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Too Frugal for Me

Richard Quinn  |  June 2, 2021

I REGULARLY READ blogs written by those who retired early to a life of ultra-frugality. Do you consider yourself careful with money? Even so, I doubt you’d enjoy the frugal lifestyle of many followers of the FIRE (financial independence/retire early) movement.

I certainly wouldn’t. If I go on another cruise, I won’t be booking an inside cabin. I can’t imagine my wife buying clothes from a thrift store and wearing them for the next 10 years. Things that strike me as too frugal: Never going out to eat. Never traveling. Not owning a car. Living on a remote piece of land and chopping firewood for heat. Picking up toys from the curbside for the kids. Moving to Mexico for the low cost of living.

And, no, I’m not trusting my eyeglasses to an online service to save money. Don’t get me wrong: I shun designer frames and designer everything else. I lean toward frugality. I avoid impulse shopping, buying the latest trendy thing and accumulating unnecessary stuff. Still, you usually get what you pay for. Have you ever read about the things you should never buy from a dollar store?

But it isn’t just the extreme frugality of the FIRE folks that bothers me. Rather, it’s also the related claim that they’re financial independent.

Don’t get me wrong: I’m not mocking these frugal folks, nor am I being a snob. But it’s important to understand the lifestyle necessary to be financial independent if you’re living on a tiny budget.

To be sure, these folks seem happy with their choices. Many are actually income-earning bloggers, authors and podcasters who are sought out by the media. In that regard, I’m jealous. Nobody seeks me out. Being an old school dinosaur is not news.

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One blogger claims to have lived on $7,000 a year or less for a decade. Another says his family of five lives on $40,000 a year and spent just $296 on groceries in March. The U.S. Department of Agriculture puts a low-cost grocery plan for a family of four at $892.90 per month. Even a thrifty food plan is estimated at $676.80 per month.

This same family pays almost zero for health insurance premiums because they keep their income low enough to collect Affordable Care Act subsidies. Meanwhile, in March, their “net worth went up $68,000 to end the month at $2,648,000.” The lesson: Because the government typically counts income but not wealth, some of the frugal few are able to qualify for subsidies and tax credits.

A couple, who “retired” 30 years ago at age 38, says that “as of the end of 2020 we spent $28,133 or $76.87 per day. Plus we blew the $2400.00 stimulus check on repairs in our humble abode in the States. Our average spending for 30 years of financial independence or 10,950 days, is $23,241 annually or $63.67 per day.” They now live in Mexico mostly, travel and have lived around the world. Frankly, it’s all beyond my comprehension, but it seems to work for them.

When I stopped working after a 50-year career, I retired. Now, I’ve learned that retired may not mean what I thought it did. Some people claim to be retired early when, in fact, they simply left their current job for something less demanding—a life of doing your own thing, so to speak, but not actually ceasing to work for income. Does the $6.70 I earn each month from my blog make me a hypocrite?

Each to his or her own. But where would we be if everybody retired at age 38?

Richard Quinn blogs at QuinnsCommentary.com. Before retiring in 2010, Dick was a compensation and benefits executive. Follow him on Twitter @QuinnsComments and check out his earlier articles.

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Cindy Brick
Cindy Brick
13 days ago

FIRE might mean something else to others…to some of our family members, we retired ‘early’ by Husband bailing at 62. (It was one of the smartest things we’ve ever done, by the way.) I keep trying to persuade other family members to do the same, even if it means they must barely survive on a paltry $45,000/yr or so…but am not having much success. Yet.

So…are you advocating NOT buying quality goods from thrift stores? Shopping at discount and remainder stores? I’d much rather get imported Japanese udon noodles from Amazon’s Warehouse Deals, and pay 50% less, then be a snob and insist on paying full price. Ditto for the cashmere sweaters I find now and then at thrift shops.

I’ll keep saving wherever I can on quality items because 1) they last a lot longer, 2)I prefer them now to the ‘cheap stuff’ — coffee’s a good example, and 3)I can use that money saved for something else. But it’s not because I HAVE to do it. Because I don’t.

Just sayin.’

Lynne
Lynne
17 days ago

I disagree with including moving to Mexico among the list of things too-frugal to consider! I retired to Mexico two years ago. And I’m not a frugal person. While it’s true you’ll be miserable if you move to a foreign country just to save money, and don’t enjoy the experience of a new culture, language and people, it’s pretty wonderful to live somewhere you never have to worry about money, and can afford to do just about anything. Just as an example, for about one-third of my housing costs when I lived in an apartment in New York, I live in Mexico in a sizable house with a large outdoor terrace with an outdoor living room and dining room I use year-round, and a big pool I swim in daily. All looked after by a housekeeper, pool guy and gardeners.

Steve Spinella
Steve Spinella
18 days ago

What? Not only do you invest wisely, but you also read between the lines on millennial FIRE blogs? I’m not sure that’s allowed. But seriously, are you really willing to work like they do in order to get attention? That doesn’t sound like the retirement I’m dreaming about….

OUTinMinnesota
OUTinMinnesota
21 days ago

When people (A) Learn the intertwined relationships of budget, income-management, and tax-management… and then use what they’ve learned to (B) Take Action and change their lives, how is that a bad thing?
 
It’s a serious question… How is it bad to do that?
 
· Redirect your scorn to people who claim to love life, but then waste their unknown allocation of years.

· Redirect your scorn to people whose spending priorities are based on emotion and trendiness instead of the logic of need and opportunity cost.

· Redirect your scorn to people unwilling to take action to budget, to manage their income, and/or to manage their level of taxation.

I’m boomer retired. So, don’t waste time pointing FIRE hate my way. Instead, please, answer the question I’ve asked:

How is it bad that people younger than we are have begun (A) learning financial stuff & (B) taking action to budget, to manage their income, and to manage their level of tax liability? 

R Quinn
R Quinn
21 days ago
Reply to  OUTinMinnesota

Not bad at all, but that is not what we are talking about.

Here is the typical scenario as far as I have been able to determine. A young single or a couple with much higher than average incomes who are fed up with their jobs for different reasons and therefore decide to live extremely frugally and save 40% or as much as 70% claimed as saving rates.

With a few exceptions there are no children and all those related expenses. Once they have accumulated $1 million or perhaps $2 million they claim to live off that money as being financially independent. Frequently that is not the case as I pointed out. And for many that idea has not been tested over many ups and downs with the stock market.

Once making that leap they have effectively locked in their income only adjusted for inflation if they follow something like the 4% rule. That means they have locked in their lifestyle for the rest of their lives if they stick to their goals. That lifestyle may be what they want, but it often is a nomadic life, moving abroad, living in a trailer or a low cost area … forever.

And then I think of all the things in life that most people deal with and I think to myself, how do those things fit their plan?

Each to his or her own as I have said, live any what that makes you happy, but as we have learned in many if not most cases, FI is not what it appears and RE is not actually retirement by definition.

It’s nice to be able to do what makes you happy, but I suggest there are consequences, yet not experience by many of the FIRE folks.

Purple Rain
Purple Rain
20 days ago
Reply to  R Quinn

DId you check out the couple (with two kids) who have an apartment in Boston that they rented out and “retired” to acreage in Vermont? They even wrote a book about it.

Turns out he continues to work in IT at the nonprofit he has been employed with for over a decade, has employer-paid health insurance and gets paid over 250k a year. I would call it deceptive marketing.

R Quinn
R Quinn
20 days ago
Reply to  Purple Rain

I now realize you are probably right on the $250k. I just looked at her blog from 2014 and said they were in the 40% tax bracket with state and federal combined which looking at the tax brackets back then means they had a taxable income of at least $400,000 so just his income 7 years later could be near that plus their other income. Amazing when you tell people you can save 65%.

R Quinn
R Quinn
20 days ago
Reply to  Purple Rain

That’s one of the bloggers I follow. they get a lot of publicity. I knew he worked from home, but not sure about the $250K that sure doesn’t show up in their finance reports they post. She delights in giving advice to people who write in with case studies.

OUTinMinnesota
OUTinMinnesota
21 days ago
Reply to  R Quinn

If you believe that there are consequences for choosing a FIRE lifestyle, then by necessity, you also believe there are consequences for not choosing it.

A good friend died this year… died wealthy. If she had somehow (magically) been given a choice to go back in time and retire early, she would have done it… no concern for money.

Purple Rain
Purple Rain
21 days ago

“This same family pays almost zero for health insurance premiums because they keep their income low enough to collect Affordable Care Act subsidies. Meanwhile, in March, their “net worth went up $68,000 to end the month at $2,648,000.” The lesson: Because the government typically counts income but not wealth, some of the frugal few are able to qualify for subsidies and tax credits.”

Change the tax structure. Don’t blame the people who found a way to work around it by using subsidies meant for the working poor.

“But where would we be if everybody retired at age 38?”

FIRE is not about retirement. It is about having the option to work for a lower salary to do something you enjoy. I personally think everyone would be a lot calmer and more content if they had this option at 38.

R Quinn
R Quinn
21 days ago
Reply to  Purple Rain

It appears that neither FI or R are accurate as many if not most are actually retired or truly financially independent. I think they need a new acronym.

J Acorn
J Acorn
15 days ago
Reply to  R Quinn

By that logic, a 70-year-old living off Social Security and investment income isn’t financially independent if he also has Medicare.

Purple Rain
Purple Rain
21 days ago
Reply to  R Quinn

Agree with that.

Purple Rain
Purple Rain
21 days ago

“I can’t imagine my wife buying clothes from a thrift store and wearing them for the next 10 years.”

I am a petite female. I cannot find decent quality clothes made in natural fabrics (cotton, wool, linen) in the stores. If I do, they fall apart within a year. Most of my wardrobe comprises decade-old clothes from thrift stores. Almost all my leather shoes are from thrift stores and have been re-soled – some multiple times.

I’m hanging on to my vintage wool sweaters and other classic clothes for dear life ‘cos even the thrift stores are full of garbage now. If I put on weight and have to go up a couple of sizes, that will be a problem.

Thomas
Thomas
21 days ago

Although the FIRE approach is certainly not for everyone (or most people), I think it’s a nice antidote to the typical workaholic, status-obsessed, high-consumption American lifestyle. Personal finance is personal. What works for someone else will probably not work for you. And that’s okay.

Personally, I am aiming for somewhere between the FIRE and the typical American lifestyle. I’m probably not going to be able to retire early, but I still aim to keep my spending low and carve out time for the things I value most in life. And I think that the FIRE bloggers’ advice has benefitted me much more than the advice I get from the traditional finance media.

R Quinn
R Quinn
21 days ago
Reply to  Thomas

My curiosity compels me to ask, what advice is beneficial from the FIRE folks. Seems like it’s mostly live extremely frugally, save and invest, stop a regular job, still live frugally, perhaps more so and then sell your experience to make money.

Richard Gore
Richard Gore
19 days ago
Reply to  R Quinn

The same could be send for most financial blogs including this one. I think I will stop reading these posts.

Roboticus Aquarius
Roboticus Aquarius
21 days ago

FIRE seems like a risky strategy to me. That doesn’t mean it’s bad, it’s just that as you say, it’s important to understand and accept those risks before taking the plunge (and bloggers should be up front about that.)

Retiring early means giving up your highest earning years, and hoping that you can reclaim some of that earning capacity if things go south. It also often means giving up professional and social contacts. Life circumstances and key relationships (i.e. spousal) can also change (or be changed by/during FIRE), throwing a big wrench in one’s plans and one’s level of happiness. Adverse health events are often a risk before and after fire, but diminished earning capacity can make it worse.

I suspect a high number of people who FIRE continue to work or return to standard work because 1) they get bored 2) they miss the variety of adult interaction 3) they miss the prestige 4) they miss the purpose or 5) they run lower on money than they anticipated or want a margin of safety.

Despite all this, it appears the rewards can be substantial – depending on one’s situation and personality.

I suspect I’m the kind of person who would take well to it, but too late! I’m past 50. If one retires at age 55 or 60, isn’t that just early retirement?

R Quinn
R Quinn
21 days ago

I don’t have any data, but many of these folks are single or if a couple do not have children which makes a big difference in spending and possible lifestyle.

parkslope
parkslope
21 days ago

I think it is interesting to compare those who adopt a FIRE strategy to those who work extremely long hours so that they can also retire in their forties or earlier. The latter approach is clearly more widely socially acceptable in our workaholic culture even though it often involves sacrificing family time and can be extremely stressful. Is the latter approach really a better route to financial independence?

Guest
Guest
21 days ago
Reply to  parkslope

Why can’t it be somewhere in between? I was never a “workaholic” and the amount of “sacrificing family time” was approximately zero (attended ALL our kids practices, games, school events, etc) and never felt “extremely stressful”. I simply STARTED EARLY investing in stock mutual funds, spent a regular amount on average stuff (no Mercedes or BMWs in my driveway), had only 2 kids, didn’t inherit a lot of money and, voila, here we are in our 50s pretty much retired. It ain’t rocket science folks.

parkslope
parkslope
21 days ago
Reply to  Guest

It looks like you benefited from a job that paid well without requiring you to sacrifice family time as well as a favorable stock market. I’m sure you know that many well-paying jobs require excessive time demands.

Guest
Guest
21 days ago
Reply to  parkslope

Sure there are but I was simply countering your inference that there are only 2 vastly different approaches. I recognize my good fortune in having found a very satisfying medium.

Brent Wilson
Brent Wilson
21 days ago

I can get behind the frustration with certain FIRE bloggers’ confidence (cockiness), but to question the entire movement seems misguided. I’d also point out that the family (Root of Good) you mention who spent $296 for monthly groceries also stated, “Grocery expenses of $296 are significantly lower than the $500 or $600 we spend in a typical month. We didn’t shop as much and we are entering the phase of emptying out our fridge and freezer before our big summer trip.”

There are a lot of smart people who FIRE. Perhaps some are younger and not as wise as traditionally retired folks, but most are not making their decision blindly. They’re plugging in their numbers to FIRE calculators like https://www.firecalc.com/ to see how their current wealth and budget would have fared during every imaginable time period since 1871. They’re scouring the threads of https://www.early-retirement.org/ to learn from normal people (not paid bloggers) who have retired anywhere from a little to extremely early.

You also seem to bemoan the fact that the Root of Good family gets ACA subsidies. Why? Have you ever implemented a tax minimization strategy? Tax loss harvested? Roth conversion? Anyone who does is taking advantage of the system that’s in place which means less money for the government. So you seem to be ok with taxes unpaid to the govt but not ok with subsidies paid from the govt. Curious.

The other thing is this. FIRE may impose a “forced frugality” but that is often a welcome trade-off for the parent who works a job 40+ hours a week and would rather spend their days with family, being more present at after-school activities, and having more energy to be their best possible selves to their children. The other day I asked my 4 year old daughter: would you like to have more toys than you could ever want or more time with your dad at home? Do I need to tell you which one she picked?

I’m not saying the normal life, with a normal job, and a normal retirement age is a bad thing. But it’s not for everyone and I don’t believe you should worry about others making the thoughtful decision to pursue the life they want to lead.

R Quinn
R Quinn
21 days ago
Reply to  Brent Wilson

To be honest I have not used any tax minimization strategy other than investing in municipal bonds, which may not be that smart, but I like the idea of tax free income.

I don’t bemoan anyone taking advantage of subsidies they are entitled to, what I object to is their acknowledgement they keep their reportable income low to get the most while bragging about the increase in their wealth and their $2.6 million and later they blog about all the assistance they will receive for college tuition based on their income and then acknowledge how unfair it is, but note they keep their wealth as retirement funds which are not considered in the aid package and at the same time claim they live off investment income.

As far as food goes, emptying the fridge is not a likely grocery strategy, but even their $500-$600 for a family of five is lower than what the USDA says is thrifty for a family of four.

I simply don’t accept the facts and figures presented by any of the so-called FIRE folks who generate income from their lifestyle. If they don’t appear way out of the norm and doing fine they have no story or services to sell.

I challenged one couple about their about their expense list, specifically that it did not include the cost of the Medicare coverages. The response was it was not considered an expense because it was deducted from their SS benefits.

As I said each to his or her own lifestyle, but if you are going to market your life to others, be 100% free with all the facts and figures and the lifestyle changes that are required to live on an income that generally is considered at the paycheck to paycheck level or in a few cases close to poverty level.

steve goodwin
steve goodwin
9 days ago
Reply to  R Quinn

“I don’t bemoan anyone taking advantage of subsidies they are entitled to, what I object to is their acknowledgement they keep their reportable income low to get the most while bragging about the increase in their wealth and their $2.6 million and later they blog about all the assistance they will receive for college tuition based on their income and then acknowledge how unfair it is, but note they keep their wealth as retirement funds which are not considered in the aid package and at the same time claim they live off investment income.”

First off, if you’ve read his blog, Justin of https://rootofgood.com is probably the most down to Earth FIRE blogger out there and certainly isn’t a braggart… 

So you object to him and his family living a perhaps frugal yet comfortable lifestyle (since 2004), and because of that, it has allowed them to continually save and invest into their retirement nest egg. Which has now grown to $2.7 million and generates a nice yearly dividend that he subsidizes with various side gigs. And because of the current Government rules and regulations his kids may qualify for assistance. Yet this “isn’t fair” to you. 

Perhaps read more of his personal journey, before painting everyone with the same brush.

Last edited 9 days ago by steve goodwin
parkslope
parkslope
21 days ago
Reply to  R Quinn

Is your gripe only with the vocal FIRE folks that you find offensive or does it also include the much much larger group of FIRE adherents who don’t feel the need to voice their lifestyle?

Last edited 21 days ago by parkslope
R Quinn
R Quinn
21 days ago
Reply to  parkslope

I’d sure mine to find those other folks who can make work a true FIRE without their own definition.

MarkP
MarkP
21 days ago

I’ve bought online eyeglasses from Warby Parker and have been very happy with the glasses, the service, and the savings.

Mik Cajon
Mik Cajon
21 days ago

Reminds me to “never trust a prophet making a profit”.

Last edited 21 days ago by Mik Cajon
R Quinn
R Quinn
21 days ago

Since writing this I stumbled on several other FIRE folks and their blogs. One couple lives on $40,000 and consider themselves nomads traveling the world living off their $1,100,000 portfolio. They are convinced their investment strategy is market crash and inflation proof. Hey, “even if the market crashes, companies will keep paying dividends” Sure always.

But just in case they earn tens of thousands a year from book deals, advising others and speaking. 

I follow a dozen or more of these FIRE blogs because they fascinate me. Many are by Millennials who claim the stress of their jobs and a more conventional lifestyle just became too much, and they sought a better life.

They all seem 100% confident they can handle whatever happens in the future although most haven’t had time to test that theory. I’m thinking some of these folks are a bit naive about life and money. 

As much as they criticize those of us who challenge their stories, many are now “experts” on investing, lifestyles and budgeting and are happy to share their expertise, often for a fee of course. I recently clicked on “we are happy to answer your questions” on a blog and found I could subscribe to their advice service for $199. 

This FIRE stuff seems a creative entrepreneurial masterpiece. 

But here is the real question. If FIRE works, why do we have any poverty, why do other Americans struggle on $40,000 or more annual income? 

Maybe the conventional lifestyle and stuff accumulation is our real problem. 

s0nicfreak
s0nicfreak
14 days ago
Reply to  R Quinn

Things can change at any time. It would be much easier to come out of retirement at say 40 than it would at 70.

 If FIRE works, why do we have any poverty, why do other Americans struggle on $40,000 or more annual income? 

Because it doesn’t work if you start from poverty. You can’t save and invest if your entire income is going to surviving. You can’t pay off a house if you can’t afford a down payment after paying rent. Can’t buy food in bulk to get it cheaper if you only have enough to afford food for the week. Etc.

I’m able to live comfortably on considerably less than $40,000 a year (with two kids still at home) but only because I fully own my house and car (so no rent, no mortgage, no car payment, and no one coming to take them away or throw us on the streets if I hit a rough patch) – that’s out of reach for most Americans that aren’t in poverty, let alone those that are – and I live in a low cost of living area (moving cost money, I had to have that money and skills that can be done from anywhere as long as I have an internet connection, to be able to move here. Most people have to live near where the jobs they can do are).

SanLouisKid
SanLouisKid
18 days ago
Reply to  R Quinn

I’m kind of with you, Richard. The FIRE movement fascinates me a bit. My parents were in the FIRE movement in the 1940s. Not because they wanted to, but because their income was so low. Being frugal because you want to be frugal is a lot more fun than being frugal because you have to. There appears to be no happy medium on a lot of things in our country. If that’s the case with finances, I’d rather be a little more FIRE than spendthrift.

IAD
IAD
21 days ago
Reply to  R Quinn

Another excellent article Richard! I’m pretty much in agreement with what you wrote and share your frustration with parts of the FIRE movement. I think the popularity and success of the FIRE is two parts.

First, we all wonder how much money will I need to retire and will I ever get there. Some people base it off of a random number (1 million, 2 million, more?), others back into it with a budget. FIRE appeals to the desire to want everything now and scrap the need to wait. As you noted, with part of the RE propped up with Government support, they are not so much retired early as they are living like poor people with a safety net. I think back to my childhood and the many poor people that were my neighbors. There is literally no difference between FIRE and them. Both work when they want on what they want, rely on the Govt for part of their need, and will refuse to buy something that they can find for cheap or free. The only difference, as I said, is the safety net that FIRE has. I think FIRE is from the “Wizard of Oz”. It looks good, but if you look too close you see its not exactly as it appears.

The second reason FIRE is successful is the time we give in. Inflation has been something one reads about from the 1970s. The stock market has gone down, but ALWAYS bounces back. Making money is so easy and foolproof! There is a time that is quickly approaching when our current trajectory will be unsustainable. The Government cannot just continue to print money, ever higher debt levels, and stock prices that often seem out of line with the financials. How will FIRE respond with a stock market in the dumps, rising inflation, and higher taxes? For me, I’d rather be employed or “for real retired.” To be neither and in my 30s or 40s doesn’t seem like a recipe for success and I’ll bet we would see most returning to the workplace.

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