Author Topic: Frugality - relative or absolute?  (Read 12529 times)

cygnus

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Frugality - relative or absolute?
« on: May 11, 2014, 05:47:02 AM »
I am new to this group but I feel as if I have finally found like minded people who behave responsibly with their finances and have their priorities set correctly.

Here is my question.  What if I said I was a true Mustachian that has been 100% debt free for the past 10 years, I spend only 20% of my income, have a job that I enjoy and doesn't interfere with my family life (wife and teenage children) and I lead a "frugal" lifestyle while still allowing myself to have quality family time and meet my financial goals.  Lets say I made $100,000 year, spent only $20k (the rest goes to taxes and savings), had an investment account of $400k and a paid off home worth $100k.  Would you call that person a Mustachian - I think so. 

What if you added a 0 to those numbers - $1million income, $4M investment account, $1M home and spent $200K a year (the rest goes to $450K in savings, $350K in taxes).  Would you still consider me a Mustachian if I spent $200,000 a year?  Is frugality an absolute or a relative concept?  If I spend "only" 20% of my income, is that frugal even though the absolute number is very large?

Elaine

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Re: Frugality - relative or absolute?
« Reply #1 on: May 11, 2014, 06:40:34 AM »
This is a really interesting question. I personally would say no, to me the person in the second "extra zero" scenario is not frugal. It's interesting though, because they would probably feel frugal, since compared to their peers they would be spending much less. I would say that they were living below their means, and that they were responsible with money, but not frugal.

I have a relative who is like this, they have two homes that are well over 5M each, all three kids in private elementary and middle school (20k per kid per year). To be fair, they are incredibly high earners and can "afford" this lifestyle, I doubt they have any debt. However, this relative recently told me that she had read my blog and that it resonated with her because she considers herself a minimalist and she doesn't care about "stuff" or status, or what other people think. While it may be true that she is less consumer driven than some of her peers, I would still say that her thinking is pretty infected. I think realistically she would have a very difficult time adjusting to a lower cost area, living in a modest house, dressing in JC Penny clothes, and driving a non-luxury car.

For me, and I realize this is totally subjective, frugality is intrinsically linked to minimalism and a feeling of "enough". My lifestyle right now provides me with everything that I need, and I spend the same amount now as when I worked close to minimum wage. Having more money doesn't change what my basic needs are, it just increases my options for consumption.

samburger

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Re: Frugality - relative or absolute?
« Reply #2 on: May 11, 2014, 07:04:33 AM »
We see plenty of people who make, say, $400k/year and spend $100k/year. They consider themselves frugal--and it's tough to argue with them, considering what they're stashing...!

That said, Elaine captures my personal definition of frugal well:

For me, and I realize this is totally subjective, frugality is intrinsically linked to minimalism and a feeling of "enough". My lifestyle right now provides me with everything that I need, and I spend the same amount now as when I worked close to minimum wage. Having more money doesn't change what my basic needs are, it just increases my options for consumption.

If I woke up tomorrow and had a $1M income, I wouldn't consider myself a frugal if I jacked my expenses up to $200k/yr.

Westoftown

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Re: Frugality - relative or absolute?
« Reply #3 on: May 11, 2014, 07:12:13 AM »
I would have to agree that the pursuit of minimalism is not relative.  It it were, each time I received a raise or bonus I would need to increase my expenses proportionally.   The moral is that things do not buy happiness, so even though you have more money, its not wise to chase more spending.  Thats pretty much rule #1 of MMM!  That said, you're always free to do whatever you choose, and spending money on something you value isnt a sin - as long as you can afford it.

huadpe

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Re: Frugality - relative or absolute?
« Reply #4 on: May 11, 2014, 08:41:12 AM »
I think there are some elements which can be relative, but most are not.  For example, housing cost can vary a ton depending where you are.  Since there aren't that many careers that make you $1 million a year, I'm taking a guess you're in a very expensive city (e.g. NY, Boston, DC, LA, or the SF bay area if the United States)  In those cities, living in a 1000sqft home (including apartment) near enough to bike/quickly transit to a downtown office job is mind-bogglingly expensive.  Since the pay for your job is so great, I wouldn't begrudge that one element of high spending.  You're essentially paying a bit of extra tax in the form of housing in order to have a monster income that lets you retire early.

So break it down a little: how much of the $200k spend is housing, and roughly what sort of housing is that getting you?

BFGirl

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Re: Frugality - relative or absolute?
« Reply #5 on: May 11, 2014, 09:37:26 AM »
I would still consider you Mustachian.  For me it is about being responsible enough with your finances that you have the freedom to live your life and enjoy your family without being a slave to your job or consumerism. 

The Happy Philosopher

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Re: Frugality - relative or absolute?
« Reply #6 on: May 11, 2014, 09:48:51 AM »
This is a really interesting question. I personally would say no, to me the person in the second "extra zero" scenario is not frugal. It's interesting though, because they would probably feel frugal, since compared to their peers they would be spending much less. I would say that they were living below their means, and that they were responsible with money, but not frugal.

I have a relative who is like this, they have two homes that are well over 5M each, all three kids in private elementary and middle school (20k per kid per year). To be fair, they are incredibly high earners and can "afford" this lifestyle, I doubt they have any debt. However, this relative recently told me that she had read my blog and that it resonated with her because she considers herself a minimalist and she doesn't care about "stuff" or status, or what other people think. While it may be true that she is less consumer driven than some of her peers, I would still say that her thinking is pretty infected. I think realistically she would have a very difficult time adjusting to a lower cost area, living in a modest house, dressing in JC Penny clothes, and driving a non-luxury car.

For me, and I realize this is totally subjective, frugality is intrinsically linked to minimalism and a feeling of "enough". My lifestyle right now provides me with everything that I need, and I spend the same amount now as when I worked close to minimum wage. Having more money doesn't change what my basic needs are, it just increases my options for consumption.

Great question! I will take the opposite side of the argument. I think it is mostly relative. Do the experiment by reducing the the numbers by a factor of 10. In many parts of the world 20k/year would seem incredibly luxurious. If we are defining mustachianism as minimalism and frugality then MMM himself wouldn't really fit the criteria because by his own admission he states he lives an extremely luxurious lifestyle. Mustachianism is a state of mind, not a dollar amount. It is learning to dissociate money from happiness. It is about freedom. It is about environmentalism. It is about growth, learning and understanding a little psychology and philosophy along the way. It's about spending consciously on things that bring maximum happiness.

If I live in a very expensive condo in a perfect location in a very expensive city (let's say 3000/mo. am I less mustachian than someone living in a rat infested slum in the same city with an extremely high crime rate (let's say this only costs 500/mo). Would I need to get 5 room mates to be as mustachian?

Another question. Do you have to save any money at all to be mustachian? What if you make 15k/yr and spend 15k/yr, are happy working a part time job that provides this. Change the numbers to 50k. Is one of these people " more mustachian"?

I really love the question op!

cygnus

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Re: Frugality - relative or absolute?
« Reply #7 on: May 11, 2014, 09:58:32 AM »

Those are all great comments and are things I often contemplate.  Until I became financially independent I was more of a minimalist.  We always had enough but I saved like crazy to get to this point.  What changed my thought process was the concept of "life is too short... so why hold back just for the sake of saving more". 

We never went on vacations that weren't a car ride away - we had great memories and I wouldn't change that.  But now that we have the means, why not go to Europe and show our kids different cultures and parts of the world.  Being "frugal" we go off season and stay in great hotels but at a much lower cost than in season (spend $6,000 on a trip that would cost $15,000).  We don't spend to keep up with the neighbors but we spend on trips, food, entertainment - life experiences - more than on flashy luxury.
 
I do struggle with my frugality (good problem to have I guess) but these comments are very helpful.

former player

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Re: Frugality - relative or absolute?
« Reply #8 on: May 11, 2014, 10:14:14 AM »
A careful reading of mustachianism reveals that it is not just about how much we spend vs how much we earn, but is also about not trashing the planet.

I'd tend to say that someone earning $100,000 a year and spending only $20,000 on themselves, their spouse and their two teenage children (OP's first example) in the USA may not be living particularly well and is probably not doing themselves, their spouse and their teenage children any favours.

On the other hand, someone spending $200,000 a year on themselves, spouse and two teenage children is probably spoiling the kids and unnecessarily trashing the planet.

Mustachianism is about sustainability, proportion, balance and consideration for others and the planet, no?  Not just about the dollar figures?

ZMonet

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Re: Frugality - relative or absolute?
« Reply #9 on: May 11, 2014, 10:54:01 AM »
To me, being Mustachian isn't as much about being frugal as it is about being efficient and about being fully mindful/cognoscente of the choices that we make.  In terms of frugality, I do think it is relative and Faellie gives a good example to illustrate that point.  Another: Is Jacob frugal and MMM not?

Celda

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Re: Frugality - relative or absolute?
« Reply #10 on: May 11, 2014, 12:37:29 PM »
It is definitely absolute.

A person's needs do not change based on income. They may change based on location (e.g. spending 20K a year may be required for basic needs in America, but only 5K a year in a developing country), but not on income.

Someone who spends 200K a year is most certainly not frugal.

tracipam

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Re: Frugality - relative or absolute?
« Reply #11 on: May 11, 2014, 12:59:19 PM »

If frugality is absolute, then all of us fail: remember, spending even $20,000 is not normal by worldwide standards.  Real frugality would be somewhere on the order of $1/day, in global terms.  Right?  I presume that anyone accessing a computer in the 1st world is not meeting that definition. 

I think we're conflicted over whether we're discussing Mustachity vs frugality.  The $1M-er is Mustachian by my definition--but frugal?  That's the question. :-)  If we're discussing in terms of the world, I think we would only consider ourselves to be frugal if we are consuming our percentage of the world resources at a level that, if everyone alive matched it, would be net sustainable.  And I don't know about the rest of you, but I'm not making it.   I think my level of consumption is about 2-3x sustainable world levels, last I checked. 


homeymomma

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Re: Frugality - relative or absolute?
« Reply #12 on: May 11, 2014, 02:23:29 PM »
It is definitely absolute.

A person's needs do not change based on income. They may change based on location (e.g. spending 20K a year may be required for basic needs in America, but only 5K a year in a developing country), but not on income.

Someone who spends 200K a year is most certainly not frugal.

I think it could be considered frugal in certain situations. One might have to be very mustachian in daily lifestyle if one chooses to lives in a city condo or house in, say, NYC, and chooses to send their multiple children to private instead of public schools. If they choose to do all of these (reasonable in a lower COL area but often unattainable in high COL area) things, they may not need a car, and may have a very small Eco-footprint. They simply value an urban, no-car lifestyle, and good quality education for their children. Mustachianism is not just about spending as little money as possible. It's about limiting spending on frivolous things so your money is available for your personal priorities (be they FIRE, family, your childrens future, traveling and seeing the world, whatever!)

But I agree that frugality and mustachianism are different. Frugality I suppose is purely financial. Mustachianism seems to have a higher goal of a happy and sustainable life, which might actually cost MORE to achieve fully (high COL area requires much higher housing costs if you want to live close to amenities or your job). I can easily see this combination reaching 200K per year is certain cities.

deborah

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Re: Frugality - relative or absolute?
« Reply #13 on: May 11, 2014, 02:44:54 PM »
This is a question I have been pondering ever since I found this site (well, not exactly - I certainly am not adding a 0). Once you have stopped having your "hair on fire", I think that Mustachianism is being conscious of your decisions and working towards making better environmental ones on an ongoing basis. This encourages you to live a simpler life which, in turn, increases your happiness.

This is a continuous process - MMM himself is gradually reducing spending, and most of his posts are about one of the aspects above, including his environmental experiments (like reducing the amount of washing he does).

The fundamental reason I consider myself Mustachian is not my level of spending (which is low, but not as low as MMM), but that I am actively following this process myself, and expect to do so for most of the rest of my life.

So, the original poster has not really provided the information to answer the question. I think he knows the answer to whether he is frugal!

Thegoblinchief

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Re: Frugality - relative or absolute?
« Reply #14 on: May 11, 2014, 08:43:17 PM »
There are hard and fast rules, but most of it comes down to what you, yourself value.

Look at all of the varied Case Study threads, particularly on the forums. Most have one or two real red flags (the absolutes) but a lot of it comes down to relative priorities and the most efficient way to achieve those.

Making it a binary choice is interesting for debate, but it's both. Life is too complicated for either/or.

The more I think about it, Frugality being an absolute is just silly. What, we have to index it to inflation now?

Zikoris

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Re: Frugality - relative or absolute?
« Reply #15 on: May 11, 2014, 08:45:27 PM »
  If we're discussing in terms of the world, I think we would only consider ourselves to be frugal if we are consuming our percentage of the world resources at a level that, if everyone alive matched it, would be net sustainable.  And I don't know about the rest of you, but I'm not making it.   I think my level of consumption is about 2-3x sustainable world levels, last I checked.

This is a really interesting idea. I wonder if anyone has ever figured out what standard of living would be the baseline?

I would guess that we would meet it - small apartment shared by two people, no car, no buying crap, and very little waste produced. It would be interesting to know.

CarDude

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Re: Frugality - relative or absolute?
« Reply #16 on: May 11, 2014, 08:53:44 PM »

If frugality is absolute, then all of us fail: remember, spending even $20,000 is not normal by worldwide standards.  Real frugality would be somewhere on the order of $1/day, in global terms.  Right?  I presume that anyone accessing a computer in the 1st world is not meeting that definition. 

I think we're conflicted over whether we're discussing Mustachity vs frugality.  The $1M-er is Mustachian by my definition--but frugal?  That's the question. :-)  If we're discussing in terms of the world, I think we would only consider ourselves to be frugal if we are consuming our percentage of the world resources at a level that, if everyone alive matched it, would be net sustainable.  And I don't know about the rest of you, but I'm not making it.   I think my level of consumption is about 2-3x sustainable world levels, last I checked.


These are great points here. I feel a lot of discussions here turn into 'Mustachianer than thou' arguments (e.g., 'how dare you drive instead of bike?' or 'why not use a clothesline instead of a dryer, energy hog!') when in the end, all of us are still living in the collective lap of luxury compared to how most folks in the world do. And while perfect shouldn't be the enemy of the good, it would probably do a lot more good for all of us to keep encouraging each other to consume less rather than lambasting each other for spending money on our individual pet peeves.

mikefixac

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Re: Frugality - relative or absolute?
« Reply #17 on: May 11, 2014, 10:15:03 PM »
Sorry if I'm a bit crude, but if I was making that kind of money and saving that large a portion of it, who gives a shit.

happy

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Re: Frugality - relative or absolute?
« Reply #18 on: May 12, 2014, 03:00:05 AM »
Firstly lets compare apples with apples. Mustachian is not the same as frugal.
To me frugal is a relatively absolute term:  spending 200k is not frugal. However frugal is not merely defined by a dollar spend either.
Mustachianism is a wider set of principles that amongst other things includes a tendency to be frugal. I think it can tolerate some grey zone of spending - as in an MMM spend > Jacob ERE spend.  But again, no matter how I look at it 200k spend is not mustachian. I think its easy to define extremes but where the cutoff is in the middle is hard to say.

Honestly I think any self-respecting mustachian earning a mill a year, would work somewhere between 6 months - 1 year, maybe up to 2 years if hyper anxious, and then retire.

marty998

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Re: Frugality - relative or absolute?
« Reply #19 on: May 12, 2014, 06:27:01 AM »
Sorry if I'm a bit crude, but if I was making that kind of money and saving that large a portion of it, who gives a shit.

How true.

But I will pose a question in regards to the following quote. (Not calling you out specifically Celda, just quoting your post as it covers lots of sentiment on this thread).

It is definitely absolute.

A person's needs do not change based on income. They may change based on location (e.g. spending 20K a year may be required for basic needs in America, but only 5K a year in a developing country), but not on income.

Someone who spends 200K a year is most certainly not frugal.

If a $200k spender was able to buy $1m worth of goods/services/value with said $200k, would that not be frugal?

happy

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Re: Frugality - relative or absolute?
« Reply #20 on: May 12, 2014, 06:41:06 AM »
That would definitely be efficient…but a frugal person would probably buy a lot less than 200k's worth (even at that deep discount) and only those things that they needed. A frugal person would buy only the amount they could use without spoilage, unless they planned to sell it on at a profit.And so it might depend on what good and services you were talking about.

matchewed

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Re: Frugality - relative or absolute?
« Reply #21 on: May 12, 2014, 08:23:55 AM »
Well if we're all in agreement with a working definition of frugality being (source)
Quote
Frugality is the quality of being frugal, sparing, thrifty, prudent or economical in the consumption of consumable resources such as food, time or money, and avoiding waste, lavishness or extravagance.

then no 200k in expenses doesn't fit that definition. We've met an absolute-ish. Is it an absolute to everyone? No as evidenced by past members of this board who have come in to complain about living extravagant lifestyles and how hard it is for them to save.

That being said I think Jacob has put it best from this article.

Quote
The second and more important aspect is the $7,000/year. The Wheaton Eco-scale explains this in a brilliant way. Consider people living at different budgets, e.g. $100k, $80k, $60k, $50k, $40k, $30k $20k, $15k, $10k, $7.5k, $5k, $2.5, $1k, and $0k. Now, what Wheaton observes is that people who spend one or two levels below you are inspiring to you in terms of budget reductions. People who spend three levels below you are slightly nutty and people who spend four or more levels below your level are crazy or downright extreme. This holds no matter where you are. If you spend 60k, then 50k and 40k is inspiring, 30k is nutty and 20k is crazy. If you spend 30k, then 20k and 15k is inspiring, 10k is nutty, and 7.5k is crazy. Conversely, people who spend a couple of levels above you are considered prodigal and wasteful.

The problem is that budgets denominated in dollars are very one-dimensional. If you look at the article above of a guy who spends 20k/year—that’s almost three times as much as I do— while living in the same area (San Francisco bay area), I note that he does something I don’t (go to bars) but I have something he hasn’t (health insurance). Otherwise we have and do many of the same things.

What is the difference? If I had to venture a guess, I’d say I’m more frugal (the way your grandparents were frugal—in fact what I do wouldn’t be considered very extreme by your grandparents or great grandparents—I’d probably be average from their perspective) and I adhere more to a do-it-your-self ethics. I’d also suspect that I’ve solved the housing situation better. On the other hand, he doesn’t have a car (but in San Francisco, that would be normal).

What really is remarkable is the similarity in lifestyle despite the disparity in spending.

More information on the concept of the Wheaton Eco-scale. Remember the takeaway isn't about the environment but can be expressed in any field or area of interest. The more in depth we go into a specific area the narrower we are in that area, less and less people will be able to relate unless broad cultural changes happen. These changes are seen in areas like environmentalism. While I was growing up formal state sponsored recycling programs were just budding. Now they are commonplace. Kind of funny to be part of a forum put in place by a guy who seems to want to enact just that sort of cultural shift. But I digress.

Thegoblinchief put it best. The answer is both. It is relative and it is absolute. There is no dichotomy here. But remember we as people are capable of changing our perspective. I would hope that a 200k expense person would realize how wasteful they are and not use MMM's proclamation of his own volcano of wastefulness to justify their own. Own up to your lifestyle.

Frugality isn't defined as a certain spending as a percentage of your income but as a conscious decision to consume less and be efficient with your resources. If that 200k expense person was actively looking to get to a more frugal level then I've got no beef. But using that ratio as some sort of shield to prove your faux frugality well then no I don't think you're being frugal. I think you're just looking for someone to justify your lifestyle.

Elaine

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Re: Frugality - relative or absolute?
« Reply #22 on: May 12, 2014, 09:14:17 AM »
What about this:
It sounds like we're getting caught on the difference between "needs" and "frugality". I think that "needs" ARE relative to each person, and may even change over time. When I am 80, my medical "needs" may take more of my income than they do now. That doesn't mean they aren't needs or that I'm suddenly less frugal. However, my needs between ages 23 and 27 have not changed, so even though my income has increased, my spending has not.

Rather than focus on this or that dollar amount (or comparing our spending to a country with an entirely different economy, which doesn't make sense), I think the focus should be on what a person considers a "need" versus a "want", and how closely they define themselves by their consumption. It's a constant act in questioning and considering what we buy.

When we agree that needs are relative it makes the variety in spending make more sense. As a small female person, I may "need" to spend a little more on an apartment in a safer area than my friend Steve who is 6'7". But Steve probably spends a lot more on food than I do, because he's a bigger person. We are both frugal, although we have some different needs.

The issue becomes sticky when people "need" to buy organic food, or "need" to have flute lessons, or "need" to wear a certain brand of clothing. I don't think there's an absolute line, and I think it's different for each person, but using basic logic you can figure out if someone's habits in general are habits borne of frugality or of consumerism.

GuitarStv

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Re: Frugality - relative or absolute?
« Reply #23 on: May 12, 2014, 11:40:24 AM »
Frugality is absolute for me.  There is a minimum that I need to be happy, a smaller minimum that I need to be survive.  The key is just to figure out where the smallest number for happiness lies.  This happiness number is unrelated to your salary.

TomTX

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Re: Frugality - relative or absolute?
« Reply #24 on: May 12, 2014, 04:26:57 PM »
If you are living on 20% of your income and stashing the rest, you're frugal. I don't care if the income is $100k, $1MM, $10MM or $100MM

SDREMNGR

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Re: Frugality - relative or absolute?
« Reply #25 on: May 12, 2014, 06:01:26 PM »
I'm in the relative camp.  Someone in the forum posted about a ladder of frugality, I forget the exact name, but it basically said that someone that is living 1 or 2 rungs above you (spending more money) are viewed as reasonable and more than that, they are viewed as spendthrift, and more than that, they are obscenely wasteful.  And people who live 1 or 2 rungs below you (spends less) are viewed as good role models for you, but people who are 3 or more runs below you are viewed as weird or extreme, and people that are more that that below you are viewed even more negatively, as in homeless or cheap, etc.

So it's always viewed relative to where one is sitting.

I think everyone would view Warren Buffet as "frugal" because he is worth $60 billion but probably spends in the millions (just a guess at $10 mil??).  That is equivalent to being worth $60 million and spending $10,000.  That is pretty frugal.  On the other hand, there are countries whose average monthly income is less than 10x what U.S.'s is.  Mexico is $609, Phillipines is $279.  That is AVERAGE, meaning there are people who are living for less.  But there are people on this forum who complain about making ends meet with $30,000/year incomes.  Obviously billions of people around the world live on much less.  "BUT I LIVE IN MICHIGAN!" they'd say.  "WHAT DO YOU EXPECT ME TO DO? MOVE OR GET ANOTHER JOB OR SELL MY SUV OR EAT A SALAD OR SOMETHING EXTREME LIKE THAT?

Anyhow, I think it's pretty funny when people say that someone who earns $1 mil and spends $200k is not frugal but someone who earns $100k and spends $20k is frugal.

bearkat

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Re: Frugality - relative or absolute?
« Reply #26 on: May 12, 2014, 06:13:21 PM »
Agreed on the great question.

I'd have to go with relative. But that said, I don't think it scales linearly, but progressively and maybe even exponentially. 20% of $1M / yr is certainly different than 20% of $100K / yr. And just as the tax code has higher earners pay a higher % in tax (for normal wage earners), I think a higher savings rate (and thus a lower spending rate) is expected at higher incomes to attain same status of "Mustachianism" as lower-earning counterparts.

From the general feel of the forums though, it seems like higher income always shortens the road to FIRE as opposed to enabling higher FIRE expenses  ... which would support the absolute camp.

On another note:

A careful reading of mustachianism reveals that it is not just about how much we spend vs how much we earn, but is also about not trashing the planet.

This made me actually chuckle, "a careful reading" reminds me of finding some secret code like on the same level as Da Vinci code, bibilical numerology, or National Treausre status. I certainly don't think MMM's environmental learnings are that secretive to pick up on.


tracipam

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Re: Frugality - relative or absolute?
« Reply #27 on: May 12, 2014, 06:33:19 PM »
  If we're discussing in terms of the world, I think we would only consider ourselves to be frugal if we are consuming our percentage of the world resources at a level that, if everyone alive matched it, would be net sustainable.  And I don't know about the rest of you, but I'm not making it.   I think my level of consumption is about 2-3x sustainable world levels, last I checked.

This is a really interesting idea. I wonder if anyone has ever figured out what standard of living would be the baseline?

I would guess that we would meet it - small apartment shared by two people, no car, no buying crap, and very little waste produced. It would be interesting to know.

I have fun with this game... er.... footprint calculator.  Of course, it doesn't put me in a very good light (my habits have changed somewhat and now I'm up to about 4 Earths to support my lifestyle habits.  Oops...):

http://footprintnetwork.org/en/index.php/GFN/page/calculators/

deborah

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Re: Frugality - relative or absolute?
« Reply #28 on: May 13, 2014, 02:01:05 AM »
  If we're discussing in terms of the world, I think we would only consider ourselves to be frugal if we are consuming our percentage of the world resources at a level that, if everyone alive matched it, would be net sustainable.  And I don't know about the rest of you, but I'm not making it.   I think my level of consumption is about 2-3x sustainable world levels, last I checked.

This is a really interesting idea. I wonder if anyone has ever figured out what standard of living would be the baseline?

I would guess that we would meet it - small apartment shared by two people, no car, no buying crap, and very little waste produced. It would be interesting to know.

I have fun with this game... er.... footprint calculator.  Of course, it doesn't put me in a very good light (my habits have changed somewhat and now I'm up to about 4 Earths to support my lifestyle habits.  Oops...):

http://footprintnetwork.org/en/index.php/GFN/page/calculators/
1.7 better than I hoped!

NewStachian

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Re: Frugality - relative or absolute?
« Reply #29 on: May 13, 2014, 04:55:25 AM »
If you are FI and legitimately happy, I think you are Mustachian.

Mustachianism means different things to different people. Some think it means frugality. I think frugality is a means to the end of financial independence. I think Mustachianism is about taking charge of your life to optimize happiness and long-term financial freedom. The route MMM took to FI (through frugality) allows you to drastically reduce your spending while not sacrificing (and in fact INCREASING) happiness. This is great and works well for those of us who choose not to go the hyper-income route (for various reasons).

So, congrats on your FI. I think multi-millionaires who spend their time hanging out on this forum definitely have the best of both worlds and have their priorities straight. I don't see any reason anyone would call you un-Mustachian except out of 'stache envy.

former player

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Re: Frugality - relative or absolute?
« Reply #30 on: May 13, 2014, 05:17:40 AM »
On another note:

A careful reading of mustachianism reveals that it is not just about how much we spend vs how much we earn, but is also about not trashing the planet.

This made me actually chuckle, "a careful reading" reminds me of finding some secret code like on the same level as Da Vinci code, bibilical numerology, or National Treausre status. I certainly don't think MMM's environmental learnings are that secretive to pick up on.

I would have thought the same as you, and granted this thread is about frugality not about mustachianism, but it seems to me that a lot of the comments throughout this forum focus almost entirely on frugality and financial independence and are much less about living well or environmental consciousness.  One of the reasons I am finding a comfortable home in mustachianism is its awareness of the need to balance all these aspects.

I suppose one might be described as frugal for living on 20% of £1M income (for certain values of frugal, that is), but one could not be described as mustachian.

deborah

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Re: Frugality - relative or absolute?
« Reply #31 on: May 15, 2014, 06:04:46 PM »
If a $200k spender was able to buy $1m worth of goods/services/value with said $200k, would that not be frugal?
This recalled me to a time - possibly 20 years ago - when Myers decided to stop selling craft stuff. Everything was available at 10% of normal price (90% off), and of course nothing in the sale would deteriorate during the rest of my life. I bought embroidery yarn. I bought LOTS of embroidery yarn.

But I didn't buy all the embroidery yarn they had - only one of every colour - it cost $300. I figured that over the rest of my life I would use one of each colour of each different type of thread, but I wouldn't be sure of using more. And I only bought every colour of the types of thread that I used - although there were other threads there that I had always found enticing. I still have the majority of these threads, but they don't take up much room, and I find that I am gradually using them. There probably won't be many left when I die. I have bought threads since then, but only several skeins of the same colour, rather than one skein of a colour.

Buying all the thread they had left would have been possible for me - but it would have been $1M frugal, and not at all Mustashian. What I did, was Mustashian because I only bought what I will actually end up using.

RapmasterD

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Re: Frugality - relative or absolute?
« Reply #32 on: May 16, 2014, 09:00:18 PM »
I'm seeing a lot of absoluteness and RULES here. And to me that is sad. One example is folks saying that if you spend 200K "that is not frugal." What if your gross household income is 900K and you live in a very expensive area? I'd say that's pretty frugal. If you're socking away 40-50% of your take home, I'd say that's pretty frugal.

Be like bamboo...a little bit flexible, people.

I have to believe that the lord of Longmont doesn't want folks opining on every granular element that constitutes whether someone is "mustachian" or not.

My vote = relative.
« Last Edit: May 16, 2014, 09:18:42 PM by RapmasterD »

RapmasterD

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Re: Frugality - relative or absolute?
« Reply #33 on: May 17, 2014, 07:03:06 AM »
Yeah Basenji, I absolutely see your point, pun intended.

So I'm now contradicting myself. Indeed I obsess over most details, practice frugality in a lot of areas, as mentioned...saving 40%-50% of our take home. AND at the same time I engage in a number of face punching behaviors, consciously.

It's the absolutism of "one can't possibly spend 200K per year and be considered frugal" that I can't relate to. Because IMHO it's still relative. Case in point, the aforementioned Warren Buffet example, although extreme, stuck with me.

I may not be mustachian, but I'm learning a lot of great tips on this forum -- many of which I've put into action (e.g., getting on bike and walking a lot more on weekends, getting on bus during the week, getting out of my car much more, canceling posh garage parking spot rental in SF, reducing monthly gas expenditures by 70%, and reducing monthly driving mileage by about the same).

anisotropy

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Re: Frugality - relative or absolute?
« Reply #34 on: May 17, 2014, 11:28:59 AM »
Relative for sure.  The 4% rule means things are relative.

mboulder

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Re: Frugality - relative or absolute?
« Reply #35 on: May 17, 2014, 01:01:31 PM »
I pop in from time to time on several forums related to FI, simple living, frugality, minimalism, etc. This topic comes up a lot. I'm always amazed at how hung up people get on labeling and trying to fit in to some label definition, or fit others in.

There is no universal definition for any of these terms. Even terms like "want" and "need" have a lot of grey area. I have a friend who keeps his thermostat at 50 degrees during harsh Colorado winters, and wears heavy down coats around the house. I prefer the heat up a little higher, but label that as a need, because I am uncomfortable going about my day when I'm that cold. He doesn't; it would be a want.

There are two ways to define these terms - first, you can define what they mean to you based on your passions, desires, beliefs, goals and background. So, I find it frugal finding a good deal on grass-fed, organic , free pasture-raised meat if buying it fits within my budget/financial plan, and given my belief that factory farms are evil and my desire to not support them. Second, you can define them by comparison with other people. So, with the same meat example, I may not be "frugal" anymore, because another "frugal" person would eschew the expensive meat, instead paying pennies in comparison for cheap, low-quality factory farmed meat. I'd rather not define my lifestyle choices based on what another person does. It's just 'keeping up with the Joneses'. It also opens us up to being judgmental - I have a friend who lives pretty frugal, due to a low paycheck and lots of debt, but he has cable. I know a lot of "frugal" people who would tell him he's not frugal and he needs to cut the cable if he wants to be frugal, and attack the debt. The fact is watching TV is his total passion and major form of recreation, so it's an expense that he budgets for because it brings him joy, even if it means working a little longer to pay off his debt. I may find that strange, but I have to admit, he finds reasonably good deals, he budgets for it and it brings him joy, so who am I to judge or label his choice?

Albert

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Re: Frugality - relative or absolute?
« Reply #36 on: May 17, 2014, 01:16:19 PM »
We are indeed quick to "label" each other…
 
Let's imagine a guy who used to earn 30k and save nothing. A year later the same person gets a much better job paying 120k. He, however, changes absolutely nothing in his spending continuing to live on 30k. Is he now mustachian?

RapmasterD

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Re: Frugality - relative or absolute?
« Reply #37 on: May 17, 2014, 02:00:50 PM »
Hallelujah micdalli. Well stated.

rmendpara

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Re: Frugality - relative or absolute?
« Reply #38 on: May 17, 2014, 03:40:22 PM »
I am new to this group but I feel as if I have finally found like minded people who behave responsibly with their finances and have their priorities set correctly.

Here is my question.  What if I said I was a true Mustachian that has been 100% debt free for the past 10 years, I spend only 20% of my income, have a job that I enjoy and doesn't interfere with my family life (wife and teenage children) and I lead a "frugal" lifestyle while still allowing myself to have quality family time and meet my financial goals.  Lets say I made $100,000 year, spent only $20k (the rest goes to taxes and savings), had an investment account of $400k and a paid off home worth $100k.  Would you call that person a Mustachian - I think so. 

What if you added a 0 to those numbers - $1million income, $4M investment account, $1M home and spent $200K a year (the rest goes to $450K in savings, $350K in taxes).  Would you still consider me a Mustachian if I spent $200,000 a year?  Is frugality an absolute or a relative concept?  If I spend "only" 20% of my income, is that frugal even though the absolute number is very large?

We are not in a contest to see who can live the cheapest. Who are we to define what is "enough" for someone else?

Being frugal is simply maximizing value in whatever you choose to do.

Spendy #1: Stay in a NYC hotel for $750/night for a 1br suite at the JW Marriott.
Frugal #1: Stay in a NYC hotel, do the same things and have an awesome time, but in a 1 br (non suite) $375/night room instead.

Spendy #2: Buy a Range Rover, fully loaded, for $95K.
Frugal #2: Buy an Acura RDX, fully loaded, for $50K.

Very rough examples, but my point is getting what you need, without the over the top "flash".

I disagree with others who think it's a "race to the bottom", but we are all entitled to our own opinions.

Being frugal is about setting a goal to be financially independent, and then reaching it.

Personally, I am a single male, will turn 25 this year, and earn $85k (gross), spend ~$35k, and have net worth over $140k with no debt. Am I frugal? Compared to others with lower income, no. Compared to others with similar income, absolutely!

The real question: Do I care what others think? Not one bit.
« Last Edit: May 17, 2014, 03:46:28 PM by rmendpara »

cygnus

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Re: Frugality - relative or absolute?
« Reply #39 on: May 18, 2014, 03:51:19 AM »
The great thing about this forum is hearing from people who have similar ideas to mine. I haven't met many Mustachians in real life so it is nice to get others opinions on topics like these.  I agree with the several posts that  said "who care's as long as you are happy and reaching your goals" but my reason for asking the question was to help me think about how to explain frugality to my teenage children.

We live in a very affluent town and I see 90%+ of our neighbors spending almost all and sometimes more than they make.  We live "relatively" frugal lives in comparison even though I know we make 5-10X more than our peers.  I was struggling with how to teach our children about frugality when we spend as much as we do.

I came up with this analogy:

Picture a large bucket with a spigot at the bottom.  In the top of the bucket you put in your earnings and the spigot is open for spending.  The goal is to fill the bucket up to the top (FI) so that you don't have to put more in (RE) as long as the spigot isn't open too much (frugality).  There are basically two ways to "win" - put more in the bucket or keep the spigot closed as much as possible.  Being frugal is trying to keep the spigot open only enough so that you can meet your needs while saving as much as possible.

In our situation I always considered myself frugal and would keep a close watch on the spigot.  I have also been fortunate that I have worked at jobs that allowed me to fill the bucket quickly.  It wasn't until we reached FI 5+ years ago that I started opening the spigot more to take advantage of some opportunities to share with my family (travel, education, charity, etc).  It seemed almost miserly to keep the spigot only dripping when the top of the bucket was overflowing.  I am just very mindful that I don't teach our children the wrong lesson by opening the spigot too much without them understanding what went into filling the bucket (and how most people have empty buckets).

So thank you all for your insights  - hopefully this discussion helped you as well.

marty998

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Re: Frugality - relative or absolute?
« Reply #40 on: May 18, 2014, 05:26:12 AM »
I'm a big fan of simple metaphors and analogies.

I tend to think of mustachianism in terms of the small (you), medium (your community) and large (your world).

Small
You have an apple tree (capital). Allow the tree to flourish and you can have apples (income) for life.

Medium
Your town's economy is dependent of fish. Fish just enough to sustain your community forever. Fish just a little too much and well, you better hope diversification is possible.

Large
Scale up up the fish analogy to planetary size. It's unthinkable what we would do without a planet, yet look what we are all doing to the one we currently have.

ok I'm getting a little off topic there, but that was where this discussion is going.

When discussing frugality I believe it should be decoupled from references to income*. Just like when calculating how much you need to retire, you should ignore how much you currently earn. Frugality is all to do with spending, not income.

Deciding both what is 'enough' and what is 'frugal' is a personal choice, and the range of those choices determines a community standard from which we naturally try and reference. (We humans love to compare)

The range of community standards leads us to where we are today with this discussion. Our standard is much tougher than the rest of the Western world. The developing world (probably) more so than us.

You can see I'm on the "relative" side of the argument.** My reasoning is that you can always find someone out there who believes they are more frugal than you.


**Note I am no longer answering the original question now. As I said, my position is that frugality should not be looked at with reference to income.
« Last Edit: May 18, 2014, 05:31:03 AM by marty998 »