are poor the ability to choose is still with you. It takes a lot of courage to pick the best bad option. I imagine a true poverty as sitting in a motel room, on which I've spent my last money, thinking about my child in foster care, and calculating how to handle a sleazebag of a manager at my new job at McDonald's. :cry:
Also, frugality is often a personal act aimed to offset the iatrogenic effect of money. At my job I often observe iatrogenic effects of medical intervention. I am very interested in iatrogenic effects of money as well. Maybe a separate thread?

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Re: Is frugality for the rich?

Post by classical_Liberal » Wed May 02, 2018 1:20 pm

The greatest assets to FI are 1) Geographic and temporal luck of the draw. Born in a western capitalist nation, now or recent history. 2)Exposure to different ideas/thought processes. In particular the way in which different socio-economic classes view and handle money. 3) Intelligence to comprehend and take advantage of these ideas (hence my previous IQ comments).

This is why easy mode is so often a person with working or middle class beginnings, who then moves to upper-middle/lower-upper class status due to higher than average intelligence tends to be most successful in FI (frugalwoods?). They understand the principals of working/middle class DYI & stretching a dollar, along with the upper-middle/lower-upper class principals regarding investment of capital. They are smart enough to realize if they reject the upper-middle/lower-upper class instinct to look like the wealthy via status symbols required to maintain standing for the wealthy (which is easier to do if comfortable in a working class living situation), but use the capital accumulation skills employee by those classes, good things happen quickly.

Once we are dealing with folks who have #1, but are 2+ standard deviations on the positive side of intelligence #3 (much of this forum, sadly sans me), actually experiencing the different socio-economic situations is not a requirement. They are able to use intelligence to independently extrapolate ideas from all classes to generate exceptional results. Hence ERE is born.

From a standpoint of iatrogenic effects of money. Imagine an upper-class person who has never been exposed to differing views of money. This persons Ivy league education was a requisite of family donations, minimal exposure to the other classes. Suddenly, tragedy befalls the family name. Fortunes and connections quickly dry up. How can this person imagine a situation in which they have to do their own housework? Do people actually do that themselves? "Work" to this person is maintaining family name and social standing. If that situation is irretrievable damaged they would have no clue how to proceed (sorry for picking on the rich, but it's an easy example).

The ideas @JP and others express about poverty are examples of nonexpousre due to the exact opposite reasons. Still, someone in poverty with average or above intelligence and/or work ethic can gain exposure to more socio-economic classes and improve there lot vis-a-vis @campitor's statements. It's just less easy.

Or maybe this framework is just wrong...

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jennypenny
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Re: Is frugality for the rich?

Post by jennypenny » Wed May 02, 2018 2:20 pm

@Clarice -- I asked because I'm really curious about the definition of frugality. I'm having trouble with it. It's obviously not simply a definition of behavior because no one would equate the low-sugar diets in your example because the motivations are different. It's not only about the motivation though, because someone saving money on a yacht or buying it used isn't 'frugal' in the same way as someone foregoing a car or large house. Or can they?

I'm curious too if the 'choice' factor is an american thing. We like to feel like we have choices.


@C_L -- not sure what you mean by exposure


I'm not knocking frugalwoods. I'm only pointing out that some people start the game in a better position. If you look at it like a video game, some people start the game with higher stats. Poor people might play the game better but it's because they've had to -- they don't have as much HP/PP/inventory and will get bounced much more quickly. Rich people can play poorly for a long time before they have to worry about upping their game (and many have the $$/connections to respawn).

If you look at it strictly from an FI perspective, it's hard to judge people who eschew frugality if they have more than enough money to cover their lifestyle. If you look at it from an ERE perspective though, resource use is an important factor so frugality is required and should be defined in a more absolute fashion IMO.
Last edited by jennypenny on Wed May 02, 2018 5:15 pm, edited 1 time in total.

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Re: Is frugality for the rich?

Post by jacob » Wed May 02, 2018 5:11 pm

If we go with an operational/pragmatic definition then whether frugality is absolute or relative depends on who you hang out with/run into.

Privately and within a limited socioeconomic group, frugality is relative. You can be the frugal one in the yacht club as you spend $10,000 on a suit of used racing sails instead of having them special ordered from North Sails and only using them for half a season before ordering new ones because they got too stretched.

On the internet, there's a good chance you'll eventually run into everybody, especially if you get popular or randomly exposed to the mainstream or some well-intentioned fool shares something you wrote on facebook afterwhich it went viral. In that case, frugality as well as pretty much everything else is absolute. As a blogger/author/facebook/twitter-poster, one will learn this sooner or later, either the easy way or the hard way. Ha!

When you're blogging, you're definitely swimming in the latter sea. Since I deliberately try to spend as little as possible (on both the absolute), I've been accused of being a "poverty tourist" when skirmishing with mainstream commentors.

It's definitely helpful to understand what Clarice points out that there's a big difference between living on $7k/year and being $7,000 in debt while having creditors knocking on your door and living on $7k/year and having $700,000 in the bank readily to tackle any emergency or jump on any opportunity (like flipping new racing sails?!) that might come along. Those are two very different games. I called them 2a and 2b above. Add a third game with 7k in expenses, 70k in income, and 700k in assets.

The only thing these three actually have in common is the spending level.

Lets torture a boxing metaphor(*). Lets assume that there weren't any such thing as weight classes and everybody fights against each other. Then weighing 220 pounds would be easy mode---that's like being 7ft tall in basketball or having two-sigma IQ (H/T c_l). You don't have to make wise and experienced decisions because you can rely on height or smarts. Weighing 180 would be average mode. And weighing 140 would be hard mode. If you're 140, you have to train very hard and make boxing your life mission, but if you do, you can do well against a 220 pound average/half-ass. That's hard-mode. If you're 220, all you need to do is to train for a year or two and you can do quite well again all the light-weights and fairly well against your own. That's easy-mode.

(*) Which should work well, because it's not that easy to move 80 pounds up in weight class.

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Re: Is frugality for the rich?

Post by jennypenny » Wed May 02, 2018 6:55 pm

I understand Clarice's point that they aren't the same. I thought my point made that clear but apparently not.

I think I'm just hung up on language as usual. Frugal is a word like 'sacrifice' that people toss around to mean deliberately doing without something (regardless of value or need), and that drives me nuts too. I'll let it go.

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Re: Is frugality for the rich?

Post by IlliniDave » Thu May 03, 2018 3:44 am

I have a nephew who is poor, he does not work on a regular basis, but he has a lot of nice things (compared to say, me) via a combination of borrowing money and nefarious skill at emotionally manipulating my dad and mooching off him (e.g., basically moved in with him the day of Mom's funeral). I have another nephew, the aforementioned's younger brother, that is poor. He works more steadily than the other. He is careful with his money, lives within his means, doesn't borrow money, does not mooch off his grandfather nor anyone else (is always the first to show up and help when there is work to be done while his deadbeat brother always has a "conflict"), and maintains his own residence and transportation, etc. Overall a lower "standard of living" than his brother despite higher income. In other words, one is frugal, the other is not; and in principle they both are exercising a choice regarding frugality. My younger nephew is not on the path to FIRE via frugality, largely due to his income level being well below median, but frugality is still a choice.

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Re: Is frugality for the rich?

Post by 7Wannabe5 » Thu May 03, 2018 6:42 am

@jp: Maybe frugality could best be defined as Maximization of Quality of Life/Resource Allocation? Of course, QOL is a much squishier metric than even SOL, so kinda gotta "A loaf of bread, a jug of wine, and thou.." it.

Obviously, I am on the slacker privileged party girl path to ERE/FI, and will likely only be able to pull it off by my self-assigned end date in some manner similar to how I managed to get into a decent university even though I went AWOL from 10th grade (SAT scores, flirting with AP chem teacher,, etc.) Also, I am currently totally mooching off of my elite American male BF likely due to either my fantastic skills at emotional manipulation ("Please, Sir, may I have some more?" form small bowl with hands, bat-bat eyelashes) OR my weak boundaries at maintaining my preferred running free like a chipmunk in the woods lifestyle (lured into captivity once more by some old man in the park holding a bag of nuts-sigh.)

So, I am not by any means speaking about challenges faced by myself when I note that this week I was engaged in the attempt to educate a five year old who was sent to school hungry (I witnessed him eating 2 full lunches, two bags of fruit, and 4 slices of banana bread in the course of a couple hours), and wearing no socks or underwear, and another 5 year old who was tested at the functional level of 16 months. I would further note that I just accepted a new job tutoring in a neighborhood which is so much worse than average, I am being offered an additional $8 an hour (enough to pay minimum wage to another worker) over standard to try to help educate the children who live there. I am employed by a privatized segment of the educational system, so this pay hike necessary to get somebody with my level of competence on the job is market or below market pricing (they were fairly desperate to get me on board), so consider the difficulties that would be faced by a child trying to get out of such a neighborhood.

IOW, there are some individuals who face HUGE upward slopes right from the get-go, and there are other individuals in our society who will never be able to care for themselves, let alone achieve ERE/FI. So, as individuals, or members of society, we have to decide what constitutes reasonable and rational attempt to provide fair playing field or reasonable level of humanity in providing care for those who are less fortunate. If you think everybody has equal opportunity and was dealt equal resources at the beginning of play, then it seems to me that you must not get out and about much.

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Re: Is frugality for the rich?

Post by Farm_or » Thu May 03, 2018 7:34 am

A lot of this is coming around to freedom of choice and awareness of cause and effect.

In a free society, we have to tolerate others making bad choices. The self inflicted poor and the diabetics (strangely are often the same). The flip side for those making the right choices, is unlimited rewards - great health and prosperity.

I came from immigrants. I know a lot of immigrants of different races. I grew up next to a reservation. I have witnessed all types of poverty.

I have seen the conquest of the human spirit in a free society. Many immigrants from all over the world risk life and limb just for the chance of success in free society. So many tales of rags to riches - all using frugal philosophy. That's my hang up with "frugality is another luxury of the rich".

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Re: Is frugality for the rich?

Post by suomalainen » Thu May 03, 2018 5:12 pm

I dunno. I may be an outlier here, but for me hard vs easy is determined more along the relationship status dimension than on the income dimension. Single = easy. Married = moderate. Married with kids = hard. Frugality to me seems easy when there's no need to compromise. I suppose it is true that I'm assuming a lack of poverty.

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Re: Is frugality for the rich?

Post by 7Wannabe5 » Fri May 04, 2018 6:18 am

@suomalainen:

I think you are on the right track which could be generalized in terms of boundaries.
Farm-or wrote:The self inflicted poor and the diabetics (strangely are often the same).
If you are black and male, your odds of becoming diabetic are much greater than if you are white and female. I probably eat a good deal more pastry than many "self-inficted" diabetics.

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Re: Is frugality for the rich?

Post by Fish » Thu May 10, 2018 8:15 am

I've added a 2nd chart to my earlier post, which shows income distribution among households with varying numbers of income earners. It's helpful for seeing where you stand among your peers. Link: viewtopic.php?p=164550#p164550
jennypenny wrote:
Sun Apr 08, 2018 1:04 pm
The chart also shows that if a person is going to 'follow their passion' into a low-income field (social work, musician), then they must stare at that chart until they realize what they are facing as far as FIRE prospects. This is what I've done with my kids. I've hammered at them to learn all they can, make as much money as possible, and then start indulging their passions once they've crossed the FI threshold.
Jenny, what a nice insight and excellent advice! I will plan to do this with my kids.

When researching this subject, I came across an epic chart which showed employment levels and wages across different occupations. I couldn't find it, so I ended up recreating something very similar using BLS Occupational Employment data (May 2017, national): https://www.bls.gov/oes/tables.htm The BLS data contains wage data at the 10th, 25th, median, 75th, and 90th percentiles so you get an idea for the inequality within a particular occupation. Although the BLS tracks >800 detailed job categories, I only show their 22 major occupational groups here. Some assumptions were made to fill in the gaps, so this data is not very accurate... but it should be good enough for getting a general idea of which occupations/industries are favorable in terms of employment demand (do jobs exist?) and income distribution. It's recommended to review this kind of data before selecting a college major or making long-term career choices.

(click for larger image)Image

Income percentile is among all the occupations in the employment statistics... the distribution is similar to the single income earner line in the 1st link of this post, except the full-time annual income at 0th percentile (y-intercept) converges to ~16k instead of going to zero.

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Re: Is frugality for the rich?

Post by jennypenny » Tue May 15, 2018 7:53 pm

Frugalwoods on PBS Newshour (ERE has a cameo) ... https://www.youtube.com/watch?v=EU6607PgzCE

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Re: Is frugality for the rich?

Post by Jason » Sat May 26, 2018 10:20 am

I don't know if frugality is for the rich but I think the issue is that its not taught as a way to get rich. I think that's the shame. That a pathway that most people can handle, the way that is most likely to keep them honest and out of trouble and is most likely their only way to get rich in the first place is staring at them but is not taken advantage of. I know that personally. Its why the "Uh oh" moment is often the "oh shit" moment when you realize it was most likely not intelligence, competence, or luck but personal behavior and decisions that explains how much money you do or do not have. I mean this shit is understandable to a child. "If you don't pay for that candy bar now, but put in the bank, in thirty years you can have all the fucking candy you want."

And I do not begrudge the Frugalwoods and her Little House on The Prairie chic. You can always look for rationalizations why some have and you don't.

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Re: Is frugality for the rich?

Post by jacob » Fri Jul 20, 2018 12:22 pm


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Re: Is frugality for the rich?

Post by prognastat » Fri Jul 20, 2018 12:39 pm

@Jacob

Him mentioning you doing it on far less kind of disputes the it can't be done aspect of the article...

Sure it isn't as easy as when you are making above average income, but that doesn't mean it can't be done. Just that is is much harder. You can't just live almost like everyone else that isn't focused at all on FIRE. Also he even mentioned you managing on $7.000 in an article where he is trying to say that $36.000 is bare bones for 2 people. If someone made the average income and was spending $7.000 annually they would have a savings rate of about 85% and should be able to retire in 5 years.

If you want to spend more you can, but that doesn't make it impossible. Of course it's harder than if you make more, but someone making minimum wage could easily say the same thing to someone making an average income.

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Re: Is frugality for the rich?

Post by jennypenny » Fri Jul 20, 2018 1:24 pm

The Flannel Guy article does a good job of explaining why it's much more difficult for lower and middle income families to achieve FIRE. What he doesn't mention though, is that IMO it's more imperative that middle/lower income families push towards FIRE because one economic hiccup and they could end up in a cycle of debt they can't get out of, putting FIRE permanently out of reach. If they aim for FIRE aggressively, they'll have the money to avoid falling into that kind of hole. If the math shows it will take someone 20-30 years, realistically they'll only get one shot at it.

Wealthier people need less time to achieve FIRE, so have the luxury of being able to fail and respawn a couple times yet still reach FIRE at a reasonable age.

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Re: Is frugality for the rich?

Post by Campitor » Fri Jul 20, 2018 1:33 pm

Immigrants are not opposed to living with extended family or friends to save money. It's not unusual to see 10 people living in a 2 to 3 bedroom apartment. Yes it sucks but sacrifices have to be made to escape poverty.

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