A Financial Frame of Mind: Drawing the Line Between Frugal and Obsessively Cheap

Michael Jackson was known for the lavish shopping sprees that he went on for his own amusement. According to unauthorized biographies by Randy J. Tarraborelli and others, though, Jackson could be grasping when it came to compensating the music producers, attorneys, managers, security agents and other professionals whose skills he depended on.

Michael Jackson’s life carries an important moral lesson on the line between frugality and cheapness, generosity and flash.  If your particular brand of financial philosophy hurts anyone — you or others in any way, you’re probably doing something wrong.

What are some of the other tests to apply to yourself?

What is your bottom line — price or value? It’s an important test to apply. If you find yourself picking a cheap, low-capacity computer solely for the price savings to be had and don’t feel like thinking about how you lose out on productivity, you could be crossing the line from frugality to cheapness.

Do you want to save to spend, or just save to save? Those who are frugal love to spend, but only on the things that they personally consider important. They may not shop for clothes or gadgets, but may spend on a college course or a great vacation. The frugal person does want to spend, but wants to do it on their own terms. A person who is cheap saves for no good reason.

Is there any elective spending that makes you happy? If you tend to lean towards cheapness, there is probably no kind of spending that does. Every elective expense leaves you with a feeling of guilt and dread. If you have a healthy attitude to money, though, there are likely to be plenty of things that you can think of, that you would spend on without feeling bad.

Are your choices short-sighted ones? Would you buy a cheaper home for the saving right now, even if it means a poor long-term investment? The inability to loosen up for a better investment is a hallmark of obsessive thrift. When it comes to investments, it’s important to take the long view.

Is your thrift more about smartness or brute force? People who tend towards frugality spend less money by being smart about their shopping. They might always buy quality brands, but choose the previous year’s model to save money. They might spend some time couponing, and always be careful never to pay credit card interest. When you’re cheap, you usually go all out, and simply shut down your spending. Your purchases will tend towards unreliable, low-cost brands, or not buying anything, at all.

Do you like spending to make others happy? Frugal people usually do. They find their careworn minds loosening up when it comes to an opportunity to spend a little money to make someone happy. If you find that you’re unable to happily spend for any reason, there’s a problem.

Finding the will to change

Whether you hold on to your money or blow everything to impress others, you basically value money itself, rather than the power to create happiness that it represents. While being tight-fisted can make you happy in a narrow sense, it can have devastating consequences on your life and the lives of those who depend on you. It’s important to step back, take a look at what your relationship with money does, and gradually develop the will to change. If you’re willing to give yourself enough time, and to begin a careful move towards moderation, you’ll find that it leaves everyone far happier.

Start by spending on others

Buy the best gifts for your loved ones on birthdays and on holidays, going as far as you can afford. Look for good charities to give to, and don’t claim a tax break. Tip well, and be generous when you pay people who work for you.

Certainly, you shouldn’t spend any more than you can actually afford. It’s important when you begin to loosen up, that you are aware of exactly where you’re headed financially. If you aren’t used to being free with your money, it could end in overreach.

Make solid, logically defensible choices

One of the best ways to make the change is to carefully begin paying for greater quality in every purchase. Whether it’s a car where you get greater protection or better quality foods that are more nutritious, upgrades where you can easily calculate the value that you’re getting for your money are an excellent way to begin.

Look for the irrationality

A careful look at your motivations for not wanting to spend money is usually the ultimate way to change. It can take a painful look at yourself to be successful. In the end, though, it’s worth it.

Sheldon Roberson came across frugal living a few years ago, and was instantly hooked as she realized how it could assist her as an investor. She encourages others to learn about these lesser-known ideas and writes on the topic for a small number of blogs.

Tenets of Sustainability: Sustainability can be Cheap

A lot of the time that I’m thinking about sustainability, the cost is one of the first things that come into mind.  There are a lot of great sustainable things out there, but some of them cost a whole boatload of money.  Some of these expensive things will have a pay back period (time it takes to recoup your investment) in the tens of years, if the item ever recoups cost before it needs to be replaced.

The thing with sustainability for most things though, is that it’s cheaper over the long term.  Some of the things you may buy will be more expensive at first, but will be made of a higher quality material and will last much longer, lowering your cost of each use.  Not only are you saving money over the long term, but by not buying something that will need to be replaced in 4 years, you’re keeping garbage out of the landfill.  So, if you’re focused on sustainability, look into high quality items that will last a while – they may be initially more expensive but will most likely be cheaper in the long run.

Over the last 10 or so years, one thing that I’ve noticed at the store is a whole boatload of new “green” products coming out, that are supposedly better for the environment in some way than their “non-green” counterpart.  Of course, the company doesnt really go into detail about why it’s greener, they just say that it is because it uses (or does not use) some ingredient.  Of course, this “green” product often comes with a nice price increase over the non green item, lots of times north of 10%.  I feel like a lot of people are concerned about the planet and want to do the right thing, so they purchase this product that claims to be greener, feeling like their extra money has done some good.  Typically though, the product is just called green and is only marginally better (or not at all) than whatever they non green version is.

One of the best parts about green cleaning solutions (and other green products) is that you can be much more sustainable and use less harsh chemicals if you simply make the product yourself!  I didnt do much of this up until two years ago because I thought that it was difficult, but it really, really isn’t.  Most cleaning solutions can be made with vinegar and water, and perhaps something else to make it smell good, and you can get vinegar for like 1.50 per gallon, where a normal sized bottle of green cleaning solution is like 4 bucks!  Depending on how much you use, you can save a ton of money making your own stuff!

Sustainability isnt just about buying the product with the expensive product with the green label.  Most times, you can save a truckload of money while trying to be more sustainable at the time of purchase as well as over the product lifetime.

Readers: Do you find green products to be more expensive as well, and does that prohibit you from buying them?  When you buy them, do you know why they are greener than their counterpart?

Tenets of Sustainability: DIY

For those of you (probably no one, but I’m being through) that are not familiar it stands for Do It Yourself.  This applies to everything that you can think of, but it’s crucial to sustainability.  One of the reasons that DIY is key to sustainability is because you’re typically reusing things for those types of projects.  The do it yourself not only applies small construction projects, but also to eating, cooking, cleaning and everything else that you do on a daily basis.

One of the most sustainable (and probably easiest) DIY projects is to build a garden.  Most estimates suggest that the food that you eat for dinner travels an average of 1,500 miles before it hits your plate.  For example, the other day H came home and said that we need to go to the store because I need a pineapple for something at her job.  Keep in mind that this is wyoming and we are in the dead of winter (a mild winter, but winter none the less).  Pineapple don’t grow in the state (I dont think, though you may be able to do it in some areas) so I told her not to expect to find one at the store.  Needless to say, I was pretty shocked to find a whole shelf full of pineapples (on sale, no less) at the store.  The tag said that they came from chile, clearly nowhere near wyoming.  This little pineapple has traveled quite ways to get here, on a ship and a train and maybe a truck, using fossil based fuel the whole way, and emitting pollutants.  Of course, I’m not saying that in your garden you will be able to grow pineapple, but this applies to a lot of other fruits.  For a more sustainable solution, try growing food yourself – you’ll be able to save some money and cut back on your food miles.

This doesnt need to stop at vegetable production either (though admittedly for a lot of people it will).  You can raise your own meat and make your own cheeses as well – you’ll need some land to do it, but it is possible.  DIY isnt just for food, either.  You can DIY anything and help out the planet because you’re typically using what you already have or you’re using resources that you paid for, which will encourage you to waste less. You may get more out of a 2×4 when making your own bookshelf than a store or large manufacturing plant would have gotten out of the same piece of wood because for them the smaller portions arent easy to deal with and cost too much.  You can easily find a use for it if you do a whole bunch of products around the house though.

The best part about this is that becoming more sustainable wont cost you much here either.  All you need to DIY things is a willingness to learn and ask questions.  Most of the things that I’ve started to DIY over the last few years the recipes (and ideas) have come from the internet.  It’s cheaper in almost all cases, as well.  Aside from that, my favorite part of DIY is knowing what goes into your stuff – when I bought my own laundry soap, I had no idea why there were phosphates in the soap, and now that I may my own, there arent.

Readers: What do you DIY around the house (and in other areas) to become more sustainable?  Do you think it is better than buying from the store, or not?  Why or Why not?

 

Tenets of Sustainability: Reuse

This post is the third post in a multi part series on sustainability.  These posts are meant to be guidelines on how to make more sustainable choices in your day to day life.  Enjoy!  You can find  the series here

We all know about the scarcity of resources, and this blog even touches on it quite a bit.  You dont have the money do to all the things that you want, and if you did, you’d be Bill Gates, and then you’d run out of time to do all the things you wanted long before you ran out of money.  Not only does scarcity apply to time and money, but it applies to resources as well.  While the ways to get resources is constantly improving, therefore expanding the amount of resources available, the fact remains that there is a finite amount of resources available.  While we cant change the fact that we need to use resources, we can change how much we use over time.  There are of course multiple ways to do this, but today I’ll talk about just one: Reuse.
Once something is bought you cant take the materials used to put it together and put them back where they came from.  Once some iron has been melted down and turned into a steel beam for a building, you cant get the iron ore back.  At this point, you’ve got to work with what you have at the current time, not think about ways that you would have done things different if you were the builder – that could have been over 100 years ago.  When you go to upgrade the building however, you can reuse the steel for something else.  It’s not trash, it’s still a resource and it still has value – perhaps not as much value as it initially did, but there is still someone, somewhere who can reuse it.
Not only is this true for large scale products like steel beams, but it is true on a personal level as well.  For instance, when I moved into my own house and became responsible for fixing up things that broke, I needed tools to do some of the jobs.  Initially, I was thinking that I’d need a huge amount of cash to just get some basic supplies like a circular saw, a drill and a few other things.  Buying those new would have cost a lot of money, and would also have taken quite a few resources out of the ground to build the new tools.  Luckily, my dad had some old tools that he had replaced that still worked just fine, and asked me if I wanted them.  Of course I jumped at the chance to abate a huge cost, and stop some resources from coming out of the ground that didnt have to.  While I didnt get the newest equipment, what I did get works just fine and suits my needs perfectly.
Reuse doesnt just apply to durable goods – basically anything can be reused.  I’ve reused my old t-shirts, old backpack straps trying to fix the dogs camping pack (don’t ask) old jeans and just about anything I can think of.  You can reuse food scraps for stock of any type (Beef, Chicken, Vegetable, Turkey) or compost.  Many things in your daily life can be turned in to multi purpose tools – even after they are no longer usable for the project you bought them for – you just have to keep an open mind and think about what you actually need when working on a project.  Most materials dont need to be thrown away – if you cut them up or otherwise modify them, you can make something out of them if you’re thinking hard enough.
Even if you dont have a generous family member, there are plenty of ways that you can reuse items to save some money (usually a lot) and help out the planet.  Here are a few of my favorite ways:
  1. Look for your item on Craigslist. There are plenty of other people in your area (most likely) that look at the item you’re looking for a useless junk in their house – offer to take it off their hands.
  2. Put the word out to friends/family.  This can help as well for the same reason listed above, but your friend may just give it to you
  3. Garage Sales.  Though this could be tough and you may not find what you’re looking for, you can often find some real gems at garage sales.  Often times people are trying to clear out space and will get rid of some stuff that is oddly expensive (50 ft extension cords, for example) for a fraction of what they would cost you for a new one.
  4. Check the alleys/backroads.  This may not be for everyone, but I’ve been doing it lately.  I’ve been trying to find some borders for my raised garden beds and dont really want to waste new, good lumber on that (nor do I want to pay for it) so when I go driving around little used roads, I’ve been looking for scrap lumber that I can use.

While reusing wont always fit your situation (You may want the warranty that comes with the new item, you may want updated features, etc) often times it’s very overlooked – even by me.  Getting your items used is a great way to keep materials from being used needlessly and save quite a bit of money.

Readers: Do you buy used items or reuse things?  If so, what things do you reuse?

Tenets of Sustainability: Know Thyself

This post is the second post in a multi part series on sustainability.  These posts are meant to be guidelines on how to make more sustainable choices in your day to day life.  Enjoy!  You can find  the first post here.

You may think this is an odd spot to start, but after giving careful consideration I think that knowing what you’re willing (and not willing) to do is key to make you as sustainable as you want to be, and no more sustainable than you think you should be.  If you go too deep into it, you could very well find yourself doing things you dont think are worth your time.  You’ll quickly become resentful and feel like you’re forced to do things that you dont even care much about, such as sprinkling your old coffee grounds on the plants, or walking 8 blocks in bitter cold and sustained wind, all to further your goal of “being more sustainable”.

You dont need to do crap you dont want to do to become more sustainable.  I find this happening a lot in my own life.  I live near the downtown area in my city, and have to run errands down there occasionally over lunch.  Not too long ago, I had to go to the post office to drop some things off.  I started walking over there, and the wind was probably sustained in the 40mph range, with gusts in the mid 50mph range.  I got about a half a block before I turned around and got in the truck and drove the few blocks it took.  While this obviously wasnt the most sustainable thing I’ve ever done, walking over there and being miserable the entire time would have really annoyed me.

The best part about becoming more sustainable is that there’s so many options you can really choose what you do want to do and what you do not want to do.  As my dad always says, “there’s more than one way to skin a cat”, and this is true in this situation as well.  If you’re concerned about the amount of energy you’re using around the house and are not interested in unplugging everything after you’re done using it because you think that’s a pain and dont want to have to plug it all back in later, dont worry about it.  That’s not going to kill all the polar bears.  Try doing something else instead, like installing a programmable thermostat, or getting new, more efficient windows.  These things (once paid for) take no extra action on your part aside from initial set up, and you dont have to mess with a plug 15 times a day.  They’ll still reduce your energy consumption (most likely much more than stopping vampire draw).

Once you figure out what you’re willing to do, keep trying new thing things, eventually, you’ll find your lower limit for sustainability – or perhaps once you get the low hanging fruit you’ll be interested in heading further down the rabbit hole.  Of course, maybe you wont.  What you need to figure out when you decide you want to be greener is how far you’re willing to go.  Once you get to this point, you can head off in as many directions as you want.  You can tackle your personal energy consumption, personal transportation, food sources, and anything else you can think of.

Tenets of Sustainability Series

Those who know me offline are well aware that I’m really not that into rules.  Oftentimes, I feel like they are too suffocating for a variety of reasons – rules don’t take every possible circumstance into account, nor are they adaptable for a unique situation.  Rules are tailor made for “textbook” cases, which almost nothing ever is (for me anyway).  For instance, despite all financial advice to the contrary I had read and heard at the time, I went and took out a loan for a vehicle.  You can read the whole story here, but needless to say, the rules that I was supposed to follow didnt take my situation into account – how could they, as they had no idea what my situation was.

This aversion to rules is pretty established because I feel like rules just cut too hard and can potentially cut in the wrong direction, and I much prefer a set of guidelines or boundaries.  Guidelines are typically more flexible, and can offer room to maneuver where rules can not.  For instance “spend less than you earn” is a nice guideline, but to enjoy you’re money you’re going to have to break that rule at some point (think taking a vacation).  In an interest to continue to become more sustainable, I’ve been working on a series of guidelines for sustainability.  They won’t include things like “Always buy local” or “Dont eat chicken unless you killed it yourself” because some people couldnt bring themselves to kill a chicken, and some dont have the extra money that local goods typically cost.

Instead, this will be a series of posts with very broad guidelines to help you live a more sustainable life – if that’s something you’re interested in.  If not, that’s cool too.  Hopefully, this series will help you look at some easy things you can to to become more sustainable, and not feel like you’re giving up anything fun in the process.  There will be things about your home, your food, your work, reuse of materials, and everything in between.

If you’ve got anything specific you’re curious about, feel free to shoot me a question and I’ll be happy to look into it for you.  The Tenets of Sustainability Series will be posted every wednesday for the next 10 Wednesdays – it would be awesome to have some excellent feedback from you readers (and lurkers)!

This is the first post in a multi post series on sustainability.  Check back soon for more!