Guest Post: How Frugality Has Forever Changed My Life For The Better

*This is the second guest post on Dividend Mantra. Pey Shadzi, a commenter and supporter of this site as well as a frequent author at Seeking Alpha, has provided an excellent article highlighting why he believes living frugally has positively impacted his life. You can follow Pey at his blog or at Seeking Alpha.*

I’m just going to charge right out of the gate and throw it all out
there: I’m a firm believer in living a frugal lifestyle.

Whether it be shopping around for the cheapest car insurance, walking
to the closest grocery store to buy items on sale or performing my due
diligence in order to secure the best deal on a piece of electronic
equipment, I certainly do not mind taking a little extra time in order
to save a few bucks. Generally I prefer to invest the money I save in
dividend-paying stocks that allow for passive income with the intent
to reinvest my dividends in reputable companies. Saving money in order
to magnify future returns… sounds like a pretty sweet deal, right?
In all honesty, I can’t wait until that glorious day when I decide to
hang up my gloves and live the coveted life of a retiree… but I
digress.

Usually when I share this little frugality-fueled passion of mine with
others who have differing opinions about spending, I often hear some
of the same commentary about how boring my life must be or how much
excitement I must be missing out on due to the fact I choose to spend
my money wisely, rather than let it go frivolously. Having been an
American consumer who spent much of his money on unnecessary items
that really didn’t add to a quality of life, I can truthfully say I’m
much happier being the frugal person that I am today.

In fact, the simple act of being frugal has led my life in a totally
different positive direction. I’ve been able to diligently save and
build up what some have called a “rather sizable nest egg for a 29
year old.” I probably don’t have to tell you that hearing those words
makes me feel pretty good. My confidence levels are up, I feel like I
can accomplish anything I put my mind to and, most importantly, one
day when my passive income is sizable enough I’ll be able to pursue
any career I want, regardless of the salary. Freedom to live wherever
you want, do whatever comes to mind and work for fun (or not work at
all) — that’s, well, a pretty sweet deal that I’m looking forward to
one day down the line.

Frugality isn’t for the faint of heart, though. It takes work and
dedication but I’d argue the return on investment and peace of mind it
provides is surely worth the time and effort.

Being conscientious with money has resulted in some pretty amazing
outcomes. Take, for example, one of my favorite college pastimes of
going out “clubbing” with my college buddies in San Diego. I can’t
tell you how many times the five of us took turns heading to the bar
to buy a round of drinks for each other in order to “have fun” and
meet women. It wasn’t uncommon for each of us to leave the bar at the
end of the night having spent well over $100 on each of our credit
cards in order to pretend we had a good time. Nowadays — though my
core group of friends has undoubtedly changed — I’m perfectly content
inviting my buddies over to my place to share a 12 pack of my own
home-brewed beer while firing up the barbeque and watching the
beautiful crimson San Diego sunsets with our girlfriends. (None of
whom we met at the bar, by the way.) One day of hanging out and
reminiscing about the “golden days” costs us far less than $10.00 a
person today. A few years ago it wasn’t uncommon for some of the same
guys to dish out $100 or more in a single night hoping girls would
notice them flashing a wad of cash at the bar.

The reality is frugality adds a layer of stability in life otherwise
not attainable by spending in order to be happy. With the amount of
cash I’ve been able to save just by not going out clubbing alone, I’ve
been able to fully fund my Roth IRA for the past two years. With
recent bullish market returns since 2009, I’m sitting on over $12,000
of non-taxable investments that will grow at an estimated 8% for the
foreseeable few decades while dividends continue to roll in. With a
few simple calculations, if I continue to max out my Roth IRA for
another 30 years or so, I’ll be sitting on a balance free from future
taxes just shy of $800,000. Suddenly those loud nights in that crowded
bar don’t seem so appealing, right?

Of course, the decision to become more contentious with our spending
is often a difficult one. Likewise, my ability to save and become
diligent with my investments took some time to learn. But, with that
said, just like with healthy eating or a sound exercise plan, starting
slowly, learning as you go and continuing to stay motivated are the
key drivers of success.

Now if you’ll excuse me, I’m heading out to the backyard to fire up
the barbeque and chill down some excellent homemade brews. Life is
good!

Comments

    • says

      Very true. Sorry, I didnt mean to sound so negative with my comment. I’m actually semi interested in solar for my house but I live in TX so you are rather far from me.

  1. says

    One thing that strikes me about the guest post is a sense of peace that so many on the earn/spend cycle (rat race) find so hard to attain. I am in the process of being more frugal and minimalist. It’s a process.

  2. says

    Pey,

    I enjoyed reading your article. Being frugal helps to cut out the fluff and figure out whats important. It allows me to gain more enjoyment in simple things. I try not to eat out very often, but when I do it’s that much better. A real treat.

    Trying to impress other people with expensive possessions and spending habits seems pretty childish to me. Something right out of highschool. It’s sad many people don’t grow out of that phase.

    CI

    • says

      Yeah, that’s so true.

      I just finished reading The Millionaire Next Door by Stanley and Danko. They do an excellent job of really driving the point home saying the wealthiest among us pretend to have least. Conversely, the individuals who are flashy and always buying the latest gadgets tend to be the crowd who does not have money and are generally not millionaires.

      Really interesting stuff and it makes a lot of sense when you think about it.

  3. says

    I loved the post, it reminds me to ask out the librarian (or kayak instructor); instead of going clubbing/gambling with my guy friends and return -$100-$300 less and most likely be depressed for a month.

    • says

      Yeah, that’s not a bad idea. I heard librarians often make salaries close to six figures!

      I still do go out once in a while but it’s much less frequent nowadays and I generally go my best to spend as little as I can simply because I have many other hobbies I would prefer to fund, like making homebrew and writing.

      Thanks very much for the comment and I like your suggestion to keep gambling to a minimum — I haven’t had much luck with gambling either, haha.

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