There’s a huuuuuge difference between being Freaky Frugal and Stupid Frugal. A Freaky Frugal person is someone who saves money but realizes there’s a Happiness Return On Investment (HROI) in spending money on certain things.
What’s a HROI? A high HROI means that you gain much more in personal happiness than you lose from the dollar cost of the expense. A low HROI means you don’t gain enough personal happiness to justify an expense. If an expense is really low or even free*, it’s pretty easy to hit a high HROI.
A Stupid Frugal person is someone who saves money at all costs – he doesn’t care about the consequences. A Stupid Frugal person is also known as a cheapskate, tightwad, skinflint, or penny-pincher. Not a fun person to be around. The classic example is Scrooge at the beginning of A Christmas Carol.
Here’s a handy, dandy table that breaks things down between Freaky and Stupid Frugal by different aspects of life:
|Category||Freaky Frugal Guy||Stupid Frugal Guy|
|Relationships||Sometimes spends money on and with others to be happy.||What relationships? Money and savings are the most important thing.|
|Stuff||Keeps and buys stuff that gives him great HROI.||Gets rid of all stuff regardless of how useful it is or how happy it makes him feel. Less is always more.|
|Experiences||Interested in free or paid experiences that give him a great HROI.||Only interested in free experiences.|
|Food||Looks for the best deals on healthy, high-quality food. You only have one body so it pays off bigtime to take care of it.||Buys the cheapest food he can find. Ramen Noodles anyone?|
|Exercise||Does strength and aerobic training regularly.||Doesn’t have time to exercise because he’s too busy making and saving money.|
|Charity||Gives money or time to causes or people he believes in. Research shows that this will make him happy.||Doesn’t give any money for anything.|
|Housing||Makes a good trade-off of size, quality, and location. Has a bias towards housing that’s close to work.||Finds the cheapest housing possible even if living there makes him miserable. May have long commute to work which ends up costing more than he realizes.|
|Transportation||Has no car or a reasonable used car. Uses car as little as possible by living close to work and bicycling or walking for transportation and health.||Has a car that requires constant maintenance. Doesn’t have a bike or use a bikeshare because it costs money and takes too much time.|
I’m ashamed to admit it but I’m still Stupid Frugal sometimes. I should know better, right?
Mrs. FF likes to run. I mean she REALLY likes to run. As in multiple races per year including the Boston Marathon which is hard to qualify for. I sometimes get annoyed with her about the money she spends on running gear, running groups, race fees, and race travel. But I stopped complaining after I realized it’s a small price to pay for her happiness and our relationship. Some things are worth the solid HROI. Duh. Besides, running keeps her in great shape which has a variety of fringe benefits. 😀
So there’s a trade off when you have a spouse or children. What’s one person’s Freaky Frugal expense is another person’s Stupid Frugal expense and vice versa. It’s very personal because HROI is very personal. You have to be willing to compromise to find a happy middle-ground. It took me many years of marriage to figure that out. Better late than never!
Debt Emergency, dial 911!
There’s also a special case the great Mr Money Mustache calls a Debt Emergency. When you have credit card debt, car loans for fancy cars, large student loans, or an unreasonable mortgage, all bets are off. You need to be Stupid/Crazy/Wacko Frugal because the debt stress will make you nuts.
Sometimes you can reduce the debt – get rid of the car, consolidate credit card debt, or downsize. But sometimes you just have to buckle down until you pay down the debt.
Thanks for reading! What’s your take on Freaky versus Stupid Frugal?
* HROI = Level of Happiness / Monetary Cost. Technically, if Monetary Cost is 0, then HROI would be undefined. But I prefer to think of it as infinite. Call it my magic math.