Question: How many people here became interested in frugality because they have come to feel enslaved in this economy?
Like everyone else who worked through the 90’s, I have been subjected to the corporate “change” agenda — fewer people doing more work to hold on to less secure jobs. It’s the same deal everywhere, you can’t escape it by changing jobs or companies. Work used to feel like a fair exchange of effort for money. Now, the money is no better, but the pace and demands of the job suck the life right out of you. The thought of working endless days and weeks in a cubicle until I’m 65 or older is severely depressing.
I know I’m not alone in my disenchantment with the corporate work world. Like thousands of others in their 40s, I held my nose as I went through the motions at work, meanwhile investing for the salvation of early retirement. Well, guess what, folks. It was all a game. The big boys took down the market and took our money home.
There’s no question the economy is squeezing me. Frugality is my way of squeezing back. This greed-driven, corrupt economy is supported, in part, by my working and spending. If I can reduce the spending part, I can eventually do something about the the working part.
I’m just looking for a sufficient life where my time is my own. To me, that is real freedom. We live in a wonderful world that we seldom get to enjoy.
My plan is simple: 1. Concentrate on getting the mortgage paid off. Doubling every payment gets me clear in another 5 years. Owning your home free and clear is the bedrock of financial security. The housing bubble in the late 80s put prices way out of my reach. I had to wait until housing bottomed out. It meant I got a late start in getting a home, throwing far too much money away in rent.
2. Spend less. The extra payments on the mortgage will help here, as I don’t permit myself to run a balance on my credit card. I discovered through two periods of unemployment that day-to-day living costs, excluding rent of mortgage, can be quite low. I should be able to give up full-time work not long after finishing off the mortgage. A short contract here and there should be more than sufficient.
3. Save more. This is limited by the amount of money going to the mortgage, but it must be done. I have unused tax-free contribution room in my pension. I can’t let these tax refunds get away.
4. Do whatever it takes to survive in the meantime. Herbal medications are quite helpful. I ‘m using St. John’s Wort to fight the depression and Valerian root to calm me and help me stay focussed. Pace yourself. I’m good at figuring out the minimum level of effort required to “meet expectations” while finding one thing I enjoy to “exceed expectations” on. To help with “work-life balance,” I transfer some personal activities, such as reading misc.consumers.frugal-living, to the workplace.
Does your plan look something like this? Or, do you already have a simple, balanced, sufficient life in which you can actually find some happiness?
Answer: I admire your intentions on stock investment. To many people get caught up in the greed, and ignorance of investing. I don’t know if you have put any of “Warren Buffet’s strategies” to use yet, but I do have this to say about it. I invest all my own money with similar strategies. I’ve been doing this for quite a few years (probably 4) and have been very successful. The one downside is that it takes a lot of time. I am lucky in that I love investigating companies and pouring over financial reports and learning new accounting (back when I started) were (and still are) actually fun hobbies of mine. If you don’t have the interest, time, perseverance to educate yourself thoroughly before investing this way, it could backfire. First and foremost, you must be able to tell when looking at financial statements if anything looks fishy or not. A company may look great, but if you can’t pick apart the Enron’s from the potential winners, you won’t get ahead.
Reading one book entitled something to the effect of “How to invest like Warren buffet” will not get you anywhere either. You must have a thorough education in accounting and finance to be successful at this strategy. That is not to say you need a degree, you can teach it all to yourself, that is how I learned.
I strongly encourage you, or anyone else in this group for that matter, to consider index funds (actively managed or ETF’s) for investments if you lack the necessary business education – and be true to yourself about your education, pretending you have the skills for your prides sake when you really do not will cost you a lot of money. I haven’t calculated this myself, but have read from a reliable source that over the last 70 years the average annual return of the market is 11%. Tap into index funds and you will be pretty close to that as well.
Something odd of your post, when you say “the other half will go straight into the stock market starting in May”, I really hope this is due to personal circumstances and not any sort of market timing or waiting. If so, you are not practicing anything of value investing. What I really hope is that you have set a goal of May because you are in the midst of self-education (accounting, finance, etc). If that is the case, I wish you all the luck. It truly is fun if you know what you are doing.
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