First, what is a Frugaler?
Well, a Frugaler is a person who is Frugal!
What is Frugal?
Dictionary.Com defines Frugal as “
Why might one want to be Frugal?
One might want to be Frugal to help oneself retire early, which is why this soon to be blogger has determined they want to change their lifestyle from a lifestyle of consumption and spending to a lifestyle of frugality and saving / investing.
The decision and journey for me started a few weeks ago when I stumbled onto the blog Budgets Are Sexy and saw the Millionaire Challenge…Well, I’m Type A and I Love a challenge.
How to become a millionaire, simply earn more and earn my way there? Well, that’s the path I was on, always spending all my excess cash and thinking, I will just earn more, I can get there!!!
Next, I stumbled onto the blog of Jim Collins – the Blogger, who was super enlightening – why do I add, the Blogger? Well, so as to not confuse you, the future reader (you cannot be a reader yet, nor might you ever be a reader, because this is my first post and I’m not going to be that inspiring, I think) with one of my favourite authors – that Jim Collins, the author of Good to Great, Built to Last and my favourite, Great by Choice (you can apply this final book to the journey I am on – target a steady 5% to 10% increase in Net Worth per year, no more and no less…consistent incremental returns over time).
While reading Jim’s blog, which I loved, I was astounded at this concept of saving in excess of 50% of ones take-home pay??? how could one do that? Especially a consumer like me who was always targeting earning my way to financial freedom instead of saving and investing my way there?
Well, it’s a good thing my wife of 10 years, and partner for 20, has always been frugal. I simply need to look at how she behaves and how she’s always scolded me and I know what I need to do, now I simply need to do it.
Another fortuitous feature of reading Jim’s blogs was stumbling onto MMM! Who is MMM? Does MMM really need an introduction? MMM is Mr. Money Mustache and he’s super inspirational, even if he can be a bit of a Mean Ass, as demonstrated by his offer to open up a store where his product would be: I PUNCH YOU IN THE FACE AND TELL YOU TO WISE THE FUCK UP AND GO SELL SOME OF YOUR SHIT INSTEAD OF BORROWING MORE MONEY! No seriously, go read his blogs. I agree with him, if you ever go into one of those stores, you deserve that as the end result.
I had a buddy that was the Corporate Controller for one of the largest of these franchises in N. America and I never told him, but it would have made me physically nauseous to work for a Company like that.
After deciding I would read every one of MMM’s blogs and then start the journey myself, I have gotten as far as October 2011, no seriously he was writing an insane amount back then when he first started, and decided to start anyway.
What am I going to write about? It won’t be a detailed how to, it will simply be a tie-in of how I’m changing my behaviours, what’s working and what isn’t working, what elements of MMM am I trying (scratch that, Trying is Failing…change it to testing), along with other bloggers, authors, etc and what impact have they had on the net worth of our family?
In that respect, once I’m satisfied with our net worth statement configuration, my wife and I are working on it, and am comfortable it’s reasonably anonymous, them I will be posting a monthly, or possibly quarterly, if monthly isn’t relevant, updated net worth statement on the journey to reach our target “we can quit now if we want” net worth, which I’m pencilling in at $2,500,000 currently, though I’m sure MMM would say “WTF, why do you need $100,000 per year in retirement, you’re clearly not a frugaler yet you silly consumer, swing by for a punch to the face and then we can explain why a much lower number would absolutely be sufficient”…Sorry to put words in your mouth MMM, after reading 5+ of your blog articles each day for the past week! that just seems like what you’d say and maybe it’s being soft???
Where are my wife and I now? I’ve got some questions for her on our net worth statement as I’ve not spent as much time on it as she has. From what I can seem we are at $550,000 in Net Worth as as 12/31/14 and things are on the up-tick and I would expect that to exceed $600,000 by year-end, relatively easily, and be on track for + $700,000 by 12/31/16 as we have some investments we will close next year.
Our current situation? We live in a beautiful city, often voted one of the best cities in the world; unfortunately, it is also one of the most unaffordable cities in the world. This leaves us in an interesting spot, as much of what MMM espouses is not necessarily feasible or practical in our situation – for example, there is very little chance I am purchasing a home for our family of 4 that is close enough to work to allow for cycling commuting for under $1,000,000, which raises interesting questions regarding mortgages and being debt free.
Fortunately, Ms. Frugaler and I were lucky enough to purchase a home at a very nice cost, much lower than today’s asking price and I simply need to listen to her and stop “wanting” more, when we don’t “need” it…please read the post on stoicism over at MMM to understand the difference betweeen the two and why Ms. Frugaler is right, and indeed has always been right!
From a salary standpoint, we are in a very good spot and earn ~ $160,000 per annum after-tax and before bonuses, so we should be able to save in excess of $1000,000 per year, excluding investment profits. We are closing on our first investment property in March 2016 (it’s pre-construction) and have a reasonable amount (~ $500,000) invested in products I feel very strongly about and expect to generate average returns in the ~ 15% / annum range.
A downside of the $500,000 invested, depending on how you view it, is that $300,000 of the investment is from funds borrowed through our home equity line of credit (HELOC) on our home. This will be a topic for future posts.
Well, Ms. Frugaler is home with some wonderful dinner and this feels like a long post already, so Mr. Frugaler out!