Friday, September 13, 2013

The Frugal Life

The Great Recession has returned many Americans to frugal living. Many cannot find jobs even during a recovery. Many have lost their homes through predatory lending practices and stagnating wages. Many people who have lost their homes are living with their parents. Many have lost jobs that they've worked at for years only to be staring at the clock or calendar wondering when they will get their next interview.

There is something to be said for the frugal life. Frugal living isn't about self-deprivation. It's about buying only what we really need and use. The days of impulse buying are gone for many Americans, including myself. I don't walk into a store unless I am clear about my intentions to buy something. I'm not a window shopper.

When I go to Costco to buy food for my family, I see the big screen TVs, but I already have one, so I don't think about buying the latest model when mine will do. I don't fantasize about buying that thing that I want. I wait, save some money and then buy it with cash. I don't use credit cards anymore, as credit cards are a giant form of hidden inflation that makes everything more expensive.

When people buy things on time, they are using money they don't have, and driving up demand. That drives up the price. Another way that the cost goes up is interest on the balance on the card. Many people are paying greater than 10% interest on their credit card balances, even though most savings accounts are only paying 1/2 of one percent interest.

I have cut the cord for TV. No satellite, no cable. Just YouTube and Netflix. No more do I have commercials beating on my brain to buy something I don't want. My general rule of thumb is that if it's a product advertised on TV, especially food, I don't need it or want it. With Netflix and YouTube, I can watch videos on any subject matter I want. I can watch movies when I want on Netflix without any trailers or commercials. I don't really care that much about disputes over retransmission rights between cable and a television network. The best part is that I don't feel like I need to sit and watch something on TV just to "use" the cable or satellite service.

I buy clothes when I need clothes, not to appeal to the latest fashion. I keep my meals simple and bag my lunch for work. I don't subscribe to bottled water delivery. I buy my own health insurance so that I can pick and choose employers. Every so often, we have some Indian buffet at a local restaurant where we can choose the portion size and pay a flat fee. And the list goes on.

But the point I want to drive home is this: there is a lot of talk about how the top 1% are abusing everyone else in the country. That abuse is not without consent. When we buy things we don't need or want, buy it on time and subscribe to services that we don't need, or try to buy houses we can't afford, we're directly supporting the 1%. 

My dad used to tell me that I'm cheap and that I'm trying too hard to hold onto money. He said that I have a backwards gene I inherited from my great grandfather. I learned long ago that money doesn't buy friends, money doesn't make me happy and accumulating money isn't the only game in life. I would not describe myself as cheap, rather, I'm frugal. I buy only what I need when I need it, and wait until I have money saved up to buy what I really want.

Every time I buy something with cash, I am denying money to the 1%. Years ago, I worked a sales job in retail as an experiment. What I learned in training is that a retail business makes $8-10 for every $100 you spend on a retailer issued credit card ("Would you like to put that on your Sears Card?"). The same retailer will make $3-4 per $100 spent on a third party credit card. The profit goes down to $1-2 per $100 spent if you just use cash. That's why I don't buy things on time unless it's a house or a car. I save money.

What does all of this have to do with technology? Technology makes all of this work. Credit cards, subscription services, health care, they all run on databases. They all use tech to run. If you're unhappy with the 1%, dialing back your spending is the very first place to start to retake your country back. 

I have no credit card debts. This affords me greater purchasing power than I would have with debt. When I just buy what I need and use, the house remains free of all the junk that could clutter up my house. When I buy with cash, I take comfort knowing that I don't have to answer to a creditor next month. That creditor is a member of the 1%.
Post a Comment