Forget Frugality: Focus on Increasing Income

[Mehdi]

Read:
http://www.stevepavlina.com/blog/2009/0 ... cheapness/

and also
http://www.stevepavlina.com/blog/2009/0 ... ucker-bet/ (Stop Fussing Over Expenses and Taxes + Cash Reserves)

Thoughts?

[mjh]

Interesting reads, thanks Mehdi. As a uni student on a low income, I have to be frugal, because my ability to earn is capped by the student allowance rules (if I earn over a certain amount from my job, my government provided student allowance is reduced by an equivalent amount).

But there is a difference between being frugal and being cheap. Frugal, to me, is spending $200 on hiking boots which have lasted me two years, and are still going strong, rather than spending $90 on a cheap pair that will tear up my feet and fall apart quickly. I also think that practicing frugality is useful in combating the often overwhelming consumerism in modern society. So when I chose to buy a small mp3 player rather than an iPod, it was as much about rejecting the idea that an iPod has inherent value beyond its utility, as it was about saving some bucks.

I used to read a lot of personal finance blogs, two of my favorites being iwillteachyoutoberich.com and thesimpledollar.com. However, recently I got rid of thesimpledollar from my reader, for reasons very similar to the Pavlina articles.

While Ramit at iwillteachyoutoberich.com encourages you to spend wisely, he argues that the returns that come from extremes of frugality are dwarfed by those you can get from bigger issues: increasing your earnings, carefully managing your finances and investments, cutting away major money leaks. Trent at thesimpledollar, however, is prone to stressing out about how much paper he wipes his arse with.

So right now I'm practicing frugality, and I think I always will. I just prefer a $5 beer over a $20 cocktail. But I recognize the importance of increasing my earning potential, which is why I've spent this year studying, at great cost.

[Tmv]

I seem to have been doing this a bit lately and to be honest I see how it is working.
Bought the best iPhone out, the thing is one of the best investments I've made. I'm just not happy when I buy cheap shit.

Very strange how I've been reading about alot of stuff lately that I've actually been doing and it's the "smart" way to be living, but I didn't even knoW it was the right way.

[pangram]

I try to get things I 'need' at second-hand stores - so far purchases there have not been disappointing. And usually it's quality stuff.
My standards are not very high, that helps.

[Tmv]

I try to get things I 'need' at second-hand stores - so far purchases there have not been disappointing. And usually it's quality stuff.
My standards are not very high, that helps.

Article makes it seem more mental than that, I got the idea from it that being able to buy the best fit for you will bring you happyness and you should be able to do it with no remorse. For example; I could have spent hundreds less on another 'quality' phone but from previous experience I know that the technology on it gets really slow and old fast as opposed to me buying an iPhone 3gs, flawless phone, super fast convient, now I can sit at work and read articles, blogs, ebooks, post on forums all in the comfort of my hand. Why? Because I didn't go cheap in this decision

[Mehdi]

I realized this stuff this year. I can't think abundance if I'm constantly controlling expenses and thinking "costs too much" etc. So I'm still tracking expenses, but I force myself to make decisions based on what I want, rather than how much it cost. And less stop caring about expenses. I still struggle with it, since I had to teach myself to be frugal & control spendings. Many years ago I used to spend more than I earned (granted I only earned 1400$ at my first job, but still).

There's the other thing about how much money you save vs. how much time you spend. I'm no longer waste hours on the Internet to find a solution to problems. I buy the fricking books/dvds/etc. Do you build home gym equipment to save couple of bucks or do you buy it and spend the time you saved on increasing income?

[Tmv]

Gyms are great for meeting sexy fit women though. Home gyms are very convenient, especially if you have your own business/ work at home alot.

[Gringo]

Nice articles. I have been doing this kinda this year (traveled to Argentina to a design conference and tourism, bought a nice 4000$ computer (for work & gaming), traveled to Miami to pick it up, bought a basic home gym (one barbell 5x5), 100$ art books), cause I could. BUT, right now I'm in a point that I'm really out of money (sucky time of year for some reason - and my main design client can't pay me until next month - fuckers). I still have debts to pay (the stuff I bought and college debt). So it's all nice until the shit hits the fan. But yes, I like the tone of Steve Pavlina's article. I should be working harder/earning more money, instead of worrying about the payments I have to do. Frugality depends on the person... but this is true - if you never had economic problems, then you would never do it. Steve Pavlina and his pals seem to have been always rich.

MJH: I also once was subscribed to thesimpledollar as well, but it got too extreme, as you said. I mean, some points he made out about saving your cell phone bills were good (like avoiding the iphone 2 year contract trap - buy the thing unlocked, or really think about how you use your phone), but the rest...

[TempestTenor]

Great advice, but I think it's only applicable to people who have already conquered frivolous spending and are in a somewhat financially sound position. I would go so far as to say that "increasing income" is an intermediate program that is best undertaken after you complete the "control your spending" beginner's program =)

Of course, the analogy kind of breaks down for those living in poverty and are already spending at a bare minimum. Then by all means skip right to Madcow...I mean..."increase income."

[wrenchhands]

What a worthless article.

First of all, buying more expensive shoes that last longer versus cheap short lasting shoes is still being a cheap skate, it's just being a more informed cheapskate. To get a slower computer and make less money is being financially terrible, I don't know who isn't calculating those things.

But, how often are things truly of higher quality because they are more expensive, and how often are things more expensive due to marketing and soft factors like that? About those 1000 and 100 dollar shoes. You're gonna tell me there's 900 dollars worth of quality between them? Sounds like monster cables to me. And there's the people who buy the nicest equipment but feel that price tag and brand alone are gonna make up for their lack of skill.

As for his talk of tables, I don't get that. A table is just a surface on 4 even legs. "Compromise" to me would be not having 4 legs, part of the surface missing, or something like that. The difference between me and steve is either A) Aesthetics or B) Tag pride. I could give a fuck less about matching sets, I care about functionality. Women and gay men seem to be the ones usually (not always) into matching dining sets and all that crap. Tag pride is just another way for men to compare their wieners. Tag pride is what he gets when he sits at it. I spent this much money on this table, therefore I'm going to condition my mind to like it. Check out this Ted talk for more on that

Things like sleep comfort and food are different, as I feel those values are more tangible and pertinent than tag pride or aesthetics. As for building your own equipment versus buying it, you got me. I bought mine used. I also don't farm, build houses, or a bunch of other things. Doesn't mean I'm not frugal in those areas.

Oh and this paragraph

On the other hand, if you live and work in an environment that doesn’t match what you really want, you’re sending yourself a different message. You’re proclaiming that life is limited and that you’re powerless to fulfill your desires. You’re settling for something you don’t really want. Is that going to lead to happiness? No, you’ll always fall short.

Sounds like Patrick Bateman in American Psycho.

[wrenchhands]

As for that second article, a lot of it seems like arrogance than actual advice. I guess if I had some sort of marketable skill I could sell it and make some income. But I don't.

[Gringo]

When it comes to clothes, you argument holds true but in other areas , it really just depends on the amount of money you have to do it (examples: buying a good computer - going to the soccer world cup - etc). So in essence, work your ass off.

[hardestgainer]

These articles seem to be targetted at people with reasonable income and useless or worse for people like me with no job and very little income.

[Mehdi]

These articles seem to be targetted at people with reasonable income and useless or worse for people like me with no job and very little income.

What I read:
* Play the game offensive: focus on increasing income rather than saving money.
* Act as if you have more money so you learn to think abundance.

[nburge]

Some interesting discussion points. For many years I thought abundance and didn't give a shit how much I spent. I just borrowed the gap between what I earned and what I wanted to spend. I've always had the mindset that I'll "earn my way out of it". About two years ago I gave up my job as a money broker, I was chasing money endlessly and the people who had it (my seniors in the firm were all very very wealthy) were unhappy anyway. They spent so much time at work (or in bars) that they never saw their wives and kids. They often ended up with expensive divorce cases. They weren't happy with the amount of money they had - they were always thinking abundance and being used to a certain way of living - wrench if you've bought a pair of $1000 shoes then you'll never want to wear the $100 shoes again; not because they're worse, just because you feel like you're taking a step backward in life. Most of them were mentally fatigued by the constant battle to make more and more money, for no end goal - they just wasted it on shit; fancy cars they seldom drove, big houses they didn't get to spend time in, high cost education for the kids they never saw...

My salary was marginally better in the new job (a few hundred £'s a month) and I could still earn bonuses. But I'd borrowed right up to the ceiling of what I could afford to repay, and repayments took up a huge slice of my cashflow each month. I hit the same liquidity squeeze the banks now face. So I did what I could do - I went frugal. I looked at my grocery bills and worked out what was important and what wasn't. I can cook tasty food, so I forgo steak and make something with a cheaper cut of meat. I ate more veg and pulses as they filled me up and cost nothing. I haven't bought a new suit in three or four years - I get the pants on mine repaired, and walked about in shoes where I kept the upper shiny whilst the sole leaked when it rained. I bought a bike and started cycling to work rather than pay for the tube. Every pound I saved I kept, not for the repayments, but to enable me to keep up some of the standards I'd become accustomed to - holidays to nice places, meals out with my girlfriend, drinks with my mates, expenses for work etc. I have had MANY months where I've just scraped over the line - paid just in time before I had to ask someone else for help. I got lucky.

I got another new job last year where the salary was higher again, and have started earning bonuses and paying off the debts. I've increased the luxuries I take out of life. I don't worry as much about the last few days before payday. So earning more is definitely the way to improve your life, rather than trying to cutback on spending. HOWEVER - as TempestTenor wrote you need to have the basics of cost control right before earning loads. You need to be able to throttle your expenditure according to your earnings. If you're in a big pile of debt you have to work your ass off to get out of it, and some of that work is in swallowing your pride and being frugal.

With any purchase people make their is a huge gap between "price" and "value" and this is one area people often get confused on. It is worth buying the best quality equipment you can afford (i.e. best value), this will seldom be the ones with the lowest price tag, but sometimes you just don't have an option.