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April 23, 2009


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My view is get the 'best deal' you can on #1, go 'cheap' on #2, and cut #3 activities down to the frequency they become luxuries (a vice is usually (not always) just a luxury done to so much excess that it becomes a necessity which no longer brings pleasure but just stops pain). After you have a huge emergency fund, use the massive savings from this to get MORE of #4 (your daily reward) & #5 (which includes less working hours as you get older and building a 401K for an earlier retirement).

"a once in a lifetime chance -- to get a great deal on what could eventually be a quickly rising asset"

Housing is dead for many years, just wait till inflation rears its head and mortgage rates spike.

Car expenses is one I hate! a car can easily cost you more than $500+ per month if its fully paid if leased or financed it can reach $1000 very quickly. I buy used 6-9 yr old Japanese cars, give me a civic or corrola and i am happy they last very long without major issues, parts are cheap and cheap on gas.

A lot of advice like this is too one-size-fits-all. Take category #4: if you've been laid off, yes, you should slash this category to the bone. If there's some big urgent expense you're facing (or some big luxury you're yearning for), again, it might make sense. But if you're doing okay, this relentless hunt to seek out and eliminate things that give you pleasure in life seems ill-advised, especially given that this article acknowledges that many have already made some cuts in this area, so what they have left is what they are likely to get significant enjoyment out of. You're not a bad, unthrifty person if you go to the theater once a year (!!!) or buy a ten-dollar block of cheese once in a while.

I've tended to scoff at people who call the advocates of frugality killjoys (especially because I know just how much it sucks when you have a lot of debt), but lately I'm less sure. There seems to be a lot of envy of people who still can afford a few things and a rush to turn everyone into drones who work the maximum hours with their heads down and save every dime.

These are all of the things I have remaining to cut in order to pay off my debt faster but I can't seem to comprimise. Seems to match up almost perfectly with the 5 above.

1. cheaper rent (~200-300/month)
2. cut cable ~155/month
3. sell my car (net the difference of selling/replacement price ~6-10k depending) then +~200/month
4. quit drinking alcohol(~130/month)

I can't bring myself to cut any of those even though that is all that's left to get to the end goal faster. Otherwise I'd say my budget is pretty barebones. If I could follow through on about 2 of these I'd probably cut my repayment down from 5 years to about 4.25 years (~35,000 difference).

Overall, a good list!

Man I wish I could get out from under my house right now.

I'm considering selling it at a loss & just paying off my debt and saving...


You might as well be a real estate agent! House prices in many parts of the country, including coastal northern California where I live, are nowhere near a bargain and continue to be grossly out-of-line with local rents and incomes. A drop of 15-20% after a run-up of 200-300% over the past decade is no bargain. Right now there are millions of unoccupied homes, and plenty of people looking to get rid of them--but can't. Banks are intentionally holding back the foreclosures. Housing busts typically last six years or so, and we're barely in year 3, and this bust was anything but typical.

Everything can be distilled to one basic concept. BEING ABLE TO DISTINGUISH BETWEEN NEEDS AND WANTS. "NEEDS" are those things that help keep us alive and healthy. "WANTS" are everything else. We NEED 5 things - food, clothing, shelter, transportation, medical care. What we choose to spend on each is a WANT. Do we live in a mansion or a cabin? Do we drive a Yugo or a BMW. Do we eat bread and water, or croissants and Perrier? Do we shop at Goodwill or Nordstroms? We WANT most things we think we NEED.

I believe that saving is not about making sacrifices, but about having your money go to the things that matter most to you.

Would you rather sacrifice your retirement in order to drive a shiny new BMW? I bet you don't. Therefore, the first thing you need to do, to start saving, is to list your values, your priorities in life, and your personal objectives. And then, send money towards them. If this exercise is done correctly, and repeated at least once a year, then it's not so difficult.

Again, it's not about making sacrifices, but to focus on what matters most.

Tell that to the people I work with who are all at their first job out of college, drive brand new cars, and always eat out for lunch.
Some people are just blind to saving money. Maybe it's a cultural thing, maybe it's how they were raised.
Not everyone has the same priorities and I agree that people should list what's important before they start cutting things out.

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