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Being Frugal Might Not Be A Good Idea


Being Frugal Might Not Be A Good IdeaOh no, two frugal centric articles in one week! Sorry about that. I didn’t coordinate with Melanie enough so that’s why we ended up with two frugal articles this week. Don’t leave yet, though. I’m going to tell you why being frugal might not be a good idea after all.

Frugal lifestyle

I have always been pretty frugal since I can remember. Our family immigrated to the US when I was 12 and my parents struggled financially for many years. We didn’t make much money, but we never built up any debt either. We lived within our means and we had to be frugal due to necessity. I guess I’m naturally frugal because the frugal habit stuck around even after I finally earned a good salary.

When I started working, I prioritize saving first and always lived within my means. The only thing I really splurged on was traveling. Over time, some lifestyle inflation is inevitable, but I think we are still living a pretty modest lifestyle now. So what’s being frugal anyway? Here are some things we do to stay frugal.

  • Moderate eating out – We usually cook at home and eat out once a week at the most.
  • Car – We share one car and we don’t put a lot of mileages on it. Mrs. RB40 mostly uses public transportation.
  • Communication – We use Ooma and don’t have to pay for a landline. Both of us use Republic Wireless and pay about $35/month combined for services.
  • Clothes – The best thing about being a stay a home dad/blogger is I can wear whatever I want. I don’t have to look professional and I usually just wear jeans and t-shirts. Mrs. RB40 needs to look professional so she spends more on clothing.
  • Entertainment – I love finding free entertainment. We’re pretty lucky because there are a ton of shows and fun stuff to do for free in the summer here. It’s a bit tougher in the winter, but we still find ways to be amused. We’ll mostly read and watch movies from the library.

We are generally pretty good with our discretionary spending and we don’t buy a lot of stuff to clutter up the house. That’s a good thing and most American household could improve there. I think it’s ridiculous that Americans buy so much useless junk that we need to rent storage units to store them.

Downside of Living Frugally

Being frugal is a good thing, but there is a downside too. Sure, we miss out on luxury cars and nice clothes, but that’s not a big deal for me. The bigger problem is that the frugal mentality clashes with the mainstream American value. That’s not good if you want to be an entrepreneur. I have been watching Shark Tank these last few weeks and I got worked up every time. Why? I got mad because I could never come up with these ideas the entrepreneurs have. I would never pay for any of the stuff that people come up with on the show. My frugality is limiting my imagination and that’s a big downside for an aspiring entrepreneur.

Let’s look at some products from recent Shark Tank episodes.

frugal might not be a good idea for entrepreneurBottle Breacher – A veteran came up with the idea to convert a 50 Caliber bullet into a bottle opener. Pretty cool, but pricey at $20+. I would never buy this because I already have a few bottle openers.

BeardBrand – They sell premium beard oil. A tiny little bottle is $15-$25. First of all, I can’t grow a beard. Second, I don’t think this beard fad is going to last. Just shave guys.

SunStaches – Novelty sunglasses. Pretty cool, but I don’t need one. This might be a nice gift, though. You can get SunStaches on Amazon.

Ninja Cards – A pack of ninja throwing cards and target. Flinging cards like ninja stars looks like a lot of fun, but do I really need one?

Floating mug Co. – A mug with built in coaster for $20. We already have mugs and numerous coasters liberated from the local pubs.

Titin – Wow, a weighted workout shirt and shorts for $250. I guess this will help you get the most out of your crossfit sessions (apparently around $150/month.)

Titin’s revenue is $1,000,000/month. Bootle Breacher sold over $500,000 worth of bottle openers last year. These numbers are amazing! The problem is I would never buy any of these things. Being frugal means being mindful when you spend money and these things are not very practical. Why should I pay $20 for a bottle opener when I can get one for $1? I have a big aversion to paying premium price.

Some of these entrepreneurs actually got partnership deals from the sharks!  That’s the problem with being frugal. I’m out of step with American consumer sand my imagination is limited. Being frugal is nice for your pocketbook, but it might not be the right mentality if you want to be an entrepreneur. Even if I come up with an awesome invention for frugal people, there wouldn’t be a big market out there. I guess I should give up my dream of inventing a blockbuster consumer product and enjoy my frugal lifestyle.

What do you think? Is being frugal the wrong move for entrepreneurs? Shark Tank is on tonight. 🙂

Follow up

Thanks for leaving your comments! Now that I think about it more, I think the imagination part isn’t the big problem. I can still imagine crazy gadgets, but I definitely don’t believe in them enough to invest my time an money. If I won’t buy it, then I probably can’t get behind it 100%. That’s what these small startups need. The inventor needs to bring their vision to the masses. The execution is much more difficult part of starting a business.

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Joe started Retire by 40 in 2010 to figure out how to retire early. He spent 16 years working in computer design and enjoyed the technical work immensely. However, he hated the corporate BS. He left his engineering career behind to become a stay-at-home dad/blogger at 38. At Retire by 40, Joe focuses on financial independence, early retirement, investing, saving, and passive income.

For 2018, Joe plans to diversify his passive income by investing in US heartland real estate through RealtyShares. He has 3 rental units in Portland and he believes the local market is getting overpriced.

Joe highly recommends Personal Capital for DIY investors. He logs on to Personal Capital almost daily to check his cash flow and net worth. They have many useful tools that will help every investor analyze their portfolio and plan for retirement.
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{ 44 comments… add one }
  • Mrs. Frugalwoods November 14, 2014, 4:05 am

    Mr. Frugalwoods and I have this exact conversation all the time! Our target demographic (frugal folk) wouldn’t buy anything we’d invent! Plus, we never think we need anything, so how could we invent something to begin with! We had to go to Bed, Bath & Beyond last week (we had an old gift card that we needed to use) and we were both completely overwhelmed. We hadn’t been in a conventional store like that in probably a year (Costco being our primary shopping venue) and the marketing and gadgetry was astounding. We were cracking up and thinking, who buys this stuff?? Clearly, I won’t be inventing bizarre kitchen knick-knacks anytime soon.

    I think the market opportunity for frugal people is high quality, durable stuff that adds value to life and/or enables greater frugality. Our set of glass tupperware is a good one–we spent more because we take our lunches to work everyday and cook every meal from scratch, so we need a place to store our food. Mr. FW’s bike (which he uses to commute every day) is another example. Love this post!

    • retirebyforty November 14, 2014, 10:15 am

      Unfortunately, I’m still cheap and don’t want to pay for high quality, durable stuff. I’m trying to change that, though. Buying cheap stuff is more expensive in the long run.

  • Taylor Lee November 14, 2014, 5:42 am

    I think there are a lot of market niches that fit the frugal demographic, just not silly consumer products like that. E.g. all the low-cost phone carriers like RW or Simple. Or budgeting software. Or blogging whatever. Granted maybe the market is smaller (I don’t know how popular beard oil is…) but at least if you *were* to market a product, it’d be something worthwhile and aligning with your values (at least, I’d hope).

    • retirebyforty November 14, 2014, 10:16 am

      I guess 5% of the population is still a huge market. 🙂 5% is just a guess. I love RW.

  • Crass Cash November 14, 2014, 5:43 am

    I suffer from the same problem. I love watching Shark Tank, but I run into the same problem. I can’t comprehend what people actually buy that they don’t use and then I can’t comprehend how much people pay for the things that they need. $5 for a bar of soap?? Jesus!

    Then I get frustrated that somebody will pay $150 for a shirt, but not spend that same amount of money on a financial planner who could change their life.

    • retirebyforty November 14, 2014, 10:17 am

      Hahaha, maybe we just need to forget about our frugal habit when we’re watching shark tank. I’ll try to remember that it’s just entertainment.

  • Hubbard November 14, 2014, 6:31 am

    “Our virtues are most frequently but vices in disguise,” argued La Rochefoucauld, and this is what seems to happening here. Mr. Udo, you seem to be conflating frugality with a failure of imagination. That is, you’re confusing the virtue of frugality with the vice that is an inability to think of what other people might be interested in.

    Mr. Udo, people like you and me are frugal, which is good, but we’re not good at thinking like entrepreneurs. We’re probably going to be ok, but let’s not kid ourselves that being thrifty is holding us back. Frugality keeps us in the black, but a failure of thinking about what others want is what keeps us from making bank.

    Other people are neither frugal nor entrepreneurial. They’re the ones who call into Dave Ramsey’s show with six figures of credit card debt and asking about payday loans for birthday parties.

    Some people aren’t frugal, but their entrepreneur skills will let them earn enough to afford silly splurges.

    And some truly amazing people are both frugal and have the skills of an entrepreneur. Back when he was nearly broke, Steve Jobs had only one piece of decor in his home: a Tiffany lamp. He ruthlessly cut costs elsewhere so he could keep pouring everything else into Apple, and it eventually paid off.

    • retirebyforty November 14, 2014, 10:19 am

      Thanks for the great comment. It is difficult to be imaginative and have the wherewithal to execute your vision. Not many people have that ability.

  • Justin @ Root of Good November 14, 2014, 6:52 am

    Those crazy zany consumer goods sound like junk that would end up in the back of the closet in my house (next to the fondue pot and the telescope). Who buys this stuff? Obviously someone, right?

    Not me. I’ll keep my cash and my sanity and not have to worry about extra clutter.

    I’m guessing some of those items are purchased for Christmas, birthday, or father’s day presents. Junk you don’t really need and probably won’t use, but someone feels compelled to buy crap for you anyway. Because that’s what we do to show affection. 🙂

    Man, I sound a little jaded.

    • retirebyforty November 14, 2014, 10:21 am

      Yeah, their revenue is ridiculously amazing. I don’t know if these companies will be able to endure the next down turn, though. People cut back and these things are not a necessity.

  • Money Beagle November 14, 2014, 7:22 am

    That’s funny. I often think the along the same lines that how could certain things out there possibly make money, but then I realize I’m thinking of it from the frugal minded perspective.

    The beard product bit on Shark Tank was hilarious.

    • retirebyforty November 14, 2014, 10:23 am

      I couldn’t believe how much money the beard oil make. That’s just crazy. I agree with the Lori. It’s a niche product that probably won’t last. I’d rather invest in a nice shaving product company. 🙂

  • beth November 14, 2014, 7:31 am

    So many people choose not to be frugal and there is nothing wrong with selling them stuff they don’t really need because they really want it.

    Perhaps it is harder for the frugal to think up ridiculous things to sell because they are always looking for ways to cut instead of splurge. Just think of the most wasteful spending person you know and target your inventions toward them.

    • retirebyforty November 14, 2014, 10:24 am

      That’s a good idea. I don’t know many wasteful people, though. My market testers wouldn’t buy any of these stuff either. 🙂

  • Mom November 14, 2014, 8:34 am

    I don’t think being frugal implies that you have a lack of imagination – I mean you have to get pretty inventive sometimes to avoid spending money! You don’t have to want to use something for you to be able to sell it – as long as you think others might want to buy it, it doesn’t have to scratch your particular itch.

    • retirebyforty November 14, 2014, 10:26 am

      Actually, the problem is you need to believe in the product to get 100% behind it. If you don’t really believe in it, then it will be hard to work 80 hours/week to make it happen. Sure, I have ideas for crazy gadgets too, but I wouldn’t put $50,000 into the business. 🙂

  • Goldeneer November 14, 2014, 8:40 am

    I’m an aspiring entrepreneur that also enjoys watching Shark Tank. Most of the products you list with the exception of Titin are luxury products that do well in a growing economy and not in a recession. I prefer to find innovative products that fulfill a need in order to do well in any economy.

    My background is product design and engineering. I’m not the target demographic for most of the products I see and I accept that. Like you, I often lack imagination but that is a skill that can be learned.

    As someone who is frugal, you run your household like a business which translates well for an entrepreneur.

    • retirebyforty November 14, 2014, 10:28 am

      Products that will do well in any economy would be great. They should feature those practical products more, but I guess it will be less entertaining. Good luck with your entrepreneurial adventure.

  • LeisureFreak Tommy November 14, 2014, 8:55 am

    I would think being frugal would mean your focus would be on more practical products instead of novelty stuff. I don’t see anything holding a frugal person back from imagination. I also believe going against the mainstream American value is a great thing because that “value” also includes a debt burden and being financially clueless. The fact any of those products made money proves that point.

  • kammi November 14, 2014, 9:51 am

    Not necessarily. I think that the best take CALCULATED risk, and that is the difference. They won’t gamble on anything. I was listening to a great podcast this week about a guy who failed to successfully pitch to a billionnaire. The billionnaire turned around and pitched the idea back to him the way he should have. He also explained that he had passed on several companies as an Angel investor that turned out to be winners, but that he also took several calculated risks that ended up paying off (as in, gave a couple thousand which flipped into a couple million at payout). For example, he worked at a software company and invested some money in ideas by some of his coworkers (so he knew the people running the company and trusted them and their ideas, etc). If buying a jet or private plane, for example, saves you on time because you own over 200 companies, it may look like a ‘splurge’ to some, but it may be more efficient to you as a business owner. That’s the way I see it; you can be thrifty, but take calculated/sensible risks and do your research. You’d be surprised how much “junk” people are interested in buying (even though you never would).

  • Matthew Allen November 14, 2014, 10:12 am

    I absolutely think that the frugality mindset limits entrepreneurs. Not only does it limit your scope of product ideas (if you are looking to create products), but I think it also limits your dreams and visions for the future. Instead of always thinking about living below or within my means – I much prefer to think about how to increase my means in order to live however or do whatever I want. I think that is the essence of successful entrepreneurs.

  • Josh November 14, 2014, 10:50 am

    There isn’t anything wrong with being frugal as long as you’re not continually denying something you desire just to save a buck. However, I have to ask all the frugal people out there, what’s the point of amassing such a large sum at middle to old age then? It’s hard to change one’s spending mindset, so unless you want to leave a huge sum to someone or just have an inexplicable need for a sense of financial security, what’s the point? Saving lots of money for old age while leading mostly a frugal life during young and middle age doesn’t make much sense to me. What would you do with several million dollars after 60 or 70? Go on a spending spree then? After mid to late 30s, time is way more precious than accumulating more money.

    • retirebyforty November 14, 2014, 11:21 pm

      For me, being frugal means I could quit my engineering job and do whatever I want. If I’m not frugal, then I’d have to keep working in a job I didn’t like. I guess you have to find a balance. I’m more for accumulating a moderate sum so you can live life your own way.

  • Diedra B November 14, 2014, 11:23 am

    I think if you let your imagination run wild a little you can come up with some ideas. I heard a speech given once by a descendant of the person who invented Scotts Miracle Grow. The ancestor a very frugal person who was tickled by some of the things Americans would buy just to throw away (like paper towels and toilet paper. . . I’m not with him on the toilet paper though). So he came up with something else for them to throw away. I’m working on a few ideas myself. Don’t underestimate the desire of the American public to buy something that they will throw away.

  • Dividend Mantra November 14, 2014, 11:41 am


    I love me some Shark Tank. Great show! I especially like O’Leary. Seems like the villain, but he’s just brutally honest. And some of those people need it.

    I also don’t understand how some of these products do so well, but just goes to show you how much waste there is in the world.

    Best regards.

    • retirebyforty November 14, 2014, 11:27 pm

      You need an abrasive guy in the panel to keep it interesting. 🙂

      • ks October 20, 2015, 2:07 pm

        O’Leary is an abrasive Canadian – it’s like getting 2 juxtaposed personalities for 1!

  • Dave in Sunny FL November 14, 2014, 12:06 pm

    I think of an entrepreneur as someone who creates their own financial path, rather than seeking to survive in a job created by someone else. There is entrepreneurial spirit in the kiddie lemonade stand, the teen mowing business, or picking up cans by the highway. I think you are an entrepreneur already, and you just aren’t giving yourself the credit.

    • retirebyforty November 14, 2014, 11:28 pm

      Thanks for the encouragement!

  • Asset-Grinder November 14, 2014, 3:21 pm

    I am pretty frugal and the wifey sometimes hates it. She keeps begging me for a vacation but I keep saying next year lol. I am all for bang for the buck. I dont mind spending money on quality items I use everyday. I am especially frugal when it comes to items that dont get much use.

  • Emily November 14, 2014, 4:21 pm

    I think that having a frugal mindset doesn’t limit your audience, it means that you can think of practical things that everyone would appreciate.

  • peterfci November 14, 2014, 6:33 pm

    I am reminded of Warren Buffett’s quote (“managerial intellect wilted in competition with managerial adrenaline. The thrill of the chase blinded the pursuers to the consequences of the catch.”) as I watch Shark Tank.

    And this “It is no measure of health to be well-adjusted to a profoundly sick society.” — Jiddu Krishnamurti

  • freebird November 14, 2014, 7:45 pm

    I don’t think money attitudes are really under your control. It’s like a hand you’re dealt and it’s best to figure out a way to play your bias to your advantage.

    Speaking of bias, I think you’re looking at survivorship bias when you watch shows like that. As an analogy your frugality probably kept you from buying lottery tickets. Yet any lottery winner who gets interviewed would quite reasonably be thankful they were not frugal. So do you now regret having not bought lottery tickets?

    Unlike a frugal person such as yourself, spendthrifts who score on Shark Tank will probably end up bankrupt in a few quarters, just like most of the lottery winners. Those who could have held onto their windfalls wouldn’t have played in the first place. Just a guess but I bet more millionaires are ants than grasshopppers.

  • Tawcan November 14, 2014, 10:38 pm

    Unfortunately that’s how the world works. Some people invent stuff that add no values but people will buy them regardless. Why would you want to buy something that you’d just throw out or put it in a box in 6 months? I’d rather use the money to do something else.

  • Mark Morelli November 15, 2014, 10:07 am

    i retired early at age 55 in part by being frugal and a minimalist. I would rather buy experiences and not things.

  • Melanie @ My Alternate Life November 15, 2014, 10:29 am

    Hey, two perspectives on frugality in a week! 😉 I never thought of it that way — frugality limiting your imagination. But I believe it’s true! I also think being in debt and struggling can stifle your creativity as it’s possible to be in survival mode. It’s like Maslow’s hierarchy of needs — creativity is higher up on the chain and a luxury.

  • [email protected] November 15, 2014, 3:00 pm

    I’m completely with you on this one. As someone that writes articles about consumer finance being this out of touch can be kind of a problem. Sometimes I write something and then think “that is common sense, why should I write about something everybody already knows?” Those articles tend to be my most successful.

  • No More Waffles November 16, 2014, 2:49 am

    Man, I’ve started watching Shark Tank last week and had the same exact response as you! I will never come up with any of the stuff that’s on the show because I couldn’t care less about those products. The sales of Bottle Breacher blew me away! I get that it’s a nice present, but still.

    Oh well, I’m still much more a fan of being frugal rather than a spendthrift.

    • retirebyforty November 16, 2014, 3:40 pm

      I can’t believe the ramp up on Bottle Breacher either. That’s crazy. I guess we have a lot of gun lovers here in the US. 🙂

  • mollyjade November 21, 2014, 1:40 pm

    I’ve seen a few frugal products on the show. Like a tiny makeup spatula that lets women get at the last of the mascara or lip gloss. Though that one wasn’t funded.

    • retirebyforty November 22, 2014, 4:00 pm

      I saw the spatula too. That was a pretty cool product. 🙂

  • zach February 22, 2015, 11:44 am

    I find it’s not just Shark Tank that pays homage to this crap. Crowdfunding websites like Kickstarter and Indie GoGo are notorious for it as well; and yes, it makes me just as frustrated to see or read about it. I’d love to become an entrepeneur, but if doing so requires that I have to subjugate making useless knick-knacks and widgets just to be able to pad my profit margins, I don’t know if Entrepreneurship is really for me. I’m glad to see that many other people feel the same way.

    P.S. I know I’m WAY behind the times with this article, but, indulge me.

  • Miguel David July 14, 2016, 1:26 pm

    Hi, I am Brazilian and live in Brazil. I think that your blog is awesome. Who reads a Brazilian blog about personal finance called ” Clube dos Poupadores” should know your articles. So, I will divulgate. You write very well and in a sophisticated way. Congratulations.

  • Ms. Frugal Asian Finance April 4, 2017, 12:05 pm

    My husband and I were born into relatively poor families, so we grew up in very frugal households. I guess frugality has become part of our habit and identity.

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