Frugality isn’t easy but it is lucrative. Many things in life aren’t easy but they are lucrative. Exercising and eating right aren’t easy. Going to college isn’t easy. Committing to one woman isn’t easy, but its lucrative. For some reason people in this instant oatmeal culture think that if it isn’t easy that it isn’t right. This is how marketers get all your money. They convince you that you can lose weight or make money in real estate or set up a click funnels website easy and get rich. They prey on people’s need to find an easy way to do something. Well, when it comes to money (and marriage) you have to go all in on what isn’t easy. Easy riches are a myth.
Everything you think about frugality is wrong
When people think of frugality they think of cutting out their coffee or buying less pairs of sneakers. Yeah that might help you save a few thousand but its not going to SHIFT your financial situation. If you want things to shift you have to make a shift. If you want to be an anomaly you have to ACT like an anomaly.
The goal here is to get you to a point where you exist in surplus so you have cash to go on offense. Playing defense might keep your money but you don’t get rich without going on the offense.
One example of this for me is a guy I know worth $200m. It always astonishes me that this man gives out loans secured by real estate in the millions, at a whim, but wears the same watch and clothes and has us housed in industrial office space as opposed to the Class A space we should be in. Every time he cuts a seven figure check (at 12% interest and a participating equity ownership in the opportunity) I think “man you could have bought a Bentley with that “, or “man you could have bought a Rolex with a fraction of that”.
From observation, I learned that you don’t use money to show you use it to capitalize. When you get to his level you capitalize on the high lifestyle of other wealthy people that leave their assets exposed (I have stories for days). After seeing this man make money moves, real money moves not Cardi B money moves, I cut off consumption cold turkey so I can start to capitalize.
I realized that I lacked capital not because of race or parents but because I spent all my money trying to compete. The watches, to impress others. The shoes, to impress others, etc etc are all the capital that I needed to build my empire. Armed with this new outlook I legit do not spend money. I stopped wearing watches, I stopped looking for new cars to buy, I stopped looking at homes that would require me to obligate 50% or more of my working income. I am willing to be talked about for not having the freshest kicks or the most fancy apartment so I can acquire what matters.
I want to say that being frugal is just the first step toward wealth building. You don’t always have to live at the BOTTOM of your means you just have to do that to get started. When you want to level up from where you land though you might have to scale back down. But that is all subjective. As your means grow so does your frugality. Frugality for me at 31 doesn’t look like it looked when I was 19 re-heating 99 cent burritos from Taco Bell.
If you want to be frugal attack these first
The BIGGEST thief of wealth are your MAJOR expenses. This is your rent/mortgage and your car note. The second thief is your showy lifestyle. Your lifestyle siphons off what is left AFTER you pay the biggest expenses. Some people call this “discretionary” income but if you don’t come from wealth none of your income should be “discretionary”. Every single dollar should have a purpose and that purpose is to go out and bring you more dollars not more recognition from haters on the gram who click like and then plot on the one up.
Part of me wanted to title this after the Gary V rant where he stated that buying the Porsche will ensure that you never own Porsche or any other business for that matter. This was reminiscent of my affordable luxury post. When you are just getting started you are likely dependent solely on your own income to build wealth. It takes money to make money in most instances, well at least it helps to have money, and your job is the first line of that capital. Like Jim Rohn says, you take some of your earned income and turn it into capital so you can become a capitalist. The problem is that if your working income is tied up into looking like you are successful in your Porsche you have zero to no discretionary income to actually become successful. You can buy the Porsche but you buy it from the income that the asset generates. Assets buy luxuries.
The people that lost big in the housing crash weren’t the people who merely owned homes. It was the people who took the risk, bought at the top of their budget and prayed that appreciation would bail them out. I am sure that you know people who remained content during the run up and as a result they still live in the same homes, they didn’t get foreclosed on, and they probably even paid their homes off. All while the world was crumbling down around others. YOU have to position yourself so that you are safe regardless of what is happening in the economy. You do that with contentment, frugality, not tying your working income into liabilities, and being smart enough to evaluate when the masses are acting in irrational exuberance (enter bitcoin).
The middle class buys liabilities that they think are assets
Your house is not an asset. A house can be an asset but if a house requires YOU to go to work to pay the mortgage (if it takes money OUT of your pocket as opposed to putting money in) it does not serve you, it is not an asset. Your car is not an asset. Especially if you own more car than is required to get from point A to point B. The base function of a vehicle is transportation. Anything you spend over the base amount required for transportation (lets say a Honda civic) is waste. Anything you spend over the base is robbing you of the capital required to participate in America.
The key takeaway here is that its not the small expenses that are eating you up but the big ones. It is tough to live below your means when it comes to housing because you do so at the expense of safety, I get it. But it’s not forever. Live like no one else so later you can live like no one else. Your later will come but if you never do the first part you will just get stuck like the masses. Looking good but not being good.
Be great, invest well,