The following is a guest post by DebtKid, who writes about his journey to get out of debt, and achieve financial stability. He runs a small software development company in Seattle as well as working as Product Ambassador for LendingClub.com
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?
A note from Lynnae: Jenn & I will be tackling this very subject tonight on Frugal Coast2Coast at 8:30 EST/5:30 PST. We’d love for you to listen, as Frugal vs. Cheap is always a fun subject.
If you like this article, please sign up for free weekly email updates.
I'm just an average mom, trying to live a frugal life and get out of debt. I write about things that have (and haven't) worked to improve my family's financial situation. What works for me may or may not work for you, and you should always consult a financial advisor before making important financial decisions.
In accordance with FTC guidelines, I state that I have a financial relationship with companies mentioned in this website. This may include receiving access to free products and services for product and service reviews and giveaways.
Any references to third party products, rates, or websites are subject to change without notice. I do my best to maintain current information, but due to the rapidly changing environment, some information may have changed since it was published. Please do the appropriate research before participating in any third party offers.