My Family Finances

  • About The Author
  • Contact
  • Blogs I Read
  • Policies and Disclaimers
  • Family Money Answers

Frugalistas Know Better Than Income Over-Acheivers

06/14/2012 by John 19 Comments

saving and spending

saving and spending (Photo credit: 401K)

Generally speaking, I’d say that the land of personal finance blogging is a land of harmony. There are few disagreements about the merits of various decisions, but not perfect agreement. For example, let’s say that I want to increase my savings; should I focus on cutting the frills from my budget or pursue new sources of income? Although most writers would agree that both are useful, bloggers tend to split into two groups: Frugalistas and Income Over-Acheivers (I needed a name so I made one up).

Frugalistas are the group of folks washing their hair with baking soda and reusing plastic bags. They shun my excessive use of un-rechargeable batteries and penchant for buying new pants when I get a seam rip. I won’t even go into my recycling of whip cream containers instead of reusing for food storage. You can watch them in action on their shows on TLC. The goal is to cut out all unnecessary spending and live  life on nothing but soda and free potato chips acquired through a 4 month stash, totaling 70 coupons. It’s a lifestyle of unending spending cuts.

Income Over-Achievers are the bloggers always talking about something called passive income, which is billed as earning money for doing nothing, but in reality translates into working multiple jobs, that added together, equals one second job. They extol investing, rental property, blogging for money and entrepreneurship. These guys are retiring at 55, because their bodies aren’t going to handle one day of work beyond 56. It’s a lifestyle of unending income acquisition.

My dilemma is that I find sense in both points of view. I do have purchases that are excessive. I can’t deny that without them my budget is better off, but those purchases do make my day more enjoyable. On the other hand, who can argue against earning more money? I have plenty of talents. I could earn a little extra money, keep my frilly budget and actually increase saving at the same time.

I spent a little bit of time over-analyzing this financial decision and determined that, in the end, frugalistas have the stronger position. Here’s why you ought to consider cutting your budget instead of expanding your income.

Cutting Your Budget is Tax Free

You know the drill. The more you make, the more they take. By “they,” I mean the people writing all the laws and receiving free healthcare for life  and working only  about 25% of the year; government.

At the very least I’m looking at 14% for employment taxes, 8% for state income taxes and another 15% for federal income taxes. It doesn’t matter how awesome my revenue per hour looks, by the time I subtract expenses and give the government 1 of every 3 pennies earned in income, my hourly rate is going to be much smaller than the check I’m cashing.

On the other hand, it’s tax free to cut your budget. One dollar of budget savings is, at a minimal, one full dollar earned.

It Takes less Time

Most budget cutting takes little or no time at all. If I wanted to cut out the occasional cup of McDonald’s coffee, all I have to do is not buy one and I’ll save a few minutes in the drive-thru as well. I’ve seen extreme couponing so I know that pinching pennies can be a time drain, but earning money always takes time.

Let’s take blogging, of which, many bloggers would agree can pay well. How many hours went into the content, creating the site, networking and commenting on other blogs? It might pay well, but it still takes a great deal of time.

Most People Have a Spending Problem

If the house is on fire, do you find more fuel for it to burn or do you try and put it out? Many people do have income generation problems and who couldn’t use more money? However, most people have a problem with spending. Budget cutting addresses that specific problem, but income earning could delay the health decision of moderation.

I believe there are merits to both approaches, but if you had to pick just one, I’d say frugalistas have a greater argument and I speak from experience. Over a year ago, my family had to find a way to make due on one income instead of two. We aimed at cutting out budget and earning more income to weather the financial storm. While we’ve managed to earn far more money from side hustles than I ever dreamed, it’s the budget cuts that have really had the largest impact; in total savings and time spent.

Where do you fall? Are you more of a frugalista or income over-acheiver? Where do you draw the line with each?

Get all the financial wisdom of My Family Finances sent to your email daily! Subscribe to My Family Finances by Email

Photo: 401kcalculator.org

Enhanced by Zemanta

Filed Under: Blogging, Family Spending

Comments

  1. SB @ FPR says

    06/14/2012 at 7:54 am

    I think I am both. I love saving but I don’t use baking soda and I do re use plastic containers. have side income and I do couponing through coupon sherpa.

    Reply
    • John says

      06/14/2012 at 1:29 pm

      I’ve never used coupon sherpa, but I’ll have to try it out. I usually do coupon chief for coupon codes. Perhaps a review of coupon sites is in order?

      Reply
  2. Kurt @ Money Counselor says

    06/14/2012 at 8:46 am

    John, love the dichotomy you’ve set up, nicely done. I think I tend more to the Frugalista camp. It’s an emotional thing. I simply feel better having cut my expenses by a dollar vs. having earned another dollar. One thing: If I, say, cut my electric bill by $3 per month by investing in CFCs, I keep getting that $3 (or more if power rates rise) for the life of those bulbs, without doing anything further. Automatic! If I earn an extra $100 one month through a side hustle, it’s generally a one-time bump. My time is required to earn $100 next month, and so on. Maybe that’s why I like cutting more than earning. The big argument for earning, in my mind, is the sky’s the limit! If one has an entrepreneurial bent, one’s life can be transformed. Expenses can be cut only so much–we have to eat and be protected from the elements.

    Reply
    • John says

      06/14/2012 at 1:31 pm

      I’m an entrepreneur at heart, so I’ll never stop trying to earn money from business ventures. However, I’ve noticed that cutting is far easier than earning.

      Reply
  3. Kylie Ofiu says

    06/14/2012 at 9:12 am

    Interesting thoughts. I am a bit of both, meaning I have created multiple streams of income (and some are passive, as in now they are set up I don’t need to do anything accept collect the income – e.g. royalties).

    But I also like to find ways to cut back and do what I can to live on less because ultimately no matter how much you earn, if you spend more than you earn or even all of your income you will never save.

    Reply
    • John says

      06/14/2012 at 1:33 pm

      I’ll have to stop by your site and see what those income streams are…ebooks maybe? While you can start off with a lot of work to earn a stream of income, there is still that build up of work in the beginning and for most things that I’ve seen, it’s usually a lot of work. There isn’t much out there that is truly passive and work equals time.

      I’m with you. Balance the approach.

      Reply
  4. John @ Married (with Debt) says

    06/14/2012 at 2:53 pm

    I agree that balance is the key. If you are so frugal that you are washing plastic bags, you have a very unhealthy relationship with money, probably worse than the overspender who doesn’t care.

    Reply
    • John says

      06/15/2012 at 8:40 pm

      Good point. I think society needs to break out of the mantra that it’s always good to save a penny.

      Reply
  5. Jonathon says

    06/14/2012 at 11:53 pm

    I completely agree that it’s easier to manage what you have than make money anew. Unfortunately most people think that there will always be opportunities to earn extra income, but experience tells me this just isn’t usually the case.

    Reply
  6. Miss T @ Prairie Eco-Thrifter says

    06/15/2012 at 10:35 am

    We try to find a balance. We save on what we don’t care about as much and spend on the things that matter. It seems to work quite well for us.

    Reply
    • John says

      06/15/2012 at 8:39 pm

      I think that’s really the trick. Focus on the things that matter.

      Reply
  7. eemusings says

    06/15/2012 at 8:17 pm

    I’m neither. I don’t want to work 24/7 on trying to bring in more, nor do I want to make my own laundry powder.

    I do agree with you that trimming back is tax free – the more you make, the higher your tax bracket, and second streams of income get hit harder (which I’m currently dealing with!)

    Reply
    • John says

      06/15/2012 at 8:38 pm

      Thanks for stopping by!

      Reply
  8. MoneySmartGuides says

    06/15/2012 at 9:52 pm

    I’m a little of both myself, but fall more into the income over-achieving group. My view is that I can only cut spending to a certain amount. With income, theoretically, my earnings potential is limitless.

    When making money you do have to take into account taxes, but there are ways you can shelter your earnings so that Uncle Sam doesn’t take as much as he would if you didn’t take advantage of the tax breaks.

    Reply
    • John says

      06/16/2012 at 2:26 pm

      Yes, the limited cuts and unlimited earning potentials cannot be overlooked. But, likewise it needs to be noted that time is not unlimited and making more money will almost always cost more time.

      Reply
  9. Jen @ Master the Art of Saving says

    06/20/2012 at 4:03 pm

    I think I’m a little bit of both. I try not to go too extreme either way because it just doesn’t sound appealing. Sometimes you just have to find your balance and do what makes you happy. 🙂

    Reply
    • John says

      06/21/2012 at 1:21 pm

      I think the middle of the road is the best place to be. I find it’s hard to be extreme when you have a family, because everyone needs to be on the same financial page when you are talking about everyone in the home.

      Reply
  10. Ginger says

    07/01/2012 at 12:56 pm

    My husband and I are grad students so basically that means we are not making much money so we need to be frugal. However, that frugalness during undergrad allowed us to be able to buy a duplex when we moved to grad school. That brings in another $4000 after expenses. Being frugal gives you the freedom to invest and be a income overachiever.

    Reply
  11. Karen says

    07/01/2012 at 3:49 pm

    I feel I have always been a frugalista. I wasn’t working full-time hours for almost a couple of years, so I had to be extra frugal during that time. I have been a side income earner for over 3.5 years doing a job that involves one of my passions.

    I would eventually like to increase my full-time job’s income, so I guess I am also an income overachiever. But it’s only because I want to save more money for a house, travel, an emergency and retirement, not buy something I’ll regret just because I can afford it.

    Reply

Leave a Reply Cancel reply

Your email address will not be published. Required fields are marked *

Sign Up and Get My Family Finances Delivered to Your Email

Enter your email address:

Delivered by FeedBurner

Search My Family Finances

Google
Custom Search

Recent Posts

  • Unexpected Home Expenses You Should Always be Prepared for
  • How To Avoid Constant Doctor Visits (Saving You Money In The Process)
  • How To Protect Elderly Parents From Scammers
  • What the Coronavirus Teaches us about Personal Finance
  • Tips to Eliminate the Stress from your Cash Plan

Archives

  • January 2022
  • October 2021
  • April 2021
  • April 2020
  • February 2020
  • October 2019
  • August 2019
  • July 2019
  • February 2019
  • January 2019
  • December 2018
  • October 2018
  • September 2018
  • August 2018
  • July 2018
  • June 2018
  • May 2018
  • April 2018
  • March 2018
  • February 2018
  • January 2018
  • December 2017
  • November 2017
  • October 2017
  • August 2017
  • July 2017
  • June 2017
  • May 2017
  • April 2017
  • January 2017
  • December 2016
  • October 2016
  • September 2016
  • August 2016
  • July 2016
  • June 2016
  • May 2016
  • April 2016
  • March 2016
  • February 2016
  • November 2015
  • September 2015
  • August 2015
  • July 2015
  • June 2015
  • May 2015
  • April 2015
  • March 2015
  • February 2015
  • January 2015
  • October 2014
  • August 2014
  • July 2014
  • May 2014
  • March 2014
  • February 2014
  • January 2014
  • December 2013
  • November 2013
  • October 2013
  • September 2013
  • August 2013
  • July 2013
  • June 2013
  • May 2013
  • April 2013
  • March 2013
  • February 2013
  • January 2013
  • November 2012
  • October 2012
  • September 2012
  • August 2012
  • July 2012
  • June 2012
  • May 2012

Categories

  • Average Family
  • Blogging
  • Budget
  • College Information for Families
  • Deals for Families
  • Family Banking
  • Family Debt Management
  • Family Finances
  • Family Grocery Spending
  • Family Insurance
  • Family Saving
  • Family Spending
  • Money Answers
  • Uncategorized

Copyright © 2023 · Genesis Sample Theme on Genesis Framework · WordPress · Log in