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I USED TO GET PARADE magazine with the Sunday newspaper. On Sept. 28, 1997, it published an article by Andrew Tobias entitled, “Want to Amass a Fortune? No Problem!” I tore out the article and filed it away with others I’ve kept, because I thought Tobias made some points that would be worth periodically revisiting.
Early in the article, Tobias—who’s perhaps best known as the author of The Only Investment Guide You’ll Ever Need—addresses the question in the title. How can you amass a fortune? Here’s his answer: “Make a budget, scrimp and save, pay off your credit cards, quit smoking, fully fund your retirement plan. Make weekly or monthly contributions to a savings account and then, when you’ve accumulated a bit more, to a low-expense, no load mutual fund. And start early—tomorrow if you possibly can. There’s not much more to it than that. Well, a little maybe.”
That seems pretty basic and maybe not particularly profound, especially for readers of HumbleDollar. Tobias, however, goes on to make three other points I’ve found helpful. Please remember that the article was published more than a quarter-century ago, so some of his examples are a bit dated.
A luxury once sampled becomes a necessity. Tobias elaborates: “You say you don’t particularly mind not having a remote-control clicker for your TV? I can state with some assurance, in that case, that you’ve never had one. Touch tone dialing? Caller ID? Microwave ovens? It’s a cinch, obviously, to be happy without these things before they’ve been invented and quite possible to be happy without them even after they’ve been invented… but so awfully hard to be happy without them once you’ve gotten used to them.”
He goes on: “Pace yourself! Live a little beneath your means. Don’t go into hock buying some whiz-bang & olufsen sound system right out of college. Make do with one of those three-in-one $279 mail order deals like the one I still use. Tease yourself with anticipation.”
I don’t think TVs are even sold without a remote control these days. Here’s an updated example: When I was in high school, I was perfectly happy watching my favorite show, The Rockford Files, on the 10-inch black-and-white TV in our basement. There’s no way I’d enjoy that today.
The TV in our family room is a 32-inch color TV with high-definition display and, of course, a remote control. When we go on vacation, sometimes we book hotel rooms with TVs that have 43-inch or even 55-inch displays. Watching shows on those units is quite a treat for us since it’s an infrequent pleasure. If we had a 65-inch or 75-inch screen in our family room, that would become the new normal. Rather than being excited, I’d probably feel mildly annoyed watching the hotel’s smaller TV.
I like the idea of pacing our acquisition of material goods. The hedonic treadmill ensures that we will eventually—and often quickly—get used to any new trinket we obtain, so why rush things? Extending the pleasant anticipation of certain purchases can increase our happiness, while also benefiting the bottom line.
Learn the difference between frugal and cheap. Again, from Tobias: “Frugal is catching yourself before you say ‘and a Coke’ as you place your order with room service, because you notice that Cokes in your minibar are cheaper (and not subject to a service charge or tip). Frugal (or crazy) is running across the street in the morning to buy a couple of Cokes to restock the minibar before the guy comes to tick off what you’ve consumed. Frugal, indeed, is avoiding places with minibars in the first place. Frugal is turning off the lights when you leave the room. Cheap is buying your spouse something less nice than she’d like when you can easily afford to make her happy. Cheap is leaving a 10 percent tip. (Cheap enters the picture, I think, when other people are involved, not just yourself.)”
While being frugal is good, demanding that others fund our frugality is not. Skimping on tips for hard-working service providers is not an honorable way to save money. There are endless ways to be frugal without taking advantage of other people.
I get significant pleasure from being frugal at the grocery store, even while recognizing that there’s no substantive impact on our financial well-being. Also, the grocery store will not be harmed when we take advantage of a good deal that it offers. Groceries aside, who among us doesn’t enjoy talking—okay, bragging—to their friends about a great deal they got on a purchase?
Avoid waste. Tobias’s take: “Waste is bad. Waste impoverishes everyone. Leaving a tool outdoors to rust is a waste. Buying exercise equipment you never use is a waste. Letting the hot water run as you shave or leaving the TV on when no one’s watching is a waste. But spending money on a fancy dinner or piano lessons isn’t necessarily a waste. You’re simply transferring the money to other people; you’re satisfying one another’s needs.”
When I have to spend money on changing the car oil or doing other preventive maintenance, I’m not exactly thrilled, but I certainly don’t consider it a waste. In fact, I’m preventing future waste in the form of a disabled vehicle. When, however, I have to spend money multiple times to replace car mirrors because people in my family—including me—keep damaging them when pulling out of the garage, it definitely feels like a waste. The regrettable loss of time and money could have been avoided had we been just a wee bit more careful.
When we splurge on a cut of meat that’s higher quality than what we typically eat, that’s not a waste. When I throw out meat simply because it went bad after getting lost in the back of the freezer, that’s clearly a waste. When we buy in bulk but end up failing to use half of what we buy, that’s not smart shopping—that’s a waste. I have mixed emotions when I do my periodic refrigerator and pantry cleanouts. I get satisfaction by increasing the order in these spaces, but I’m dismayed to see the amount of wasted food I end up throwing out.
Ken Cutler lives in Lancaster, Pennsylvania, and has worked as an electrical engineer in the nuclear power industry for more than 38 years. There, he has become an informal financial advisor for many of his coworkers. Ken is involved in his church, enjoys traveling and hiking with his wife Lisa, is a shortwave radio hobbyist, and has a soft spot for cats and dogs. Check out Ken’s earlier articles.
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I’m so addicted to being frugal that I tried to repair our TV by replacing a computer board. It didn’t work, but it quieted the Frugal Monster. Now I can buy a new one without guilt.
there’s a difference between being a cheapskate versus being a frugal person.
We have a 75-inch TV, and it really is nice. My husband insisted and I resisted, but now I’m glad we have it. The day it was installed, we turned on a baseball game, and you could literally see individual blades of green grass on the infield.
We watch a lot of live sports and movies, and we also like to host viewing parties for neighbors and friends, so for us, it’s been something that fits things we like to do.
You’re right, though, that most hotel rooms seem like a downgrade now. But we don’t watch much TV when we’re traveling, anyway.
I have nothing against large TVs. Now that they are so reasonably priced, they are probably one of the best entertainment values out there. We have a fancy entertainment center that my late father-in-law made for us that can’t accommodate TVs larger than 32″.
I have a friend who has an 85-inch tv.
I wonder how large TVs will eventually get?
I have a friend who has a villa with a 100″ TV (i’m not talking about screen projector here).
When on the Vegas strip, don’t even open the mini bar fridge. Sensors in the door and on the goods inside get automatically charged to your room. Found this out the hard way. We didn’t even consume them, but got charged anyway. Just FYI….
Thanks for the article. Waste to me is the worst habit.
I like your thinking, its practical, repurposing items is also a helpful savings tool. For example a Cuban friend displayed saving breads twist closure components. She’s right.
I just re-wrapped a holiday gift reusing one.
Imagine cast iron cookware, necessary adequate I.T,/ 1 meal a day, plus fruits. We are no longer growing youths. Books(kindle) and exercise daily.
This country is wasteful.The trash haulers know it.
When I.T goes down, everything ‘halts’ in major cities worldwide. I’ve seen it happen. History is being re-written again propagandized. I saw a friend’s new car, come to him automatically.No thanks.
Well, I used to be frugal when I was young. I didn’t buy a single thing I didn’t need, enjoyed inexpensive hobbies, shopped for bargains, etc, etc.
It does work. Now that I am retired, I have discovered I have saved more money than I can ever spend. Just buying whatever I like, and paying whatever it costs, I am still spending only about 30% of my income, so frugality has gone by the wayside.
That’s quite amazing.
Ken, thanks for confirming that really good advice stands the test of time.
I now regularly see 65-inch TVs advertised with at under $300. ($299 or less) Heck, I just saw Walmart has a 50-inch one for $148 on one of their Black Friday promotions.
It still amazes me how TVs can be sold so cheaply.
$148 adjusted for inflation would be about $19 back in 1970. Could you imagine buying a 50 inch TV for $19 in 1970?
Thanks for the good reminders, Ken. My own “luxury that became a necessity” is the free 3-month SiriusXM radio subscription that came with the 2008 Chevy Cobalt (still being driven by my daughter in Brooklyn). For about $1 a day for an all-access subscription, I can listen to it anytime, anywhere, either on my phone (plugged into the 2019 Kia) or in my down-sized home on my rebuilt Bose Wave SoundTouch player (a gift from my kids who got an employee discount through my cousin, a Bose retiree 😀😉). Sometimes the simplest pleasures can really add to our quality of life.
This is Chris Good article, Ken. When you were talking about things you don’t use, it reminded me of the wonderful Buy Nothing group in our town. The Buy Nothing Project is an organization that tries to keep things out of landfills and connect people in their communities. Our group is very active on Facebook. I have given and received items though it. Thought I would mention this organization in case some of the HD readers would benefit.
My sister in Queens is a huge fan and participant. She’s also met some very nice, like-minded people. I’ll have to see if there’s one in my area. Thanks for mentioning it.
Tobias’s, yours and my thoughts intersect at so many points. When I read the quote about “luxury” to my wife, she commented that “they were listening to our conversation “ about new car features. We’re shopping for a vehicle and discussing trim levels and the year models that have the various ones we want and “need.” For a host of conveniences in life, I tend to resist the trend toward new and improved, for frugality’s sake and also the fear of going soft. And sometimes just stubbornness.
Ed, you and I probably do think a lot alike when it comes to car shopping. Here’s another example of my tendencies: we were possibly the last family in our town to own a high definition TV. Why is that? Our cathode ray tube TV still worked fine, and I was a bit stubborn about upgrading.
I feel like a dinosaur for not owning a 4K TV.
Ditto. We’re dinosaurs, but we may be moving with a herd of them here.
Thanks for the reminder of how simple the smart decisions in life can be!