MMS010: All About Extreme Savings – Is It For You?

MMS010: All About Extreme Savings – Is It For You?

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Summary

Episode 10 – Ever hear of Extreme Saving? Well in this episode we’re diving deep into extreme saving with the help of Kraig Mathias of Create My Independence. Find out if extreme saving can help you and how to get started.

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episode10-cover

Some important questions discussed in this episode:

  • What is extreme saving?
  • How is extreme savings beneficial?
  • Can you really retire early?
  • How can I start saving more? What mindset do I need?

Links, Tools, and Programs To  Help The Extreme Saver

Panelists In This Episode:

For a quick bio of each of our show participants, head on over to our panelists page.

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7 Responses to MMS010: All About Extreme Savings – Is It For You?

  1. Is it possible for people to USE and ENJOY their money NOW,
    while AT THE SAME TIME SAVING and GROWING
    that SAME MONEY
    for their FUTURE?

    • That was my point throughout the show. As I mentioned, I figured out what was needed for a comfortable future, and what we need for a “rainy day” and then my family and I use the rest to enjoy life now. It doesn’t have to be either/or, as I mention several times during the show. Myself, I am not an extreme saver, although I have no problem with those who prefer that lifestyle.

    • Look at what you spend money on and see what it is you really love to have. Then see if you can eliminate non-essentials wants to give yourself space to enjoy money and save it too.

    • I think it is possible to enjoy now and save and grow as well. You just have to set your priorities, decide what’s important and setup automatic saving for your future goals, and save for more short term priorities as well. Extreme saving doesn’t have to be for everyone, but saving in some form should be something everyone looks at doing.

  2. A critically important point which people often miss—and I think you guys missed it too—is that “sacrificing” is a only novice/beginner’s issue. It’s only a problem for the first year or two. The thing is that people don’t tend to remain in a vacuum after they stop buying. They start to develop skills and find other means.

    For example, I just received an offer from my electric company detailing the cost of replacing a broken GFIC outlet. It was almost $300. Now, if you just started “extreme saving”, you might think of “going without” that outlet. That would indeed be a sacrifice but because you know of no other way to fix your problem, you’re stuck sacrificing. However, spending some time researching it, it turns out that a GFIC outlet only costs $15; that my city allows the homeowner to replace such without a building permit; and that it’s easy to do if you can read simply circuit diagram.

    So we have three scenarios
    1) The consumer who spends $300 on a new outlet.
    2) The unskilled saver who sacrifices his outlet.
    3) The skilled saver who replaces his outlet for $15. (It takes some effort to get to this point)

    As time goes by more and more such skills are developed and they start to play together allowing even more things to get done without involving the consumer-economy.

    This is why cost-of-living and standard-of-living are very different for a skilled extreme saver while they’re typically thought of being the same by an unskilled consumer. Twelve years have passed since I last lived out of two suitcases (that mobility makes the most sense for a junior researcher), and we now live in a 1000sqft house (paid 100% in cash). And yet, combined we spend about $11,000/year for two adults. Our neighbors who are typical consumers easily spend 4x as much and yet you can not tell the difference between the way we live. It’s just that they route a lot more of their economic activity around the market (where it gets counted in dollars) whereas we do it ourselves where it gets counted in skills.

    This is empowering. So another answer to “how to deal with the sacrifice” is “learn about alternatives.” It can be very empowering not to rely on Walmart and the food court for most things in life. You might just find that it’s more fun if you have access to ten different kinds of fun you’re able to make on your own than just the one kind that can be purchased of the rack.

    This also means that there’s no material lower limit to how much you can decouple standard of living from the rest of the economy. You can spend 20k/person with above average skill. However, that doesn’t mean that anything below that is “sacrifice”. You can spend 10k/person with very high skill (after 5 years or so). Or you can spend 5k/year with extremely high skill. The relation is

    standard-of-living = skill-level times cost-of-living.

    For an average consumer, the skill-level is 1… but it’s certainly possible to learn how to make that a 2, a 3, or a 4.

    In addition, the higher your skill level gets, the more your perspective changes. For example, our house is currently at 60F, but I’m not wearing winter coats. I could certainly afford to put it up to 75F, but I don’t want it at 75F. It would be too warm. Because the things I do (like examples above) means that I’m mostly lightly/medium active which generates its own warmth. I’m not spending my house-time mostly sitting down in front of the TV or the computer, hence my home needs to be colder. And that just saves money as a bonus.

    In conclusion, increased levels and numbers of skills allows you to spend your money much better. This allows you to spend increasingly less money as long as you keep getting smarter and smarter. It’s similar to how a swimmer uses less and less energy for the same speed the more efficient he gets. A rookie swimmer and an expert swimmer has very different techniques and styles. The same goes for spending. An expert spender is not someone who sacrifices just like an expert swimmer is not someone sinks to the bottom once the effort is lowered.

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