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Frugal Today, Rich Tomorrow

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Are you frugal? Or are you constantly looking for the next best thing to buy? Are you living in such a way that will allow you to grow rich in the future, or are you buying up everything that you can now, only to limit yourself in the future? Sometimes it can be hard to be honest with ourselves, but if we don’t take a hard look at our habits, then we will most likely never prosper in our later years.

Frugal Today

20131218 - frugalWhen I was younger I had two big screen TVs, a home theater surround sound system, and a custom audio system in my truck. Beyond this, I had my heart set on earning an extra $500 a month so I could lease a brand new Mercedes. My mindset was definitely not on frugality. In today’s society though, it’s really not surprising that this is how I started out. TV ads show us brand new cars, houses, and stylish clothing – and the message is clear – each of this things would make our peers respect us more and will also make us much happier. I believed it then, but today I think it’s total crap.

The media wants you to believe that frugality is the same as being poor – and poor people are always miserable. However, I had an incredibly fun day yesterday and it barely cost me anything. The warm weather (relatively speaking) has finally made it up to Michigan, so I was able to move some furniture back into my porch and sit out in the sunshine will listening to a Detroit Tigers game on the radio. Later in the day, I picked up all the sticks out of my yard and used them to make a campfire while I grilled chicken. It was a delightful evening and almost anyone could have done it. Spending money does not necessarily make you happy.

Rich Tomorrow

rich tomorrowThe other great thing about frugality is that it can make you rich in the future. The typical message today is that you will always have a car payment, house payment, and credit card debt, but what if you didn’t have any of those things? Don’t you think you could get pretty wealthy in a few years? Many of you know that I am currently trying to pay off my house mortgage. If I am successful, my mortgage will drop from $53,500 to $0.00 in a matter of 10 months. So what happens when it is gone?

If I keep living in the same way and earn the same amount of money, then I will likely have at least $50,000 extra dollars each year. Well, around my area $50k could buy me a house that I could then rent out for $700 a month. If I continued to live frugally and put the rental money toward my future investments, then I could buy 12 or more rental houses within 10 years and have absolutely no debt. The equity in these houses will be about $700,000 and my rentals will provide a cash inflow of $7,000 a month (which equates to $84,000), which is plenty to live on from year to year.

At this point, I will still be less than 40 years old. I could continue to invest for the next 30 years and increase my earnings to millions! And, all it takes is a little bit of frugality. Do your best to ignore the mainstream media. Car leases and big houses to not bring happiness – having the freedom to do whatever you want in life will make you much happier, and frugality is just the beginning of this financial freedom.

Are you frugal today? Do you see riches in your future?

Money

AUTHOR Derek

My name is Derek, and I have my Bachelors Degree in Finance from Grand Valley State University. After graduation, I was not able to find a job that fully utilized my degree, but I still had a passion for Finance! So, I decided to focus my passion in the stock market. I studied Cash Flows, Balance Sheets, and Income Statements, put some money into the market and saw a good return on my investment. As satisfying as this was, I still felt that something was missing. I have a passion for Finance, but I also have a passion for people. If you have a willingness to learn, I will continue to teach.

11 Comments

  1. Great article!!!

    • Thanks! I recently began to realize how important frugality is for my future cash reserves and income. I just had to write about it!

  2. You’re right. There does seem to be a negative connotation attached to the word frugal. I love that you embrace the term anyway. I prefer to describe myself as thoughtful and conscious of spending. I am certainly not a penny-pincher or cheap, so I reject those sort of associations.

    • I don’t mind the negative connotation. πŸ˜‰ People will be jealous of my frugality when they are struggling to retire on their meager cash reserves.

  3. The media does not beat the frugality drum! They want you to buy big and buy often. Those who can resist those urges can certainly do better in the long run. Thanks so much for the insightful post!

    • Ha, the media definitely does not beat the frugality drum. πŸ™‚ By following the crowd in our society today, you are only being lead toward debt and poverty. Go against the crowd, be weird, and experience freedom, prosperity, and wealth! πŸ™‚

  4. Over the years I’ve been variously flushed with cash and pretty darn broke. What I’ve found is that having cash doesn’t make me necessarily feel “rich” – just safe and secure. Being broke is the opposite – it makes life feel risky. It makes me worry.

    So in terms of frugality, the thing I love about it is simply the security that having money in the bank brings.

    Even if I had large sums of money in the bank I still think I’d struggle to spend it without guilt.

    So the “riches” I look forward to are simply increased freedom – both in terms of my life options and in terms of not having to worry about money. But I don’t see myself buying a brand new car or a vacation property in the Caribbean!

    • At this point, I need to be careful not to hoard my money. It took a little bit for me to unload some cash toward the mortgage, but I am certainly glad I did. Pretty soon, that bill will be gone and I will have so much more freedom! πŸ™‚

  5. Very inspiring to see your plan working out so well for you. Wow houses for $50K? The wife and I really need to get out of Los Angeles haha.
    We have the right mindset in place, we just need more time and compound interest to nurture our frugality and turn it into a comfortable early retirement.

    • I love it when my readers are inspired! Yes, houses do come cheap around here – especially if you can find a foreclosure deal. I have actually seen them for as low as $30,000, but it did need quite a bit of work. Nice to hear from you Carlos, and good luck with your plans of early retirement! πŸ™‚


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