Author Topic: Do you think frugality holds you back in any way?  (Read 17335 times)

socal0218

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Re: Do you think frugality holds you back in any way?
« Reply #50 on: June 09, 2015, 10:27:37 AM »
Not me personally, but I've seen it in others.  I live in an EHCOL (Extremely High Cost of Living) area.  Housing prices have doubled and doubled again in the last 18 years.  Several families that I know did not buy houses/condos during that time, though they could have, because they wanted to avoid debt or wait until housing declined.  In the meantime, rents went up 10% every year.  Eventually, they were forced out of the area due to housing costs, and now commute 1.5-2 hours each way to their public service jobs that they can't leave, due to pension issues.  These were frugal people, that screwed themselves royally due to being too frugal and debt averse.  A crappy 1200 square foot 3/2 house went from $300k to $1.2M in that time.

I don't fault these folks for their instincts, but I find it interesting that they don't pull the plug completely on this place, and move to somewhere where the wage/price structure is more affordable.  Now they have the worst of all worlds: high taxes, horrible commute, crappy schools, bad air, bad water, and hot as hell in the summertime.

Where is the EHCOL? NYC? I'm in Orange County, CA and am always interested in other high cost of living areas.  Thank you.

Dicey

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Re: Do you think frugality holds you back in any way?
« Reply #51 on: June 09, 2015, 03:06:16 PM »
I'd love to have someone in real life to talk to that is just as excited as I am about being frugal and retiring early.  I talk to my husband but even he's not really all that excited about it.  He likes that I am, because it benefits him, but he doesn't like having to be frugal himself.  It's the main reason I like reading this forum so much, so I know I'm not the only weirdo out there who likes trying to save as much as possible. 

To the OP, I can say with absolute certainty that when I was about 23, if I wasn't going to happy hour almost nightly with a certain group of people, I would not have gotten the job that took me from a salaried $25/hour job with no paid overtime to my contracting job of $50/hour with time and a half OT (of which the OT was plentiful, a good thing).  Best career decision I ever made.  Loved the job, the people and the pay.  I paid off about $100k worth of debt (mostly student loans and my scion xA loan) in a little over a year while maxing 401k like a boss.  Having said that, I could have certainly spent less at those happy hours and probably wouldn't have had to attend as many for the same result to occur... then again, I did end up dating my husband as a result of those nights out as well.  I do not regret that period of my life or any of the decision I made AT ALL.
^^This.^^
I'm FIRE and thrilled to be so. Now I hang around here from time to time to offer the encouragement I wish I'd had so many years ago, particularly to single women. It's nice to know that I can let my frugal freak flag fly here with little to worry about in the way of repercussion...

Dicey

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Re: Do you think frugality holds you back in any way?
« Reply #52 on: June 09, 2015, 03:08:51 PM »
I am 33, but my friends are in their mid 20's to late 20's....if only they knew how much I wish I could be their age right now and start investing at their age instead of having to start at 30 years old.

And people 5-10 years older than you (and older than that) are saying the same thing about your age.  ;)

+1, which reminds me of the old gardener's adage. "The best time to plant a tree is twenty years ago. The next best time is today."

john c

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Re: Do you think frugality holds you back in any way?
« Reply #53 on: June 09, 2015, 05:09:21 PM »
Where is the EHCOL? NYC? I'm in Orange County, CA and am always interested in other high cost of living areas.  Thank you.

The Silicon Valley.  Housing prices have gone up 33% or more in the past 2.5 years.  I just found out that another family I know is likely getting pushed out, though the husband has a very good job as a software development manager at a good company (not a "hot" one).  They've been here 15 years....and should have bought a house when they were $400k, instead of $800k to $1.2M.
« Last Edit: June 09, 2015, 05:14:38 PM by john c »

socal0218

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Re: Do you think frugality holds you back in any way?
« Reply #54 on: June 10, 2015, 11:22:27 AM »
Where is the EHCOL? NYC? I'm in Orange County, CA and am always interested in other high cost of living areas.  Thank you.

The Silicon Valley.  Housing prices have gone up 33% or more in the past 2.5 years.  I just found out that another family I know is likely getting pushed out, though the husband has a very good job as a software development manager at a good company (not a "hot" one).  They've been here 15 years....and should have bought a house when they were $400k, instead of $800k to $1.2M.

Oh yeah I be that is PRICEY.  That's sad that they get pushed out, but I guess that is what the market provides.  Now that tech has set up shop there would prices ever return to what might be considered "normal" levels or is it similar to the same effect Microsoft had on Seattle?

StockBeard

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Re: Do you think frugality holds you back in any way?
« Reply #55 on: June 10, 2015, 11:36:00 AM »
In answer to the OP, these days, yes, I have made the conscious choice to not quit my job because ot pays well and is one of the key factors to my future FI, and I feel this could be holding me back, either on a more successful carrier, or simply being a bit happier for the next few years until retirement.

The right approach is of course to balance things out: would it be better to be happier for the next few years ,and reach FI a little bit later. Probably, but I decided to be "all in" for the next few years, and there is a bad side to that decision.

john c

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Re: Do you think frugality holds you back in any way?
« Reply #56 on: June 10, 2015, 01:56:32 PM »
Oh yeah I be that is PRICEY.  That's sad that they get pushed out, but I guess that is what the market provides.  Now that tech has set up shop there would prices ever return to what might be considered "normal" levels or is it similar to the same effect Microsoft had on Seattle?

I would make the reverse comparison....Microsoft has done to Seattle what tech has been doing to the Silicon Valley since HP opened up shop here in 1938. :)

This is one of the global centers of growth, much like New York, London, Shanghai, or Hong Kong.  I don't anticipate that abating any time soon. 

vagon

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Re: Do you think frugality holds you back in any way?
« Reply #57 on: June 10, 2015, 06:03:01 PM »
Oh yeah I be that is PRICEY.  That's sad that they get pushed out, but I guess that is what the market provides.  Now that tech has set up shop there would prices ever return to what might be considered "normal" levels or is it similar to the same effect Microsoft had on Seattle?

Or like GM did to Detroit. Early days though.

mr_orange

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Re: Do you think frugality holds you back in any way?
« Reply #58 on: June 10, 2015, 06:47:24 PM »
To me excessive focus on any one side of the equation means you necessarily can't spend as much time or energy on the other items necessary for FI.  You can:

1.  Reduce expenses
2.  Grow income
3.  Learn to get your investments to work harder

Item 1 has a logical floor.  You can't reduce expenses past some point and there is a hard constraint here.  Having a low item 1 makes your hurdle lower, but time spent focusing here trades off time that could be spent on the other two items.

Item 2, in theory, has unlimited upside.  If you can work yourself into a situation where you control more of your time it allows you to focus more on this item instead of item 1.  A small business can increase your earning potential many fold and thus reduce your time to FI substantially.  I honestly think many people would be better-served focusing energy here instead of hyper focusing on item 1.  Many people don't have the necessary arrangement for this though and are stuck focusing on item 1. 

Item 3 can have a huge impact on FI as well.  Many people think that the market wins in the long run and the only way to FI is to grind things out at a 4% SWR.  If you're disciplined and willing to take some educated risks I think many people can increase their yields substantially, but most of this requires some active participation to do.  You have to get the skills necessary and even after acquiring said skills you need to invest time to execute. 

So yeah, I think frugality holds people back because they focus too much energy on item one above and not enough on the other two items.  It's like having a football team with a stellar defense where the special teams and offense are both horrible.  Balance is the key to me.  It is good to be frugal, but doing so at the expense of doubling your earnings because you're unwilling to have the tools to take risk is biting off your nose to spite your face. 

MLKnits

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Re: Do you think frugality holds you back in any way?
« Reply #59 on: June 11, 2015, 06:15:09 AM »
Poorer in money? Sure. Not the frugality specifically, but the attitude that lends itself to the overall philosophy.

I could have/could still go get a corporate job, work 80 hours a week, and never retire; I'd probably die with tens of millions. Instead I own my own business, I work maybe 35 hours a week, and I get a lot of time to sip coffee and read on my balcony. Frugality helps that remain feasible: by keeping some control on lifestyle inflation, I don't need to grind and grind for more and more money, which, yes, means my lifetime earning potential is vastly lower.

On the other hand, though, forced frugality can be very motivating. My dad had six kids by the time he was 24 (he was Mormon at the time). The great job that supported his wife and the first two kids wasn't nearly enough by the time four, five, and six came, and he's spent decades as a (happy) workaholic, earning vastly more than others in his field who simply didn't need to put all of their time and energy into supporting large families. Even now he supports, to one degree or another, several adult members of the family, and that's always at the back of his head, pushing him to negotiate harder and earn more.

Wilson Hall

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Re: Do you think frugality holds you back in any way?
« Reply #60 on: June 11, 2015, 06:42:08 PM »
[quote
"The best time to plant a tree is twenty years ago. The next best time is today."
[/quote]

Love this!