Apr 082016
 

Before upsetting anyone let’s define cheap:

CHEAP — Buying inexpensive or low quality despite being able to pay for the higher quality item.

Cheapness can be good or evil. The latter can damage reputations, friendships, the economy, and/or personal health. Good cheapness can lead to financial freedom.

Examples of evil cheapness:

  • Postponing preventative medical care
  • Eating low quality food
  • Wearing poor-fitting clothes
  • Bailing on social situations
  • Foregoing international travel

Examples of good cheapness:

  • Fixing things that break
  • Bringing bag lunches
  • Biking/walking instead of driving
  • Drinking water (instead of sugar drinks)
  • Using the library

You’ll notice that all the good cheapness examples have secondary benefits related mostly to health and/or personal satisfaction.  Now that we’ve defined cheapness let’s call it frugality. But why bother with it?

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Sep 132015
 

Imagine that instead of buying that expensive thing that you can probably live without, you took your money and invested it instead. Depending on your age and investment skills I’d say over a lifetime that money could easily triple. For example:

$10 invested for 25 years at 7% return = (10*1.07^25) = $54.27

Which in today’s dollars is $36.81. Lets round it down to a conservative $30.

This means that a dollar saved today will became three dollars in 25 years with proper investing. This isn’t anything new, we all realize that compound interest multiplies your cash like rabbits. So I’m going to draw the opposite parallel. Spending money is like murdering those rabbits. Not only do you murder that rabbit, but you murder all future offspring of said rabbit. This is the part most people choose to ignore (the spending part, not rabbit murdering. I don’t condone murdering rabbits unless you are really hungry). Every spent dollar is one that can’t be put to work making more dollars. Continue reading »