Frugal Analogs

I’ve enjoyed the podcast ChooseFI very much. I like that the hosts are normal dudes (probably more normal than me) stumbling through life like the rest of us. The hosts talk a lot about the idea of frugal analogs, which is an incredibly powerful concept.

Examples of frugal analogs in ***my*** life include:

  • $100/month cell phone plan => $1/month prepaid plan
    • Save $100/person/month
    • voice.google.com
    • Free VOIP
    • Hangouts app (apple, android)
      • Somehow I got lazy and went 78% over my $1/month cell phone budget last month due to travelling (spending $1.78 total).

  • Real golf => Frisbee golf
    • Save $20-50/person/round
  • Movie theater => Home projector
    • Save $10/person/movie
  • Eating out => Eating in / Brown bag
    • Save $7-50/person/meal
    • Save large amounts of time by not having to drive to restaurant, wait in line, etc.
    • Gain huge health benefits by eating foods with ingredients you control that aren’t laden with salts and saturated fats
  • Morning Starbucks => Water
    • Save $3-5/person/cup
  • Drive to work => Bike to work
    • Save $0.53/mile per IRS reimbursement rates.
  • Gym membership => Home gym & bike commute
    • Save $50/month
    • My current workout routine is 1-2 sets of following:
      • Pullups (currently 20-25 depending on how hard I push)
      • Plank (currently 4 minutes of hell)
      • Pushups (currently 40 reps)
      • Squats (currently 10 reps of 115lbs…weak, but still kicks my butt)
      • Bike 12 miles total to work and back
    • I purchased a $250 squat rack from Amazon a few years back for Squats + Pullups. It’s unbelievably cheap to set up a home gym when you recognize how little equipment is required. Gravity is ubiquitous. Body weight is quite ubiquitous as well. Gravity + Body Weight = home gym whenever you want one. Not having gym equipment is an unacceptable excuse.
  • Buying books/audio-books on Amazon => Borrowing from library
    • Save $5-10/book
    • Overdrive (has apps for android + apple) is fantastic if your library hosts this, though some libraries are more generous in their offerings.
  • Exotic overseas vacation => Visit family in minivan or week long backpacking trip in US mountains
    • Save $1k/person
  • Pay financial advisor => Do it yourself
    • Save 1% of assets per year in fees, resulting in hundreds of thousands of dollars in savings down the road
  • Barber/Hair Stylist => DIY with clippers / CreaClip
    • Save $20-50 per cut
    • Save time of driving across town
  • Grocery stores => Costco
    • Save 20-40% on groceries
    • Save time buying in bulk and avoiding decision fatigue through letting Costco curate the 1 ketchup option for you
  • Skiing => Sledding
    • Save $75/person/day
  • Consumerism / Keeping up with the Jones’s => Being happy with “Enough”
    • Save $$$$$/year
    • Gain happiness and peace of mind
  • Live in San Francisco CA => Live in low cost of living (LCOL) area
    • Save $$$$$$/year
    • Avoid horrific traffic and crowds

To ***me*** this is pure arbitrage. In every instance the frugal analog is 99% (if not 100%) as good as the real deal, yet it costs 30-100% less. I grew up skiing and golfing as a kid (I got free golf through working at a golf course). In college skiing was pretty cheap ($100/season). Once I grew up and these activities got more expensive, I dropped both hobbies like a bad habit because there are perfectly good frugal analogs which make ***me*** just as happy.

Said differently, the above is how we continue to live like poor college students into adulthood. Remember how great college was when we had no money? We were poor, but it didn’t matter because so was every else. Life was great. We had freedom, friendship, autonomy, and a deep sense of community. Then somehow we grow up, get jobs, incur seemingly insurmountable financial obligations, and decades of our lives pass by as we spend the entirety of our paychecks while trying to keep up with the Joneses chasing this elusive thing called happiness, all the while losing our autonomy and sense of community while living in McMansions.

The best things in life are free. Playing catch with a child. Playing a board game with family. Going on an evening walk with a spouse. Going on an afternoon hike.

The effect of each of the above substitutions is almost imperceptible to one’s financial well being over the immediate future. However, when cumulated over decades, it is literally the difference between poverty and abundance in retirement. MrMoneyMustache, the godfather of PF blogging, has a similar post here: http://www.mrmoneymustache.com/2012/10/08/how-to-go-from-middle-class-to-kickass/

 

*** Several commenters have rightfully responded with the following arguments: “FrugalProfessor, this article represents your preferences and not mine.” Totally agreed. For me, I get just as much joy/happiness out of the cheap stuff as I do the real deal. Others may not feel that way. Others may enjoy overseas vacations substantially more than the frugal analog. Others may enjoy skiing substantially more than the frugal analog. Others may enjoy spending $150/month on a cell phone bill that they could get down to $1/month. Fine. No problems here. The point of the article is that systematically adopting “frugal analogs” is the way pretty much anyone can retire in comfort rather than being impoverished. And I’m not exaggerating here. Some people, like myself, were born frugal and genuinely enjoy the frugal analogs as much as the real deal. Other people feel much less happy participating in the frugal analogs. For people like me, the decision is a no brainer, which is the case I make in the post. For others, they have to make the trade-off of more happiness now for less money (substantially less money after accounting for forgone compound interest) and happiness in the future. I’m fortunate to not have to make this decision too often, because I’m perfectly satiated with our current standard of living and, once the kids are out of the house & home is paid off, could easily see my spending go to $20k/year.

19 thoughts on “Frugal Analogs

  1. I like this line of thinking in general, but some of this list is equivalent to “Go on vacation ($X,XXX) –> Stay home ($X)”. They are not analogs. We often find these kinds of false equivalence arguments in hardline situations (minimalism, frugality, religion, politics, diet).

    Let’s say someone likes skiing. The frugal thing to do is to figure out how to do it frugally, not to stop doing it. (caveat: if it’s causing you to go into debt, stop temporarily) Sledding is not a workout and it’s not challenging, but it is fun. So if you’re only doing it for fun, sure stop skiing. But if you’re also doing it for the challenge (and/or the workout) keep doing it, but find a way to make it less costly.

    “The best things in life are free.” I think we can probably dispel with this cliché by now. Sure, many great things in life are free. But many great things in life cost money. It’s not about a black/white either/or, but about figuring out how to make it all work without being irrational.

    Note: I like your blog and I don’t mean for this to be an attack. 🙂 Again, I like your general line of thinking here.

    • I’m happy to receive the criticism. Keep it coming.

      I should have prefaced this post that these analogs are unique to my preferences. I genuinely have as much fun sledding as I do skiing. And this is coming from a dude who grew up skiing & skied for years in college. I genuinely have as much fun driving to CO/UT & hiking and backpacking than I would an exotic overseas vacation. But those are my preferences. I understand that it may not work for everyone. I genuinely like throwing a movie up on the garage and having an outdoor movie night more than hemorrhaging money at the theater down the road. Is it my underlying frugality shaping my preferences? Perhaps. Am I fooling myself? Perhaps.

      The icing on the cake that I didn’t fully highlight in the post is that every time I exercise my frugality muscles I am closer to purchasing my freedom. And this brings me unbelievable joy.

      • Right, I get that sledding can be fun, but my point is sledding and skiing are not analogs *except* if your only criteria is fun.

        “I genuinely have as much fun driving to CO/UT & hiking and backpacking than I would an exotic overseas vacation.” As do I. (Did a road trip to AZ/UT/CO this year, actually.) But would I take back the $100k+ I’ve spent traveling to ~30 countries over the past ~10 years? Not a chance. As I get older I already notice my travel experiences are different, and in some ways worse, than in my 20s. I’d rather have the experiences whenever I can instead of delaying until some point in the future that may never come. All the while still planning for that future, of course.

        • I think we’re in agreement. If you value international travel, go for it. That’s the power of frugality. It frees up cash otherwise allocated to low-happiness expenditures and reallocates them to those things that bring you great joy, be it skiing, international travel, etc. Absent frugality, money is pissed away before it can be allocated to high-value activities.

          I lived abroad for a couple years. I don’t regret that experience either. I don’t regret my frugality either. Given how easy I am to please, it’s nice to enjoy a simple life while purchasing my freedom. Freedom will allow us to travel live abroad for 4-12 months if we wanted to. It’s something I’m considering down the road. I agree, though, that a travel experience with my family in my 40s will be different from a travel experience in my 20s. I follow these people and love their stories: http://bodeswell.org/about/ & http://www.thedangerz.com/about-us/.

          By exposing myself to the world, people can emulate the good things I’m doing and avoid the bad things I’m doing (like perhaps being too frugal). I love that the internet can expose us all to differing viewpoints. The purpose of this blog is to provide one more data point in the infinite expanse of the internet, paying back in small part what I’ve learned from others.

          • “By exposing myself to the world, people can emulate the good things I’m doing and avoid the bad things I’m doing …” This is a good sentence that hopefully won’t be lost in the comments.

            “Absent frugality, money is pissed away before it can be allocated to high-value activities.” Yes, that’s a trap many folks fall into. Which is why I appreciate folks like you who write about their frugal endeavors even if I don’t always personally agree that they’re optimal.

    • The cell phone thing is pretty unique to me. I’ve been doing it for over a decade. Perhaps it warrants its own blog post on how to integrate with Google Voice.

  2. Shortly after my husband and I got married, he had a terrible haircut experience which sent us to the store to pick up a cheap clipper and I took a stab at cutting his hair for the first time. Now, 7 years later, I’m still cutting his hair using the same cheap clippers. And honestly, with the skills I’ve developed over time, my haircuts are as good (if not better!) than what he could get done by a barber. It’s amazing what you can do with a clipper! I’ve copied many of David Beckham’s and Zayn Malik’s hairstyles with ease.

    We also have a home gym… probably spent around $3250 but we have essentially created our own CrossFit box in our basement complete with rubber flooring, 2 squat racks, barbells, 650 lb weights/bumpers, concept rower, kettle bells, dumb bells, GHD, rings, etc. It’s a large chunk of change, but the alternative is $100/month membership for each of us plus a babysitter (over $3k per year!). Currently, we can head downstairs for a workout together once the kids are sleeping. Not to mention, gym equipment holds some resale value if we ever need to sell it.

    • Glad to hear you’re embracing several frugal analogs! It really is amazing how great the analog is compared to the real deal.

      • No doubt! I am also in the same boat as you with the whole ‘being frugal is easy’ thing. For me, I think it’s a result of being raised by very frugal parents, especially my mom! She’s the queen of packed lunches for road trips, shopping trips, etc.

  3. I think the key sentence is this “Once I grew up and these activities got more expensive, I dropped both hobbies like a bad habit because there are perfectly good frugal analogs which make me just as happy.” Key word: Me.

    I grew up skiing. I LOVE skiing and sledding, while fun, doesn’t even compare to me.

    Where you have to be careful is when in every case, you justify the more expensive option.

    • Great point. Same point Karol made. I’ll update the post with disclaimers that these are **my** preferences. I’m blessed to have been born frugal and easily appeased. This is by far my most valuable attribute.

  4. While I agree with frugal analogues in concept and practice some, I actually have some that are even less expensive than the ones you chose, it has to be pointed out that the analogue may well be 99% as good to you but may be totally inadequate for someone else. There are people that cannot successfully work out in isolation. They need the peer pressure and encouragement of groups, just look at how successful cross fit and SoulCycle are, that’s purely because of human factors, and we are human. Also water is no equivalent to coffee for someone that functions better with caffeine. Suggesting that sledding could satisfy most skiers or boarders need to rip off a few thousand vertical feet is pretty unrealistic to a hard core snowfiend. Not criticizing at all, those analogues are perfect for you and I bet some of mine would not work for you either. The great thing about the community is there are millions of them and every one that gets put out there saves somebody else a ton of money! Nice post!

    • Thanks for the feedback Steveark. I agree that it’s nice to share life hacks. Some things that work for me won’t work for others, and vice versa. But I believe we’re in the same boat that the sharing of ideas is an empowering mechanism for change in the world.

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