Wednesday, November 26, 2014

Clare K. Levison: Frugal Isn't Cheap

Unless you're serving a lengthy prison term or living in extreme poverty, Clare K. Levison's Frugal Isn't Cheap: Spend Less, Save More, and Live BETTER (Career Press, 2013) will have something for you, some idea or angle that will deliver. 

I've gotten to the point where I enjoy these kinds of books, and this one is part of the new wave. In addition to pragmatic advice specific to living in the USA, some ideas are of international pertinence. And then there are the vignettes: little examples drawn from the financial lives of such characters as Rembrandt, Thomas Jefferson, Mark Twain, M.C. Hammer and Mike Tyson, plus financial lessons learned directly by Levison (such as raising chickens in Virginia). 

Philosophy-for-living crops up from time to time, too, with little statements to live by that are sort of like Kong Fuzi (Confucius) aphorisms. All of these elements work together.

Levison's biggest challenge for most readers is savings. She wants people to aim for a savings rate of 20%. However, she has plenty of ideas for how to move in that direction, even when starting from 0. Keep in mind, she notes, that Americans on average save about 4% between paychecks, so anything above 4% is better than average, and a lot better than being in the red. Starting from scratch, the first thing to do is to accumulate $1,000 in savings. Next, aim for a regular 5% savings rate, and so on, until you can boost it to the full Monty.

Levison has a little game idea: each day, divert one typical expenditure into a savings jar or piggy bank, and eventually dump that all into savings (page 89). Also, "pay yourself" at the beginning of the month, not at the end of the month. "Pay yourself" really means: dump a percentage of money into savings immediately and then don't touch it.

A couple of other points. Emergencies: "if you can plan for an event, it's not an emergency" (page 93). Windfalls: divert 80% of such events as tax refunds into savings and spend the rest.

Easy savings: don't order soda or other junk drinks when eating out. (I concur: drink water for free and spend only on good stuff like coffee and booze).  Don't overdo coupons or you'll be buying too much crap just because it's "discounted." Avoid malls if you can. 

Online banking: do it, and check it regularly. Same for any credit cards or other financial type accounts. 

Decline overdraft protection (this is especially important for students and anyone else living from paycheck to paycheck). 

In the philosophy of life department, Levison encourages people to write letters, notes and cards. I concur. She also has a lot of ideas for charity giving (a mixed approach).  Also: network, use social media, have a business card, and so on. No one is an island!

By the way, from Levison's point of view, automobiles are basically worthless except for function: "a car is not an investment . . . a car is an expense . . ." (page 126).

And here are some good existential zingers: "You are your greatest asset. You are your greatest liability" (page 147). "The thing holding you back is you" (page 149). And finally: "The money isn't the variable; the person controlling the money is. . ." (page 174).

Oh, there's a whole lot more to be found in Frugal Isn't Cheap: Spend Less, Save More, and Live BETTER  - these are just some of the things that I found particularly interesting. No matter what you think, "if you have the cash, you have the power."

Today's Rune:  Breakthrough. 


Barbara Bruederlin said...

She sounds like a woman after my own heart! The thing I love about this sort of personal financial management book is that they are so sensible. No magic bullets or mumbo-jumbo.

Charles Gramlich said...

Sounds like some good points. I should probably read something like this.

Adorably Dead said...

Sounds like a book I need to check out, and soon. I'm very disorganized with money and I think that's my main problem.

Also, Happy Gorge Yourself On Turkey Day. I hope the Tryptophan Fairy treats you kindly. ;p

the walking man said...

Oddly enough being able to save is being able to tell the difference between wants and needs, I need gas for the furnace, i may want logs but the fireplace is inefficient.

Most get discouraged in savings because the investment return (interest rate) is artificially held low. don't save money for interest rates, it's taxable, save the cash because a 4 figure bank account looks better than a three, a five better than a four and a six better than a five.

Don't save shit until you are debt free, saving is easier when you're not paying a shylock bank.

Stay liquid and f you have to play in the stock market cash out each time it reaches a new high and will fall back below your cash out point.

I am not cheap with others but I am also not willing to buy anything for myself that I already had and gave away or know it is a whimsy. Rather keep the digits in the bank account, it is a form of wishful thinking I may be able to pay for my grand kids college.

Erik Donald France said...

Thanks all for the comments ~ much appreciated ~ happy Thanksgiving ~ cheers ~!

jodi said...

Erik-some great tips there.. I am a terrible saver, but by investing in real estate, I am forced to make a payment and therefore eqrue equity!