Wednesday, January 4, 2017

More Frugal Than the Frugal Challenge

What happens when you join a "frugal" challenge, but you find that you're actually MORE frugal than the Frugalista?

To wit:  Today's recommendation is to calculate the savings from cutting out a recurring expense and investing it, rather than spending the money for this thing. 

The example?  Cable television.

Ha! Ha ... ha! 

Not only do I *not* have cable television, but I also don't have a television.  Back when I did have a television, I was paying $12/month, for "Lifeline" cable, which amounted to, basically, PBS and the major network stations. 

If, as the miser suggests, I had invested that $12 instead of absorbing it into our household budget, after four years (which is how long it's been since we had a television) I'd have $495 in savings.  After thirty years of diligently saving that $144 per year, at 7% interest, I would have a whopping  $13458. 

Her example was a $75 per month cable bill (or $900/year), and investing THAT amount for thirty years.  The final number in her scenario looks a lot more impressive than my reality.

I don't disagree with her point, which is that we often claim that we can't save or that we don't have any money, when there are things for which we pay that we could very easily do without.  It's about making choices.  I chose, many years ago, to be a stay-at-home Mom, and with that choice came certain sacrifices.

We sacrificed cable, because paying for it didn't make sense when we weren't benefitting from it. 

What this frugal expert really means to tell us is that it's about choice, not sacrifice, and that being frugal doesn't mean we can't enjoy our lives.  I don't have cable, but I still do a lot of "watching."  We have a Netflix account (although it has been on the chopping block for a number of years.  We just have to make the cut), and we borrow DVDs from the library.  That's plenty enough watching for any person.  In short, we really haven't given up anything.

I can think of one thing I could, probably should, cut.  It's Coffee Shop coffee.  I spend about $8/week getting coffee for me and my daughters.  With her challenge in mind - to find something to cut - if we decide to cut that thing, in 15 years at 7% interest, by saving $8 week, I could have almost $10,000 in the bank.  It's not enough to retire on, but if I were really frugal in retirement, it would be enough to live for a year (if my house were paid off and I didn't have a car payment).

While I don't disagree that having a few grand in the bank would be nice in my golden years, I'm not an investment-minded person.  I believe in "investing" in real things - my home, my children, my community - and those kinds of things don't add up to 7% interest per year on dollars. 

The other problem I have with following this frugal advice is that I don't, actually, trust the economy to be healthy enough to keep my investments safe for my future.  I could end up like one of those Enron people - losing everything in the blink of an eye.  So, if I choose to sacrifice my weekly coffee with my daughters and save the $8, maybe fourteen years and eleven months from now the economy completely crashes or the businesses in which I'm invested go bust, and instead of having $9,991 in the bank, I have no money ... and have not had coffee with my daughters in fourteen years. 

I don't know which would be more sad. 

For the record, we did have an investment portfolio a few years ago.  We lost a lot of money.  I'm a little gun shy now.

I read James Howard Kunstler's Forecast for 2017.  It's bleak.  But then, Mr. Kunstler's blog posts aren't, typically, of the uplifting variety.  It's not all doom and gloom, but it is reality as he sees it (his World Made By Hand series is pretty hopeful, actually.  There's a fair share of gloom and sad stuff that happens, but overall, he believes in the adaptability of the human spirit). 

If he's right, any investments I make today, will be worth nothing in the future, because the future of our global economy is questionable.  The whole thing, according to Kunstler, looks like it might just teeter over the edge and fall into the abyss - and soon.  Read it for yourself.  But the gist is that we've run out of resources, and most of us have been living on credit and accruing debt. 

And, now, we have a President-elect who shifts money around like sands shifting on the beach as the tide comes in.  A few years ago, he lost a sum of money that could have supported my entire community for decades.   I live in a community with million-dollar beach houses.  He could have purchased the entire town with the money he lost.  Dissolved into thin air ... like water vapor on a cold morning.    

I'm not terribly optimistic about investing money.  I don't have millions - or thousands ... or even hundreds - of dollars to invest, but what I do have is the ability to create what I need to survive in my own little space. 

Teddy Roosevelt, famously advised us to "Do what you can with what you have where you are."  I've lived by that mantra for many years. 

I may not be building a bank account, but I am building ... something. 

I guess the future will tell us which was more valuable. 

3 comments:

  1. People fail to realize that they can't eat money ... or gold.

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    1. I've said that same thing on several occasions.

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  2. I totally agree: invest in things and experiences rather than entrusting money in the system. I'd rather spend my money on canning jars, solar panels, yarn and fabric, and under the column of experiences would be our weekly family brunch at a local cafe.

    I'd rather ensure we have lumber for raised beds and plastic for hoop tunnels than stick money into a savings account that may disappear when I want to use it.

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