Friday, February 26, 2016

The Frugal Planner's Weekly Dispatch: Taking Frugality to the Extreme - from Bloomingdale resident Chuck Donalies

From: Chuck Donalies, CFP® [] On Behalf Of Chuck Donalies, CFP®
Sent: Friday, February 26, 2016 9:00 AM
Subject: The Frugal Planner's Weekly Dispatch: Taking Frugality to the Extreme

The Frugal Planner's Weekly Dispatch

Taking Frugality to the Extreme

Volume 2, Issue 9
February 26, 2016

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I don't have a mustache. As a consolation prize, I submit to you a photo of my girls with mustaches.

Even I'm Not That Frugal

If you're a regular reader you probably know that I'm frugal. The title of my Weekly Dispatch might have been a clue. It turns out I'm not nearly as frugal as the blogger, anti-debt and anti-consumerism guru Mr. Money Mustache.
If you aren't familiar with Mr. Money Mustache, check out a profile of him in a recent edition of The New Yorker. Don't have time to read the article? No problem. Here's the short version:

Mr. Money Mustache is ridiculously frugal. He retired at age 30 from his career as a software engineer. How did he do this? By saving as much as possible and by keeping his expenses extremely low. He claims to spend an average of $24K a year even though he now earns far more than that from his blog (~$400K per year!). His wife, Mrs. Money Mustache, who I met at a conference last year, calls him "a weird dude".

I'm writing about Mr. Money Mustache not because I aspire to his level of frugality but because I believe in the following two aspects of his philosophy.

1. Consumerism Is A Vicious Cycle

The following quote from Chuck Palahniuk's book Fight Club, which was turned into one of my favorite movies, illustrates the vicious cycle that is consumerism:

"Advertising has us chasing cars and clothes, working jobs we hate so we can buy shit we don't need."

Throughout my career, I've spoken with many people who aren't happy with their jobs but continue because the income enables them to buy stuff. These same people are often reluctant to skip the Starbucks, pass on the latest gadget, or buy a less expensive car, even if that might allow them to consider alternatives that would make them happier.

Now, not everyone has the luxury of cutting costs. Sometimes you do what you have to in order to make ends meet. My point is that our society makes it easy to live above, rather than below, our means.

2. Living A Simple Life Might Actually Make You Happier

For the sake of argument, let's assume you can reduce your spending, which enables you to save more for retirement or some other goal. At first, you might miss the stuff you used to splurge on but I find most people quickly adjust to their new habits.

Here's a personal example: My wife and I cut cable a few years ago in order to save money. Initially, we (or maybe just I) missed having access to loads of channels. However, we quickly found better ways to fill our leisure time, such as playing with the girls, reading or painting. We were much happier after we made this change - and we saved a little more money every month.

Of course, the cable company eventually raised the monthly cost of our high-speed internet to the point where it was actually less expensive to both have cable and high-speed internet. Thanks, Comcast.

The Takeaway

It's unrealistic to expect anyone to be as frugal as Mr. Money Mustache. He's wired differently than the average person. However, a moderate version of his philosophy to spend less and save more is definitely attainable.

What I'm Reading
Every so often I like to share what's on my reading list:
  1. Dark Pools by Scott Patterson. I've been fascinated and infuriated by high-frequency trading (HFT) ever since I read Michael Lewis's excellent Flash Boys. I'll have a post about HFT in the coming weeks.
  2. To Sell is Human by Daniel H. Pink. I've always considered myself an introvert. Recently, I met someone who said I was actually an ambivert, neither overly extroverted or wildly introverted. I guess I'll find out what I am after reading this book.
  3. Profit First by Mike Michalwicz. I had to take an accounting class as part of Johns Hopkins MBA program. The course was helpful as I started my business, but I've found the cash flow management process outlined in Profit First to be even better. I especially recommend this book to entrepreneurs.

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  1. Regarding the Internet. Make sure you call them every year to get a new discount for Internet only! They're reluctant and last time it took a bit of hard lining- but shaved $15 off my total monthly bill. I do wish we could get RCN in Bloomingdale, they were great in terms of service and price when I lived in Georgetown, and still have low Internet only packages.

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