Hacker News new | past | comments | ask | show | jobs | submit login

Story of my life, Ed. I am your poster boy who lives "cheap" and not "frugal" by choice. I clip coupons and browse slickdeals before committing to a purchase. I never buy anything at MSRP. I monitor airfare prices for weeks before booking a ticket.

This is a difficult problem to escape because it's one that I behaved myself into, and that it's self-reinforcing for a variety of reasons:

- When you're already on a fixed salary, the opportunity cost of spending time on being cheap is not obvious. You're not taking time away from that $500/hr side consulting gig that you don't have. Instead, you're at a situation where the marginal rate of return on clipping coupons (say, $10/hr) is significantly better than spending the next hour working on that iPhone app that is months from release and has no interested buyers (how long is it going to take to recoup the Apple developer fee?).

- Some people get a rush out of saving money, a feeling of "Ha! I beat the system." To them, saving money is a form of entertainment [1], and there's certainly far worse hobbies to have from a well-being perspective. Unfortunately, there are people who take this too far and end up as total misers or compulsive hoarders. I'm not a pathological case, but I've done things that would make some people cringe.

- Seeing people successfully live frugally can be a motivator to follow in their path. My parents are immigrants who worked hard and saved for 20 years before they were finally able to afford a house in an expensive neighborhood (and nearly paid for it all in cash). They drive Toyotas, shop at Costco, and cook at home. They are basically the epitome of the "millionaire next door" [2].

- There's also a moral justification for this. "Why do I have to keep up with my spendthrift neighbors? So what if I don't drive a Maserati or carry a Hermès bag? No thanks, I shall be comfortable in my own skin, since envy and greed are evil." This is now an identity statement [3], and while it's a good position to take from a financial perspective, it can be crippling in the way it makes some people closed-minded. Of course, this doesn't necessarily stop them from pontificating about retirement at 30.

I do still think that my years of being cheap are starting to pay off, mostly because I'm finally getting comfortable with the sort of "discretionary" expenses you mentioned in your post. The difference is that it probably took a much larger bank balance for me to consider them "affordable." I just flew across the continent purely on a whim to visit some friends that I hadn't seen in years, I no longer cringe at expensive bar tabs if they were time well spent with buddies, I can afford to make an impulse electronics purchase just to see what it's like, and I'm preparing for that self-funded sabbatical [4] to reboot my life.

Was it worth it? Well, it was really, really hard to re-orient myself this way, and it took much more sacrifice than necessary, but the good news is that aside from lost time, most of the rest hopefully can be recovered.

[1] http://www.budgetsaresexy.com/2009/08/saving-money-trumps-se...

[2] http://www.amazon.com/Millionaire-Next-Door-Thomas-Stanley/d...

[3] http://www.paulgraham.com/identity.html

[4] http://www.joelonsoftware.com/articles/fog0000000076.html




Well I would say that savings driven life is far better than the spendthrift side of things. Now this is purely personal choice. No denying.

In my case I like to sit on piles of cash, without any debts and EMI's to pay. And loan interests to worry about. I like to live a tension free life at the same time get a realization that I'm getting rich. And if you do so, you actually see that a lot of luxuries come a little late, but they come at zero stress, worries and hassles to worry about. The lateness in affording things is often very differential and in my case at least has made very little difference. Over the years you are far better off having money, peace and tranquility in your life even if you drive the Mercedes two years late. Than having a Mercedes right now and all the while paying off debts endlessly in cycles(Home, Credit card etc).

Now the point is simple, I don't really understand the spend thrift part of the world. Just because I don't dine at a seven star hotel eating a sever course meal, I doesn't mean I'm not eating well. I eat whatever I like, drink whatever I like and wear whatever I like. I just don't fall for the brands and buy 1 get two free kinda stuff.

I can go with the same phone for some years provided that server the job for the moment. Which most of the times it does. I don't see any reason to have credit card(Yes I don't have a credit card at all). Its just if you don't succumb to peer pressure and blindly imitating others spending patterns. You sort of can end up saving really lots of money. With savings and investments you can really end up making a lot after a while.

And then you can buy everything your want, retire early. Buy your dream home and live well.

In fact this is more pleasurable than the other approach.


It's funny that a black 0 in your bank account can make you better off than so many others, these days.


Debt is a dangerous thing. I don't think the same about governments. But I consider debt to be disastrous for individuals.

The reason is simple a lot of your work, time and energy drains into paying the most scary thing invented by finance industry so far - 'Compound Interest'. This is especially dangerous in the case of credit card. The debt keeps mounting because of two reason, you being unable to pay and yet still continuing to borrow money. This sort of a spending patters brings a lot of pain to people every where.

And all of this for what? Upgrading from iPhone 4 to iPhone 4s. Is this really worth?

In this sort of set up people living with a savings driven life get a automatic lead ahead of spendings driven people.

Because while you are working to pay off the interest money. He works for the same time and saves that interest money.

I think it will be safe to say to say that if your paying X% money as interest to bank by working for hours Y(Remember you are loosing X% money, thereby in effect rendering your Y hours of work useless, as though it never happenned). The same X% is the money earned by the savings driven guy in the same Y hours(Additional to the money he is already earning. So this his extra income).

You work to loose money and he works to get rich. Although both work for the same time. One gets richer other gets poorer. This is how bad debt can inflict suffering on you.

These days you can be relatively rich by just saving money! And avoiding debt.


I think the lack of understand about borrowing to fund an asset, versus borrowing to fund lifestyle. If it is going to return higher than the interest rate you are borrowing at, then cool. If, in the case of a house, it is cheaper than renting (without a high risk of capital value falling putting you into liquidity diffulties), then also cool.

Borrowing for consumption is where people make the mistake.


Don't forget however that you still have to have a roof over your head. Assuming you have close to $0 net worth when you graduate, you still have to lose money, be it over a mortgage or over renting.

So, the question is, which is cheaper? Your mortgage, or your landlord?


Money let's you trade things you don't mind doing and stuff you don't need for things you want other people to do and stuff you want to have. Clipping coupons can pay 1000$ an hour or 1.5$ an hour but the important thing is not just ROI but how much you like or dislike doing things. But with stuff there is a third option. I don't listen to music so the cost of a CD or concert ticket is irrelevant to me. I don't like to travel so the cost of a plane ticket is irrelevant, I don't like posters, nick nacks, or buying clothes so most stores simply don't have anything I want to buy.

So, when you see someone that saves most of their money don't assume they are hording it, some people just don't find all that many things they want to trade it for at a price they are willing to pay. Now I like playing video games, but I have several of them unopened new in box so I don't feel the need to buy yet another one that may or may not get played etc. I have cable TV, but I spend far more time playing free flash games not because they are cheap but because I simply enjoy them more. http://www.kongregate.com/games/light_bringer777/learn-to-fl...


I think it was a post on HN awhile back that got me thinking like this. If I don't want to do it, and the opportunity cost for me is greater than the cost to hire someone else to do it, then I should just pay them. The key here is the opportunity cost is for me, not for anyone else. For example, I hate mowing the lawn and I estimate I'd have to be paid well over $100 to get me to "enjoy" doing it. Thus, I pay the $60 for lawn service. To me, I just earned $40 of my time back. Now, I'll admit, it isn't as cost effective as being cheap or "frugal", but I do think I enjoy life a bit more.




Guidelines | FAQ | Lists | API | Security | Legal | Apply to YC | Contact

Search: