I’ve enjoyed the podcast ChooseFI very much. I like that the hosts are normal dudes (probably more normal than me) stumbling through life like the rest of us. The hosts talk a lot about the idea of frugal analogs, which is an incredibly powerful concept.
Examples of frugal analogs in ***my*** life include:
- $100/month cell phone plan => $1/month prepaid plan
- Real golf => Frisbee golf
- Save $20-50/person/round
- Movie theater => Home projector
- Save $10/person/movie
- Eating out => Eating in / Brown bag
- Save $7-50/person/meal
- Save large amounts of time by not having to drive to restaurant, wait in line, etc.
- Gain huge health benefits by eating foods with ingredients you control that aren’t laden with salts and saturated fats
- Morning Starbucks => Water
- Save $3-5/person/cup
- Drive to work => Bike to work
- Save $0.53/mile per IRS reimbursement rates.
- Gym membership => Home gym & bike commute
- Save $50/month
- My current workout routine is 1-2 sets of following:
- Pullups (currently 20-25 depending on how hard I push)
- Plank (currently 4 minutes of hell)
- Pushups (currently 40 reps)
- Squats (currently 10 reps of 115lbs…weak, but still kicks my butt)
- Bike 12 miles total to work and back
- I purchased a $250 squat rack from Amazon a few years back for Squats + Pullups. It’s unbelievably cheap to set up a home gym when you recognize how little equipment is required. Gravity is ubiquitous. Body weight is quite ubiquitous as well. Gravity + Body Weight = home gym whenever you want one. Not having gym equipment is an unacceptable excuse.
- Buying books/audio-books on Amazon => Borrowing from library
- Save $5-10/book
- Overdrive (has apps for android + apple) is fantastic if your library hosts this, though some libraries are more generous in their offerings.
- Exotic overseas vacation => Visit family in minivan or week long backpacking trip in US mountains
- Save $1k/person
- Pay financial advisor => Do it yourself
- Save 1% of assets per year in fees, resulting in hundreds of thousands of dollars in savings down the road
- Barber/Hair Stylist => DIY with clippers / CreaClip
- Save $20-50 per cut
- Save time of driving across town
- Grocery stores => Costco
- Save 20-40% on groceries
- Save time buying in bulk and avoiding decision fatigue through letting Costco curate the 1 ketchup option for you
- Skiing => Sledding
- Save $75/person/day
- Consumerism / Keeping up with the Jones’s => Being happy with “Enough”
- Save $$$$$/year
- Gain happiness and peace of mind
- Live in San Francisco CA => Live in low cost of living (LCOL) area
- Save $$$$$$/year
- Avoid horrific traffic and crowds
To ***me*** this is pure arbitrage. In every instance the frugal analog is 99% (if not 100%) as good as the real deal, yet it costs 30-100% less. I grew up skiing and golfing as a kid (I got free golf through working at a golf course). In college skiing was pretty cheap ($100/season). Once I grew up and these activities got more expensive, I dropped both hobbies like a bad habit because there are perfectly good frugal analogs which make ***me*** just as happy.
Said differently, the above is how we continue to live like poor college students into adulthood. Remember how great college was when we had no money? We were poor, but it didn’t matter because so was every else. Life was great. We had freedom, friendship, autonomy, and a deep sense of community. Then somehow we grow up, get jobs, incur seemingly insurmountable financial obligations, and decades of our lives pass by as we spend the entirety of our paychecks while trying to keep up with the Joneses chasing this elusive thing called happiness, all the while losing our autonomy and sense of community while living in McMansions.
The best things in life are free. Playing catch with a child. Playing a board game with family. Going on an evening walk with a spouse. Going on an afternoon hike.
The effect of each of the above substitutions is almost imperceptible to one’s financial well being over the immediate future. However, when cumulated over decades, it is literally the difference between poverty and abundance in retirement. MrMoneyMustache, the godfather of PF blogging, has a similar post here: http://www.mrmoneymustache.com/2012/10/08/how-to-go-from-middle-class-to-kickass/
*** Several commenters have rightfully responded with the following arguments: “FrugalProfessor, this article represents your preferences and not mine.” Totally agreed. For me, I get just as much joy/happiness out of the cheap stuff as I do the real deal. Others may not feel that way. Others may enjoy overseas vacations substantially more than the frugal analog. Others may enjoy skiing substantially more than the frugal analog. Others may enjoy spending $150/month on a cell phone bill that they could get down to $1/month. Fine. No problems here. The point of the article is that systematically adopting “frugal analogs” is the way pretty much anyone can retire in comfort rather than being impoverished. And I’m not exaggerating here. Some people, like myself, were born frugal and genuinely enjoy the frugal analogs as much as the real deal. Other people feel much less happy participating in the frugal analogs. For people like me, the decision is a no brainer, which is the case I make in the post. For others, they have to make the trade-off of more happiness now for less money (substantially less money after accounting for forgone compound interest) and happiness in the future. I’m fortunate to not have to make this decision too often, because I’m perfectly satiated with our current standard of living and, once the kids are out of the house & home is paid off, could easily see my spending go to $20k/year.