Unhealthy Frugality Disease

Unhealthy Frugality Disease

Julie MarquezPro Member
Investor · Skagit County, WA · Member since 2016 · 1k+ posts · 807 votes

Blame it on the holidays, consumerism season, or the purchase of my latest rehab project, but I've been thinking a lot about my relationship with spending money. I have this unhealthy relationship with healthy money management. It probably stems from the fact that my real estate investor parents are very frugal, and I grew up sorting our garbage into burnables and non-burnables, saving everything, and never spending money unless it were heavily discounted or a tremendous value (hello all you can eat buffets). Then I found mint.com about five years ago and started diligently tracking my personal spending habits. This tool is a great resource to budget and save, and it helped me to save up for a new car and then buy an investment property.

But what isn't cool is my determination to save all my money, and this little internal goal of mine to spend as little money as possible. Having the idea that I have to save everything puts me in a lot of despair at times; like when I had to shell out $100 for a (worthless) doctor appointment and $100 for a flat tire.

I'm not even a poor person. I make enough money from my job to save about $2000 a month; but I have created this mentality that if I'm not saving $2000 or more, then I'm losing money. But this terrible disease about NOT spending money ruins me when I HAVE to spend a little money. Some say it's just the cost of life. I say that I need to change my mentality so I don't get all crotchety when the fact of the matter arises.

So there's my broken, little, money heart on the line. I need a new view on my money and to understand it's power and joy, and to not get so hurt about parting with it. Do any other real estate investors suffer from unhealthy frugality and how to I transform my relationship with spending money? Thanks friends!

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Investor · Singapore · Member since 2013 · 1k+ posts · 3k+ votes
9y

People put way too much emphasis on money. Just because its easy to count doesnt mean its the only way to track your life. What is far far more valuable and non renewable is time. To me money is a way to get better experience with my time. I have a certain number of days on the planet. Money allow me to spend them more in the way I want to and less in the way I dont. Thats it. If I buy a nice house to live in, my time is more enjoyable than if I am homeless. If I drive a BMW, my time in the car is more fun than in a Honda. If I travel, its experiences that enrich my life. If I help people, it gives me satisfaction of doing some good. If I didnt spend the money, I would have none of that and would have wasted my time. Which is far more terrifying to me than losing money.

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  • Real Estate Agent · Willoughby, OH · Member since 2014 · 560 posts · 690 votes
    9y
  • CPA · Raleigh, NC · Member since 2013 · 1k+ posts · 2k+ votes
    9y

    @Jeff Brower just to clarify, BP occasionally re-posts previously written articles. I don't update them, they just re-post them. 

    They did the same for my 2014 goals article which left some of my followers and clients scratching their heads because the goals seemed outdated based on my growth :)

  • Real Estate Agent · Willoughby, OH · Member since 2014 · 560 posts · 690 votes
    9y

    @Brandon Hall ah I see. Well a great applicable article nonetheless! Opportunity cost is something that I feel is lost on most people. You hit the nail on the head.

  • CPA · Raleigh, NC · Member since 2013 · 1k+ posts · 2k+ votes
    9y

    @Jeff Brower without trying to sound self-serving, the folks you generally hear about clipping coupons and avoiding the Starbucks Latte are self-preparing their tax returns and don't engage in tax planning. The largest expense they have (taxes), they completely ignore. Mind blowing!

  • Rental Property Investor · Phoenix/Lima, Arizona/OH · Member since 2012 · 4k+ posts · 4k+ votes
    9y
    Originally posted by @Brandon Hall:

    @Jeff Brower without trying to sound self-serving, the folks you generally hear about clipping coupons and avoiding the Starbucks Latte are self-preparing their tax returns and don't engage in tax planning. The largest expense they have (taxes), they completely ignore. Mind blowing!

    Brandon - that's not true. I avoid starbucks cause the coffee sucks and is gmo. But I am cheap as all get-up!

    I just furnished a new set of appliances for the house we just bought in AZ (you should come visit), and you should have seen me negotiate that stuff... it was laughable. I mean down to the last $1! I don't have extra money cause I spend all of it on CPA :)

    I could really develop this topic. This is fun. Wanna write something for the blog together? 

  • Investor · Orange County, CA · Member since 2009 · 230 posts · 138 votes
    9y
    Originally posted by @Julie Marquez:

    @Sarah D. I'm saving up for a down payment for my next investment property. I think other investors get that and are doing the same, but why am I so obsessive about it saving every penny? I'm probably not the most "fun" person in my circle of friends, but they understand my limited spending habits, and I do value my time and money spent with them. I think somewhere in the management of my personal finances, I've just become a little too obsessed with saving (necessary and unnecessary).

    I don't see any issue with that at all. However, it's always possible to go overboard. You never want to be the person who goes out to dinner with a group and then skips out on paying for the drinks and tip (not saying that's you). It's better to not go out to dinner at all in that case.  

    Life is all about choices and goals. Right now, it sounds like your goal is getting your next investment property. Awesome! Nothing wrong with scrimping and saving up for that. Dave Ramsey says "if you'll live like no one else (now), you can live like no one else (later)". 

    My wife and I live in a place that we really don't like all that much, but we do it because it's cheap and we like being able to save the money. That serves the broader goal of building a future. The place we live in now is less important than increased financial security in the future. 

  • Specialist · Honolulu, HI · Member since 2014 · 1k+ posts · 1k+ votes
    9y
    Originally posted by :

    @Andrey Y. Income problem?!? Now I have to worry about making more money? Get a promotion and a raise at work? I'm saving up for an investment property, hoping that will increase my income.

     Exactly. That is what you should be worried about -- generating income either through your W-2 job or investing. Think about it this way: think of the money you are spending now per month .... how much would you save if you tried reaaalllly hard to be frugal, make sacrifices, etc. That will probably be no more than a few hundred dollars a month! That will never make you secure or wealthy. You cannot shrink your way to wealth, period. Expand the way you think and generating income will become natural, as others on this thread have alluded to.

  • Maui · Member since 2014 · 20 posts · 3 votes
    9y

    @Julie Marquez, seek happiness in what you have, not in what money can buy. I've experimented with this enough times to conclude that my equity is there to make me independent of employment and not to shower myself with fancy gifts which would end up being taken for granted without raising long-term happiness. If you decide to start spending more, I suspect that your happiness level over time will remain the same or even decline. Nothing wrong with seeking good value :)

    I'd say that unhealthy frugality is when you're paying less and getting a LOT less than you would if you had paid more. For instance, if you cheap out on food too much and pay for it with your health, that is unhealthy (pun not intended) frugality and is not good value. Also, sometimes you can spend more time finding value than you end up saving. It's okay if you enjoy the process though.

  • Investor · Sioux Falls, SD · Member since 2015 · 20 posts · 6 votes
    9y

    @Julie Marquez I wish I had some input, but I am in the same boat. I have to ask.. I have a very similar mind set.. Each month I have a set amount of cash I want to save towards a down-payment for the next property... If I don't save that money for the month, I can't help but feel like I am a failure and will never reach my goals. 

    What happens if you can't manage to save your monthly goal (I think you mentioned $2000) because of unforeseen expenses?

  • Flipper/Rehabber · Tallahassee, FL · Member since 2014 · 462 posts · 237 votes
    9y
    Borrow your way to wealth, is there a book called that? If so get it. Nothing wrong with being frugal just don't let it hold you back.
  • Professional · Warren, MI · Member since 2014 · 13 posts · 13 votes
    9y

    Ok Wow Julie!! I just recently received my degree in Finance and I'm working on getting my CFP certification (I am not licensed yet so these remarks are just my opinion.) A client like you are what we have dreamed about from day one...Lol. It sounds like you have the hard part perfected, which is so crucial, start saving! Nice Julie! The hard part for you is done. You stated you use mint.com which is a great website. It sounds like you have everything set up for saving, investing, hopefully 401k, IRA's, etc. My suggestion for you would be to set aside saving funds for those emergencies (Tires) so when they come up if you haven't already. This way you will not feel the pain of the emergency and if you don't need it, fine then it just grows but we all know in life they will arise. Secondly, you should set aside a Fun Fund, $25, $50, $100 a month, whatever you feel fits your budget just to splurge. This splurge is a gift for you by being so good by reaching your saving goal of $2,000 each month. This will not only help you feel like you are living more but it will also bring more happiness emotionally and psychologically to your saving habit which will create a win-win in your life. Good luck Julie:-)

  • Real Estate Agent · Westboro, MA · Member since 2016 · 1k+ posts · 471 votes
    9y

    this is a great topic! I don't fully agree with don't get the coffee daily etc. It is simply the compound effect and a Stat most financially savy people undestand. It could save you a couple hundred over a year but you could have easily added more income from your primary w2 job or additional income stream not to worry about your simple daily habit.

    If you are reviewing yous finances weekly (better yet daily) you are in better shape then most people. confront your finances and take control of them mint.com is a great starter for budgeting and seeing where your money is spent. I started to daily review my finances at it takes me 5m in the morning to track, very helpful and would reccomend if you are currently not doing this. 

    I agree with cresting more income streams, this is key. Also why people look to invest in real estate since it an additional stream of income while holding a full time job. The key with rei is stay persistent and there is no such thing as an overnight success, it is just daily habits that lead people closer to their goals. Pick a niche and stick with it, don't fall for Shiney object syndrome and you'll be fine. 

  • New Milford, CT · Member since 2016 · 7 posts · 2 votes
    9y

    Hi Julie, This thread struck a chord with me. Thanks so much for asking the question and starting this topic. I didn't have much money as a child, so I became a "saver". I'm not so consistent that I am OCD about it, but there is a lot of overlap in my habits of thought and yours. One phrase that I heard from a spiritual healer once is, "Money is love." I've pondered this on occasion, and I think that extra money can be used in beautiful ways to make the world a better place and help people around us who genuinely need it. We can use extra money to have lunch with friends, join social organizations (as someone suggested), donate to charities or organizations that interest you, buy beautiful things, see beautiful and awe inspiring places, etc. So, next time you're looking at a dollar, ask Lincoln, "how can you and I make the world a more loving place?"  Another spiritual approach to dealing with money is expressing gratitude when paying bills. As you look at the charges in your credit card or other statement, you can be grateful for the food that nourished you, the farmers, truckers, distributors, stores that sold it. And you can be grateful for all the workers in the world who helped bring you gasoline to your local station. And so on with other ordinary expenses.

    I wish you all the best as you try to change your habits of thought into those that bring you more peace.

  • Real Estate Investor · Lexington, SC · Member since 2016 · 27 posts · 8 votes
    9y

    The best resource I've ever found for how to manage your money while you're young and not try to pinch penny's is http://www.iwillteachyoutoberich.com

    Ignore the name (I know it sounds gimmicky). The first personal finance book I ever picked up was by the owner of this site. It changed the way I look at money. I don't pinch penny's anymore. I just look for big wins, spend money on things I love and cut out the things that cost alot that I don't really care about. For instance, I work from home in IT so we have a single car between my wife and I. No need for 2 payments, tax bills, insurance, etc. We also don't have cable. Just Internet and streaming services. This gives us more money to spend on our primary house, my love of brewing beer, guns, awesome vacations every year, etc. We are also able to save money consistently and pay down bills quickly (for example we paid off $40k in student loans in 2 years). Take a look at the book below. It's an easy read but might get you out of this mind set.

    http://www.iwillteachyoutoberich.com/book/

  • Investor · Greenville South Carolina and Lihue, HI · Member since 2016 · 69 posts · 14 votes
    9y
    Julie Marquez I also grew up with a scarcity mindset and have driven my husband crazy going from store to store looking for the best deal. Now I give myself a monthly "allowance"-this has really helped me to have freedom from this "disease", which can affect your life (and those around you). Best of luck in your quest to find what works best to free yourself from this.
  • Investor · Greenville South Carolina and Lihue, HI · Member since 2016 · 69 posts · 14 votes
    9y
    Fill in the blank: Money is _________. For me it was money is security and I will never have enough.
  • Boston, MA · Member since 2016 · 32 posts · 7 votes
    9y

    Well said, @Anish Tolia . You made a great point. And to piggyback off of what you've said, I think people should really see and treat money for what it really is: a tool, and your personal employee, not the other way around. By this, I'm not implying not to work hard and save, but to do so for a real purpose coupled with an end-goal in mind. For instance, to invest some of your hard-earned money on key investments that will enable you to become financially independent, which will allow you to enjoy life to the fullest in the NOW.

    @Julie Marquez I just recently read "The Richest Man In Babylon" and it doesn't necessarily talk about the issues you're having, I'm sure there's better books on the matter, but it gives you a deep understanding of the roots of money and the ways our ancestors made it work for them. Today not much has changed; we're still making the same investments in different assets, with the same systems in place. This read might help you see money in a different light.

    Just my thoughts.

  • Visalia-Fresno, CA · Member since 2009 · 1k+ posts · 863 votes
    9y

    @Julie Marquez 

    My thought has been to always stress out my bank account by buying real estate.  The constant strain on my bank account has stimulated my mind to create new and more income which got me out of a day job and now owning +40 units....

    Franklin

  • Real Estate Investor · Sacramento, CA · Member since 2010 · 298 posts · 103 votes
    9y

    Sorry, Julie, but I'm afraid I can't be much help to you. I admire your parents for being very frugal and love the fact they won't buy anything unless it's heavily discounted  or  a tremendous value, because that's how I usually live my life. I don't like spending money for personal purposes, though I will spend it  on property maintenance and rehab when necessary. Too many people spend carelessly, so if anything, more people in general would be well served developing leaner spending habits. Example, I've had  a few medical procedures the last couple years, and they usually give patients these strange socks to  wear that have little rubber nubs imbedded in the fabric to improve traction, and the colors are not my favorite. But I'm still using every one of those socks now that I'm home, and plan to until they get holes or  wear out.  I just see it as one less pair of socks I have to buy! 

  • Real Estate Investor · Sacramento, CA · Member since 2010 · 298 posts · 103 votes
    9y

    Sorry, Julie, but I'm afraid I can't be much help to you. I admire your parents for being very frugal and love the fact they won't buy anything unless it's heavily discounted  or  a tremendous value, because that's how I usually live my life. I don't like spending money for personal purposes, though I will spend it  on property maintenance and rehab when necessary. Too many people spend carelessly, so if anything, more people in general would be well served developing leaner spending habits. Example, I've had  a few medical procedures the last couple years, and they usually give patients these strange socks to  wear that have little rubber nubs imbedded in the fabric to improve traction, and the colors are not my favorite. But I'm still using every one of those socks now that I'm home, and plan to until they get holes or  wear out.  I just see it as one less pair of socks I have to buy! 

  • Investor · Round Rock, TX · Member since 2010 · 8k+ posts · 4k+ votes
    9y

    I read and post on MMM pretty frequently now.  Bogleheads is a lot more balanced in my opinion, but I find the audience on MMM to be a smidge smarter and the topics to be better.  Emergdoc also has some good content, but it is a obviously physician-centric.  

    Although I post less on BP than I used to I'm still closing in on 10,000 posts so I feel like I understand the perspective here pretty well too.  

    It is hard to find sound tax advice online, mostly because the fact pattern drives the discussion a lot and everyone's situation is pretty different.  

    Takeaways:

    1.  Living below your means (LBYM) is essential.  At some point financing strategies won't help you if your expenses outpace your income

    2.  Cutting expenses eventually DOES decrease your standard of living despite what the extremists on MMM or the early retirement forums tell you

    3.  You can't always live for tomorrow.  Enjoying today is equally as important

    4.  Earning more income has unlimited upside potential in theory, but for every dollar you earn you have to pay taxes on the earnings.  Reducing spending is more efficient in many cases

    5.  The skill that people fail to learn that impacts their ability to increase their standard of living or retire earlier is raising and organizing money.  It is hard so people don't do it

    6.  Reducing taxes is very important, but the goal should be maximal after-tax gains; not minimal income

    7.  For reducing expenses a very large part of any savings are packed into the highest expenses.  Taxes, child care, personal residence, food, etc.  For me these 4 items drive over 70% of my expenses.  Focus on these and not on picking fights about small items

    8.  Funneling maximal money into tax-deferred vehicles seems "optimal" on many forums, but when you can earn greater than 30% on these dollars the strings attached outweigh the benefit

    9.  Conflating the money working with YOU working is rampant on BP and other active forums.  Make sure you account for things properly

    So my advice to those looking to build wealth is:

    -Cut the vanity expenses first and focus attention on the large items next.  The Pareto principle applies here

    -What you can save each month will fuel your ability to invest.  Investing with reputable partners to learn whatever business you're seeking to enter is the best way to do it.  Find out how to provide value to those that can train you and trust them to help your money make money as you learn to be active on your own

    -Learn to raise and organize money.  If you can effectively master this skill you can hire whatever talent you lack

    -Focus on maximizing after-tax income and NOT on minimizing taxes.  Take any advice from your accountant with a grain of salt.  Their view is myopic and they're generally not finance people

    -Take care not to be the person who has terrible relationships with their parents, kids, and spouse.  Live a balanced life

  • Real Estate Investor · Spokane, WA · Member since 2016 · 3 posts · 6 votes
    9y

    Hi Julie,

    Your reason for wanting several rental income properties is to feel secure and enjoy life in your old age. But your feeling won't end when you get there.  You get just one life.  Not yet, but some point you must live in and for the present, not the future.  I was like you.  So I learned to better enjoy life by acquiring buy and hold small multi family properties in places I liked to visit. I kept one of the units in each place for my own use.  Now I travel alot, which brought me out of the frugality mode I was in during my early acquisition years. I know your area well. Perhaps a duplex or fourplex in sunny Scottsdale might be on your acquisition list someday...

  • Rental Property Investor · Norfolk, VA · Member since 2016 · 2 posts · 1 vote
    9y

    @Julie Marquez - A great way to earn free/inexpensive trips. 

    https://www.reddit.com/r/churning/

  • Realtor · Sequim WA & Port Angeles, WA · Member since 2016 · 164 posts · 78 votes
    9y

    I would say that how you feel or view money is completely normal given your upbringing but you are truly blessed to be able to save 2K/month & most people do not have that option.

    I have tried to remember that life is about giving and not about keeping or taking. So my purpose is to help others as well as to help myself along the way.

    For me, it's hard to stay in the business of property management if I was not in it to serve others (this can be a very thankless job). If you are an investor, you are providing a service to others (housing) and you should recognize that you are a giver and a provider for those who cannot or will not do that.

    Why were you put on this planet? Was it to save and accumulate wealth and things or was it to make a difference and to be able to give back? Things go into perspective when you realize that we are here for a short time and we are here for a reason.

  • Maui · Member since 2014 · 20 posts · 3 votes
    9y

    While it may seem slightly off-topic at first, what @Joshua Auel is suggesting is related to an idea I would suggest for you as well. If you got a better deal on everything you bought (a 2-6% discount), would it make you feel better when buying what you should buy anyway? Better yet, instead of getting cash back, you might get back rewards that you can only spend on travel. Then it won't feel like money, but more of a budget that you have to enjoy and can't earn a return on, so you're not likely to be too frugal with it. Assuming you have excellent credit, you could get approved for a high-reward credit card. I just had one that gave me 5% on most of my spending, but that particular one is going away in a few months. There is currently a good travel deal from Chase if you're looking to travel more.

    To summarize, earning a small bonus on all of my purchases makes me feel even better about them, and if it's a travel reward, it could get you thinking about your next trip, which is always a pleasant thought.

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