Frugality: How Far is Too Far?

2am in the morning. I awoke with a startle…what in the world was that shrieking noise? Is that a vacuum cleaner? Really?! Who in the world would be vacuuming at 2 in the bloody morning?

I felt my camping pad beneath me and the hard carpet under it. I remembered.

I was sleeping on the floor of my small office.

I had a fleeting thought as the vacuum fading away and I drifted back to sleep…

“I really need more money so I can get a place of my own with no shrieking vacuums at 2am….”

From that point onward I was a frugal machine. I had lost my home in the summer of 2007 and living in my small office was hardly flattering. But I was broke, and became obsessed with saving as much on anything that I could. I kept a gym membership that was a block away from my office, and that was where I showered each morning before starting the day. I had a small mini-fridge my brother had given me, and with that, a microwave, and a hot pot, I cooked eggs, top ramen, mac and cheese, and a whole host of not so great but cheap meals.

I spent 2 months living in my office before a family member lent me a $1000 to help me put down a deposit on a small apartment. No more office living for me. About twice a week I was sleeping in my car anyway because it was easier than trying to hide my living presence in the office building.

But my manic frugality started to take a toll on me.

Every penny that left my pocket was painful. Even buying food, which I knew I needed to survive, made me feel ill.

So, this begs the question, how far is too far in frugality? Is saving a buck always best for your mental and financial health?

From my own experience I would say you can take frugality too far. While frugality is a admirable trait you can make into an idol impairs your ability to make rational and big picture decisions about your health and wealth.

So, how far is too far?

1. Spending money prudently shouldn’t be painful

Do you find yourself buying cheaper food items even though you know you’ll get more satisfaction (and nutrition) from the higher priced item? Spending money should not make you sick. When you spend money on food, or any item that improves your life and allows you to be productive, you should not feel sick.

2. Frugality should not impair your ability to generate more income

When I was living in my office, after about 3 weeks I began to get a little stir crazy. I had no place to relax. No place to call home. My frugality was a necessity to some extent, but it was also a result of my stubbornness.

I began to notice a decrease in my productivity. Even though I was living in my office, and was there 24/7 I was getting less and less done.

Being frugal should never take away from your ability to generate more income. What good is saving a dollar, if you are so worn down that you miss out on generating an extra $2?

For self-employed people, being too frugal can severly limit your business growth. If you have tasks that you are doing that could be done by a cheaper employee, it’s time to let go and learn to delegate. Sure you might save $200/month by doing your own bookkeeping, but if it takes you 10 hours and causes you to stress out…is your frugal mindset really helping you?

3. Your time is valuable

In the last year I’ve really changed how I think about saving money. To me, as a small business owner, my most important asset is my time. If I’m not doing income generating work, I’m losing money. And so if I can improve my productivity 10% by purchasing a larger monitor, or a faster computer, those are purchases I will jump at now without question.

4. Frugality is more than just price

What’s more frugal? A used pair of jeans I wear once, but pay only $5 for. Or a new pair of jeans that cost $30, but I wear every day?

Obviously I’m getting more value out of the new pair, even though they cost $25 more. Don’t always equate frugality with price. I think frugality is a mindset and recognizing the importance of value.

So being frugal sometimes means that new pair of jeans.

5. Don’t be frugal just for frugality’s sake

Why are you frugal? Are you frugal because you are trying to get out of debt? Or save for a down payment? Or just to put food on the table for your family?

Those are fantastic reasons to be frugal.

But if you are frugal just to horde money, or because you are just a complete cheapskate…maybe it’s time to reexamine why you spend and save the way you do. When being frugal becomes the number one goal in your life…you are missing the point.

Frugality is a means to an end. Not the end itself.

How far is too far in frugality to you?



Author

By , on Mar 23, 2009
DebtKid DebtKid started DebtKid.com to document his through bankruptcy, a short sale, living in his office, and ultimately get out of debt. He started with over $300K in debt and has been slowly hacking away at it.

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{17 Comments}

  1. Christa:

    Very interesting topic and actually there are two issues that DebtKid brings up. One is living frugally versus living cheaply. The other is living frugally personally versus running a business frugally. It’s this second issue, that as a business owner, I struggled with. I’d been writing a blog as FrugalMomLA where I would discuss all my money-saving behaviors and great deals as a mom and wife. But, during my workday, as a co-owner of a small business, I knew I had to spend money. Why? To make money. We pay our employees well. Why? So that they feel valued and it keeps morale high when they know they’re being paid fairly. They’re not overpaid but we do the best we can. Since I’m the Business Development person, I spend money on hosting seminars, doing marketing and much more to advance our company name, attract new clients, and, most importantly, keep our current clients informed about our products and services. And, I believe strongly in the idea that you get what you give. As a sidenote, since we’ve started tithing at church, our business has really shown tremendous growth. In the end, I felt like I had a split personality by writing a personal blog about saving while in business I have to spend in order to make money. So, I stopped writing FrugalMomLA and I’ve felt much better ever since. But, I miss writing a blog.

  2. Alger:

    I agree with Catharine that enjoyment is what counts. Living simply doesn’t necessarily mean deprivation. In fact, it can open up a whole new world that gives life far greater meaning than the mass commercialization we’ve become accustomed to.

  3. Frank:

    Marci raises a good point with the frugal but attitude, mindset, or just your way of life comment. I’ve been frugal for so many years its a comfortable part of my life. While I buy healthy groceries, and the occasional pair of new $20 jeans when the old pair wears out, my “balance” is still highly skewed to frugality or simple living. The few times I splurged on a far-away vacation or a consumer article which wasn’t a necessity I generally didn’t enjoy it as much as a road trip or finding something (a want, not a need) second hand.

  4. Catharine:

    TStrump: Excellent Point! Time is money. And so is energy. I do have a full time career, and an increasingly dependant elderly spouse.

    I’m thinking some money well spent on a one time spring house cleaning event would be so worth both my time and energy and money.

    I’m thinking of walls, windows, and balcony cleaning. What a relief that would be for me.

  5. Dawn:

    I really liked this post a lot. I struggle with this to some degree, because I am in one of those situations where every penny counts – yet at the same time, I know myself and if I don’t strive for a balance, I will quickly swing over to the other side and go on a spending binge!

  6. Jodz:

    Great post and so true. I have made some unwise decisions thinking I was saving money but, if I had spent a little more and looked at the quality, it would have actually cost me less.

  7. TStrump:

    I think it’s important to factor in time.
    Something isn’t really cheaper if it robs precious time from your day.
    Case in point – saved $200 on a non-direct flight last year but it added 6 hrs to our journey.
    Not worth it!

  8. Dana:

    I think excessive frugality is not unlike frivolous spending in that you are going beyond what is considered reasonable given your financial situation. The key is to find that good balance.

  9. Well said. Great post!

  10. Great post! Frugality like anything else requires balance and moderation . . .

  11. Catharine:

    There’s a difference between living frugally and living a joyfully frugal life. I’m like everyone else, intentionally living a simple lifestyle while I retire some debt load.

    I enjoy preparing a simple meal, I enjoy my walks, I enjoy my big comfy bed, I enjoy sitting at my desk at the window and breathing in the good clean air.

    I enjoy that my home smells sweet from lemon peels, and I enjoy the fact that my left delicious supper will also be my bag lunch tomorrow.

    I enjoy driving my 10 year old well maintained car, and probably will drive it for some time yet.

    I enjoy taking stock of where I really don’t mind spending my money, on manicures and pedicures, and a little percussion drum set for my grandson made out of gourds.

    I’ve enjoyed reading this web site, and I’ve enjoyed reading that I’m not the only one who enjoys homemade cleaning products.

    I have a couple of friends who have simply turned “cheap”, and there’s a huge difference.

  12. The word balance comes to mind for me, also.

    I think if we stop looking at money as anything but what it is – a tool – we begin to treat it differently.

    I like Suze’s philosophy as well.

  13. bob:

    Everyone’s situation is different, hence frugality exists for different reasons. I assume the person in this story lost their home to foreclosure, meaning they were likely not frugal before, therefor they aren’t as accustomed to being frugal to start with. Secondly, his situation sounds dire, thus being frugal was an outright and perhaps unpleasant necessity.

    As for my Wife and I, we enjoy being frugal because we have set goals for our savings. I’ve never been in debt and always pay cash for everything instead of taking out a loan. Our goal is to pay for our first house with cash as well and not have any debt, nor ever be in a situation where our lives are totally dependent on our jobs to meet bare essentials. Its been hard work and even though I could be driving a new BMW or taking out a loan on a Mcmansion somewhere, I enjoy feeling like a minority. We make decent incomes and most people in our shoes do like the majority regardless of income do: Buy the absolute maximum their salaries afford them. But by saving and living frugally, we will hopefully cut at least a decade off of our working careers and be debt-free throughout.

    So yes- I delight in being frugal because doing so means a better life for us in the future.

  14. Although a lot of people don’t like her, I like how Suze Orman says People First, then money, then things. I think it can apply to both ends of the spectrum.

  15. marci:

    I think there are at least two types of frugality. One is by necessity – meaning you HAVE to do it for a certain timespan because of your immediate financial situation. In that case, I think you cannot be TOO frugal – it’s temporary to dig you out of a hole.

    The other would be frugal by attitude, mindset, or it’s just your way of life. That is voluntary and you are doing it for peace of mind, savings, and a certain sense of security, as well as being able to splurge on the things you really want to spend the money on.

    I agree with Amanda – Balance. Balance was the first word that came to mind when I read the article. You have to find that balance that makes your life satisfactory.

  16. I love your insight. As I sit and read your article I find my head nodding in agreement. In this economy it is so incredibly easy to find yourself becoming cheaper and cheaper. What I mean by that is this… my husband has a good job, I am a stay-at-home mom, and we live a comfortable life. We have never lived beyond our means and we put money away for retirement. But now with the stock market taking such a dive we ‘feel’ like we have to tighten our belts a couple of notches. I am not saying that is a bad thing. I think this was a good wake-up call for a lot of people. What I am saying is that we don’t need to live ‘on the cheap.’ Everyone should always live within their means but it’s one thing to be frugal and another to be cheap!

  17. I think too far in frugality is when you try to save so much that you can’t enjoy your life. I’ve know people who never went out to eat or took a little vacation, not because they didn’t have the money to, but because they were trying to be so frugal.

    The key is to find a good balance between saving money and enjoying some of it. What good is it to work so hard making money if you can never enjoy any of it. It will only make you feel discouraged and cheated in the end.

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