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Frugal: the new F word

Frugal: the new F word

What I’m reading
Some stores are scrapping self-checkouts.

Only 10% of US workers have the “optimal” characteristics to to save well for retirement.

“We frequently overestimate just how much happiness money can buy.” The pay raise people say they need to be happy.

Ranking streaming services by cost increase.

What I am thinking
I find many things come down to the fact that words can have different definitions. For example, I have discussed how people who dislike the term FIRE often choose to focus on the early retirement piece and not the financial independence piece. Same goes with people who say there is no such thing as “dividend investing.” Well, the term has been defined by the people who use it, so of course there is.

From what I can see, no word has been more maligned in the personal finance community than the word frugal. Let’s check out some history:

frugal (adj.)
“economical in use,” 1590s, from French frugal, from Latin frugalis, from undeclined adjective frugi “useful, proper, worthy, honest; temperate, economical,” originally dative of frux (plural fruges) “fruit, produce,” figuratively “value, result, success,” from PIE root *bhrug- “to enjoy,” with derivatives referring to agricultural products. Sense evolved in Latin from “useful” to “profitable” to “economical.” Related: Frugally.

PHEW. There is a LOT going on in there! What’s interesting is that on that page there is no mention of the word frugal being aligned with the word cheap but yet, it’s what frugality has come to mean to a lot of people. I think we’ve done the word frugal dirty and I am done with it!

Clearly, I consider myself a frugal person but I don’t consider myself cheap. To me, spending judiciously is what I think of when I think of the word frugal. I also think the word applies to more than just money: I want to get the maximum enjoyment out of things I spend time and energy on as well. I don’t watch a lot of movies or tv shows because I get very little value out of them. It isn’t a judgment on whether or not movies/tv are a good use of time, it’s about how I want to spend my time. I have a friend who loves movies and gets a ton of value from hitting up a theatre a few times a month. She loves it. She also loathes cooking, so she spends as few hours as possible in the kitchen. I love to cook, so I spend a lot more time cooking from scratch. We are both using our time on the things we love. That’s being frugal with our time and energy.

The same goes for your financial picture: spend money consciously on the things you love and you will get great value out of spending that money. Conversely, reaching for that credit card mindlessly every time your brain decides to have a dopamine hit for funsies and you end up broke with no money to spend on things that truly bring you joy.

Of course, people will say that frugal people focus too much on small things and ignore the larger things eating into their budgets. In some cases, that is for sure a fair assessment. For example, the easiest way for me to set up a Registered Disability Savings Plan (RDSP) was to set it up via a brick and mortar bank that had limited investment options (mostly high-fee mutual funds). It fills me with dread to know that I am paying management fees out the wazoo because of this limitation. But, the Canadian government matches my contribution 100% and those amounts grow tax free. So even with the high MER, I am still ahead. Unfortunately, many online banks don’t even offer the RDSP because there aren’t enough clients for them to deal with the hassle. Next year will be the last year that I will be eligible for the matching grant and while I hope online banks (*cough* I am talking to you Wealthsimple!) get into the game, if that doesn’t happen I will intensely research options to switch banks so I can whittle away at those crazy fees. The big things DO matter a lot – especially compounded. Large purchases such as cars, using a financial planner who takes a % of your investment, buying a home, the career you choose etc. can mean big gains and losses over a lifetime. It makes complete sense to focus on these things first.

I would argue though that making frugal choices in your everyday life also builds up your frugal muscle. Frugality becomes a habit and it contributes to your overall financial health. I am not saying that you should drive 20km to save .20cents on OJ – by definition that isn’t frugal at all! But if you shop at the grocery store near your house it takes a few short minutes to take a look at the sale items and think about buying those things and incorporating them into meals this week. It’s way better to plan ahead than end up buying a bunch of food you bought when you went to the grocery store with good intentions (or worse! Hungry!) and it ends up rotting in your fridge.

Also, most of us start our lives not making a whole lot of money. What we do have we have to use wisely if we want to balance getting our bills paid with being able to, say, have a social life. When you have less, you need to plan your money as carefully as possible. Because all the big things in your life are probably already as low as they can go you need to start cutting ruthlessly in other areas. The same goes for people who have lower incomes: telling them to not sweat about the small stuff is terrible advice when the small stuff is contributing to their inability to manage their finances and is increasing their debt. These people need to learn the skills of blackbelt scrimping until they can breathe again.

I spent years being ultra-frugal and making cutthroat decisions in how to spend. Those years allowed me to start a small business – and then to subsequently give up that business to stay at home with my kids. We rarely ate out, we mostly did the free activities available around the city and we had a YMCA membership that gave us access to fun sports classes for the kids. Most of those things were also walking or biking distance from our house. We had a really good life because we were able to access a lot of low-cost, fun stuff.

That frugality also came in handy when I decided to go back to work. Being able to live off one salary allowed me to wait and take contracts for work that I enjoyed and that were at a higher salary. I didn’t have to take the first job that came along because I knew that while the money was nice we didn’t need it to survive. I doubled my salary and went from a low-level admin position to heading up a team in a high-level position in under 5 years. I was free from the constraints of having to scramble for work to keep our family afloat. That kind of freedom to pursue the type of work you want to do is worth a lot more than eating out and shopping a lot.

Our house is paid off and our incomes is more than enough to spend well beyond what we need. But with my diagnosis it has been abundantly clear how precious time is. So while we could be buying up everything our little heart’s desire, we are choosing instead to invest Mr. Tucker’s salary to buy him an early retirement. Thankfully, my disability income is more than enough to support our family – if we spend judiciously. Buying his time back is the most frugal thing we can do right now.

In the end, frugality is a skill that never leaves you. You can also administer it as much or as less as you want to depending on your circumstances. If you have little money, you will have to tighten your belt. If you have a lot of money, you can loosen the belt if you’d like. But it’s exactly like riding a bike: you never forget how to use it.

People like good news about their bad decisions

People like good news about their bad decisions

Links
• I absolutely adore Katherine May’s books and have bought myself a copy of Wintering to re-read during the dark days ahead. Her newsletter is a lovely read about how to feel grounded in turbulent times.

• I’ve long been a big fan of alternative housing which is funny for someone for whom accessibility is a top concern. Still, this is a good piece about living on a boat. I wish it was more of a choice for many people

• Which cities have bubble risk in their property markets?

• A dollar is a medium of exchange, not a store of value. Some great points here!

• A great non-fiction-ish short story on the real costs of inflation in business and life.

People love good news about their bad decisions
This is why things like Girl Math and Little Treat culture gain traction on TikTok and other social media sites. It feels good to get confirmation that your decisions are in line with the decisions of others. We are, after all, a tribal species.

Unfortunately though, all of these videos and commentary from influencers has very little application to your own personal situation. As the adage goes in personal finance: the only person who cares about your money is you. It doesn’t matter how many videos you watch extoling the virtues of getting a “little treat” in the form of an $8 latte a day if you are miserable because you are sinking in debt – and you don’t even enjoy the latte that much. You need to take a look at your own situation and decide whether or not certain things have value and make you happy. Ignore the noise from the internet telling you that you can ignore any purchase under $5. It’s just “girl math!” What they aren’t telling you is that $5 once a day is $150 a month.

I think the challenge is when a treat becomes, over time, a habit. No one can decide that line for you but if you truly enjoy eating lunch out every day to the tune of $15 a day, then that is probably something you can decide to keep. But if it means you’re upset that can’t afford to go to a fancy dinner with friends because you’ve blown all of your spending money, then maybe review that habit. It’s on you to make those choices and no one else can make them for you.

Yes, there are systemic challenges that are happening and we should all be pushing for change. There is a housing crisis, a recession looming, pensions have gone the way of the Dodo and it can be easy to throw up your hands and say, “screw it, I am going to make myself happy today.” If you choose to do that, who am I to stop you? It’s your life. I am not going to judge. In fact, I don’t care at all. The only person who cares about your money is you.

I see so many people bemoaning standard personal finance advice,

“That wouldn’t work for me!”
“I don’t want to give up my lifestyle!”
“I need X!”
“That sounds like deprivation to me!”
“We need two cars!”
“I can’t eat leftovers!”
“I deserve this for working so hard!”
“Why bother saving, I’ll never be able to afford to buy a house/go on vacation/retire.”

You know what? You are absolutely right. Please carry on.

Do you think Dave Bach or Suze Orman give two shits about what you do with your money? No. They’re busy rolling around in the piles of cash because they’ve been on the personal finance scene for forever and a day spitting out books, getting speaking gigs, plying their trade. All your criticism of typical advice to get your financial affairs in order doesn’t matter one bit. The truth is, it’s very basic and it works. The info they’re peddling isn’t even new or revelational: they are saying the same stuff that you can read on the internet for free any day of the week.

Pay off your debt.
Live below your means.
Save the rest.
Have money in the bank for emergencies.
Save money and invest it long term.

You can bitch and moan all you want that it’s hard, or that you feel judged or that it doesn’t leave you much room for fun things but all it is, is information. You can ignore this information, or you can use it as a springboard to change your life. No one else cares.

We paid off the mortgage!

We paid off the mortgage!


Mr. Tucker opening the door of our home the day we got the keys

Our plan has always been to pay off the mortgage as soon as possible. Partially, it was because Mr. Tucker said that he would feel more comfortable with the guaranteed payoff but also as the prime rate got higher and higher it just made sense. We were set to renew for another term this September and we knew we wouldn’t get that sweet 2% interest that we’ve had for the past six years. So we rolled up our sleeves, didn’t take a vacation this winter, and we funneled every extra cent into savings.

Yesterday, Mr. Tucker walked into the bank, handed them a cheque, and walked out with our payout and discharge noted. He felt great.

Eyes are going to roll if I bring up the rent vs. own debate here and drill down into the financial quagmire of it all. Honestly, people who are smarter than me have done a great job of discussing the nitty gritty. What I am going to do though is discuss my own thought process because as a disabled person I feel like that changes a lot of my decision making. So let’s go for it:

Renting isn’t throwing your money away: that’s like saying that we shouldn’t eat because some of it lands in the sewage system. Shelter – like food – is a need, and you need to have shelter. Many of my friends rent and it suits them just fine because they don’t have to deal with the hassle of home ownership. But that brings me to the untold story about renting…

A lot of my friends who rent are either well off or very poor: let’s face it, the buy vs. rent debate can only really happen for people who have the privilege to make the choice. My rich friends rent because the premium on their time and money is important to them and my poor friends rent because they have absolutely zero choice in the matter.

During the pandemic when housing prices exploded, I saw friends get evicted because their landlords sold their properties. In our province, your rent is controlled under certain circumstances so if you live somewhere a long time your rent will be much lower than current market rents. But in a situation where home prices and rents start soaring, you risk eviction into a high-priced market. If you have a good income you probably will be mildly irritated but if you are a low wage worker or you are on disability, your options are very, very limited. Since we have a housing crisis in Canada right now being a low-income renter must be terrifying. Renovictions and other sneaky tactics are at an all time high and they can take years to resolve with the Landlord-Tenant Board. I think the stress would break me.

Disabled people also tend to be poorer and being poor can sometimes mean bad credit or no credit. Getting a rental without a credit check is really difficult in 2023.

Finding an accessible rental is near impossible: when you are able bodied and have money, you have a world of options. You can rent a small shithole and save a fortune. When you are a wheelchair-user, for example, you need more room and more accommodations within the house from shorter counters to handrails and benches in a roll-in shower. More room costs more money and few landlords would pay to renovate a current space. Your options are generally subsidized or co-op housing but that could mean years on a waitlist.

Even for disabled people who have the money to buy a home, the costs can quickly spiral. Developers are generally not keen to change things even if you bought a condo from plan, which means you will be on the hook for renovations to make it habitable. If you buy a pre-owned home, renovations generally are needed too.

Why don’t you just move to a lower cost of living area!?: this is decent advice for people who have the option but for someone like me who has a bunch of specialists who know my needs, accessing health care in another area may not be as easy. For those of us who spent years getting a diagnosis and who have built solid relationships with their care team won’t want to risk having to restart the process in a new area and risk getting a care team that doesn’t suit our needs. For example, a friend of mine with a heart condition has considered moving to the country but right now he is an 8 minute drive from the Heart Institute. Would you risk not having the care you needed in a crisis?

Which brings us to the fact that most hospitals and specialists tend to be concentrated in urban centres of large cities that are accessible by public transit. Most disabled people use some sort of public transit to get around as private hires can be costly and the options are limited.

I like to give my kids stability: I have read some stories about how people moved around a lot as kids and were fine with it. I am glad they had a positive experience or a higher purpose that made it worthwhile. I had to move thrice as a kid and I hated it. I really wished for some kind of stability in my life. When we moved to our current home, the Youngest struggled a lot as well. They had a really hard time adjusting and were really upset about moving.

Of course, things happen and there are myriad reasons that families are forced to move – both negative and positive. But it was a priority for Mr. Tucker and I to give our kids a home and so we made that happen. If something happens to Mr. Tucker and I am left with the kids in our bungalow, I can manage because…

We make continuous accessibility improvements: when it became harder and harder for me to step into the tub, we installed an accessible tub. Because our backyard has a lot of steps, we hired a carpenter to build ramps. As the years go on we don’t know how mobility will be because everyone with PLS is different. So as owners, we can adjust our home as necessary and…

We get tax credits related to accessibility improvements: so when we do renovate to make our home more user friendly for me, we do get some tax credits for it.


If the housing crisis continues, we can renovate for our kids: the vacancy rate is under 2% and the average one-bedroom condo is renting for $2000 a month in our city. Who knows what the future holds as we bring many new (much needed!) immigrants into the country over the next few years? I suspect that it will get worse before it gets better and that housing prices won’t see a drop but more of a stagnation or small increase.

On our property we could theoretically renovate our basement to put in a two-bedroom apartment as well as build a coach house in the backyard. If our kids needed a place to go, we could do that. If we found ourselves suddenly needing more income, we could rent out some space. I like the idea that we have a property that gives us options. Or, if need be we could always…

Sell the house if we need money someday: I don’t like the saying, “My house is the best investment I have ever made!” Because most of the time the people who say it will admit that it is usually one of the only investments they have ever made. Having said that, it is still worth something. While I wanted a home to put down roots and raise a family the time may come when I am forced to move on and selling our home may end up paying for Long Term Care.

We were lucky in the fact that we were able to save for our kid’s education, Mr. Tucker’s RRSPs AND were able to still pay off the house. The flip side of that is that I know folks who wanted the stability of a home to raise their families but didn’t have much in the way of other savings after that because their salaries were so much lower. People also may be risk adverse (often, we forget that not everyone is as interested in this stuff as we are). So they get the stability of raising a family for many years, paying off their mortgage as they go along and when it comes time to retire, they sell the home and use that as their retirement money.

Sure, it may not be the best option for the finance nerds who optimize every penny but the reality is that most people aren’t optimizers looking for ways to eek out a percentage point more from their investments. They like safe bets* and paying off a mortgage is a safe bet to them.

I think rent vs. own comes down to your own personal priorities and preferences (if you have options). I always find these conversations about GOOD vs. BAD disingenuous because as we all know: personal finance is personal. Also – and as much as the FinBros think it doesn’t – feelings matter! You need to be comfortable with your decision and be able to sleep at night.

For Mr. Tucker he really, really, really wanted to pay off the house and so we worked on that even though for the majority of the time we saved, we would have made way more on an index fund. In retrospect with the prime rate being so high it was a smart move to not have to renew in September at an exorbitant rate but we didn’t have a crystal ball: it was a decision made purely because it worked for us.


Home, sweet home


*I am definitely not entertaining the “bUt It iSn’T rEaLlY, lOoK aT mY dEtAiLeD sPrEaDsHeEt…” Yes, inflation is a thing. Yes, they could probably make more in an index fund but if they WON’T do that because human psychology being human psychology, this is at least something.