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Frugality Vs. “Big Wins” – Why You Shouldn’t Care About Either

in Money Basics, Rants

frugalilty-vs-big-wins

Remember the good ‘ole fashion back-and-forth between two personal finance giants earlier this year?

Ramit’s big wins vs. Trent’s frugality?

It started with the word “short-sighted” and ended with a challenge.  In between, things were kept lively with over 250 comments between the readers of the two sites.

Who won?

Depends on whose blog comments you read, I guess.   Or maybe the cheesy-but-true answer is that in shining a big freakin’ spotlight on the issue, everyone ended up winning.  Alright, so maybe that’s a little too cheesy.

Over the months that followed the debate, I bounced back and forth between the two sides.  My identity crisis deepened as I began blogging publicly.

Crap… am I going to be a frugality person?  I’ve been living that life for the past year, so I fit in nicely.  But wait, I don’t want to ignore the big wins.  I’ve negotiated by credit card rates, too.  I love the idea of capitalizing on a “big win” opportunity…

NEWSFLASH:  This isn’t a war.

I don’t have to choose a side.  Neither do you.  Instead, let’s stop caring about either option.

Neither side has all the answers. Both writers know this.  Ramit constantly refers to “mercilessly cutting costs” on things that you aren’t passionate about.  Wouldn’t reasonable frugality help there?  Of course, it would.  While, Trent’s primary response to the “challenge” was to take two hours and do both (agreed).  Makes sense, as Trent regularly blogs on increasing income, negotiating big purchases, and developing your talents/skills, as well.

How’s this?  Don’t let yourself (like me) be distracted by the stereotypes.  Instead, drop a bomb on your financial life.  Blow the shit out of it. Simplify, but cutting any that doesn’t survive.  Eliminate anything that’s not absolutely essential.

You can’t frugalize everything. You’ll go insane.  On the other hand, one day of negotiating doesn’t eradicate five years of neglect (I know firsthand).

The more we simplify our financial lives the more efficiently we can balance both sides of the coin.

Let’s focus our time on those activities that radically help defeat our limiting beliefs.  The empowering motivation of a ‘big win” is quickly lost if it doesn’t change behaviors.  Let’s strive to leverage these “big” moments to create a series of small (yes, sometimes frugal) behavioral changes that will build a foundation for the rest of our lives.

Am I 5 months late to the party?  Yeah, well it’s taken me this long to really reflect and carve out my own stance.  Some of us think slower than others. What’s your stance?  What’s worth focusing on for you?

{ 22 comments… read them below or add one }

Stephanie PTY July 28, 2009 at 11:17 AM

Great insight into a mammoth debate. Some people make more than enough to ignore most frugality tips, and whether they actually should or not depends on the lifestyle they want to lead. Others are in a position where they need to do absolutely everything they can – big wins and little frugality hacks alike.

But I think it’s like the Stephen Covey story about the big rocks and the sand in the jar. If you fill the jar with sand first, you can’t fit any big rocks in. But if you put the big rocks in first, you’ve still got room left for sand. Take care of the big wins first, and then start some frugality hacks to fill the space in your financial life.
.-= Stephanie PTY´s last blog ..Moving: Finding an Apartment, Part 1 =-.

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MoneyEnergy July 28, 2009 at 11:22 AM

Wow, thanks for the reminder about that great “rocks in the jar” story. That’s one of the most motivating metaphors I’ve ever heard. Work on the essentials first, then you can always fit everything else in later…
.-= MoneyEnergy´s last blog ..When To Buy US Dollars and How to Take Advantage of the Canadian-USD Exchange Rate =-.

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Baker August 1, 2009 at 10:18 AM

As always Stephanie, great insight on the Covey story.

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MoneyEnergy July 28, 2009 at 11:20 AM

I agree; I think using any and all strategies that work is a good idea. The key thing might be to just not let yourself backtrack or erase the savings gains you have made. And if you do slip or fall behind, to just get back up and going ahead and make the change so that that won’t happen again if possible. On my recent trip to UK I negotiated on my hotel costs, then reflected afterwards that my plane ticket far outweighed the effects of even doing that. But I wanted to make sure I had a good quality flight – that’s not something I’m willing to go extra cheap on. Point is it’s good to use both strategies.
.-= MoneyEnergy´s last blog ..When To Buy US Dollars and How to Take Advantage of the Canadian-USD Exchange Rate =-.

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Studenomist July 28, 2009 at 11:37 AM

My point of view is to give both a try. I’m saving money this year by not driving to school which I guess is a “big win.” On the other hand I use the money saved to travel around with my friends/girlfriend when I get the chance. Then there are days where I save a dollar by making my own coffee. Then on that same evening I may end up at a dinner spending $100!

You can’t live a life where all you focus on is “big win” or “frugality”- the key is to integrate both into a life of no regrets!

Well I hope that all made sense lol.
.-= Studenomist´s last blog ..Best iPhone & iPod Touch Apps For College Students Part 1 =-.

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Brian July 28, 2009 at 11:40 AM

Baker,

I think about that debate a lot because it does represent a conflict inside of me over how i want to spend my own financial efforts. Furthermore, it was a brief pissing contest between two people i really like and respect.

For me, the big wins take paramount. I live the typical lifestyle of one of Ramit’s readers. I will never NEED to live so frugally that saving $5 on detergent will impact how i look at my bottom line. Then again, Trent had a great post this week about when to be frugal and splurge. My roommate and i have a maid service every few weeks and it costs us a decent chunk of change. However, my time spent working or doing things for pleasure has a higher value than the amount i spend on the service.

Egads, i am conflicted as well. I will say, EVERYONE SHOULD take care of the BIG WINS. While EVERYONE can CHOOSE to be FRUGAL to whatever DEGREE suits them.
.-= Brian´s last blog ..Outstanding Items: My New Car (sort of), 401(K), and My New Headphones =-.

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Baker August 1, 2009 at 10:19 AM

I can see your points, although I certainly value frugality slighter higher than you!

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Kosmo @ The Casual Observer July 28, 2009 at 12:45 PM

Like many things in life, I think personal finance is an issue where you should understand what the experts have to say, take this information along with your own experiences and insights, and mold your own solution.

I think “blowing it up” occassionally is not a bad idea. Over time, you could definitely lose touch with what you are doing with your money.

In my own personal situation, I’m frugal to a point. Will I buy generic Chicken Noodle soup? No – the bang for the buck just isn’t there. Will I cut my own hair? Yes, although that’s really more about convenience than cost. Will I shop online for books and DVD? Yes – this is actually more convenient (easier to search Amazon than to go to Wal Mart and scan the shelves) as well as being cheaper. I’ve recently stopped buying new hardcover books. I realized that I can about 6 weeks and the hardcover pops up cheap on Half.com. With life as busy as it is, it’s rare that I’d read the book in those 6 weeks anyway, esp with the current backlog. Hence, I loose absolutely nothing by waiting. I do invoke the Grisham Exception to this rule each year (and probably the Dan Brown exception this September).

In the end, you have to map a path that makes sense for you. The key is not necessarily the details of the map, but that you have a map as your cut your way through the financial jungles of life.

I didn’t realize New Zealand had tigers.
.-= Kosmo @ The Casual Observer´s last blog ..A late summer night’s dream =-.

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Baker August 1, 2009 at 10:20 AM

New Zealand has tigers wandering the streets. That’s why everyone drives cars.

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Amber July 28, 2009 at 1:22 PM

I think the crux of the “answer” to the debate lies in your current state of affairs. Ramit’s audience (the selfish spender that sucks at frugality) probably needs to be told that shopping at TJ Maxx is better than paying full price at the upscale stores. But Trent’s audience already determined a long time ago that Target or thrift stores is cheaper than TJ Maxx! It really comes down to Ramit’s point about spending on the things you care about and cutting spending mercilessly on the things you don’t care about. And I think that needs to be coupled with your own value system in regards to the time and effort needed to do something and how that effects other areas of your life.

To me, the most important thing is knowing where your money is going every month and making conscious decisions to spend it that way!

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TheDebtHawk.com July 28, 2009 at 2:55 PM

You are absolutely right that both approaches can and should be used together. However, I think that the “Big Wins” philosophy hinges on the fact that a person’s time and energy is limited and therefore make sure that you focus on the Big Wins first. If you have the ability to do both, great, but if you don’t, then focus on where you can get the biggest bang for your buck.
.-= TheDebtHawk.com´s last blog ..Should I Pay Off Car Loan Using 401(k)? =-.

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Eden July 28, 2009 at 2:55 PM

Very well said! The more I learn, the less dogmatic I am becoming with regard to all things personal finance. There really are very few hard and fast rules, of course understanding the few rules that do apply is critical.
.-= Eden´s last blog ..5 Frugal Golf Tips to Make the Game Affordable Again =-.

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Kevin M July 28, 2009 at 3:19 PM

Wow, was that debate really 5 months ago? Time flies.

I see both sides here. However, like some “Trent-ites” argued, a lot of people that read his site already take care of the “big wins” and they are looking to do more. I fall into that camp for the most part. I believe this whole thing started over the infamous homemade laundry detergent and how much money Trent saved, but to me it’s about more than the money. Re-read the post about how Trent made it and you can see how he enjoyed it. For me, making my own detergent is about knowing what chemicals my family is exposed to rather than trusting a big corporation.

How about this for a big win – we’re shopping for new appliances – specifically a dishwasher, stove/oven and microwave that mounts above the oven. We looked at the big box home improvement stores and could get everything for about $1200-1300. Then we went to a scratch and dent store we’ve bought from previously and he’s going to get us the same brand-name appliances for $700 total. Not bad for a couple hour’s work and negotiation.

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Baker August 1, 2009 at 10:22 AM

Exactly Kevin!

A large percentage of people utilizing frugality ALREADY take care of big wins. I really think the key is leveraging the momentum of these bigger wins to make the smaller, frugal changes…

Glad to see we connected on this one :-).

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kenyantykoon July 29, 2009 at 12:39 PM

being frugal is a fact of life that i have to live with for the time being- being a broke ass student and all. But this does not stop me from hoping and working for the time that i will have more cash that i could ever use in my wildest dreams. Idont know about y’all but i dont want to live my life always thinking about money, or the lack of it. Since the end justifies the means being frugal is a necessary evil.

.-= kenyantykoon´s last blog ..ARE COMMON STOCKS YOUR CHOICE INVESTMENT VEHICLE? =-.

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Lakita July 30, 2009 at 12:47 AM

Time flies! I can’t believe this was 5 months ago. When following the debate I remember thinking that I would apply both. Though, I must admit that I lean towards the “big wins”, but I see the value in the frugal hacks that Trent provides.

Either way, if your not disciplined to save/invest the money saved (earned?) from big-wins or frugal hacks then it’s a big waste of time. Perhaps the assumption is people employing big-wins or frugal hacks are conscious enough to make smart decisions with the increased cash flow.
.-= Lakita´s last blog ..abunDANCE =-.

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Baker August 1, 2009 at 10:25 AM

You’ve pointed out one of my only issues with big wins. I don’t think they “stick” as much as frugality.

What I mean is that ONLY relying on big wins might mean that you blow the money saved/earned on these, because your day-to-day habits haven’t changed…

That whole subject itself might be post worthy in the future.

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Josh Moore July 30, 2009 at 8:35 AM

Hi Baker,

Another great post! I like to think personally that the results lie in being content with where we are in life, and the simple pleasures. We can spend within our limits, and both big wins and small wins help to achieve this goal.

Ultimately it is like the cash flow and cash growth aspects of a business. Cash growth (big wins) make a dramatic impact of personal wealth over the long term, but cash flow (small wins) are what keep things operational and effective on a daily basis.

My opinion is that as individuals we need to find the best of both for our personal situation and apply them! Without application, both are useless.

Keep up the excellent work!

:)

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Baker August 1, 2009 at 10:25 AM

Great point. Plays off comment above, nicely.

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Matt Jabs July 30, 2009 at 7:56 PM

As usual… Adam hit the nail on the head!

I do both, I do both – I figured I’d say it twice… once for each side. :-)
.-= Matt Jabs´s last blog ..Debt Reduction – Emergency Fund Savings – The Balanced 75/25 Method =-.

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Chessiq August 1, 2009 at 1:10 PM

I think it is possible for a person to focus on the “big wins” and ignore “frugality”. I do not think, however, that one can be frugal without having gone through the “big wins” process. A truly frugal person, by definition, has already implemented the ideas in the “big wins” personal finance, or is simultaneously employing them together with the “frugal” personal finance.
Thus, a frugal person will be better off than a “big wins” person, since the “big wins” approach is a sub-set of frugality. QED
.-= Chessiq´s last blog ..CPA Exam REG preparation (20 days to go) =-.

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Robert September 18, 2009 at 3:16 PM

Good point yet again! Nailed it. Love the tigers too.

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