Is my frugality an illusion?

[TacheTastic]

I think I save about as much as I can manage to with it still being sustainable, but sometimes I wonder. I read some of ERE before, but I just couldn't imagine how I could actually arrange my life to spend that little. I get frustrated because I wish I could save more, but then I think that is just the stage of life I am at right now. I spend on average (over the last two years according to YNAB) a shade over £1550 per month. This does include everything, including buying a new (to me) car in that time. I house share, but I book-keep that as income rather than reduced expenses because I have a lodger rather than renting a room. Does my spending sound out of line? I would love to hear the experience of other people, as I feel like a minimum wage fraud/dreamer sometimes.

[Laserjet3051]

Its all relative, after taxes and savings are considered, I spend about £7,130 per month (I'm in the US, but converted to £ for this thread). Of course, a bit over 25% of that spending alone is pure health care expense (mostly premiums). So, everyone really has a different story to tell given their circumstances (we are a family of 4).

[PhilB]

Without knowing more details there's no way to offer an opinion.  If that £1,550 includes rent on a 2 bed flat then it sounds like you are doing brilliantly.  If you own outright with no mortgage and low council tax then rather less so.
There's also the wider question of how does that fit into your wider finances and FIRE plans.  If your income is £1,600 pm and your stache tiny then it definitely warrants some soul searching.  If your income is £4k pm and your stache is already snowballing then that's rather different.
ERE is indeed extreme - the clue is in the title.

[never give up]

Yes s bit more context and detail required here. Is this spending just for yourself? I am single and currently spend around £875 a month but have no mortgage or rent to pay. A full case study style breakdown of your expenses is probably required if you were willing to share.

You don’t have to go full on ERE but I decided to see if I could do just three or four things that would be regarded as ‘extreme’ by non-Mustachian standards. It’s amazing how much that impact can have on your expenses.

I therefore:

1. Reduced my car mileage from 4000 miles a year to 1000.
2. I won’t fly.
3. I sold three bikes, loads of clothing and equipment. I love cycling but now I just own a single bike and basic equipment.
4. I eliminated all takeaways, minimised eating out, and cut my grocery spend by 20%.

As well as having a major benefit on my expenses these was also benefit for the environment. I walk nearly 6 miles a day to and from work, in all weathers, and colleagues look at me as if I’m mad. So I guess that is extreme but doesn’t feel like it to me.

[Playing with Fire UK]

What's the monthly spending if you strip out the price of the car?

[highlandterrier]

It's not that important to compare yourself to others except for a bit of fun in my opinion, if you have found something that works for you and moves you in the right direction then go with it.

Anyway for what it's worth, our average spend for two (mortgage free) people is about £2,000 per month of which about £400 is discretionary spend from my less than frugal wife. So your spending does not sound out of line to me.

Do what you want to do and don't worry about others, it truly does not matter, tread your own path.

[TacheTastic]

That spending includes the rent on a two bedroom house at £400 a month. Council tax is about £800 per year as I get single person discount.

I am currently a student nurse, so over the last 2.5 years I haven't had much control over my commute. I get a new placement for three months twice a year (longer in this final year), and I don't get help with the commute costs. I am looking to get a job with cheaper/quicker commute once I graduate in September. Transport costs over the last year (so excluding buying the new £1500 car) average at £289 per month. It didn't make sense to keep moving every 3-6 months to whichever town I was in, up until my current placement where I am renting a room and cycling to placement.

Monthly spend over the last two years excluding the car is £1516. It is just me for food and "fun" money, but the gas/electric/water/toilet roll is for two-person occupancy of the house. If my lodger moved out I wouldn't have to pay council tax at the moment. He isn't wasteful.

Sadly PhilB hits the nail on the head. My income average over the last 12 months (which is a huge improvement on the previous year) is £1,800. My stash is a very hard-earned £5,000, which has taken me about 3 years. I also have some cash in my online saver for my placement room rent that will be refunded by uni, which can go into stash after that.

I am sure that things will get better when I am not juggling a degree and full-time placement and part-time work. I just wondered if I am kidding myself about how well I actually do manage my money.

[Playing with Fire UK]

I am sure that things will get better when I am not juggling a degree and full-time placement and part-time work. I just wondered if I am kidding myself about how well I actually do manage my money.

Ahhhhh, I see where you are coming from. It's a really personal call that each of us makes about where we draw the line between spending and saving, convenience and effort, work and leisure. You've done well to accumulate a stash on a relatively low wage while studying. Presumably, your income will increase after you graduate?

The next question is what are your financial goals. Are you looking to retire early? Super early? Buy a house? Do you want to be able to take sabbaticals, work seasonally, work part-time? Looking at your workload, if it was me I'd want to be saving as much as possible from that - there comes a point where working an extra hour doesn't let you save any more because you buy convenience food to compensate for being tired or buy yourself a treat because you feel worn out.

I imagine that there is some scope for reducing costs and increasing savings if it is what you want. Have you looked at switching bills, mobile and minimising food costs? Alternatively, maybe now it makes more sense to focus on graduating and your job after graduating?

If you are on track for your goals then you are doing great.

[vand]

Despite what every frugalista (and I consider myself an aspiring member) may claim, life becomes dull and outright boring if you dial your spending back to poverty levels. There's a reason it's called poverty. Frugality is important, but income is also important if you are aspiring to build wealth.

The bigger theme is to identify what brings value to your life and align your consumption accordingly. It won't work any other way.. because you will always then see saving your money instead of spending it as a sacrifice and an act of willpower, and willpower is finite. For example, a lot of people enjoy travelling and seeing new places.. personally I find it all a pain in the ass and am quite happy not taking 5 holidays/citybreaks a year. For me, not pursuing this lifestyle is not a sacrifice at all, as I prefer familiarity of my own home and locality.

[Ducknald Don]

Despite what every frugalista (and I consider myself an aspiring member) may claim, life becomes dull and outright boring if you dial your spending back to poverty levels.

That's not the claim on the ERE site, the argument is that for every spendy fun activity there is a free or nearly free alternative if you look for it.

Not that I claim to have achieved that, I still have a long way to go.

[vand]

Despite what every frugalista (and I consider myself an aspiring member) may claim, life becomes dull and outright boring if you dial your spending back to poverty levels.

That's not the claim on the ERE site, the argument is that for every spendy fun activity there is a free or nearly free alternative if you look for it.

Not that I claim to have achieved that, I still have a long way to go.

Well I would take any claims made on ERE with a pinch of salt.. the clue's in the name "Early Retirement Extreme".  Extremities, by definition, are not comfortable states of being for most people.

[BookLoverL]

I enjoy reading ERE and my spending is about £5,000 per year. However, this is artificially lowered by the fact that I live with my parents, and if I stopped being able to do that then to maintain the same spending I'd have to work hard to find a housing solution that was cheaper than "rent a place by yourself" and also possibly cut back on a couple of hobby spending categories I still have.

You're still relatively frugal living on the amount you said you live on - especially if you live in the south where house prices are more expensive. I'm pretty sure it would be very tricky for me to get more than about £1,000 lower per year than where I am without going full barebones or selling my car, which I need for work.

Advantages I have that allowed me to lower my spending this much:

I live in the north where everything in general is slightly cheaper.
I hate the taste of alcohol and also fizzy drinks so I only ever drink tap water and fruit tea. Maybe fruit juice once a month. This might be a big chunk of your grocery spending, depending on your drinking habits - I calculated once that my dad spends at least £1,000 per year just on alcohol.
I'm an introvert, so I don't feel the need to meet up with other people in places that require spending money more than once a month or so.
I don't fly for eco reasons so most of my holidays are either staycations or go-somewhere-cheapish-in-the-UK holidays. I did go on the Eurostar one time though, which was a little more expensive...
I take a maximum of two of said holidays per year. Normally my budget comes to under £200 for the whole holiday.
My family has a culture of cooking at home every night, and all of us can cook. We eat out about twice a year. The only other time I eat out is when I meet up with friends, and I'm not a picky eater so I usually go for the cheaper end of the menu, whatever it is.
A lot of my hobbies are mostly free, such as "read information on the internet", "self-study things on the internet", "read fanfiction on the internet", "go for a walk in the countryside that is on my doorstep", etc. I'm not strongly emotionally attached to any expensive hobby. I'm in one local club that requires a small weekly fee, but given I don't actually go every week I only spend around £100 per year on that, and I limit my book buying to around £240 per year tops and my cinema-watching to around £100 per year.

I think you get the idea. ;)

Some people might consider my life boring, but due to the nature of my personality, I find most of the things I do fascinating. If you have more extravagant tastes, naturally it will take more money to fund them.

[never give up]

Yes ERE himself said he regretted using the word "Extreme" in his blog title because the word is so off-putting. Nothing is extreme. What does extreme mean? We have things we value and choose to do or not to do. No one can do anything extreme because it's not sustainable to keep something like that up for any reasonable time period. However there are things we do that are "normal" to ourselves that may be deemed extreme by other people. As I mentioned before I walk nearly 6 miles a day to and from work in all weathers and I'm sure this would be deemed "extreme" by some people but to me it is normal and I am happier doing that than taking the car. So by its very nature it is not extreme to me, however it does save a lot of money.

I always like the MMM approach of multiplying a monthly expense by 177 to get what you would have saved if you forego said expense and invested it instead for ten years. That gym membership/haircut/subscription or whatever at £50 a month equates to (50 X 177) £8850. Is that gym membership/haircut/subscription worth foregoing that? For some expenses you tend to think, no that's expensive I'll try and cut back on it or eliminate it entirely. For others it seems acceptable as you deem to get value for that expenditure. If you apply this to all your discretionary spending it quickly becomes obvious where you gain value and where you don't.

With this approach it is then impossible to feel deprived although you may not save as much as you would like. I am going without in a few areas at the moment. I have employed this approach since I found MMM about 20 months ago and I probably have another couple of years to go following this pattern. My post FIRE expenses will be higher than my current expenditure as I gradually inflate back to my "normal" levels. I am happy with that now and don't feel deprived because the goal is more important to me than any satisfaction gained by spending the money in the short term.

Optimise all essential costs as far as possible and with regards to discretionary spending you have to ask yourself how much do you want to FIRE. If your desire to FIRE is your main goal there are many free alternatives to costly habits as BookLoverL has ably demonstrated. If you would rather cruise then that's fine to, just accept the savings rate will be lower.

[MonkeyJenga]

Despite what every frugalista (and I consider myself an aspiring member) may claim, life becomes dull and outright boring if you dial your spending back to poverty levels.

That's not the claim on the ERE site, the argument is that for every spendy fun activity there is a free or nearly free alternative if you look for it.

Not that I claim to have achieved that, I still have a long way to go.

Well I would take any claims made on ERE with a pinch of salt.. the clue's in the name "Early Retirement Extreme".  Extremities, by definition, are not comfortable states of being for most people.

MMM made a similar post: https://www.mrmoneymustache.com/2011/05/05/get-rich-with-profitable-leisure-time/

When I started to think creatively and try to save money on hobbies, I started enjoying my free time more.

Of course, I haven't hit actual poverty levels ($12,000/yr). I spent around $22k for a couple years in a HCOLA, and one year lower than that. Some people think that's poverty level. It's not. But I spent almost nothing on entertainment and had fun years.

[TacheTastic]

OK, I think it sounds like I need to go all out on the declarations. Monthly averages over the last year.

Rent - £400
Council Tax - £71
Water - £21
Gas - £36
Electric - £35
Internet/Phone - £23
Mobile phone - £7
Transport - £289 (Includes travel to placement and across the country to see my family)
Cat - £43 (All food, vets bills, insurance, flea treatment etc etc)
Groceries etc - £143
Holidays/camping trips - £80 (Went overboard this year, went away with a boyfriend and spent way more than I would usually contemplate)
House repairs/improvements/upkeep - £45 (I paid to gravel my back garden last year. Worth every penny in not having to mow the lawn anymore. Also new bed linen.)
Medical/opticians/dental - £12
Clothes - £20 (Including more watch repairs than I can talk about)
Gifts - £38
Computer/Software/Education related spending - £37 (could not contemplate the stress of writing my dissertation on my old laptop. Spent £270 on a new one to make sure that I didn't have that issue)
Gym - £14 (Had a gym class membership last summer. Cancelled when I changed placement(again))
Haircut - £16
Social spending - £170 (Strangely enough, this has dropped again now I am no longer dating my ex.)

I think I probably need to reconsider the amount I spend on going out. And a facepunch for letting myself spend too much on a single holiday and meals out with my ex.

[May2030]

You are doing just fine in my book, £5k stash is brilliant. The biggest thing is when you qualify and pay goes up you have a really solid base to accelerate  savings.

I live in a two bed house and your utilities are the same as mine but your council tax is £50 cheaper. If you have optimised your utilities tariffs its hard to save much. Taking out the purchase price of your car has me wondering if you drive it, it would be hard in my mind to run a car any cheaper. The student nurses I used to know drank lots of vodka before they went out to cut expenditure, top tip LOL. Looks like the cat has to go !!!!! Joke.

I have recently realised I have gone too far down the frugality route and stopped living life to save for a distant goal. For me its important to get the saving balance right to save consistently.

[vand]

OK, I think it sounds like I need to go all out on the declarations. Monthly averages over the last year.

Rent - £400
Council Tax - £71
Water - £21
Gas - £36
Electric - £35
Internet/Phone - £23
Mobile phone - £7
Transport - £289 (Includes travel to placement and across the country to see my family)
Cat - £43 (All food, vets bills, insurance, flea treatment etc etc)
Groceries etc - £143
Holidays/camping trips - £80 (Went overboard this year, went away with a boyfriend and spent way more than I would usually contemplate)
House repairs/improvements/upkeep - £45 (I paid to gravel my back garden last year. Worth every penny in not having to mow the lawn anymore. Also new bed linen.)
Medical/opticians/dental - £12
Clothes - £20 (Including more watch repairs than I can talk about)
Gifts - £38
Computer/Software/Education related spending - £37 (could not contemplate the stress of writing my dissertation on my old laptop. Spent £270 on a new one to make sure that I didn't have that issue)
Gym - £14 (Had a gym class membership last summer. Cancelled when I changed placement(again))
Haircut - £16
Social spending - £170 (Strangely enough, this has dropped again now I am no longer dating my ex.)

I think I probably need to reconsider the amount I spend on going out. And a facepunch for letting myself spend too much on a single holiday and meals out with my ex.

This seems fine to me. Nothing particularly extravagant.

The rather inconvenient truth is that there are two sides to the FI/RE equation.. spending is one side of the coin. If you want to accelerate your path to FIRE then focussing on frugality becomes a game of diminishing returns, at which point it's probably time to push the envelope on the income side of things

[PhilB]

Those numbers all seem very reasonable.  As vand says, pushing the income end of the see saw is where you should now be looking as the best way to get your savings rate up.  You are already doing a good job on this by having a lodger.  Once you are qualified and start racking up the overtime your stash will really start to grow - as long as you can resist the temptation for too much lifestyle inflation.

[BookLoverL]

OK, I think it sounds like I need to go all out on the declarations. Monthly averages over the last year.

Rent - £400
Council Tax - £71
Water - £21
Gas - £36
Electric - £35
Internet/Phone - £23
Mobile phone - £7
Transport - £289 (Includes travel to placement and across the country to see my family)
Cat - £43 (All food, vets bills, insurance, flea treatment etc etc)
Groceries etc - £143
Holidays/camping trips - £80 (Went overboard this year, went away with a boyfriend and spent way more than I would usually contemplate)
House repairs/improvements/upkeep - £45 (I paid to gravel my back garden last year. Worth every penny in not having to mow the lawn anymore. Also new bed linen.)
Medical/opticians/dental - £12
Clothes - £20 (Including more watch repairs than I can talk about)
Gifts - £38
Computer/Software/Education related spending - £37 (could not contemplate the stress of writing my dissertation on my old laptop. Spent £270 on a new one to make sure that I didn't have that issue)
Gym - £14 (Had a gym class membership last summer. Cancelled when I changed placement(again))
Haircut - £16
Social spending - £170 (Strangely enough, this has dropped again now I am no longer dating my ex.)

I think I probably need to reconsider the amount I spend on going out. And a facepunch for letting myself spend too much on a single holiday and meals out with my ex.

This seems fine to me. Nothing particularly extravagant.

The rather inconvenient truth is that there are two sides to the FI/RE equation.. spending is one side of the coin. If you want to accelerate your path to FIRE then focussing on frugality becomes a game of diminishing returns, at which point it's probably time to push the envelope on the income side of things

Seems fine to me as well, nothing too extravagant. I think you've already identified the main high figures, the holidays and the social spending, and if your ex was encouraging you to go to places you wouldn't normally go, those'll drop naturally.

You could probably also streamline the groceries part if you wanted to - right now I make it that you're at about £35 per week? But if you're satisfied with your progress towards FIRE, then you don't need to per se.

Transport is high, but it sounds like it's high due to unavoidable reasons.

[vand]

Yes ERE himself said he regretted using the word "Extreme" in his blog title because the word is so off-putting. Nothing is extreme. What does extreme mean? We have things we value and choose to do or not to do

Now you're just making this stuff up, aren't you? If "nothing is extreme" as you claim then why don't you go ahead and live on £0 for the next 12 months and in theory be FI as of tomorrow?

I agree that we have things we value, which was my original point: align your spending with your values. Most of us, no matter how much we'd like to think otherwise, do actually have standards. I consider myself frugal but there are limits to this - I don't particularly want to live in a car and eat ramen noodles and drink tap water each day, every day. Do you know anyone doing this? would you consider that extreme? I'm not into fashion but I don't want to look like a tramp dressed from the skip either. Again, would you consider that extreme? I would.

[never give up]

I’m not sure how I have made anything up. The point I was making was that extreme doesn’t exist in terms of the things we actually choose to do. No one would do something extreme for any length of time because it’s unsustainable. The clue is in the word. Therefore no one does anything extreme from our own individual point of view. However we may do things that are “normal” or maybe challenging to us that seem “extreme” to others e.g. my walking to work example.

I would consider living in a car eating noodles and drinking tap water extreme yes, hence I don’t do it. However someone else may choose to do it and if they did they would perceive that as their normal, not extreme. I would consider jumping out of an aeroplane an extreme kind of hobby, but for someone that loves it and has made hundreds of parachute jumps it’s kind of normal. I know someone that has about 8 city breaks a year. They would deem you “extreme” for not going on any at all. “Extreme” is really very subjective.

My point about the monthly expense x177 calculation is a way of applying maths to aligning spending with values. Your standards either fail or pass this test and you either proceed with the purchase or you choose to save the money instead. It is up to us all to decide where that balance is and there is no wrong or right.

You wouldn’t want to look like a tramp dressed from a skip and I don’t blame you. (It’s a tough look to pull off well and none of the major designers are embracing it.) Therefore you have a choice how you spend money on clothes. You could probably spend from £5 to £3000 on an outfit. Where on that scale will you choose to spend? That’s up to you. Whatever you choose will fall within your accepted values. However someone that would spend five times as much may perceive you as being extremely frugal.

By living intentionally and understanding what the impact is to our FI date when we choose to spend money, we put ourselves in a much better position than those trapped in consumerism who don’t realise what they are sacrificing every time they spend money.

[PhilB]

What's all this about looking liker a tramp dressed from a skip?  Have you been talking to my wife?

[never give up]

Haha. I'm actually wearing my muddy gardening clothes right now. The top is over twenty years old with the trousers not too far behind. I didn’t get them from a skip though.

[BookLoverL]

Yes ERE himself said he regretted using the word "Extreme" in his blog title because the word is so off-putting. Nothing is extreme. What does extreme mean? We have things we value and choose to do or not to do

Now you're just making this stuff up, aren't you? If "nothing is extreme" as you claim then why don't you go ahead and live on £0 for the next 12 months and in theory be FI as of tomorrow?

I agree that we have things we value, which was my original point: align your spending with your values. Most of us, no matter how much we'd like to think otherwise, do actually have standards. I consider myself frugal but there are limits to this - I don't particularly want to live in a car and eat ramen noodles and drink tap water each day, every day. Do you know anyone doing this? would you consider that extreme? I'm not into fashion but I don't want to look like a tramp dressed from the skip either. Again, would you consider that extreme? I would.

I can't remember where it was, but I definitely saw something written by Jacob where he said (I'm paraphrasing) he sort of wished he'd called it Emergent Renaissance Economy or something instead of Early Retirement Extreme. In my opinion, the first is an accurate description of his book's philosophy/general strategy, and the second is what you do with that strategy in a specific set of cases (the ones where you go full throttle on the tactics and front-load all the work).

It's true that some things are extreme. If you want real extreme, I think there was a guy who lived in a cave on literally zero money for a number of years, I think his name was Daniel Suelo or something.

I don't live in a car or eat ramen noodles (and actually, I don't think they'd be a very cost-effective way of achieving a balanced diet on the cheap, for the cheapest balanced diet you'd want a large bag of some sort of staple carb combined with seasonal veg, and then whatever cheap protein you could find in your area to add to it). However, I do drink tap water every day - and it tastes good! If you live in a country or area where the tap water is poor quality and bad for your health, you'd probably want some sort of filtering system, though, or boil it and add it to tea, idk. But in the UK the water's generally fine. ;)