Friday, December 14, 2007

Frugal Friday - Is Frugality a Fallacy?

Crystal is hosting a Frugal Friday. Here is my Frugal Friday tip - does frugality even work? Is it a fallacy? Fallacy is defined as "a misconception resulting from incorrect reasoning ". Is your reasoning on pinching pennies incorrect?

Let me begin by saying that we do try to live frugally and responsibly with our money. We try not to waste food, spend inordinate amounts of money on fleeting pleasures, or to spend money to keep up with the proverbial Joneses. Once in awhile I do re-use my ziplock bags or my tinfoil (only if it’s been on dry foods). I shop at garage sales and thrift stores and I even used cloth diapers (though I was never totally convinced of the savings vs the work and hassle).

It seems like so often people that are trying to save money/make money – get out of debt - get so caught up in the little things, little ways to save money, to live frugally, that they miss the forest for the trees.

They become fixated on the nickel and dime stuff but they do not tackle the bigger issues. They give themselves the illusion of frugality but it doesn’t amount to much.

No one ever avoided the poor house b/c they washed their tinfoil, turned the thermostat down at night, saved every extra packet of ketchup from fast food restaurants, recycled their Christmas cards or made their own cleaning products from vinegar. These all are good things, “waste not, want not” and all that – but if you really want to make a difference – your whole lifestyle needs to change and you need to focus on the major issues.

Again to avoid offending anyone – I am not saying that you shouldn’t do the little things too, I’m always happy to save a couple of dollars – and I realize that some people are doing the little things because they have no control over the “big things”, and every penny does count. That’s right – but the bigger pennies count for more.

For a few years, my dh and I were financial counselors through a Christian organization. There was only one case that I can remember – where the financial problems were due to a lack of money (a young couple starting out, lots of college bills, and wife newly pregnant). Most of the financial problems were due to the following:

Too many cars – or expensive cars
Too big/expensive of a house
Paying for private school education or kids’ college

For the most part, the people we saw were not spending too much money on entertainment or on gifts or on vacations or in savings accounts – because they did not have the money to do so. Some of them had budgets, some did not – some probably kept track of every penny but it didn’t help.

The decisions you make on the choice of a house can mean hundreds of dollars a month once you consider all the costs of housing (more taxes, more work, more furniture needed, higher utilities). And a difference of $5,000-10,000 a year. If you are not right on the big stuff, saving $5 a week on brown-bagging it – isn’t going to make a difference. If you are buried 10 ft deep in debt, a spoon isn’t much help.

Nickel and diming will never make a difference when you are up against too much house, or too many cars, or monthly tuitions that are above your means. Take care of the big issues and then all the small things WILL make a difference.


Amy said...

Very well put.

Mom2fur said...

I wish our house only cost us hundreds of dollars. Living here on Long Island (my home since birth almost 52 years ago) we're talking thousands. It gets more expensive every year. We have things to show for the taxes, like superior schools. But it still hurts to think I may have to leave the place I love for more affordable environs when my husband retires. I want to stay here where my children are, and where my future grandchildren will be. I don't want to be the grammy they visit down in Florida. So, we're keeping our eyes peeled for a cottage (our high ranch has 11 rooms and 2.5 baths) with 'just enough space and a little fenced in yard.' They do exist, and I do believe we'll find one. We have to, one way or another. You are right--it's the big tickets like mortgage and property tax that are the killers.
In the meantime, I think it is also important to keep doing the little things. We've been changing out the old bulbs for those new curly ones and I'm already seeing a drop in our electric bill. I use coupons and shop sales, with an average savings per trip of 40%. As much as I am able, I take the money saved and put it into my savings account. It's a lot easier to see those little savings if they don't get absorbed back into the household budget. So no, frugality isn't a fallacy (IMHO), because it is always better to do something than nothing.

EdibleEducation said...

I definitely don't want to give the impression that frugality should be thrown out the window! Yes the little things matter and they are good to do...but if you wait until later to do the little things, it won't happen. You need to develop good habits as soon as you see a change you can make. But if you are head over ears in debt...those little things will not get you out of debt.

Good idea mom2fur to keep the savings from coupons etc. in a separate account where you can see the money accumulate...and gives you encouragement to keep on keeping on!

Vickie said...

Thanks for stopping by my blog and leaving a comment. I am really glad you did sicne I found your post on frugality. I had a few things I wanted to add.

When I met my husband he was struggling with three young children and a mass of debt left over from what insurance did not cover when his first wife struggled through cancer for three years before her death. I agree that the tin foil and washing ziploc bags can keep people not focused on the big picture.

We radically changed our lives when we married. We have not used a credit card since 2001. My husband took on two more jobs and I learned to cut back. We paid off over 53,000 dollars and have lived debt free now for a few years. We have four teenagers and that is a money pit in and of itself. :) Most people do not want to do without the things that others consider necessary such as cable, cell phones, going out, vacations, etc. We would love our children to be in private Christian schools and personally I wished we took some awesome vacations, however, we have a goal in mind. When people get caught up in the world culture and the gimme's and I have to have that mentality they can't win and bringing your lunch each day or washing out ziploc bags is not going to help their cause.

We live in a very affluent area where most live in houses that are 500k plus. Their kids want for nothing and they have all the latest gadgets, etc. But our children understand the value of a dollar and what it takes to earn that money. We know that when they are out on their own the lessons they have learned by watching us will have an influence on their 'family tree'.

Thanks for your comment. It was bold and to the point. I find most try to rationalize their debt. It sure feels good to only owe on our home and that is not a huge debt now. God is good and He has been faithful to provide for us.