Hey BP! I'm still quite new around here so I know I'm risking outing myself as someone who "doesn't get it yet" by asking this, but I've been consuming everything I can to try to educate myself - podcasts, books, forum conversations. (I have yet to get out to a local meet-up, but I'll get there.) I think of this as part of what it takes for a new investor like me to get up to speed. One thing that keeps coming up - particularly as I read my way through some of the titles folks on the podcast identify as their favorite business books - is the idea of drastically minimizing expenses. I guess the volume and frequency of the "you must live an exceptionally modest lifestyle" message has surprised me and I'm curious if you have tips for how to accomplish the spirit of what they're saying without drifting into self-deprivation. Live below you means, sure, but some of this advice...I dunno. Of course I get that living on $20,000 a year, for example, would provide a big boost to my wealth building but I've lived on that income before, as I'm sure many of us have, and I don't recall it being very pleasant. I don't need to splash money all over the place, but what's the point of using real estate as a tool to build passive income and increase my long-term wealth if it doesn't also improve my standard of living as I go along? Sure my retirement would be GREAT if I save 50% of my income, but... What am I missing here, BP?

@Ryan Pozzi, I think it matters a lot where you are at. If you have several thousand sitting in savings why cut back? If you have 3 unpaid credit cards owing $10K each you really need to cut back. If you are in your 60s and well set compared to being in your 20s or 30s it matters a lot. If you don't have a lot saving now and having your investment grow for 30 more years can a major source of income later. Having only a few years until retirement a few thousand might not mater much. I have done buy and hold for well into 20 years. I started slow, and had very little to invest. We added when we could afford it, and often sold to be able to put money down on several more properties. Despite turning 60 next year I am still buying. I am more interested in gaining sudden equity or good cash flow rather than long term payout now. If I can value add $20K, then I go for it. I no longer think about a good payoff in 20 years. I am beginning to pay properties off. Your investing strategy depends on where you are at financially and time wise. You won't see me not eating out or not buying the new tool I really like. I did that over 30 years ago to graduate with less than $10K debt after 10 years of college.

@Ryan Pozzi Frugality has been very good to us. We're moving down to around $33K a year for a couple with no kids. So first of all, it's a LOT easier when you're married and both agree that this is what you want. Secondly, the expenses you need to go hardest after are typically not related to things that you would necessarily see as daily lifestyle pick-me-ups. The two largest expenses of the American household are housing costs and transportation. Do you have a car payment, like 90% of Americans? Well, you should go after that a lot harder than you should go after the latte you buy down at the corner ever Friday morning. Where do you live? Since I'm something of the perfect example of that, let me tell you where and how I was living before I realized how much money I was throwing away. This isn't the first time on BP. When my mother and I moved here from Europe, my brother decided that the best place for my mother was a townhouse condo in a very nice part of my area. So we sold our house in Europe and moved in, buying the condo outright. At the time, the condo payment was something around $160/month. You go snow removal, trash removal, cable, exterior maintenance, and sewage expenses for that amount. You got access to tennis courts and a private pool. It seemed like a reasonable deal. The years passed, my mother died, I got married, my wife bought my brother out, and I have still NEVER used to the pool. I have never played a game of tennis in my life. The condo is very far from my wife's work. I telecommute to my current W2 job, so it doesn't matter where I live. The TV in my house hasn't worked for almost five years now. The snow removal turned out to be a joke and not worth it -- they only do something when it gets heavy and then they do it grudgingly. Sewage costs have risen and risen because the whole development's underground infrastructure is falling apart. The HOA assessment is now up to $400/month, and I own this place outright. There was a "special assessment" last year of $2000 to repave the roads of the development. Only an idiot would live here, my wife and I have long understood. This place eats money and gives us very little. What it did do for us starting out was give us a place that we could borrow money on easily, and we took full advantage of that. We have been working hard to GTFO since that realization, and we're succeeding, flexing our frugality muscles intelligently. To get back to the car payment, my wife and I bought three RAV4s in six years, switching them out like furnace filters. Once we got on the financial freedom wagon, we finished paying off the last one, found a mechanic we liked, and now we're car-payment free. The third biggest line item in the American household budget is food. We live within easy driving distance of two Aldis, and now do most of our food shopping there instead of the local overpriced supermarket chain and the even more outrageously overpriced Whole Foods a few minutes away. We have finally accepted that the only way we're going to get reasonably good food in our area for a reasonable price is to cook it ourselves, after years of trying new restaurants and being disappointed. About the only eating out we still do is a once-a-month outing to a local Chinese buffet. This, for us, has been a major lifestyle change that took time and work to get right, as well as a bit of investment in cooking equipment. But it's saved us quite a bit of money. Credit cards! 60% of Americans pay interest on a balance every month. Is that you? If so, STOP! That's a wonderful gift you're giving yourself. You can quickly cut expenses down to the bone and only eat dried ramen and drink coffee from ground you've run water through three times. That's what most people think about when they think about frugality. But getting to the cheapest possible food is not what you should be focusing primarily on, and doing it down to ramen and coffee is not going to be fun for you, as you pointed out. Look at your housing situation first, then your transportation, then go after low-hanging fruit like vampire-like outstanding personal credit, then think about how to change your food budget intelligently. Frugality takes time and analysis when it's done well, and it's done with a steady hand on your household budget. What we're working on to finally get out of this housing situation is moving to a large duplex in another part of town and renting out the upstairs. I bought the duplex very cheaply and have been renovating it steady for quite some time now -- it would have been wiser to invest in something else or to carry out this reno differently, but the something else was an opportunity that did not come along and I was working within my skill set on the reno. When we're in the duplex, and this townhouse is sold off and our home equity loans are paid off, and our rental business continues to grow, my estimates indicate that we'll be down $42K a year from the lifestyle we once had, in the paid-off condo with the car payment and the out-of-control living expenses. Yes, we were spending $75K/year back in the day on some really, really didn't need. If you want to understand how this process works better, I can't recommend @Scott Trench's book Set for Life and the BP Money Podcast enough. I only managed to read that pretty late in the game, however. The book that changed a lot of things for us, really did resonate with is, was Thomas J. Stanley's The Millionaire Next Door, which Scott frequently mentions is high among his own personal favorite finance books. Since reading that book, I've read everything Stanley wrote before he died, and it's all based around the same topic. His daughter has recently published an update on Stanley's research that'a also worth reading. I am most definitely happier now with a wife I never but never fight about money with and a household budget we understand every single last little thing about, than we were back in the days when we were wondering where-oh-where $75K a month was going and why it was so hard...so very hard...just impossibly hard to get ahead with our W2 income muzzled as a wealth-building tool. We've also been pretty lucky (if not to say incredibly lucky) in our real estate investments at the same time, pumping our money into investments that makes money for us instead of liabilities that aren't good for our financial and personal well-being. It takes time. But it's worth it. It's not easy, but every little win reinforces the last one.

Smart spending is not about frugality at all. It's about knowing exactly what you value and being intentional about spending. "I value time with my family" but I have a big house and costly cars so I have to work tons of hours... "I want to be healthy" but I eat bad and have not seen the gym in years... These are challenges we all have. Show me your checkbook (and calendar) and I will tell you what you value. What people 'say' and what they 'do' are two different things. When your checkbook is wired to your goals, life is good (and you are in the minority). For the record, mine is not yet there.

One of the keys that will make your journey easier to is to get a great paying job. That way you can put aside some money while still having fun and enjoying life. Alas, it takes money to make money *unless you're well connected* . I agree with you that it doesnt make any sense to be super frugal for many years if you are going to miserable in your prime years. At the same time though, you may not always need to buy the newest iphone, always get $5 coffees in the morning, etc. and find ways to put aside a bit of extra cash that adds up.

Live the lifestyle you want to live with the understanding you are responsible for paying for it. Then go out and pay for it with you investments. Contrary to what many believe and say, you CAN have your cake...and eat it too. You just have to decide on the cake, and plan how to get it....and taking steps backwards (reducing your lifestyle), although is a way that can get your there, isn't the only way to get there.

It is whatever you want it to be. I personally don't care much for luxury items so I live a modest life style. If my properties brought in a million/ year in cash flow I wouldn't change much about myself. When my wife and I increase our yearly income each year not much changes if your watching us in our everyday life. It comes down to what you personally want and what you personally want to do with what you earn.

@Ryan Pozzi Haven’t read the responses, but I’ll just give you a short and sweet answer. It’s not “the” answer, but an answer. I avoid credit card interest. I bought a personal home for half the price my banker said I could buy. And I never buy brand new cars. And I avoid lifestyle creep. I still take 1-2 vacations a year, but the above simple advice is what I’ve told my kids they need to do to “get ahead”. None of that is real estate advice. Just life advice. Oh, and choose your life partner very carefully (financially speaking).

My opinion is yes. The the more you save the more you have for investments. It's that simple. How quick do you want to be financially independent?

Is it really about not spending the money you make?

Jay HinrichsBusiness Member

Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes

7y

Originally posted by @Randy E.:

Originally posted by @Steve Vaughan:

Great memories can be built without large dollar signs.

This should be printed 100 point bold with flashing letters.

A few years ago, I had a discussion with another father of young children who said he could not imagine depriving his children of the necessary things in childhood that create wonderful childhood memories. His example was a yearly trip to DisneyWorld (or DisneyLand, I can't remember which) where they stayed a few days at a lodge inside the park. I mentioned that I could create great memories for my kids by going to a big lake in a small town, or to the beach near the end of the season, for a fraction of the cost. The other father insisted that it took a $3500 Disney vacation to create such memories. To each, his own.

If someone can spend like that and still save enough money to invest, that's great. If someone who spends like that complains that they simply "can't" save enough to invest, well that's a different story. Someone who doesn't earn enough to spend big and save big has to make a decision on what's really important to themselves. If you want to invest, really want to invest, then you will save. If you want to live a lifestyle that prevents you (on your current income) from saving enough to invest, that's a choice you can also make. Neither is right or wrong, but one will help you become an investor more quickly than the other.

a 10 dollar rod and reel combo and some worms or grub worms and go fishing for blue gill or crappie tell me what 3 to 7 year old would not dig that.. and many times they dont need a license. :)

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Steve Vaughan

Rental Property Investor · East Wenatchee, WA · Member since 2014 · 10k+ posts · 16k+ votes

7y

Absolutely nothing wrong with spending on things that are important to you. Theatre and music events can also be awesome networking opportunities. We rub elbows regularly with the premier theater show sponsors (that are friendly and down to earth) business owners. Cool crowd. Good friends.

We have an envelope full of tickets to upcoming shows and concerts. Chalk full. We support one of our theater arts buildings that is in danger of losing their parking lot, which has been borrowed for years. Culture and the arts are what separate us from beasts.

Prioritize and have a plan is all most of us are saying.. Sounds like you're heading in the right direction!

3 Reply

Jay HinrichsBusiness Member

Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes

7y

Originally posted by @Kelly Iannone:

@Ryan Pozzi your comment “without self-deprivation” is largely subjective. To me, it’s about consciously making the choice to identify why level I’m comfortable spending at and redirect excess income to investments. We are up to a 36% savings rate and I am far from deprived. Now could I do a lot more fun stuff TODAY with that money, yes, but that would be at the sacrifice of a financially secure future. And knowing we are securing our future brings comfort to today.

Another take away you should be getting from all those podcast/books is to grow your income. You can only cut expenses so far so focus on growing income to grow that savings rate. You have to have the self discipline to know your end goal and what it takes to get there. We want to retire in 10 years, so we are focused on growing our savings rate further and redirecting a portion of that to REI. We have been investing in low fee index funds through our 401ks for many years.

My wife and I were coming back from the Napa Valley on Friday.. and she points to this ladies hand bag and says Hey that bag is 3500 dollars .. :) I go to the out let store and buy her coach bags that look great to me for 200 to 300 dollars. I buy her one about every 6 months.. Plus i go to costco and buy her some nice jewelry once a quarter or if she has had a nice closing..

I look at it this way.. you have 2 distinct things going on here.. you have those that have a different chosen field / JOB other than anything to do with real estate but feel rentals or some type of cash flow real estate is their goal to become independent of owning their own business or working for someone else.. And its that job that allows them to become investors.. and as such they need to do what everyone is talking about here.. when U have a set income at least to start you must manage within that revenue stream. and of course being money smart ( Dave Ramsey) is the fast track.

Then you have those that chosen profession is Real Estate ( myself and my wife) I was financially free when I was 18 and pass the real estate license test.. And my wife same thing 30 years as a broker.. we are a real estate family.. and as such.. while we have owned a lot of rentals.. we find putting our energy into increasing our income has worked for us.. we set our own schedules. ( this winter we are in our Vegas home which is now our primary and its paid for).. So we just do what we do.. At the point we dont want to work our small business we can then decide what kind of cash flow instruments we might want to own.. Last year we had a homerun with some bank stock. Our small bank needed money in the GFC we put in a nice chunk from our IRA and well bank got bought and we got a 5X return.. tax differed now that is what i call passive.. LOL.

Keep in mind those that you see with the lambo's and jets and etc.. are generally selling programs or trying to raise investor capital and usually need to have those things to impress those they are trying to get to buy their system or invest in their deal .

Then you have the balance and you cant take it with you.. if I went on the austerity program years ago I would be farther along.. but then i would not had the life experiences that I cherish. Last thing i want to be is a money hoarder never going anywhere and then some illness takes me out.. WE live in the Jet age for me personally travel is one big privilege that is worth spending the money on. But since I am in the business of Real Estate and I fly almost 100k miles a year all over these great states checking on my vendors and projects I get enough frequent flyer miles to exchange those for 4 business class seats abroad all for free.. and Since i frequent the same hotel chain I get massive points.. so i am doing the dave Ramsy.. we take a trip to Europe or Asia or anywhere and flight is free hotel is free.. Food is food..

So to me being in the business is far different than working a W 2 and trying to use extra money to invest.. When you are full time in real estate selling it flipping it building it.. skys the limit on income.. so to me its make more money. :)

Although I am just like many above but in my own way.. I have no rentals so i have no debt.. and I can do that becasue i have worked 40 years doing deals.. of course 08 kicked us in the butt.. but it also kicked a bunch of landlords if you owned in the wrong locations.

Its all good..

That all said if I lived were many of you folks live were you can buy rentals for the price of cars.. I would do exactly what your doing.. and scale it and be great at it. I would not sell real estate in a market were prices are low.. this is why I see wholesaling so popular those guys can and do rip a ton of equity from sellers and makes it worth their time. but like all small business only a small percentage are the experts that really make it work.

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Curtis Mears

Property Manager · Raleigh, NC · Member since 2014 · 729 posts · 596 votes

7y

@Ryan Pozzi

I usually ask myself, do I want something or do I need it. generally, the items a want, often go unused after a day. I may think I need it, but really it adds no value to my life. most objects become clutter.

2 Reply

Tanner Marsey

Rental Property Investor · San Diego, CA · Member since 2017 · 439 posts · 578 votes

7y

Everything in moderation. You only get one go around. Spend the money on things that you enjoy and make you happy.... pass on spending money on things that don’t. We drive modest cars because they get us from A to B and driving luxury vehicles brings us no joy, but we like going on vacation from time to time and going out for drinks and nice dinners occasionally.

Live at/below your means. And for me, personally, living at your means takes investing into account and enjoy the ride. You can have a million rentals but when all said and done....but that isn’t what it’s all about.

1 Reply

Tanner Marsey

Rental Property Investor · San Diego, CA · Member since 2017 · 439 posts · 578 votes

7y

Also, I don’t want to wait until I’m 60 to start enjoying traveling and other stuff.

4 Reply

John D.

Rental Property Investor · La Quinta, CA · Member since 2014 · 1k+ posts · 779 votes

7y

Just a couple hours ago I set up an empty whiteboard in front of myself, tried to write down what I wanted, that I didn't have. Still haven't figured it out. The only things it seems I might be missing are my own constraints, not related to time, money, or anything inbetween.

2 Reply

Mike Dymski

Investor · Greenville, SC · Member since 2016 · 5k+ posts · 13k+ votes

7y

Originally posted by @Kai Van Leuven:

@Ryan Pozzi

I have a tendency to oversimplify everything. This is my personal finance strategy.

YOU CAN HAVE ONE NICE THING!!!

I don’t pay credit card interest, have a car payment, eat my money, or anything else like that. I do however have a pretty nice tractor that I really enjoy. My wife has a really nice horse she boards.

My parents are extremely cheap. My dad has a rare and expensive Rolex that he loves. My mom is constantly entertaining people. She loves to have 30-40 people over. All of us don’t spend money on things that don’t bring anything to us.

We just went out for my birthday with my in laws. We brought a coupon for our group. It made me happy! We eat out maybe once ever 3-4 months.

Where most folks get stuck is they have too many bottomless pits of money. They have a couple car payments, credit cards, mortgage, and eat out a couple times a week. To me all of those habits will back you into a corner financially.

Pick your nice thing and live super cheap with everything else.

"You can have anything you want, but not everything." -Laura Lang

5 Reply

Shawn McenteerBusiness Member

Realtor · Boonton Township, NJ · Member since 2013 · 2k+ posts · 1k+ votes

7y

Originally posted by @Steve Vaughan:

We still have wonderful experiences and fun. My boys and I might play frisbee golf and go for a Costco hotdog afterward for a treat where others may do something costing far more than $8, but we don't feel we are doing without at all. Another favorite we do is kids bowl free, a national thing. I'll get a pass all summer for $20 to bowl 2 games a day if I want. The kids are completely free. Great memories can be built without large dollar signs.

I love the Costco name drop. My wife and I try to supplement as much of our living as we can through Costco. Clothing, food, etc. My brand is Kirkland lol

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Jay HinrichsBusiness Member

Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes

7y

Originally posted by @Shawn Mcenteer:

Originally posted by @Steve Vaughan:

We still have wonderful experiences and fun. My boys and I might play frisbee golf and go for a Costco hotdog afterward for a treat where others may do something costing far more than $8, but we don't feel we are doing without at all. Another favorite we do is kids bowl free, a national thing. I'll get a pass all summer for $20 to bowl 2 games a day if I want. The kids are completely free. Great memories can be built without large dollar signs.

I love the Costco name drop. My wife and I try to supplement as much of our living as we can through Costco. Clothing, food, etc. My brand is Kirkland lol

I go right for the Jewelry.. !!! Happy wife Happy life..

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Jay HinrichsBusiness Member

Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes

7y

Originally posted by @Tanner Marsey:

Also, I don’t want to wait until I’m 60 to start enjoying traveling and other stuff.

I grew up in a real estate family ( my dad ) and he just worked.. finally his attonrey told him you HAVE to STOP and smell the roses.

well he finally went to Maui in 67 or 68 when Maui was way cool.. bought 2 weeks of time share.. and used those two weeks until he passed.. actually ended up living their in his last years.. if he had not made that investment in time share I am not sure he would have done much vacationing..

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Jim K.

Handyman · Pittsburgh, PA · Member since 2018 · 5k+ posts · 13k+ votes

7y

@Tanner Marsey

Not a big fan of the supposed Ancient Greek concept of "everything in moderation" or <<Παν μέτρον άριστον>>, which doesn't actually MEAN "everything in moderation."

The first word, <<Παν>> means "all." That's also why it's used a prefix in English in words like "pantheism" and "panorama."

The second word, <<μέτρον>> is "measure" and it should be familiar from words like "meter" and "metronome."

The last word <<άριστον>> is "best" or "finest," and it is most usually used in English in the word "aristocrat."

Just think for a minute about how stupid "everything in moderation" as a permissive saying really is.

Murder in moderation? Heroin? Genocide? Nuclear war? Pandemics of infectious diseases? Planetkilling asteroids hitting Earth?

A better translation would be, "It's best to calculate everything."

2 Reply

Tanner Marsey

Rental Property Investor · San Diego, CA · Member since 2017 · 439 posts · 578 votes

7y

Originally posted by @Jim K.:

@Tanner Marsey

Not a big fan of the supposed Ancient Greek concept of "everything in moderation" or <<Παν μέτρον άριστον>>, which doesn't actually MEAN "everything in moderation."

The first word, <<Παν>> means "all." That's also why it's used a prefix in English in words like "pantheism" and "panorama."

The second word, <<μέτρον>> is "measure" and it should be familiar from words like "meter" and "metronome."

The last word <<άριστον>> is "best" or "finest," and it is most usually used in English in the word "aristocrat."

Just think for a minute about how stupid "everything in moderation" as a permissive saying really is.

Murder in moderation? Heroin? Genocide? Nuclear war? Pandemics of infectious diseases? Planetkilling asteroids hitting Earth?

A better translation would be, "It's best to calculate everything."

The more you know....

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Jim K.

Handyman · Pittsburgh, PA · Member since 2018 · 5k+ posts · 13k+ votes

7y

@Tanner Marsey

...the more depressed you get.

3 Reply

Jeff C.

Real Estate Broker · Bakersfield, CA · Member since 2018 · 269 posts · 597 votes

7y

How much you'll have to "deprive" yourself to achieve a decent savings rate is of course largely dependent on your income. If you're looking to put away $30k a year and all you're making is $30k, then no degree of asceticism is going to do the trick. Your time and effort would probably be better spent looking to increase your income. Now if you're making $300k a year and consistently have nothing left over, then yes you probably have a spending problem and it's time to analyze that and do some realignment.

I don't focus so much on not spending money as I do on extracting maximum value from every dollar I spend. There's a right way even to spend a lot of money. I like nice things. However I'm not a retail buyer of anything.. from my home, to cars, right down to my socks. For example I own, and have owned, quite a few high end swiss watches. I wait until I spot great deals, buy and wear them for a few years, sell them and get my money back (and often times more). My aggregate cost of owning them over the years is less than zero (other than the opportunity cost of funds). I bought my house, which was certainly more house than I needed at the time, at a trustees sale well below market. I take quite a few vacations (roughly 40 countries so far), with the airfare mostly being paid for by miles accumulated through putting business expenses on my credit cards and collecting sign up bonuses for said cards. I accumulate hotel points in the same way. I also never buy new cars. I prefer to let some other sucker drive them 10-20k miles first and lose 40% of their money.

I save most of my income, but I don't feel deprived in the least.

2 Reply

Account Closed

Lender · Pensacola, FL · Member since 2017 · 658 posts · 626 votes

7y

Originally posted by @Ryan Pozzi:

. . . I don't need to splash money all over the place, but what's the point of using real estate as a tool to build passive income and increase my long-term wealth if it doesn't also improve my standard of living as I go along? Sure my retirement would be GREAT if I save 50% of my income, but... What am I missing here, BP?

No, you have it all wrong. You need to splash money all over the place. Why settle for economical when you can afford luxury? Buy now and save. It's the American Way. 😄

Where do you shop? What do you buy? Let us know and if any of these businesses are publicly-traded, I'll look into buying some shares. Your spending is my income.

1 Reply

Randy E.

Rental Property Investor · Durham, NC · Member since 2014 · 1k+ posts · 1k+ votes

7y

Originally posted by @Jay Hinrichs:

Jay, if I was where you are on the REI food chain, I'd be a lot looser with the checkbook. I'd probably travel as much as you and have the extra houses and the plane and, and and. Actually, an extra house (for personal use, not as a rental) is one of my shorter-term goals. I'll probably bypass the plane though, but I'm sure I could find some other way to spend that $$.

I'm never getting to your level, but I'll be a happy little me if I can reach where I want to be in five more years.

1 Reply

Account Closed

Investor · Milwaukee, WI · Member since 2013 · 1k+ posts · 1k+ votes

7y

Yet another fun thread that fuses RE to life

I had a friend who would say "if you want it bad enough, you must need it"

The Hawaiians say "if you need more, want less"

Yet another friend who would say "sometimes there is a long amount of time in between the things we really want"

I say "all we really have is in the moment"

The Jedi say "your focus determines your reality"

I recently had an interesting thing happen to me, where I finally plotted out how I would get from where I am now to the point where I could retire and have an income stream that paid the bills, which is a simple goal that many here share. So I indeed figured it out and was super proud of myself, a bit relieved to have finally done it and happy it is possible. But then it became really philosophical real fast, when I asked myself what I would do then!?! Almost instantly I realized that I would be bored out of my mind without some daily tasks and something to make me feel I was being productive. Hmm...

I personally think that being really poor, like wondering how you will eat poor, is fantastic for a persons perspective. You find out quick that the best things in life are free, and all that crap we are convinced we need, is really just desire. Only one thing we all really need.

I don't think you are wrong one bit. What's the point of making money if not to use it to improve our lives in some manner? Can't take it with you, so might as well enjoy the ride.

As far as the rest of it, it is simply learning how to discipline ourselves to use the hard-earned money we do have in the most productive possible way.

I say decide what makes you happy on a daily basis and go for it. 99.99% of the people here have decided that means more money and financial freedom.

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Joe SplitrockPro Member

Moderator

Rental Property Investor · Sioux Falls, SD · Member since 2015 · 9k+ posts · 18k+ votes

7y

The reason you keep hearing references to controlling spending is because of simple math:

Income-expenses=savings

Savings is what builds net worth, through investing.

People say increase income, but no matter how high your income, if your spending is greater, you will go deeper in debt.

That is why there are movie stars, athletes and lottery winners who go bankrupt. Making money is only half the equation.

Very often what happens when people get better jobs or gain income through investments is they spend more money. They never gain net worth because their expenses increase as fast as their income.

The other problem is the idea that you need to spend more money to get more enjoyment. Financial freedom has brought me more happiness than material belongings.

In fact having “too much” can become a burden. It is just more to care for, more to store and more to lose. Ever gotten a door dent on a brand new car? It sucks! When I get a door dent on a ten year old car, I could care less.

7 Reply

Eric Martin

Rental Property Investor · Lexington, KY · Member since 2018 · 52 posts · 55 votes

7y

@Ryan Pozzi To quote the book Rich Dad Poor Dad, “If your pattern is to spend everything you get, most likely an increase in cash will just result in an increase in spending.”

If extensive saving is a common theme you have picked up on, it’s probably because it’s true. Saving money and wisely investing is what leads to wealth. Just like when you see someone in great shape running outside and you think to yourself “They are in great shape. They don’t need to run!” The reason they are in great shape because they choose to run and live a healthy lifestyle. Just like consistent saving and budgeting is crucial for a healthy financial lifestyle.

Aggressively saving and being able to have fun in life are not mutually exclusive. It is possible to build wealth and still indulge a little once in a while, but while everyone else buys luxuries first and saves/invests the remainder, those who are financially successful invest first and buy luxuries last.

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Account Closed

Lender · Pensacola, FL · Member since 2017 · 658 posts · 626 votes

7y

Originally posted by @Account Closed:

Yet another fun thread that fuses RE to life

I had a friend who would say "if you want it bad enough, you must need it"

The Hawaiians say "if you need more, want less"

Yet another friend who would say "sometimes there is a long amount of time in between the things we really want"

I say "all we really have is in the moment"

The Jedi say "your focus determines your reality"

. . .

I say decide what makes you happy on a daily basis and go for it. 99.99% of the people here have decided that means more money and financial freedom.

A dropout from the prestigious London School of Economics (Michael Philip Jagger) has said on many occasions over the years: "You can't always get what you want, but if you try sometimes, you just might find you get what you need."

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Jarrod Hannon

Member since 2018 · 27 posts · 10 votes

7y

I feel like the amount of frugality is different for everyone. if you're making $40,000 a year then living a lavish lifestyle is probably out of question, but if you have a household income of $200,000/yr then you can still put away and invest $100,000 (half) and still live a damn good lifestyle. when I hear the phrase "live below your means" I always think of it as you need to look at your budget and decide where you want to be According to your own finances.

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Ryan Mertens

Developer · Holladay · Member since 2019 · 64 posts · 36 votes

7y

Shortest answer to your question is what my mom taught me a long time ago:

“You can have it now, or you can have it later. And if you choose to have it later you can have it a lot nicer,and for a lot longer.”

She’s an executive vice President of a major hospital network.

Drove her Honda accord with 200+ thousand miles into the executive parking lot, And got asked to show identification the first day because certainly someone of her status wouldn’t be driving something like that.

4 Reply

Ty Ottaberry

Rental Property Investor · Gilmer tx · Member since 2018 · 87 posts · 21 votes

7y

@Ryan Pozzi

A lot of average people might laugh when you say you can learn how to get ritch by simply playing a board game or an online game. But truly they can laugh all they want lol it doesn't matter if you're a seasoned investor or a newbie playing the game Cashflow by Robert Kiyosaki can really build your wealth building strategies. The online version starts out by setting your goals to what you want to achieve in the long run AKA the fast track and it's up to you how quickly you get to the fast track.then It gives you a set middle class salary ,such as a janitors income with his average debt to income ratio then it drops you straighten a rat race. Everything in the game is based on reality . It allows you to make mistakes and learn different strategies in order to get to the fast track. It's all up to you how and how fast you can learn. I could sit here and explain everything very detailed list but some reason this message board is limiting My space, not allowing me to see what I'm writing on my phone. So excuse me if my words are misspelled lol. Go check the game out at richdad.com . Like I said they can laugh all they want ,I'm playing the game in real life now on my way to a very wealthy future,

1 Reply

Chris C.

Raleigh, NC · Member since 2017 · 347 posts · 94 votes

7y

@Ryan Pozzi everything should be a balance. For example, saving now allows you to spend more money acquiring properties. But it also matters your quality of life. Sure you could eat ramen every day and buy a new house even couple of months. Or you could buy one every few years and eat at fancy restaurants. It's about what you want in life

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Is it really about not spending the money you make?

Is it really about not spending the money you make?

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