Transitioning into the FIRE mentality from normal life can be difficult. Chances are as you begin it will become painstakingly obvious that some of your friends are making less money than you, yet they’re spending more. You might notice that they have a newer car than yours, or their apartment is nicer, or they go out to eat a lot more than you.
Your first reaction is probably to feel jealous. It’s okay to feel jealous, but recognize that jealousy for what it is and move past it. You can’t constantly compare your lifestyle to others or you’ll never be happy! There will always be someone earning more than you, spending more than you, and living an easier/better/cooler life than you do.
When you start to have a jealous reaction, remind yourself that you have a large goal and purpose you’re working toward. If you spent money the same way they did, you would never get to retire while they and the rest of the population are still working!
What Makes us Different
The majority of Americans are living paycheck to paycheck, and have debt that lowers their spending power significantly since they have to pay interest on top of their principle. not all debt is bad debt, but when consumers choose to do reckless things like not have a safety fund or put bills on their credit cards that they can’t pay, they are buying into a system designed to suck money out of them and keep them poor, all for the sake of having material things.
Instead, we FIRE devotees choose to try and operate more like the system than the poor souls slaving away inside it. Instead of borrow money for things we don’t need, our goal is to lend money for a profit in the form of stocks, bonds, and real estate.
To do this takes a surplus of cash, which you can acquire by adopting the frugal mindset. The idea of having a frugal mindset is to only buy the things you need and to take pleasure in that. Just because you’re frugal doesn’t mean that you can’t have nice things though. It means spending your dollars where they count, and not on whatever frivolous thing catches your eye at the mall.
Some Advice on Becoming Frugal
To adopt the frugal mindset, I first recommend doing something counterproductive: look at all the things you use for an extended period of time on a daily basis and make sure you’ve spent enough money on them. That’s right. An article about being frugal is telling you to potentially spend more money.
This varies widely from person to person, but here are some examples that apply in many situations. Chances are you have a bed with a mattress; you’re not sleeping on a mat on the floor. Barring people who travel most of the week, you spend 8 hours of sleep in that bed just about every night, so it makes sense to spend a good sum of money on it since you use it every day and your sleep will actively affect your productivity, mood, etc.
Another situational example would be a heavy-duty cast-iron skillet. If you enjoy cooking, it makes sense to spend cash on good culinary equipment. Obviously don’t go too crazy with this, but if owning a nice crock pot, sous vide setup, or meat smoker will entice you to cook your own food more often, last a long time, and make cooking more enjoyable, then chances are it could be a wise and exciting future purchase.
Finally, I’ll present one that is a grey area in lean fire and minimalist circles. A suit with good construction, quality material, and tailored to fit your body is an expensive ask. However, with proper care, the suit should last a decade or more. In addition, suits are typically worn to important meetings, events, and interviews, so looking nice matters. Looking sharper than the competition, though vain, can often yield dividends. I believe that formal clothing can definitely be argued for in the “spend on quality and make it last” camp.
Where the Real Frugality Starts
There is a flip side to spending big on your needs in the name of frugality, and that is that you have to cut out your wants. If you go to the mall to check out an amazing sale and you find a $100 item for 50% off then you just saved yourself $50 right? NO! That is only true if the item is a need and you had to buy it in the first place.
If you could continue living a happy and fulfilling life without that new purse, that eighth pair of shoes or that badass back massaging chair, then you lost the $50 you spent, instead of “gaining” the $50 you saved. It still makes sense to wait until Amazon Prime day to buy clothes that you need, a new pair of running shoes because yours are worn out, or a 5 lb container of whey protein (if you’re into fitness), but separate the wants from the needs before you start shopping and you won’t be as easily swayed to turn your $50 cart into a $500 one.
By spending big on things you’ll actually use, and cutting out spending on things you won’t, you may incur high initial costs, but your overall cost of living will go down. The goal is to lower your long term expenses so you can put your extra earnings away rather than spend them chasing the high of owning something new.
Establishing the Mindset
When you look at money, rather than thinking of it as a means to get a bunch of cool stuff you don’t need, imagine a vehicle that will take you from your current financial position to a better one. Use your money to buy time and security, not trinkets that will provide you short term pleasure. Build your nest egg, and when you do you’ll build confidence around money with it.
Unexpected one-time expenses like a blown tire or a trip to the doctor won’t cause the same level of anxiety that it once did. The cost is now a drop in the bucket rather than your last sip of water in the desert. You can always go back and buy the trinkets once you’re FIRE’d, but you can never get back the time or un-feel the stress.