I’ve been thinking a lot lately about frugality and the intersection of money and time. Sarah and I recorded a “frugal parenting tips” episode when I was in Miami. A lot of listeners requested this and sent in their tips as well. I quite enjoyed this New York Times article on the white-maleness of much of the “Financial independence/retire early” (or “early retirement” backwards) FIRE universe, and some of the alternate voices. I have looked through a few of the traditional voices’ websites. I also recently read Meet the Frugalwoods (not written by a white man!) after reading Elizabeth Willard Thames’s blog.
All of this FIRE consumption has helped clarify my thoughts about the financial independence/retire early world, and what I find useful, and what I find less so.
We all come to these things with our histories, so a bit about mine. I’m naturally frugal. Or possibly just cheap. This has its upsides. I have written in the past about my ability to live just fine on my $18,000/year salary during my year-long internship in Washington DC after college. When I moved to NYC and decided to freelance full time, I prioritized savings, building up well over 2 years of expenses by the time I got married and started merging finances. While this is not financial independence (that generally means having enough assets to live off an annual 4 percent withdrawal rate) having a reasonable quantity of assets removes the immediate pressure of needing to make money from most decisions. With 2+ years of runway, I was pretty sure I could find something.
My husband has turned out to be similar to me in this regard (though he does find it easier to spend money at the grocery store!). We save a decent proportion of our income automatically.
So in theory I should be naturally inclined to FIRE literature. And I probably am. But I have a few reservations that always temper my enthusiasm for the topic.
One is that so much of this literature is about scrimping on little things. Make your own shampoo, stack 50 cent coupons on cereal. People get very excited about these tips (and sometimes a wee bit judgmental about people who don’t do them), because you can do something about them in the near term. These tips on little things can create enough content to fill a book. But smart finance is really about getting the big pieces right. Spend less than the calculators say you theoretically could on housing and you open up massive space in your budget to save while still buying whatever shampoo you want.
Another complaint: A lot of FIRE literature is based on the idea that work is bad. It’s keeping you from living your real life. You are trading away your life for money! Hence the idea that you would work to earn money to pay for something you can do yourself is seen as regrettable.
But if you love what you do (and I’d note that what I do for a living now is what a reasonable number of FIRE people choose to do after they achieve financial independence) then many of the exhortations hold much less weight. Why are you working to earn money to pay a cleaning service when you could do it yourself? Well, I like writing and speaking and I don’t enjoy cleaning. That seems straightforward enough. Why am I working to pay someone else to be with my kids? Well, it turns out I spend copious quantities of time with my kids (I’ve got the time logs to prove it!) and I spend about 35-40 hours a week using my other talents to do something else I love, which I think has a positive impact on the world, or at the least on the people who write and tell me that it has. Sounds like a good balance to me.
Because I’m so naturally frugal (cheap) my evolution has had to go in a different direction from many of the FIRE sorts. I do recognize the contributions they are making to counter a larger cultural narrative where a surprising number of people believe that one of the first things you should do when you get serious money is go out and buy a Porsche. I’m not clawing out of debt. I’m not teaching myself to question consumer culture. I already wear clothes until they wear out. I color my own hair. My kids wear hand-me-downs and discount store clothes. I’m driving an 8-year-old car.
Instead, I have had to learn that spending money on things that matter to you is not evil. Money is a tool. It can be used to build the life you want.
That’s why I had to write down this statement in the Frugalwoods book that made me stop in my tracks: “Paying money is the laziest, least creative way to solve a problem or reach a desired end.”
At first this made me mad; the pejorative word “lazy” will do that.
But then I had to laugh at this. One woman’s “lazy” is another person’s “efficient, effective, and time-saving.” The entire genesis of money stemmed from humanity not wanting to reinvent the wheel every time it needed dinner. Even in the old barter economies, people often wound up using something as a currency (e.g. salt) because it kept that “dual coincidence of wants” from turning into “dual wants of coincidence.” Thank goodness we can rely on the least creative way of achieving something, so we can use our brains’ creativity to do other things! Like, oh, I don’t know, inventing air travel and modern medicine. Or even writing books and podcast scripts.
In any case, there’s nothing wrong with achieving financial independence. As a smaller step long before that: there’s nothing wrong, and much right, with accumulating enough assets to remove most money fears. If this is within people’s ability to do, having a solid emergency fund plus longer-term savings is an excellent goal. Getting rid of day-to-day financial worries is liberating. There’s nothing wrong with retiring early, but I think it’s also a useful question to ask what you’d like to do enough that you wouldn’t be counting the days until retirement. You could achieve financial independence and do that…or maybe you could do it on the way to financial independence, and really have an enjoyable life coming and going. There are lots of ways to work.
There are also lots of things money can do beyond buy you the ability not to work. It can enable life-changing experiences. For many people reading this blog, I imagine, there comes a point when we realize that time is more limited than money; money can be earned, but time gone never comes back.
Occasionally I’m not cheap. A great many years ago, I studied abroad in Australia. I lived in Melbourne, but figured while I was there I should see the country. I had some savings from summer and school year jobs and the copious freelancing I was doing even then. While I hated pulling money out of my bank account (for people like me, spending money is painful), I decided I should take advantage of the opportunity. I camped in Tasmania and went diving by the Great Barrier Reef. I went hiking in the monsoon vine forest near Kakadu National Park and saw Uluru and a show in the Sydney Opera House.
I’m glad I did. Twenty years later, I can earn the sums I spent then on discount air fare and hostels quickly. But I haven’t been back to Australia yet. I’m glad my money bought me memories.
In other news: Have you read my money book? It’s called All the Money in the World: What the Happiest People Know About Getting and Spending. Kirkus called it “Quirky, insightful and enjoyable — a welcome corrective to the typical advice from economists and financial managers steeped in the ‘dismal science.'”
In other other news: I read The Frugal Girl’s blog every day. I love that she is cheerful and non-judgmental about money matters!
Hi Laura. Thanks for this. I have followed FIRE bloggers for a while and my biggest complaint is the general methodology can be very short-sighted. In my chosen career I need to go out for lunch and coffee and drinks and need more childcare than our (reasonably priced, quality) daycare provides – and skimping on these things now creates a real possibility down the road that I will earn LESS money. I credit your writing with arming me with tools to buy more childcare and house cleaning and convenience than I would be naturally inclined to pay for! Keep up the good work 🙂
@Emily – thanks! Yes, childcare is an investment, not an expense. I know big chunks of the FIRE community are quite judgmental about paying for childcare, which strikes me as short-sighted too. Or (as the NY Times article notes) they’re bros who view human relationships as an impediment to achieving early retirement…so I guess that’s a different issue.
I will have to check out that NYT article. My husband and I are both frugal/cheap. My husband is more cheap than I am, but we are both way cheaper than the average person. We are willing to spend money on experiences, like travel, but we like to save money by eating out less, dressing our son in hand-me-downs, and driving the same car for 10+ years, for example. I think we kind of view it as a challenge – how little money can we spend? We aren’t coupon clippers but we consider what’s on sale at the grocery store when we meal plan. We aren’t in debt and we have a lot in savings, but we also both work in financial services so have no diversification of our income sources. As a result, we feel like we really need to live below our means because there is a good chance that one or both of us will lose our job at some point, especially since our field is shrinking/consolidating. I also would like to retire early, ideally in my 50s. I like my career and wouldn’t want to change jobs, but I still want to be done working pretty early. I have lots of hobbies and interests and would like to be more involved in a non-profit some day. So that is my goal. Maybe I will work longer than I think I will but I want to have the option to opt out of my corporate full-time job at some point.
@Lisa- if you have great ideas for what to do with your time other than your current job, then retiring early could be a good goal. And you guys are smart to assume that you both won’t be able to keep your same jobs forever. I’m always amazed at the proportion of middle-to-higher income people who spend almost everything that comes in. If you have a low income it makes sense, but not so much for higher income folks!
My problem with the fire movement is the negativity towards work. I love my job! The idea of retiring fills me with dread, like I am no longer useful and just waiting to die. My job is fun exciting, challenging and extremely rewarding. I’m frugal but still enjoy life and travel.
@Susan – I’m with you. I know exactly what I’d be doing if I retired. And it’s pretty much exactly what I’m doing now. I might travel a bit more for pleasure but that’s more limited by having young kids, and the kids’ school schedule, and I don’t think I’m going to start homeschooling them to make that possible. I know me and I know my children and I’m pretty sure that would not feel like a life improvement for any of us 🙂
I like your perspective on this. I’ve read the Frugalwoods blog on and off in the past, and was surprised to eventually learn (I think through a review of the book, which I haven’t actually read) that her husband still has a job with a six-figure salary – so, they didn’t actually “retire” by any means. They just moved to Vermont!
@Rebecca- oh, interesting. So in fact they have a very traditional set-up then. In the book she talks about not paying for childcare and only working during nap times. And I guess he works…whenever? Always curious how these things get split.
He works for Actblue (an organization that helps Democratic candidates fundraise) remotely. She does freelance and wrote her book. They are not “retired early” but the definition of that is very different in the FIRE community. It’s not that you don’t get paid ever again- it’s more that you follow your passions and be in a place to say “no” rather than being forced to say “yes.” They had enough $$ saved (and planned to do an airbnb at one point on their property) that he didn’t need to earn an income. Due to this, he had the power in order to tell his job that he could continue to do it but only remotely. It’s obvious- but being in a financially secure position means you have more power at the negotiating table to design your life how you want.
@Rebecca- also, that answers the health insurance question for them, which is always a doozy for achieving FI. Intentionally having a gap between employer-sponsored and Medicare is going to require a reasonable amount of cash to fill. And especially since they have young kids.
I mostly enjoy it, but I’ve also gotten frustrated with the Frugalwoods’ blog at times because she refers to herself as “a stay-at-home mom” even though she works freelance. Their three-year-old does go to preschool a few days a week now but it closes in the summer, and they don’t pay for any other childcare or have family nearby to help out. A neighbor does watch the kids once a month for their date night, but I think Mrs. Frugalwoods enjoyment of life would go up quite a bit if there was just a bit more paid childcare.
Yep. Really, the fact that she’s not transparent about their actual employment situation (on her blog or, apparently, in her book) soured me on her stuff a little bit. It’s like, you too can live a fabulous dream life on a homestead in Vermont if you just cut back your expenses… and, oh yeah, also have a partner with a full-time remote job with a six figure salary.
The Frugalwoods call themselves financially independent, yet they have employer-paid health insurance premiums for a high-income family of four. Without proof that they could afford health care costs on their own, with their current income and family size, I don’t give credit to their claim of being FI.
Searching through the blog archives, I found only one post from back in 2015 where they addressed projected health care costs once they transitioned to homestead life. The budget spreadsheet included in the post contains a math error that tallies their annual insurance premium expense at 66% less than it actually would be, based on estimated monthly premiums. Though several people called out this error in the comments, the Frugalwoods never fixed it in the main post. The 2015 cost projections were also based on a family of two, with the ACA health insurance marketplace in its early years and Mr. Frugalwoods stating “I feel confident that the ACA is here to stay.” In the current political climate, that assertion is questionable.
So, aside from a four-year-old post based on projected (not actual) health care expenses for a family situation that no longer exists, the Frugalwoods have not provided any hard data to prove they could tackle health care costs on their own, without depending on an employer. To me, that makes their declaration of financial independence less than credible — as if they’re trying to claim an accomplishment they didn’t earn.
@Jenzer – yes, health insurance is a big what-if. We have a very good plan through my husband’s employer. If he were to retire, this would require a large chunk of assets to replace with a 4% withdrawal rate. As it is, we’ll have to deal with this eventually, something I am aware of as a self-employed person. When he turns 65 and becomes eligible for Medicare, I’ll be 55 and will need to be on something we’re paying for for 10 years.
I just looked on one of the online calculators for the Frugalwoods situation. The average family plan has premiums of about $1100-1200 a month, so about $14,000 a year, and then an $8000 deductible. So to do this responsibly, you’d need $22,000 a year (assuming you might need to meet that deductible annually). Using the 4% withdrawal rate, that’s about half a million in extra assets required. And that may understate things, since health insurance rates have often risen by more than inflation.
My husband and I are both self-employed now, with two children at home. Our self-funded health insurance expenses take a big chunk out of the monthly budget. In just three years, the monthly premiums alone have gone up by almost 25%.
We offset some of the costs with a tax-advantaged health savings account, but I pay for those tax savings with my time. The IRS requires a non-trivial amount of recordkeeping to support both HSA contributions and disbursements.
The time and money required to cover your own health care expenses can be significant. Any discussion of FIRE which glosses over these expenses frustrates me.
Totally agree. There is more than one way to look at money, and sometimes the extreme (and often judgmental) attitude of the FIRE community gets me worked up.
Ps – I loved All The Money In The World. It helped me break down a lot of inhibiting assumptions I’d been making about the world (like that I couldn’t afford to have as many kids as I wanted.) So thanks for that!
I was excited to hear you write about this- I’m a longtime reader of the blog who is also into the FIRE movement. I’ve spent a long time doing reflection and reading on both sides of the equation- and I think you have good points that are ideally espoused in the FIRE movement but the traditional media doesn’t get (well, it’s less click bait if you don’t have the extreme angle). Here are some points I would raise-
1. “Retire early” doesn’t mean retire early, it’s more “optional.” There are what we like to call “the retirement police” where they say well you’re not retired early so therefore you’re not FIRE. But as I said in a comment above, it’s more you follow your passion and you probably make some $$ along the way, but it’s not required. Would you do your current job for free or almost free? Many people would not, which is why we get some blowback by some of the community who say that unless you never make another penny, you’re not retired early.
2. Yes there are all kinds of savings tips the community uses, but many people don’t follow most of them- it’s more on focusing on the biggest expenses to optimize saving rate- housing, transportation, food, and travel. People live in large 3,000 square foot houses with space that they don’t use and spend more on utilities and cleaning. Car payments are well documented to be high in the USA, as are food budgets. BUT- that being said. Here’s the thing, if you *want* that big house or that $1500 monthly food budget, that is okay (I mean, of course it is it’s your life)- but you should be conscious of the fact that you are actively choosing to do that. I love Paula Pant’s tagline- you can afford anything, but not everything. Don’t spend the $$ on these big things passively or because society tells you what is and is not acceptable. Do it because it brings true value to your life.
3. I like your thought process on trading time for doing what you love vs the mundane. I work as a NP in the NICU. I adore my job because I adore babies and it feels good to help families in their times of crisis. I also enjoy the satisfaction being able to effect clinical policy changes at my provider level that helps babies in real time. I do get compensated very well for this, over six figures. Would I do my job for free? Maybe not 40 hours a week but some hours for sure. What I’ve taken from the FIRE movement & reading your time management books is that I want to get to a point where I’m financially well off to cut my hours down to something like a 0.6 FTE…Designing my future this way would mean that I would only work about 4×24 shifts a month (there’s a call room, so I do get some sleep most of the time, lol) but would receive full benefits and receive close to a six figure salary, that I could comfortably live on. I recognize that I’m extremely extremely lucky to have a job that pays well, is flexible, and something that I love (and I suspect you might say something similar about your own career). I don’t think many people can say that, which led in part of the growth of the FIRE movement.
thanks for your thoughts on the subject!
@Justine – all great points! I think it’s the anti-work angle that most bothers me and always gets me riled up when I come across it in the FIRE literature. Not all work is a soulless exercise in giving away your life for $$. It can be a big source of meaning in our lives. Sure, you can find your passion after early retirement but I think it’s also possible to find and pursue your passion prior to retirement (which, as you pointed out, is what I’d say). I’m really glad that people like you choose to work! And, it sounds like, would like to continue to do so in some way regardless of finances. Thank goodness.
Laura,
The best sentence I have ever read:
Why are you working to earn money to pay a cleaning service when you could do it yourself? Well, I like writing and speaking and I don’t enjoy cleaning
If avoiding something you don’t like to allow you do something you do like isn’t the dream then I don’t know what is!
Marie
I loved this post and then I got to the end, and oh! A link to my blog. Thank you! : )
I go back and forth on the FIRE thing. I do think it’s great for some people. But it’s definitely not for everyone (that’d be back for the workforce anyway), and I think some people do better when they have a job with defined hours to go work at. Not everyone is a self-starter and not everyone is able to provide a sufficient amount of structure to their days without work.
Then again, most of the people in the FIRE movement ARE self-starters to begin with, so this is a largely theoretical objection.
I am fascinated by the FIRE movement and I enjoy reading frugality blogs. I also don’t think I would retire early, but one thing I think about often is sabbaticals. I wish there was more freedom to take a month to six months off and come back to your job. I think it could have a lot of benefits all around.
I also really enjoyed All the Money in the World–to me it was very similar to 168 Hours in changing my perceptions of how I spent my time/money. It was nice to keep that in mind when I started reading FIRE blogs, because while I am frugal in some aspects, I also like nice, high-quality things from time to time.
FIRE is definitely not for me. I quickly realized that the main way they save money was doing everything themselves, and I have no interest in spending my time baking from scratch or raising a vegetable garden to save on groceries. And I’ve tried being more handy around the house and it generally ends in disaster. For example, we had no working locks on any of our doors for two days after moving into our new house because I was convinced after watching a few YouTube videos I knew how to change our locks. Not only did I fail at it, I couldn’t properly reattach them after taking them off. (Luckily there was a massive snowstorm so the burglary risk was low…though that’s also why it took a while to get locksmiths out.) After a few epic fails comparable to that, I realized how presumptuous it was of me to assume the work of skilled tradespeople could just be learned from a youtube video. Anyways, I try to keep my major expenses low (mortgage, transportation costs), strongly question recurring expenses (daycare, loans, etc) to make sure they’re essential and competitively priced, save a sizable percentage on the front end, and otherwise don’t worry at all about how I spend the rest. And in the meantime, I’m lucky enough to love my job, consider my colleagues to be friends, and see no reason to have being able to quit as a major goal I orient my life around.
Actually, the main way people save money in the FIRE movement is doing exactly what you described as keeping the big expenses under control- you mentioned housing & transportation. Most people add in food as another big expense to have under control, as well as travel. I doubt that many people in the FIRE movement do a vegetable garden to save a lot of $$ in food though. I have been growing things for a couple of years and I view it more of a hobby. I don’t even think I’ve broken even when you consider fertilizer, proper soil, pots, water bills, starter plants, etc etc. So I would argue that you actually are adopting some of the main principles of FIRE.
If you love your job, that’s fantastic. I would venture to say that many people don’t (for the record, I love my job too). Being financially independent gives one options, rather than being restrictive. There’s a great podcast called “ChooseFI” (FI=financial independence) where the hosts often say that they aren’t militant about any particular concept in the FI community except that you take action, self-reflecting on what truly brings value to your life, rather than being a passive actor in your own life stage.
As an aside, I never thought I would be so evangelical about the FIRE movement (I’ve written some other comments up above). I think it’s refreshing to write here because this isn’t the typical media outlet in which people can have an axe to grind on anything.
Love this. Two immediate thoughts: 1. I used to struggle with money as “bad” until a friend pointed out to me that you can’t give what you don’t have. Being financially independent means you have the ability to help others and give in ways you wouldn’t be able to otherwise. 2. I heard a woman on a podcast recently praised for her goal of retiring at 50. She described focusing on work now, not having children, and saving money so she could retire early to travel etc. I tried to imagine this and honestly I wouldn’t want to retire at 50, I’d be incredibly bored! I enjoy staying busy, and, yes, working…. so I don’t know that I’ll ever truly “retire” regardless of my savings.
I am not frugal at all but I enjoy reading about other people who are. I love my job (physician) and have no interest in retiring early. I am more interested in making money so that I can pay for added conveniences/services in my life. It gives me so much more pleasure to pay for a handyman to do a job properly instead of trying to do it myself. The main thing I want to prioritize spending on is travel. I also am hugely bothered by having things “wrong” with my house, so I will shell out for repairs without hesitation.
I also love reading about FIRE, I don’t plan on retiring very early but really try to keep our large expenses low and focus on spending money in ways that will add value to our life. Would I love a fancier, bigger, more well decorated house? Sure… but it won’t add much joy into my life and will only make more work for me. A nicer kitchen stove though, yes! A more enjoyable cooking experience, which I do every day. 🙂 I agree that FIRE literature is way too white and male.
Very insightful especially about how to interpret ‘laziness’. I read the Frugalwoods blog regularly and I like it but don’t take it as gospel. A lot of the case studies feature people who seem to want to retire without knowing what they actually want to do with their time. To what end? Personally I think it’s a balance of present versus future self. Without getting morbid, I don’t know that I will be around to enjoy retiring at 50 and the work I’d have to do to get there would make my present life miserable. It took 15 years of hard graft just to become middle class. That was while doing some amazing travel, so maybe I could have done it in 10 without, or in 5 if I’d gone into a more lucrative field but I don’t regret it -y choices led to my life/family today and provided amazing experiences. I definitely promote frugality but not at the expense of happiness. Work can be an integral part of a happy and frugal life, and work doesn’t have to be about being a cog in the capitalist machine.
@RG – yes, the case studies are interesting. I read the recent one about the young couple where he’s an assistant coach. I got the sense that one reason the wife was interested in early retirement is that he traveled a lot and she was (understandably!) lonely taking care of their two young kids. It sounded like he liked his work. Again, nothing wrong with building up assets, but the family might be happier if she was able to go back to work doing something she found interesting. Even if childcare consumed all her income it might be worthwhile – but I know that’s not always a popular suggestion.
I have followed blogs regarding the FIRE movement since 2011. The general idea is that you save enough money so that ultimately you have the choice and freedom to pivot to something else you like to do. The comments about scrimping on the little things are valid though I think the movement is more about making a conscious decision about your spending habits, like get the $2 shampoo instead of the $10 one. As we all know, little spending here and there really adds up.
Great post. I grew up very frugal (cheap) but my husband did not and he actually started to rub off on me, and I can appreciate paying for convenience or even enjoyment. I have no plans to retire early, but I do care deeply about savings for the future, so we also try to manage the big things (housing/car mostly) so we don’t have to sweat the small things and still save enough for my comfort.
For many reasons the Frugalwoods annoy me, so very very smug in their perfection.
I do LOVE The Frugal Girl and read every day.
@Ana- the Frugal Girl is awesome! I think your situation sounds like a good split with your personalities. You get the big stuff right so you save, and then you have some space to spend without him feeling reined in.
Why pursue financial independence when you enjoy your work? Because sometimes, your ability to earn an income is taken away from you.
My husband was a commercial pilot for twenty years. He knows of several pilots who developed health conditions that led to them losing their FAA medical certification well before traditional retirement age. Just like that, their ability to earn an income from flying was gone.
With that looming as a possibility, we set a goal early in our marriage to reach a point where income from aviation wasn’t necessary for our financial survival. Through the growth of a side business, we achieved that goal. That enabled my husband to retire from commercial aviation three years ago — by choice, not because ill health forced him to do it.
Achieving financial independence can be a lot like packing a parachute: maybe you’ll never need to deploy it, but if you do, you’ll be grateful to have it at your disposal.
@Jenzer – this is definitely something to consider. I just read some interesting statistics on the number of people in their 50s/early 60s who wound up retired before they planned. It’s high. Sometimes it’s health, or a family member’s health, or a job loss situation. And as you point out, if you’re in a business that requires you clear a very high health bar, this might be even more iffy.
I enjoy some FIRE bloggers and have even written posts for a few. My husband and I are at retirement age (he’s in his 70s, me in my 60s) and still enjoy working, at our convenience– but then, we always did. We figured out a way to work our own hours back in the Eighties, and never stopped. We manage the time/money equation by living fairly minimalist without depriving ourselves.
My irritation with the FIRE brigade is that they are very us-them: bloggers like Mr MM make sweeping negative generalizations about everyone else. Anyone not in the FIRE world wastes money, is materialistic, owns a brand new car, eats out all the time, doesn’t care about the climate, etc., etc. FIRE readers, on the other hand, are a rarified group who like to think they’re very special. It’s a good marketing strategy to attract readers, I guess. I find it snarky and condescending. Still, I browse FIRE blogs and find interesting themes sometimes.
@Louisa- yes, a brash persona can be a good way to attract readers and make them feel like they’re part of the “in” group. There’s a lot I probably could learn about marketing from that, but I also don’t think I could sustain it, long term. Oh well!
Budgeting allows you to be frugal and put money towards things that are important to you. I am frugal and very rarely spend money on vacations. I brown- bag my lunch almost every day. However, I budget for house cleaning and kids’ school lunches (buying time) and a trip to the hair stylist every 6 weeks (for cut, color and highlights). These things may be splurges for others, but are a necessity for me. I loved your book “All the Money in the World”. It really started to help me to see money as a tool, and not feel guilty for spending it on some things that seem frivolous.