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Your Take: Why Are You Frugal?

Frugality has become a very hot topic lately because of the recession. In fact, it became the topic of Chris Farrell’s The New Frugality [3] and one that I think was overlooked for far too long. Despite my Devil’s Advocate post saying that frugality was foolish [4], I believe the being frugal is exceptionally important, especially if you’re young.

When you’re young, you usually have very little money but a whole lot of time. You’re able to turn that time into money through your work and that’s generally where you make the bulk of your income. As you get older, your savings grow and are able to generate income and, hopefully, generates the bulk of your income. The more you can save when your young, the faster that capital accumulates and you can live off that income. You go from depending on your labor for income to depending on your capital. I’m frugal because I believe my dollars can work on my behalf if I can keep them in my wallet.

The second reason I’m frugal is because there are things I value and things I don’t. For the things I don’t value, I want to pay as little as possible. I don’t pay top dollar for a brand new car, I buy used and off Ebay to get the best deal I can on something reliable. I don’t need a $40,000 or $30,000 or even a $20,000 car (and the car loan that comes with it) because that isn’t important to me. I’m able to save there so that I can spend my money on the things I do care about.

As I’ve often said in the past, my lovely wife and I love to travel and when we do, I pay for quality and value. I don’t spend freely without regard but I certainly budget a large amount for the trip and spend close to it (if not more!). As Greg Karp once said to me, Experiences appreciate, things depreciate [5], and I fully intend to invest as much as possible in experiences. 🙂

Why are you frugal?