The Surprisingly Simple “Secret” to Financial Freedom Most 9 to 5-ers Overlook

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“I’m ready to get serious about financial freedom!”

I used to be that guy—loudly proclaiming my intentions to build wealth and passive income, with the desire to invest in anything and everything that might grant me the freedom from a life of 9-5 drudgery.

I was working 40-50 hours a week at a steady 9 to 5, earning a nice, median salary. I had an affordable, newish car, a nice apartment, and the best television package money could buy.

It’s a good thing that most people out there are like I was—because I recognize now just how weak and beatable I was. Just how lazy and incompetent. I for sure wasn’t serious. Thank goodness that most people are like I was. Otherwise, financial freedom might be difficult to achieve.

See, as a single person starting from zero, with no dependents and a decent job paying more than $40,000 per year, barring some extreme exception, I should have been building wealth at at least a rate of $10,000, if not $20,000-$30,000, per year—if I were really “serious”.

If I were married with or without kids, then progress towards financial freedom should have been far more rapid. With two people in my household earning serious incomes (and with tax advantages that I can only dream of), we would make our progress that much faster. Again, this is assuming that we truly were “serious” about building wealth.

Now, most people aren’t serious about building wealth, and that’s totally OK. I don’t intend to write for the average person interested in nice cars, fancy hilltop houses, and three meals out a week. I’m not judging them, and financial freedom is not everyone’s goal.

Nope, this article is intended for all the 9 to 5-ers out there, starting from scratch or close to it who really badly want financial freedom. I want to show them that as a fellow 9 to 5-er, there is only one way that truly makes sense for you to get started on your journey to financial freedom.

And you aren’t going to like it.

It’s not by investing or building multiple income streams. It’s a far easier and more common sense approach:

Preserving capital. 


If you stop reading right there, that’s your prerogative. It’s likely that you’ll never, ever have the chance to compete in any serious real estate or business endeavor, and again, that’s totally fine.

Wealth building begins and ends with preservation of capital, and for pretty much all of the people like me out there—those with full-time, demanding, but decently paying jobs—the hard truth is that that first step in the process to escape from a 40-year cubicle life has been and always will come down to preservation of capital. Frugality. Savings. Penny pinching. Whatever you want to call it.

See, when I actually became “serious” about building wealth, I of course realized what everyone else does—that there are three things that all must be applied consistently over the long-term:

  • I must preserve more of my current income.
  • I must seek greater and additional sources of income.
  • I must intelligently apply preserved capital to investments capable of producing outsized returns.

Almost anyone thinking about building wealth understands these basic premises. What most people don’t understand is that for full-time, W2 employees, any hope at real wealth must BEGIN with preservation of current income.

Related: 3 Negatively Cashflowing “Assets” That Devastate 20-Somethings’ Finances

Nope, at zero/negative net worth, you cannot begin by seeking outside sources of income after long hours at your day job with a high probability of success. And no, you cannot expect any paltry investments made from your cubicle to pay off outsized returns (like investing in stocks, for example).

If your plan is to do either of those things, then you will have a long career. I hope that you like your job. You’ll never (or at best, you will slowly) accumulate large amounts of capital because you aren’t working the system correctly, and you aren’t approaching wealth creation in the correct order.

The 3 Secret Reasons Why Frugality is (& Always Will Be) the FIRST Step of Wealth Creation

Reason #1: Frugality exponentially increases opportunity.

If you are like me, then you might have been listening to all those big shot investors and businessmen out there on the forums. Those guys that say things like, “Don’t limit yourself to a scarcity mindset” and “Don’t sacrifice! Build your income!” They’ve convinced you to, “Expand your mind—money is unlimited.” They’ve convinced you that you need to focus on income, not savings.

Guess what? Mr. Big Shot isn’t wrong! Income (and chasing higher and higher investment returns) is a necessary path forward, the path to financial freedom and true wealth. You should build more and more income streams, in ever increasing amounts over time!

But the intimidating big shot investor that looms over you telling you to focus on investments and earning more is forgetting something that is painfully obvious to all of us currently employed in full-time, average, wage-paying work:

You CAN’T seek greater opportunity because if you lose your 9 to 5, you’re screwed! In fact, because you aren’t frugal, you can’t even take a lower paying job with more upside. 

Think about that.


Let’s say you earn $50,000 per year. If I offered you a job that would allow you a ton of opportunity over the medium term, but resulted in a short term loss of benefits and pay, could you take it?

I couldn’t—at least not back when I first started working. I had bills to pay. The car, mortgage/rent, the internet, the partying, the cable bill, and whatever else I spent my money on. But fast forward a year or so later, when opportunity approached, I was able to quit my job and do exactly what I describe above. Why? Because I had become frugal. I lived far below my means and saved a ton of money every paycheck. I could afford to take a chance on a startup and to pursue my dreams.

You will never be able to keep up with the frugal, truly serious fellow in the game of long-term wealth creation if you are totally dependent on that reliable stream of income from your employer. You can’t take risks. And scaling your income is a heck of a lot harder to do when you can’t take risks.

If you can easily get by on significantly less income than you currently earn, you open yourself up to an entire world of possibilities or opportunities. I like to call it “luck.” Those possibilities absolutely include jobs and businesses opportunities that offer short-term sacrifice for huge long-term gain.

Are you in enough control of your spending that you can take advantage of opportunity when it comes your way? Or will you take the long way around?

Reason #2: Frugality negatively impacts your lifestyle WAY LESS than trying to build a business.

It’s always fun to hear people talk about how frugal people “sacrifice” and that “life’s too short” to pinch pennies. It’s pretty incredible that most people out there like to say things like, “Yeah, I wish I could save, but I’ve got a family and want to have fun. I need to focus on earning more money instead!”

These people have created an argument that I am unable to comprehend. They claim that both financial security AND family/recreational time are priorities in their lives, yet they somehow believe that being frugal will hurt their lifestyle more than attempting to earn more money. These people must be living on a different planet than me.

Imagine this scenario:

You currently work a 40-50 hour per week job, and though it pays at or near the median US income of about $50,000 per year, you spend almost everything you earn and live paycheck to paycheck. Also, you live in the United States of America where employers don’t take too kindly to you working on outside businesses or freelance work while you sit at your cubicle.

For those living in a world like the one described here, there are only two times during which they can work on this whole “earning more money” thing:

  1. After work, during those times when they would have otherwise been relaxing with friends or family
  2. During the time they would have been sleeping

Now, I don’t know about you, but having attempted to do those things, I can tell you that working harder and longer hours for my own side businesses was WAY more intrusive to my lifestyle than cutting back on certain physical amenities.

You know what affected my life way less than working really hard to start a business after work? When I moved my work closer to home (new job) and then moved my home even closer to work (new home). I did both and now bike to work.

This approach to wealth creation creates both more time and money. Contrast that to me driving an Uber after work. Or trying to build a website from scratch. Or starting a tee-shirt business. All of which I tried. All of which were hard. And all of which produced taxable income. All of which were not fun in the slightest.

Biking is easy. It’s also fun and healthy and FREE. It actually doesn’t negatively impact life at all. When I’m forced to commute via vehicle because of snow, that affects my life. I have to sit in a traffic jam, get no exercise, and deal with parking and the rest of it.

I’m not sure where the word “sacrifice” comes in for you, but you are out of your mind if you think that cutting back on spending in the ways that I’m talking about—intelligent frugality—are hurting my lifestyle, especially in comparison to trying to develop outside income streams from scratch.

But let’s say that you hate biking, love your big swanky apartment/house, and love eating out, even on your own. Think about this: Is it easier to found a business that creates a meaningful income or to get happy with a bike commute, some cheap and healthy lunches, and a slightly smaller, but 2x cheaper apartment/house? Which of those activities allows for more quality recreational time and more financial comfort?

If you think you are going to build a business that will earn you hundreds or thousands of dollars per month while maintaining your quality of life, think again.

Reason #3: Becoming frugal does NOT preclude you from earning more income!

I somehow had the ridiculous proposition in my head that frugality excluded me from focusing on earning more and achieving excellent investment returns. Wow! I hope you’ll laugh at my ridiculousness and learn from it. The complete opposite was actually true.

See, instead of trying to start side businesses and invest with close to nothing, as I became frugal, I started to accumulate thousands of dollars with which to get “serious” about investing and building businesses. Then, I started to accumulate tens of thousands of dollars, which allowed me to get even more serious. Give me another year or so, and I plan to have accumulated hundreds of thousands of dollars.

I’m not talking about taking the employer match on my IRA or building up an emergency fund, which everyone should do regardless of what their other life goals are. No, I’m talking about building up large, liquid capital, enough for you to consider buying things like real estate and small businesses.

If you’re really serious about building wealth, then go out there and earn more and spend less. As I see things, there are really only three logical ways to build wealth, assuming you have low to no liquid assets with which to currently invest:

  1. Save more and earn the same
  2. Earn more and spend the same
  3. Spend less and earn more

Of these approaches, the only approach that seems absurd to me (as someone who wants the maximum financial gain at the least cost to my quality of life) is option two. As someone just entering the game of wealth creation with low to no assets, that is the lowest marginal use of my time of those three approaches and the one most likely to frustrate me.

Related: The Surprising Lesson a Six-Figure Salary in My 20s Taught Me About Wealth

Trying to earn more money after work starting from scratch is the approach that will have the largest negative impact on your lifestyle with the lowest impact on your financial position. You’ll give up after six months. And you’ll pay a hefty amount of income tax on your earnings.

It’s amazing to me that I even considered doing the really hard stuff involved in becoming an entrepreneur from scratch, when tens of thousands of dollars I was already earning were begging to be rescued. And it was so easy. And it made my life so much better. And enabled me to buy real estate, which I guess made me an entrepreneur automatically.



Before you write off frugality as a limited mindset befitting only the narrow-minded, remember that in this article we are referring specifically to the case of those who currently work full-time jobs. These are the people who currently have no or low liquid assets and live paycheck to paycheck.

For these folks, I believe that for the reasons stated above, starting with frugality is the fastest, highest probability way to accumulate large amounts of wealth quickly and to increase income and investment opportunities exponentially. It’s also the way that they can do that without significantly hurting their lifestyles. To repeat what we all know, building wealth comes down to two things:

  1. Accumulating larger and larger amounts of capital
  2. Investing accumulated capital at higher and higher returns

For the employee with low assets, there really are few good ways to accumulate wealth by focusing in on investing or building additional income streams after work hours. Sure, it’s possible and you’ll hear about those stories from time to time, but I’ll bet you that those stories exemplify extraordinary hard work or some little known advantage.

Why do all that hard work and not take the easy pickings of giving up needless luxuries that really don’t improve your quality of life at all? If you really want to get rich that badly while also living the good life, why would you work long hours on earning taxable, after-hours income, when you can put in far less effort for a far greater marginal return by focusing on preserving what you already have?

Want to live comfortably with more free time and experience the magic of exponentially increasing control over your own destiny?

Cut back on needless expenses. Become frugal. Build assets.

Then, build businesses!

Looking to set yourself up for life as early as possible and enjoy time on your terms? Scott Trench’s book Set for Life is now available! Whether you’d like to “retire” from wage-paying work, become less dependent on your demanding nine-to-five, or simply spend time doing what you love, Set for Life will give you a plan to get there. This isn’t about saving up a nest egg. It’s not about setting aside money for a “rainy day.” Set for Life is an actionable guide that helps readers build the accessible wealth they need to achieve early financial freedom.

[We are republishing this article to help out our newer readers.]

Do you agree with my assessment? If not, I want to hear your rationale!

Leave me a comment, and let’s get a conversation going.

About Author

Scott Trench

Scott Trench is a perpetual student of personal finance, real estate investing, sales, business, and personal development. He is CEO of, a real estate investor, and author of the best-selling book Set for Life. He hopes to now share the knowledge he has acquired with others so that they will have the tools they need to repeat his results in just 3-5 years, giving them the option to go anywhere they want in the world, work any job, start any business, or finish out the journey to financial independence and retire young. Scott lives in Denver, Colorado and enjoys skiing, rugby, craft beers, and terrible punny jokes. Find out more about Scott’s story at, MadFientist, and ChooseFI.


  1. Robert Easter

    Nice Article,

    If only CEO’s, CFO’s and Managing executives of most publicly traded corporations would think this way…the PEG ratio’s and total liabilities on those companies would be allot nicer right now.

    I am a total fan of Frugality…it’s served me very well. It also allows me to not sweat the unexpected when everyone else about me is crying “the sky is falling.” It also allows me to spend on value added additions to my real estate projects.

    Simply put –

    frugality breeds peace of mind.

    • Aleksandar P.

      Robert, I am not sure I understand your remark on CEO’s and CFO’s. PEG ratio is just a valuation tool and reflects the market perception of the certain company and estimated growth. It does not have to do anything with CEO’s and CFO’s performance. And what is better for you as a potential investor (want lower PEG) is not necessarily good for the management (want higher PEG).

      And when it comes to liabilities, I can’t blame them. As long as FED is willing to keep interest rates artificially low, why wouldn’t a CEO borrow a “cheap money”? As long as Return on Capital is higher than interest rate of issued notes/bonds they are good to go. Obviously, investors don’t complain otherwise we wouldn’t have market this high.

  2. Tim Puffer

    The problem is that most people don’t care/want to track their expenses. I have a friend whom every time I ask how his budget is going it is “i’m working on it”. As Scott said it isn’t that impactful on your quality to be more frugal. While people like my friend live paycheck to paycheck the rest of us will be moving toward living the lives we want and not the lives that a 9-to-5 says we have to.

    • Scott Trench

      Tim – this is a great comment. I’m actually working on a next post along the theme of “If you aren’t paying attention, you will get screwed (financially) at EVERY step of the wealth curve”. I think that you’ll like it!

  3. Joe Harper

    Yet another reality-based discussion on Personal Finance. I’ve been with the state for 14 years. I make $55,000. I’ve bought 16 properties in the last four years. It wasn’t until I focused on paying down debt – lowering expenses – and watching every penny of income that I

  4. Joe Harper

    …was able to make exponential leaps in my net worth. That was so many years ago that I too forget to tell interested people that they should start learning about personal finance instead of explaining deals.

    You are absolutely correct in every aspect of this post. I’ve already sent it to people that need to read it.

  5. Jonathan Cope

    A nice piece, Scott.

    Thank you.

    Frugality offers freedom and preserves capital for the development of a life of independence.

    Avoiding the trappings of wealth allows for the accumulation of wealth through time’s power of compounding.

    Ben Franklin earned his personal independence – prior to providing many of us ours – through frugality, wise business development, establishment of float and the astute application of its cost-free leverage.

    Charlie Munger later emulated Franklin’s approach and became one of the finest investors of the modern era, following a successful career as an attorney and real estate developer.

    Each man spent their time between investments learning in and endowing libraries.

    Each believed deeply in multi-disciplinary life-long learning.

    One of the most cost effective and important assets available is knowledge.

    Get a library card and read your way through the syllabus of book recommendations – real estate and business – offered weekly during the BP podcasts.

    When reading take notes, sketch your plan, and establish your daily routine and ambition affirmations.

    Munger counsels that the difficulty of becoming wealthy is a) in the initial accumulation of capital and b) in the waiting.

    He has filled his days of waiting by reading; a cost avoidance strategy of the first order.

    He has also surrounded himself with a network of investor friends with whom to discuss readings and impressions of the big ideas, investments, and life approaches.

    Do the same.

    Find people with whom to discuss your plans, share your fears and uncertainties, and learnings.

    Frugality, as the basis of a lifetime of learning from the masters, the movers, and the successful, offers a tremendous opportunity for the accumulation of wealth when paired with a long-term investment approach developed and refined carefully over the with knowledge synthesized from the perspectives of others.

    Here’s to building wealth and knowledge both.

    Thank you again for the article, Scott.

    Good luck.

    • Scott Trench

      In this comment you have cited both my personal favorite historical figure of all time (Ben Franklin) and one of the great investors of all time that I along with you and likely a majority of serious students of finance study and have deep respect for.

      Thanks for bringing this up, and I completely agree with the approach that they espouse and that you summarize so elegantly here!

  6. baylen brice


    Great Read and this is advice someone serious about starting a business or first time real estate purchase should live by. I think the general population would benefit from reading most of this. Like you, I too agree with living a frugal lifestyle.

    The only piece of the article I disagree with is selling your car then biking to work, I’m sure you meant it as an eye opening example but I feel it’s a little extreme and goes against time being money. Buying real estate, renovations, and meeting investors would be near impossible and impossible if you live in a city the size of mine. Cars CAN be cheap if people can put their ego away about driving an average inexpensive car.

    The approach mentioned below takes an immense amount of focus but pays off. All of my mentors talk about it in their and own many rental properties today.

    “Cut back on needless expenses. Become frugal. Build assets.

    Then, build businesses!”

    I will also add a quote my mentor always tells me: change your friends, change your life

    The people you spend your time with can be considered an expense of your time if it is not productive to the goals you have set up. I use to spend my time going out to the local bar scene with my “friends” once or twice every weekend. Talk about a huge time expense and financial expense.

    • Scott Trench

      Baylen – thank you very much for the comment here. I totally agree that time wasters are just as likely to impede your progress towards your goals.

      My thoughts on bicycling are some of my strongest convictions. I believe that for many people that work in cities or have the capability to commute via bicycle to work, that they will see dramatic increases in their wealth, productivity, health, and that they will SAVE time, rather than lose it. This is of course not true for the suburban commuter with a 30 minute car commute. I’m talking about people who commit to living less than 5 miles from their workplace and biking to work as part of a planned, wholistic commitment to building a financial foundation. The bicycle is the ultimate sign of commitment, and it has changed my life for the better, saving me time, money and fitness every day.

    • Alan Bossert

      As for “Time is Money”, don’t forget the concept of ‘Effective Speed’ as defined in the Book ‘Happy City’. The average 9-5er has a 27 mile per day commute and spends 1 hour per day on the road. The average cost of making this commute is $9,122 annually. Let’s say this person earns $20 per hour. He then needs to work an additional 45 minutes per day to pay for his drive. So it takes almost 2 hours of work and travel time to cover those 27 miles. Effective travel speed is just over 15 mph. Suddenly the average car commute doesn’t look so fast!

    • Scott Trench

      Than you Julie! I agree with this completely. The priority is financial independence. I’m going to splurge on assets that produce wealth and cash flow instead of on items that clutter my house and don’t bring true happiness.

  7. “If you think you are going to build a business that will earn you hundreds or thousands of dollars per month while maintaining your quality of life, think again.”

    I have to disagree here. Been there done that. Once you start earning that kind of income, life becomes more of an adventure and more like retirement. You find yourself gravitating to things that don’t make money but are instead worthwhile ideas or passions to pursue.

    • Scott Trench

      Ross – I think the way that you do. I like to build businesses and invest in real estate. It’s fun, rewarding, and challenging.

      When I say that you can’t build businesses while maintaining your quality of life, I am referring to the 9-5er, full time employee that is just starting out on a serious financial journey. For that person, who is solely looking for income, and NOT pursuing a passion, I believe that he or she will likely find huge frustration, not financial gain, from an approach that prioritizes earning more money and building businesses on the side after working a full time job.

      THAT’s where they will get frustrated, and that is who I believe is far less likely to succeed building business from scratch during the moonlight hours. I still think that people serious about personal finance should try to build businesses, but not unless they are prioritizing frugality first.

  8. Steve Sequenzia

    I respect your views here and I absolutely agree with being frugal to gain financial freedom but I completely disagree with this:

    “If I were married with or without kids, then progress towards financial freedom should have been far more rapid. With two people in my household earning serious incomes (and with tax advantages that I can only dream of), we would make our progress that much faster. Again, this is assuming that we truly were “serious” about building wealth.”

    You clearly have no idea how expensive it is to raise kids. The “tax advantages” are a joke compared to the actual cost of raising kids.

    Just my input.

    • Scott Trench

      I always get brushback when I comment on that, and you are right that I have no defense for those who have kids – I can’t understand.

      I will say that I am skeptical of the kids argument because I believe that it reflects the same truth that is in front of everyone else when it comes to financial freedom:


      Do the children really need the best school district? Or will they be better off with a financially free set of parents in 5-10 years at the lesser ranked school miles closer to work?

      These are questions that I would expect to be difficult for parents, and one’s that I will have to make someday, I’m sure.

      • Austin Watson

        I think if you are a DINK (Double Income No Kids) you should be able to easily accelerate your plan. I think adding kids the mix doesn’t slow you down but it also doesn’t accelerate anything.

        Child Care: 15 – 20 K per year
        Activites (Sports, Dance etc. ) 1-2 K per year

        There are other costs associated as well (food, clothing, school supplies, fuel, healthcare etc.)

        I think you can still create and adhere to a financial plan, even if you have kids. You just have to make decisions on what is really important. Sometimes you have to cut out things you may really want. For example: I want a new truck (badly) but I know that if I save that extra 500-700 per month and put it towards a future investment it will pay off big time.

  9. Keith Bitely

    You’re absolutely right about being frugal. I’m only now beginning my journey into real estate. However, for so many years, a good portion of my co-workers would always proclaim the mantra that life is too short, and pinching pennies wasn’t worth it as they bought cars, jewelry, or a bunch of other nonsense that i didn’t see of any value. They believe in treating themselves.

    I certainly get the concept of treating myself. But, for me, the biggest treat I gave to myself was going into semi-retirement at the age of 43. Having all of this extra time to pursue my dreams is a much bigger treat than a fancy car could have ever been. And, I can guarantee you that as I’m sipping my coffee in the park on a random Tuesday morning, I’m a lot happier than they are. And, we all made just about the same amount of salary, but they are in no position to do what I have done because they refused to be frugal. So, there they sit, still being miserable, and working for the man. No, thank you!

  10. Jiri Vetyska

    Great article Scott!
    I would like to add to it a little from experience.
    I’ve always had the frugality mindset and was able to save large portion of my income. But like a lot of younger people, started chasing a lot of investments, like flipping, stocks, and it was all very time consuming, stressful and in the long term, nothing to show for all the extra effort.

    Frugality alone doesn’t get you very far. It is no doubt the best way to get started, one thing that’s available to all of us.
    But to actually build wealth, you need a really good investment plan. And with full time job, it shouldn’t require much time or energy. Otherwise you are working two jobs and go crazy soon.
    Owning real-estate is one great way to do that – build wealth with very little involvement.
    Good luck!

    • Scott Trench

      I agree Jiri! Thank you for this comment. I absolutely agree that a sound investment strategy and building businesses are the path to true wealth. I think that the problem is that a lot of folks are looking to jump right to that step… but they don’t have any money or time!

      That’s why I think that for almost every full-time employee out there today, the FIRST step is frugality 😉

  11. Excellent wisdom-rich read, both OP and comments. Just wanted to chime in on the awesome notion of moving closer to work and commuting by bike. Check with a tax pro, but you might be able to deduct your auto related costs as a business expense if you pedal to W2 but drive for your own biz. And there’s no better way to get a feel for the neighborhood you’re thinking of buying into. Riding a bike is a fab way to absorb details that would be missed in a car.

    • Scott Trench

      Yes! I have experienced all these advantages and then some. On a bike you can stop and ask the neighbors of a new block about the house for sale. On a bike you can take a slightly different route home every day and pick up on all the developments in the neighborhoods you are interested in. And you can also put in the earbuds and listen to the BP podcast like you would in the car haha

  12. Michael Swan

    I believe Dave Ramsey, the king of Kindergarten financial planning says, “Live like no one else today, so you can live like no one else tomorrow. The only problem with this mentality is that if you follow his plan and pay off all your debt, including leveraged tax deferred cash flow, you will not be financially free. It seems like frugality as you and Dave Ramsey would suggest would be obvious to get started. My biggest problem, by living a frugal life and enjoying the simpler things in life until my present age of 50, I really have difficulty spending. There is always in the back of my mind, save and buy more passive tax deferred properties that will fund my retirement in 5 to 10 years. I do work about 50-60 hours still at my day job and have over $4,000,000.00 in total residential rental properties and over 2 million in net worth, but in the back of my mind, I can’t be satisfied or secure enough to quit my 7:00 a.m-3:30 day job and two nights a week job too.

    I think I need to bite the bullet and quit my night job first in the next year and then my daytime job after my only child graduates from college in 4 or 5 years. He just started college and my rental properties tax deferred cash flow pay for his college and my mortgage and small car payment.

    If a lowly paid Catholic School teacher and part time Adjunct College Professor can live frugally and do this to ensure my families financial freedom. You can too. Just make sure you force yourself to splurge and spend along the way. You can go overboard on the frugality plan.


    • Scott Trench

      Swanny – you are in a great spot which is no surprise given your work ethic of working two full time jobs in spite of a net worth of over $2M. Congratulations on your success and I am awed by your tireless pursuit of progress!

    • Cameron Wilks

      Thanks for this comment. I’m not as far along as you but already worried about the same thing. I know I will be able to retire early, but what if later on I regret not having saved more? What if I have trouble allowing myself to draw down the savings? It can be hard to live a strict accumulation lifestyle for 50 years and then suddenly reverse it.

    • Dan Heuschele

      I’m in a similar situation on the what is enough money/success and I am used to working hard and cannot make myself break free. I have accumulated significant wealth by working hard. I used to be frugal but now spend lavishly in comparison so in that respect I am using the wealth. What I am unable to do for some reason is cut back significantly on my work. My 9-5 job is not nearly as rewarding as it used to be but I continue to work it. I dislike paying others to do what I can do better but I also dislike how little time I have. In the last couple of weeks I worked maybe an additional full-time job related to my REI doing rehab work that I should have paid to have done (I actually was paying to have it done but their work and progress I found unsatisfactory). It does not matter that I have the money to pay someone else to do the work. Maybe my work ethic is too entrenched or I am still too frugal. This weekend I plan on spending one of the two days largely on my REIs doing tasks that I really should pay someone else to do yet I am planning on doing them myself (2 Gazebos at one REI and pavers at another REI).

      So I understand and share the issues you describe about letting go of 9-5 job, reducing time on secondary income stream work, fugality, etc.

      Hopefully we both make choices that lead us to enjoy life to the fullest (enjoy the work we have done in the past).

  13. Jerome Kaidor

    I did this back in the 80’s and 90’s. Didn’t eat out much, didn’t go to Disneyland, didn’t buy fancy clothes, didn’t buy new cars. All the while, I was earning a high 5-figure income – then low six figures. By the early 2000’s, I had 64 units.

    When the company stock was shooting through the roof, and the new BMWs and Mercedes were appearing in the parking lot, I soldiered on in my old Japanese pickup truck.

    When the company stock started to slide – from a high of $96 to a low of 48 CENTS, I decided to get serious about my own business. Around the fifth big layoff, it was my turn. I whistled as I walked through the parking lot for the last time. That was in 2003, and I haven’t worked a W2 job since.

    I’ve reached a point in my life though, where I search for a balance between frugality & fun, between money and time. “Time = money”. Sometimes it’s worth it to spend some money to leverage somebody else’s time. When I first got started, I did my own apartment turnovers.
    Now, with 95 units, I woudn’t dream of swinging a hammer.

    • Scott Trench

      Jerome – I don’t consider spending that frees up your time to pursue more business or eliminat distractions to progress to be anti-frugal! In fact, I think that those types of spending ought to be encouraged. I splurge, for example on the following:

      Audible – there’s nothing like having the TOP quality books available to you to listen to and absorb while doing mundane tasks.
      Real Estate Course – I’m training to get my CO license, $800 is a splurge, that may provide me great opportunity for the rest of my life.
      Mailing lists..
      Air Conditioning Units for the tenants
      Tools and equipment for the property

      Those are great things to spend money on, and to focus on quality, not frugality, in my opinion! I’d absolutely hire out the contract work like you, were I in your shoes!

  14. Jeff S.

    The best part of being frugal is splurging. I used 50k of RE cash flow for travel. The travel has a higher value than the cash. It is all relative. If I stay in an all inclusive resort and do most of my eating and drinking at the resort I am saving money rather than eating and drinking in town. That is my idea of frugal.

    I have 5 cars but most are older and my work truck is a 1982 Ford. If I don’t have to work and don’t spend down savings then I am frugal enough IMO.

  15. Minh Le

    Frugality is good, but earning more is better. There’s only so much you can cut on your spending while your earning potential can be much more. My thinking is a little different than yours. I like to make more so I can spend more. Think and Grow Rich is a good book to read with respect to changing one’s mindset. ?

    My DESIRE to leave the W-2 world was so great that I jumped head first into real estate before turning 36 in the midst of the Global Financial Crisis. Thank god it has worked out, and I’m getting over 6 figures of almost passive income each year. I call it LUCK while my friends call it CONVICTION.

    NOW, you couldn’t pay me $300k/year to go back to a W-2 job. I own the most precious commodity in the world, which is MY TIME. I wish all W-2ers the best of luck in achieving their financial freedom. ?

  16. Scott,
    You outdid yourself on this one. Nice work!

    Writing about frugality in an honest and inspiring way is difficult. I think you approached it very well with the rational benefits and the objection-busters.

    Another benefit of frugality is confidence in the face of fear. So many people are motivated by fear and security with their money. Why don’t people jump into entrepreneurship or into retirement? They’re terrified, of course.

    When you realize you can live on a little and still be very happy, it changes the whole game. This doesn’t mean you can’t increase your spending over time as you can afford it, but it’s nice to know you’ve lived on a little at some point in the past and not only survived buy enjoyed it.

    Keep up the inspiring thoughts, bud!

    • Scott Trench

      Thanks Chad! I agree that frugality also makes everything about building wealth less scary – it allows you to take risks, and the worst case scenario is that you simply build wealth less quickly than you might have otherwise! Not much of a risk at all, and it allows you to be bolder and more aggressive than the paycheck to paycheck folk.

  17. Dean Meier

    This may be one of my favorite discussions (to have with my wife (@8 ).

    One thing I would add; there’s a difference between frugal and cheap. No one likes a cheapskate. It’s important to always think about value. For instance, is it a valuable use of your time to spend 2 weeks painting and cleaning a rental turn gone bad when you can pay a crew to do it in a week? Only you can answer that question. The numbers might be a wash with time being the difference. I’ve painted plenty of walls in my day and I can now say, it is a better use of my time to do anything else and pay someone $20 dollars an hour to do that type of work.

    One thing I did in my life when I was a little less comfortable was to make a deal with myself. If I were going to have someone clean my house, I would have to do something with that time that would either make me more money or improve me. If I didn’t keep that deal, then I would have to fire the house cleaner. Might sound silly but I still think like that today.

    Remember, everything has a price. You have to choose to pay it.

    • Christy Greene

      I totally agree.

      When I am trading money for time, I ask myself, “How much money do I generate in that amount of time? Will it cost me more in time than money? Will this person or service do a better job that I could? ”

      If I am trading money for a product, I have to ask myself is this really what I want or is am I settling for a cheap substitute ? If I know that I won’t be happy with it, I will end up saving more money to buy what I really want.

      I know someone who went on a honeymoon and to save money, they cheaped out on the hotel selection, and travel arrangements. They ended up disappointed in the accommodations, and just not being pleased with the trip. This was a honeymoon trip….you can be frugal on the meals and tours but don’t be cheap on a momentous occasion!! To save money, this person ended up being cheap not frugal, with a wife that cried on the honeymoon…..YIKES!!!

      • Jerome Kaidor

        Honeymoon: My wife and I had the ultimate cheap honeymoon. She had an uncle who ran a tour business, hauling groups of Russian immigrants from San Francisco up to Tahoe. He did his first run to Vegas. There was so much interest that he filled a second bus. He needed a tour guide for the second bus. So we got our trip to Vegas for free, plus $200.

        Everything that could possibly go wrong, went wrong. The buses were slow going up the hills, and so we were late for the casinos. Yet my wife’s uncle insisted on going to every single casino, because he was getting a kickback for bringing in the busloads of people.

        The next day, we first went in search of flowers. My fiancee did NOT want to get married without flowers! We walked through three enormous casinos before we found one with a flower shop.

        The limo from the wedding chapel was VERY late. We waited… and waited… and waited….

        We were married in the company of strangers.

        My wife was scalded in the hotel shower.

        In the return bus, she bent over as I sat up, and knocked my glasses clear across the bus. And broke them.

        When we got out of the bus, somebody tried to steal our luggage. They broke one of the flowers.

        We walked back to the car. Someone had broken in and stolen the radio.

        We drove back to our crackerbox apartment, plopped onto our bed, and had a good cry.

        ….but we were married, and it had cost us a net total of ……zero…..

        We took the money we had saved, and bought our first house.

        Around the same time, my wife’s cousin got married. Big wedding, all the trimmings. Fancy reception, catered. Live band. Fifty or 100 guests. Seven years later, they were divorced. Thirty-five years later,
        we’re still going strong.

  18. Christy Greene

    So, my husband and I are in “Mustachian territory”. We are currently saving up 82-88% of our income. Yeah, you read that right. Just in case the readers don’t know what I am talking about, we follow a blogger who is extremely frugal and stopped working in his 20’s. His website is He says that we can achieve financial freedom if we save and invest if we save at least 70% or more of our income.
    Is it difficult? YES!!! We use the created by the Dave Ramsey team to track our expenses. It is a lot easier than anything we have tried. We are frugal and I know we can even be more extreme, but we have to balance out our life with an occasional meal out and a vacation every other year. ..and we save for those.
    One of the things I appreciate about your blog post is that you mention that “frugality increases opportunity”. Basically, if you have more money, you also have more choices to build wealth and the first way to do that is by the money that is already coming in….your income.
    I know I am not going to win any popularity votes here by saying that we want to cash flow everything. We have NO DEBT and we want to put down a HUGE deposit when we buy our house. Unlike most investors on this forum, when we purchase our rental, we will be paying that in cash. Yes, I know, that will take a long time, but at least I can go to sleep at night, I won’t have to worry about the cash flow of the house because we will use the 100% DOWN method. I LOVE THIS BLOG ARTICLE because this explains how we can gain wealth the fastest!!! By using the money we already have coming in to work for us!!
    I think people think that if they are frugal and go by a budget, they will WON”T BE FREE but the frugality lifestyle will ultimately bring you FREEDOM in dividends later….regardless, you can pay now or pay later.

  19. Cynthia Ortiz

    Nice article! If everyone actually applied this simple concept to their lives our country would be in a much better place. People need to take personal responsibility and stop blaming others for their unfortunate financial situations.

  20. Nathan E.

    Nice work Scott. The argument that you can only reduce your expenses so much, while income is infinite to justify excessive spending doesn’t do it for me. By reducing expenses you can see an instantaneous increase in the ratio of income to “outgo”. This ratio is really what determines when you will be financially independent.

    Thanks for the article from a fellow Commodore and bike commuter.

  21. Brian Larson

    Great, great article. Frugality can be very difficult but it is powerful.

    One word of caution, extreme frugality or a focus on the future of financial freedom can break a family. I have seen it first hand. Yhe mindset of “no family trips extra things” can put a strain on a relationship over time (both with spouses and with parent/child) and that can eventually break the family….and for what? A totally different future than you planned and saved for (divorce, lost kids, etc).

    My wife and i take a spend/save counterbalance approach. This is much like the idea work/life counterbalance in The One Thing. You cannot have two extremes or a perfect balance so you must have a counterbalance. We have a tight savings amount that will always be hit and included in budget then we have a splurge/spend line that we cycle up and down as needed (cycle up for anniversary trip or big gift for kids, cycle down when we need to lock in cash for new investment, house, etc).

    Picture the graphic from the one thing where you have your Y axis of time straight up, witha tight zigzag line for savings mostly keeping on the right (save quadrant). Then you have another zigzag soend line that is much bigger in width (splurge vs lockdown) overlaid

    Anyways, great article, just an alternate thought that i believe still fits in your approach.

    • Scott Trench

      Brian – thanks for this! I get this type of feedback fairly often, and I realize that as a young single man that this is easier for me than it would be for others. I totally agree that there can be a balance between the two and that extreme frugality at the expense of your relationships is not the correct way to go about things.

      • Brian Larson

        dang, I deleted my original reply.

        Anyways, power to you for being able to control the consumer demons. its tough when you have kids and married (I can attest) but it might be as tough when you are young and single. Every marketing and ad machine is aimed at you 24/7 and they have more ways to target you every day. So power to you.


  22. Karrah St Cyr

    Great article! I’ve been tracking my spending and saving since I was 20. When I met my husband five years later, I already had an established system. I knew that if he became proactive about saving and took the budget seriously, then this relationship had legs! Five years, two kids, one house, and a dog later, we’ve cut our income in half (I stay home because the cost of daycare in the DC area is through the roof) and we’re not nearly as comfortable as we use to be. Recently I decided to become serious about REI and we’re working on building the capital to get started. I’m also looking into online work for an additional source of income, but with a six month old and a two year old, time is scarce. People do it though. Thanks for the post! I’ve been preaching “save, save, save” for years!

  23. Jerome Kaidor

    Hi Karrah, I admire your persistence in the face of adversity! I have a pair of two-year-old twins myself, and I have to say that keeping up with them and my landlording business ( 96 units ) is quite challenging. Thank goodness for my excellent staff at the biggest complex! I tell everybody I have two jobs, a little one and a big one. The little one is the apartments, and the big one is the babies. I spend my time singing silly songs, filing evictions, playing with megablocks, paying bills and booking rents :).

    Still, it’s time for my babies to get out a little into the great world, and I am looking for daycare for them. So far,it is A) Hard to Find. and B) Expensive. Here in the SF bay area, even occasional babysitters start at $20/hour.

  24. Rachel Holland

    I could not agree more with this article! My husband and I are currently living in Seattle paying a ridiculous amount of money for a 600 sq ft house with both of us commuting 45 minutes or so to work. We want to acquire real estate investment properties as soon as possible, and have actually come pretty close to getting deals under contract a couple of times. But after thinking it over we have decided to move closer to our jobs in a less expensive area where we will be saving double the amount per month than what we are now. Even though this feels like the ‘slower’ path to wealth at the moment, we know it will absolutely be worth it!

  25. You don\’t have to be frugal. I know what frugality is. I\’ve done it before. It involved 5 roommates and no car. I lived on $5K a year.

    What you have to be, however, is relatively frugal. Guess what? Relatively frugal on a $100K income is a heck of a lot easier than relatively frugal on a $40K income. If you make $40K and I make $100K, I get to live just like you, yet save 60% of my income. Is spending $40K a year incredibly wasteful? Absolutely! Am I, making $100K a year, going to get wealthy despite blowing all that cash? Absolutely! And I\’ll do it faster than you can on your $40K income. There\’s no way for you to save $60K a year on a $40K a year income. Sorry. How do I know? Because I already did.

    I\’ve been relatively frugal at a lot of different incomes, and now I\’ve arrived at \”enough.\” Make sure you know what it looks like when you get there lest you blow right by it and forget why you spend all that time and energy earning, saving and investing.

    Now, to present the other side of the coin, the best part about saving instead of trying to earn more is that the tax code favors it dramatically. Even if your gross income doubles, your net income might only go up by 50%. Whereas if you can cut your spending by 50%, you can cut your income by more than 50%. Gotta love that progressive tax code.

  26. Kyle Vandever

    Great read, Scott.

    As a recently college graduate, frugality has been a way of life the last 5 years. After graduation, I watched as friends and peers went out and bought nice cars, big houses, and ultimately increased their monthly expenses. All while living under MASSIVE student debt. Although it would be fun to have those things, I find being frugal more beneficial to my peace of mind. I don’t have to worry about the looming car payment (I paid cash for a cheap car), or a racking up a credit card full of things that will break or I won’t use after a year. Popular society shuns frugality. So, thank you for shining light on frugality. I’m working to become more frugal, while earning more. And I’ll admit, sometimes that new car, or shiny object looks like it would make life so much easier but there’s nothing wrong with living with less.

    I had one question though. Do you believe in shying away from monthly payments (mainly on liabilities)?

  27. Kevin Izquierdo

    “Don’t start from scratch when thousands of dollars are begging to be rescued.”
    I LOVE this passage.
    I love these kinds of articles where I feel like I’m being scolded for not knowing the things that are right in front of me.
    Thanks for writing!

  28. Chris Virgilio

    This is an awesome case where the comments section is a better read than the actual article! The article itself was great, but the back and forth, and sharing of ideas after the fact are priceless. Well done, everyone.

    We were Dave Ramsey disciples up until a few months ago. We saw the value of being debt free and staying there, but started really learning about the power of leverage an appreciable assets like real estate. Rich Dad, Poor Dad really set me on a new path, and the Ramsey investing plan seems too scammy/unrealistic in terms of pulling us up out of our W2. That’s our goal, to live life the way we want and spend as many important moments with the people we love as possible. Debt free is a nice step (or 7), but REI is truly transformative.

    • Brad Lohnes

      Hi, Chris. I agree – I think that Dave Ramsey & Robert Kiyosaki are nice counterpoints and there is a good place in between. I follow Ramsey’s Total Money Makeover for everything except the investment advice. I do put some money into mutual funds (index funds) to capture company matching, tax benefits and generally to have a “Plan B” at age 65. But I think that the leverage of debt makes sense for the purchase of real estate, especially as Kiyosaki explains – as long as someone else is paying for it. And the problem with retirement savings plans, at least here in New Zealand, is that you can’t cash in until you reach retirement age. With property, of course, I can retire as soon as I have enough passive income.

      I try to keep the two in balance in some kind of yin/yang with dollar bills scenario. 🙂

  29. That was a great article!! Very candid, honest and straight-forward! I can certainly appreciate that. I would much rather have someone tell me the hard, cold facts as opposed to sugar-coating, and omitting pertinent and beneficial information for the sake of trying not to burst my over-inflated bubble. Thanks for the wisdom! Thanks for sharing!

  30. Michael Chambless


    Thank you for this article. I am 31 and retired from a W2 job when I was 28. I left my job to start a company in a field I gained knowledge about from the W2 job I had. Shortly after, I sold it for a large profit and fully retired into real estate.

    I’ve been doing well flipping houses the last 3 years, but I am married, and my wife, 27, is very risk averse and flipping is only consistent as long as I am still doing it. She still has her high paying corporate job because of her need for consistent income. We have made a lot and spend a lot. So, recently I thought how we can go from working a lot to make a lot, to working a little and still making a lot.

    Obviously, being a huge bigger pockets fan, loving frugality at heart but not in my actions, I thought how can I use these two resources to make our lives easier so my wife can also retire from her W2 job and not be worried.

    Then I asked myself, why is this big house we are living in so important to us, when if we lived more reasonably, we could buy many houses and rent them?

    It has been a big topic of discussion for us and we recently decided that it’s a great idea. Now that I have read this article and you suggested living in a less expensive home, it has confirmed our decision.

    Again, thank you for this article. It has helped me feel better about this life-changing (for the better) decision. Now with our 3rd child on the way, this could not have come at a better time.

  31. Charles Morgan

    I am a big proponent of Frugality as a way of getting a leg up on investment. I cut out cable TV (still have cheap internet), I drive a cheap 8 year old gas saver, I am reducing my cell phone bill and will be at $0/month when my current phone is paid off (thank you Freedompop and Google Hangouts). I do splurge on occasion but I try to make it count, bought a car for my girlfriend (cash) from my RE investments, and a motorcycle for me. I splurge on the tools I use for my rentals.
    Yes I am still doing work on some of my houses but I try to mix it with fun, I have replaced the plumbing in the mobile I bought in a resort area during the weekends when my girlfriend and I go up there to get away. It gives me something to do while she shops and we are both happy!

  32. Brad Lohnes

    I find it interesting that modern western culture despises both frugality and wealth at the same time. I’ve recently come to the conclusion that while the masses blame the greedy rich for all of society’s problems, greed is actually buying something you can’t afford.

    My wife and I were speaking with friends recently and they made the implication that because we wanted to accumulate rental properties (wealth) we were “taking” those properties from others – i.e. being greedy. We are greedy, but not because of the rental properties. We are greedy because we have a home with a mortgage which implies we actually can’t afford our own house – the rentals pay for themselves so they’re fine. 🙂

    Anyway, just something that has crystallized in my mind over the past year or two.

    • Scott Trench

      I really really like this comment. It made me think a lot here. I think that you are right – modern culture does tend to envy the rich and have disdain for the frugal!

      I will say however, that if it’s between that and being dependent on someone else, you can hate me all day long. I’d rather be frugal, then rich, than live a lifetime of moderate-high financial stress and uncertainty. That’s a no-brainer to me.

  33. Konstantina Mazaraki

    Firstly i would like to thank you for your article Scott. Spot on.

    From my personal experience few years back i had to take a long hard look at my finances due to the massive debt i had accumulated. Part of this process was for me to actually go through the credit card statements etc wondering where on earth all this money had gone.

    Did not take long to realize that 99% of this money was spent on things i really really really could do without. Yet when i was buying them i thought there were must have’s.

    Long story short when adding all the money spend in the years this gave such a total equaling to at least 5 additional properties for me which added to the ones i have now (obviously purchased after my financial rehab!) would mean that i would be in a position to quit my job much sooner.

    So for me frugality and spending my very hard earned cash in a wiser fashion saved my financial future. And has put me to the right path for achieving financial freedom

  34. Tom MacDonald

    Good article, Scott, thanks for writing. I especially appreciate that you provided specific numbers for your audience – those working up to 50 hour weeks earning around $50k with no savings. Oftentimes it’s easy to question whether financial advice is truly applicable to one’s situation if the author declines to specifically describe the audience’s earnings and job/life situation.

    Looking forward to reading more of your articles,

  35. Andres blandon

    Hey Scott,

    Thanks for sharing! It really made me think about the choices we make on a 9 – 5er mentality. I have recently been presented with the possibility to change jobs and 2 very different opportunities arose. One that is a higher paying 9-5 in Louisiana and another opening with a lower salary in South Florida.

    After much research I realized that while the opportunity in Louisiana seemed “Better” as a yearly salary, the state tax in addition to the income tax made it a lower take home pay at the end of the day. Less money to save and less opportunity to invest. I considered that at least in South Florida properties are easier to rent. I could get a room mate or possibly do AirBnB to supplement my income.

    Great post!

  36. Travis Crane

    This is a great article, thank you. Frugality with my personal finances led to the opportunity to start my own business…and the cost concious mindset with my personal checkbook carried over and created a great expense concious culture in the business too. This culture really helped our business get through some rough times from 2008-2011…and continues to help our clients everyday.

    I always tell my kids a penny saved is more like 1.2-1.5 pennies earned.

  37. James Rodgers

    Before I even finish reading this article, I want to comment and say that my wife stays at home to raise our kids, and we currently live off of a single paycheck.. Less than we could bring in, for sure. Not because we are not serious about building wealth, but because to us the decision of raising our children the way they deserve to be raised- personally, day-in-day-out, not via strangers in daycares- that decision is a higher one than how soon we achieve financial freedom. That is an extremely well thought-out decision, and we are also serious about building wealth and achieving financial freedom. My sweet little wife is willing to move out of our cozy 3-2 and into a house hack with a 3-year old and a newborn. But if your definition of “serious” is being willing to sacrifice all other meaningful aspects of life on the altar of financial freedom, then we will never be serious, and I will never regret it. Even if I work my 9-5 for the next 40 years and can’t even retire well, I would choose that every time over outsourcing the nurturing of our kids.

    I have enjoyed other articles of yours, Scott, but a little disappointed here.


    • James Rodgers

      I do strongly agree with your overall message, though. The idea of ensuring you are maximizing what your current income can do before adding outside work to your plate is brilliant, efficient, and seriously ignored in this whole arena, or so I’ve seen so far.

      Just yesterday I commented on a similar post about my new habit of instead of meeting a friend for lunch (and the pressure of someone covering the whole ticket), I’ve been inviting friends to brown-bag-it to the park. A much more enjoyable setting to connect!

      “marginal use of my time” – an analysis that anyone at any income level will benefit from, and basically the validity of your post.

      So I want to make an additional comment saying that I agree with your assessment.


    • Scott Trench

      If you are house-hacking with a family, for what it’s worth I’d say that it sounds like you are pretty serious. Sounds like you will move fairly rapidly towards financial freedom and/or have substantial assets and income outside of your job in a few years. It also sounds like you have your priorities clearly laid out, and have a very economical system for both giving your children a great start in life, and moving towards financial freedom as is reasonable in your situation. I also suspect, based on your comment, that your wife is on board with financial freedom, and is a huge asset in that endeavor.

      Sounds to me like you are building wealth. What I mean to say in the article there is that two adults in the household working together should prove synergistic, not destructive, to wealth building – it sounds in your case that there is a synergy there. Too often, folks complain that they can’t build wealth because or save money the way that I and many investors on BP do because of their significant other and/or children. My observations (but not my direct experience, of course) lead me to believe that two intelligent adults can prioritize BOTH financial freedom and their children’s best interests just as effectively (if not more so) as a single person.

  38. Hunter Votour

    This is so great!

    I didn’t realize how significant frugality was until I looked at my finances and realized how much capital I was throwing down the toilet.. I have little to ZERO expenses and a lot of income and nothing to show!.. I wish I could have read this post 2 years ago!

  39. Ryan Dressel

    I love the article and think these concepts should be taught in school!

    The biggest challenge to the real-world application of frugality are the people you surround yourself with in your life. Having a lot of friends & family can be great, but at the same time are very expensive. Birthday parties, wedding invites, dating/date night, gifts, and nights out all add up (especially around the age of 27-30). Can you budget for these things? Sure, but it still cuts into your net savings each month/year.

  40. James Clark

    Simply direct, well said and great point of views! Frugality is definitely where I am sure many could use a little extra effort and practice a bit more including myself. This is something to share with our children to give them an advantage earlier in life. Its amazing little habits that you can change that will save more of your hard earned money. This article reminds me of a saying my mother would often say when practicing frugality. My mother would see a penny lying around but not without saying “A penny saved is a penny earned.” Regardless if you find the penny, don’t be too proud to pick it up.

    Lots of great articles! Keep up the great work!

  41. Jesse Aiken

    I love that you say preserving capital is key. I have the same opinion and always look for ways to do it. The next step is maximizing that capital and making it grow.
    It’s almost as if you wrote this article about me. I work a full time w2 as a healthcare professional and make 50k/year. I have always been a saver. My parents taught me to always live below my means. I know I could do better, but try to keep life balance while still being smart with my money. For example, it would be difficult for me to do without a car, but mine is nothing special and it’s paid for. An automobile really is a big expense. I always look for value with every purchase and will not buy something without value and/or that I don’t need (with the exception of a treat now and then). I’m a bit of a minimalist.
    I’m 36 years old and over the years I managed to accumulate a fair amount of capital via w2 income. For several years I had been considering different investments, none of which were very attractive to me ie: Mutual funds and such. What I really want is freedom and control of my life and my investments. It wasn’t until I started reading about real estate that I realized this and saw the real potential to make it happen. Brandon Turner’ s book on rental property investing was a big one. BOOM I was hooked!
    I gobbled up all the info I could (still continue and will always continue to do so) and bought my first duplex last October (30 year conventional). It was a fixer and I did 90% renovations myself. It wasn’t easy, but since I have the skills, it made more sense to do it myself in order to preserve capital. At 50k/year I’m worth about $25/hour, so it didn’t make at lot of sense to hire contractors at 50-100/hour to do work that I could do myself. If I had other ways to make more with my time, then it wouldnt have made sense but i didn’t at the time. Im working on it :). It isn’t in the long term plan to continue doing this and is not sustainable but in the beginning it makes sense and allows one to make the available capital stretch farther, grow faster, and open more opportunities. Jered Sturm wrote another article outlining this that i really like also.
    Enter the maximizing capital stage. Since turning the duplex I have the downstairs flat leased at the top of the market (i made it nice for about 1/3 of the cost) and rent 2 rooms in the upstairs flat where i live which i also renovated myself. It’s basically like having a fully occupied strong cash flowing property…and living there for free…you know how it goes ;). Not to mention the forced equity that i will be able to use in the form of more capital in the future. Now that my living expenses are covered and then some, I’m able to conserve more capital and make it grow faster.
    Jump ahead to April of this year. I purchased a single family estate home with a partner using private money. Again taking on a large portion of the Reno myself. I had more help with that one but it was still several 100 hour weeks on a quick turn to get the place leased to grad students. By using private money and leveraging myself and my partner, we were able to complete the project with almost zero out of pocket and again…conserve capital. We will be refinancing and are confident that we have 25% equity keeping our own capital out of the deal.
    Then last week I closed on another brick duplex (2nd 30 year conventional). The lesson I learned from my first purchase was that taking on another project like it would probably be unhealthy. I kept that in mind when looking for my next property. The new purchase is relatively turn key and I ended up paying about the same per unit as the first one without the hundreds of hours of labor and stress. The major difference is, I don’t have as much equity as the other…which I don’t like, but it’s a solid fully occupied
    strong cash flowing property and i dont think it was a terrible move. Lesson learned and I will be looking for more equity with less of my own time and labor moving forward.
    I’m going to look at yet another brick duplex after work tomorrow that has a possibility for a value ad situation. The next day I’m meeting with an older investor who has a 3 and a 4 unit he might sell. Thats an off market lead I got from a loan officer when looking into an unsecured LOC at my bank. I don’t need the LOC yet so now’s the time to get it. I’m looking farther down the road and using what’s available to save my own cash. I’ll be looking at the duplex with private money in mind and possible seller financing on the 3 or 4 unit…maybe both? :). The ceative finance strategy boils down to…yep, conserving capital. I still have capital to use but im trying to make it go farther and grow faster.
    I am also self managing and maintaining at this point and will continue to do so until it no longer makes sense or isn’t possible. This is just another way to conserve and maximize capital. It’s so important to do, both personally and with with the investments. Conserving, maximizing, and compounding capital is the key if you want to grow faster! Especially in the beginning.
    I’ve been doing this less than a year and definitely still a newb…i haven’t even been through my first tax season yet. I’m learning as I go and trying to get better every day. So far so good.
    Thank you for the article Scott. It really resonated with me especially and is both validating and motivating. Bigger Pockets is such an amazing resource and i thank you and your colleagues for all you do. You are making a difference in people’s lives.

  42. Michael Zambon on

    I think your underlying message is strong here, but in addition to frugality, you should put some more tangible, numerical results. Mr Money Mustache has some great pointers on what percentage of take home pay gets you to retirement, and how fast. I believe it was 69% savings rate gets you to retirement in ~10 yrs..

  43. Kathlyn Lewis

    Glad to see this on the repost. We have kind of done financial independence “backward” (I’m almost 50 and didn’t get serious about being able to “retire” until about 10 years ago) and there are times when younger people will ask me about “retirement.” I will point them here because you explain it all so much better than I ever could!

  44. James W.

    I do not quite agree with you on frugality – but if I am reading this correctly, I congratulate you for identifying the key and the game changer – if you lose your 9-5 – you’ve lost before playing it.

    Its like letting go the bird in hand for two in the bush, and it remains to be seen those birds plays out.

    I hope this was one of your points, and I have not misunderstood here.

    About furgality – there’s substance to it, but if and only if you can save a big chunk. Saving a few hundred bucks here and there in every little thing is no way to live.

    But if you can save a thousand bucks a month by doing something, you better bend backwards and do it.

  45. Kevin H.

    I’m in 100% agreement with what you said, Scott.

    I think we all execute the plan a bit differently, and there are arguably ways that I probably could have done things better in terms of seeking higher investment returns earlier in my post-college working career. For example, I paid off my primary residence first, which seems contrary to the advice given by many — it still gave me some great benefits though, which I’ll touch on in a minute.

    Nevertheless, despite any differences we might have in structuring our individual savings plans, I think the reality is just as simple and glaringly obvious as it has ever been: it almost always takes money to make money, and the best way to get the money it takes to make more money is to save as much money as you can from what you’re currently earning.

    When it comes to savings, I’ll stack my lifestyle up against just about anyone else’s. I’ll freely admit that I haven’t invested enough, or put enough of the money I’ve saved to good enough use at this point (I have too much cash — hence why I got involved around here). But, that aside, I wouldn’t even have the option to consider the investments I’m currently contemplating if I hadn’t saved efficiently along the way.

    Some of my close friends are aware of my financial position, and some of them have described my position as “lucky”. Luck didn’t have anything to do with this, and that’s a concept that is unfortunately lost on most people. When I graduated college and started working (2003) I had just $6 in my bank account. I work a solidly middle class job, as does my wife. We have always been frugal, and have always put the extra money we’ve saved towards things like our mortgage or our savings. As a result of that behavior we managed to pay off our Denver area home around four years ago, when I was just 33 years old, and she was just 29 years old. Now, as I said above, there were probably better uses for the money that I put into extra principal payments, but I still don’t regret what we did. If I thought our savings was impressive when we first paid off this house, I really had no idea how fast we’d be able to accumulate capital once we killed the mortgage bill… our savings rate shot through the roof in the past few years, because we still know how to live frugally, we’re both earning more money from the normal and expected career advancements we’ve had within our “9 to 5” jobs, and we’re no longer having to put money toward the mortgage on this house.

    It was because of that savings early on that we managed to do what I just described above, and it is because of that savings that we’re now in a favorable position to do some big things on the investment side in the next few years, which will hopefully land us in a position of financial freedom (which is what I’ve always sought). Our next goal is to start generating some outside streams of income, so that we begin to make some serious money that isn’t tied to our time in the office.

    Friends and family often ask us how we got where we are today (not rich, but quite healthy financially). These folks are often (innocently enough) searching for some magic bullet, or guru-style secret. This isn’t the result of a late night infomercial, unfortunately. And, to be honest, I usually hear the same string of excuses described in this article when I ask these folks why they aren’t pursuing the dream: “well, I want to enjoy my life”, “We like doing things”, “you can’t take the money with you”, “we don’t want to stop eating out”, “we like traveling”, etc.

    Frankly, the excuses are ridiculous. First, we do enjoy our lives. I went hiking in the Rocky Mountains yesterday, and I’ll be doing the same again today as soon as I hit send on this message (cost: a pair of shoes every six months, and about $11 in gas money). We also have a few luxuries that we enjoy (my wife’s horse, as an example), and we do go out to eat from time to time, and try to squeeze in a yearly vacation. But, the part that makes the excuses from friends seem entirely ridiculous to me is the fact that they’re really missing the forest for the trees in life. I don’t save diligently because I don’t enjoy nice things, I do so because I want to be able to enjoy more of my life with freedom from the career-related rat race. We only have a finite number of years on this planet, and I don’t want to spend them all working for someone else. I want to spend them doing the things I enjoy!

    In life you can work hard now, or work harder later.

  46. Nancy Bachety

    It’s widely proclaimed that financial education is lacking in the US school system. But for those who declare to build wealth by starting a busines – a perfectly legitimate and wise way – they overlook the fact that, as bad of a job that we do in teaching financial literacy, we do much worse teaching how to start and operate a business in our schools. And if you think of those who have had massive success with starting their own businesses, schooling and degrees have had little to do with their success. I don’t know the answer, but I wish I could find the curriculum for teaching “How to originate your own business”.

  47. Tammy coughlin

    Thanks so much for your article. Being married, with kids and home, our most recent change is to buckle down and save. We have always stashed money away in our 401ks and had only minor income for emergencies, no debt other than the mortgage, but need to get that pile of cash to start investing.

  48. Chris Tylo

    The only thing that matters is the experience in life that you want to have. If you want to work 9-5, great, if you want to be frugal, great, if you want to be rich, great, even if you want to be poor and wander, great!

    The amazing thing is that no one’s reality is your reality and the only thing that matters in your life is how your experience makes you feel. Everything that has ever happened, has happened within you, that is life, everything else is just the ambiance of life.

  49. Terri Dyer

    We now get a thrill out of living below our means, and love seeing how much we save on dumb things that never really made a difference in our lives in the first place. So many people over look that living frugal and budgeting is a huge part of finding financial freedom and wealth. With huge car and house payments it would be really hard to break free from the 9-5. We started purchasing rental homes 5 years ago. We never used any of our profits, everything went back into the business. Doing so allowed us to grow bigger and bigger. Now we will be “retiring” next year and just do our real estate investing business. The only way we can do this is because we invest and live under our means, we don’t spend every last dime we make!

  50. Jake Barone

    Thanks for this post, it made me think of Warren Buffett, one of the richest people on earth, and also one of the most frugal! Even Warren watches what he spends at McDonalds down to the penny. This post resonates with me as I start my professional career as an engineer with visions of saving enough money to begin in real estate investing in the next 18 months.

  51. Seana Mach

    That was my first financial book I have read, and I have been hooked ever since!! Now I am working to acquire as much knowledge while living as frugally as possible, with of course healthy foods in check (had to add that in there, because I love fitness) but it was definitely SUPER insightful. Especially for us that have no wealth in our family at all. I cannot wait to be the first to start building that. Thank you again for all of this amazing knowledge!

  52. Samuel Kwak

    Great post on an important concept for people, especially millennials like myself need to understand and digest. The point on spending less and earning more is something I am working on. Pressing on towards FIRE. Thanks for the insight!

  53. Jeremy Paul

    Scottie! Brilliant article! It’s about time someone wrote about frugality or reducing ones expenses. I’ve read a lot of posts on BiggerPockets where investors are advising other investors to buy a rental property (with a loan) that will cashflow enough money to pay for their car payment or credit card bill or mortgage, etc. In my opinion this not good advice. Someone who has a credit card bill or a car payment probably isn’t trying hard enough to save money or live frugally, pardon me for sounding like Ben Leybovich, in my opinion Ben invests wisely.
    Depending on the amount of the credit card bill or car note, paying those debts off is as equal to multiple cashflowing properties. Sure, you’re not building equity or appreciation by paying off your debt but from my experience you don’t want to be over-leveraged. It only takes one bad property investment to sink your finances especially if you’re over-leveraged with minimum savings and lots of expenses. I’m not saying you have to live Dave Ramsey style but for you newbies who can’t save money you may want to consider Dave’s teachings.
    Be smart fellow investors! Scottie has it right. Living frugally or well beneath your means sets in motion a lifestyle that is primed for financial freedom.

  54. Fernando Enrile

    Scott, great article! By the way I love your book Set for Life, I bought it a few months ago and it gave me a a new perspective on frugality. To be frank, growing up, I hate that word, I felt deprived when I hear that I should be frugal. My mindset was I’ll make a lot of money so I don’t have to be frugal, I saw frugal folks as those who deprived themselves and penny pinching as a very sad thing to do. Those all change as I realized that as a 9-5er who wants to achieve financial freedom before the age of 40 (I only have a few years left), I have to watch my expenses and look for opportunities to cut the needless spending. I like Reason #2: Frugality negatively impacts your lifestyle WAY LESS than trying to build a business, as someone build a side hustle, I can see the challenge this brings to my personal life after my 9-5, it would have been easier and more beneficial to my personal life Anyway, I’m still going to pursue to earn more and spend less, and I’ll send you an email so I remain accountable. Thanks for your valuable insight bro! May this new year bring all of us more success and happiness, all the best and be blessed!

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