The Frugality Disease (From Filled With Money) [3 Articles] (2024)

~ Tuesday, October 31, 2023 Blog Post ~

By Filled With Money, June 17, 2022

Frugality disease is a mental disorder in which the person just can’t shake the negative feeling of spending money. They can’t even get over the hurdle of spending money for essential items such as toilet paper, food, and water. They still try to look for a cheaper option even if the option in front of them is good enough.

There’s nothing wrong with penny pinching here and there. However, once someone feels pain from not penny pinching is when it becomes clear that it’s a problem. I get it. It feels good to save money here and there. After all, money is what allows us to live and put food on the table.

However, there comes a limit to that. Too much saving money is a sign of a mental disorder that needs to be fixed. As someone who’s saved and invested their money for 6+ years, I realize I’m more frugal than the average person. However, I’m not so frugal that I neglect life essential items such as insurance, cars, food, and the like.

Frugality disease is something that is on the rise with many people partaking in the FIRE movement. Not eating out often is good. However, not eating out at all throughout the year isn’t a good option. We need to enjoy and have fun once in a while with the money we amassed.

If we don’t, then what was the point of having money in the first place? Frugality is good, too much frugality is bad. Now that I’m on year six of the FIRE journey, I recognize just how important spending money can be. Doing social activities like going out of town and attending weddings is money well spent in my book.

Frugality disease is an obsessive compulsive personality disorder (OCPD) in which the person tries to save money, at all costs. Even at the expense of their health, mental sanity, and the like. To them, saving money is more important than the value they get from spending money.

It’s no secret that price is what you pay, value is what you get. However, the ones who have the frugality disease don’t even care about the value they receive in return. All they care about is the price that they pay! What! They don’t care about the food they get in return to avoid starvation.

They care about the dollars going out of their bank accounts. Many people who join the financial independence, retire early movement suffer from this disease. They are too focused on trying to declare financial independence that they even skimp out on life essentials such as insurance.

They figure, well if I’m not going to drive that much anyway, what’s the point of carrying insurance? There are expenses that you can easily cut out like eating out too much at expensive restaurants that saves an extra $100 per week. However, there are essential expenses that you HAVE to spend on and can’t skimp out on.

I’m all for frugality and for saving money. I’m NOT for cheap and being too frugal. There is such a thing. Saving money, is generally a good thing. However, saving pennies but spending dollars later down the road isn’t a good option to take. It’s a dangerous path.

Below are the 7 tell-tale signs of being too frugal.

There are people out there who actually refuse to buy insurance because they haven’t used insurance in the past five years. They think the worst case scenarios can’t happen. I recently got into a car accident in May 2022. The person ran a stop sign on her way to work. I never planned or expected the accident to happen.

However, the accident happened anyway. It’s unexpected events such as these that will happen in your life, no matter how much you don’t want it to. Insurance is an essential line items for everyday living. Otherwise, you are literally rolling the dice with your life. That’s the frugality disease.

For what? To save $1,000 per year? Is that really worth the hassle of it potentially causing you financial ruin? It’s not. The essential items are essential items for a reason. You really don’t want to skimp out on any of them. When I was a college student, I didn’t have health insurance because I couldn’t afford it. It didn’t feel so good.

Whether we like it or not, we HAVE to spend money in our lives. There are none of us in this world who went through life without spending money. With spending money comes two things. You give up money in exchange for something else. People who suffer from the frugality disease focus on the money they give up.

They don’t focus on the value they receive in return. Whether we like it or not, we have to spend money on gas, car, and phones. In the caveman times, those expenses weren’t necessary. However, in the modern world, those expenses became a necessity. We don’t need a phone in order to be alive.

However, we need a phone in our lives for other purposes. When it makes that much of an impact to your life, it’s a good idea to not skimp out on them. I paid good money for my iPhone 10 that I have. I will be upgrading my phone in the next 2–3 years. A good phone is something that I can’t live without.

No frugality disease in my household.

I get it. In the United States, people are more afraid to go to the doctors than anywhere else. The healthcare costs in the country are enormously and too expensive for anyone to afford, except the ultra wealthy. I actually knew a boyfriend of a coworker who refused to go to the hospital even though he needed to.

He needed to remove his appendix. He was so afraid of the bill that he would rather suffer rather than get the treatment that he needs. Yes, when he got out of the hospital they slapped him with a $100,000 bill. However, had he not gone through with the procedure, he likely wouldn’t have lived.

He negotiated the bill to zero afterwards.

It was very uncertain times. However, dealing with that uncertain time is better than potentially having long term health complications later down the road. He was not going to live a healthy life if he had made the problem linger on for more years. Thank goodness he got the care he needed.

Not going to the doctors is a sign of the frugality disease.

Fun isn’t a, “maybe I’ll get around to it” expense. Fun is a necessary expense. You HAVE to have fun in your life otherwise you don’t function properly. People who skimp out on this expense suffers from the frugality disease. We need to watch a good TV show or a good movie, or whatever our hobbies might be.

For me, I really enjoy trying out new restaurants around the city. The other day, I tried an all you can eat Korean BBQ. Yum. Although I thought it was too expensive, it was a good trip and I figured out good restaurant places around the city. Whether we want to our not, we have to relax and enjoy ourselves in the long run.

There are free activities to enjoy, as well. Simple things like going to the park or biking around town is a good activity to get the heart rate up and enjoy the outdoors. However, there’s nothing wrong with spending money for fun in the budget if it is worth it. The frugality disease allows for no such fun, which isn’t good.

I get it. You have a credit card that gives you a 2% cash back on all purchases. So when you spend $10, you feel joy from getting back the 20 cents. It makes you feel like you won against the retailer. It makes you feel joy. However, think about it in big picture terms. Is 20 cents really going to matter in the long run?

Not really. Heck, 20 cents doesn’t even matter to your life today. It’s really just a rounding error. Sure, it can add up. But the most it’ll add up to is a couple thousand dollars over a year, IF that. Frugality disease is when you feel joy from saving 20 cents instead of feeling enormous joy from increasing income by $10,000.

Your time is worth so much more than saving a few pennies here and there. In fact, for a lot of people’s wages, it probably costs more to figure out how to save those 20 cents than the gain they get from saving those 20 cents. It’s just not worth it. Your time is worth significantly more.

Frugality disease is when you keep technology because it perfectly runs rather than look for the most optimal solution. I used to have a very outdated iPhone 5s until 2021. I had that phone for about 7 years. That’s a ridiculously long time to have it!

When I switched over my phone to the 10s is when I saw just how much I was missing out. The speed with which apps open, websites load, and the like is night and day. The time that I save from the faster processing power is well worth the $300 that I paid for the phone. I don’t think I will ever sell that phone for the next 2 years, either.

The frugality disease is when the bare minimum solution works instead of looking for the most optimal solution. The most optimal solution is out there. It isn’t necessarily the most expensive option either. $300 over the lifetime use of my phone is going to be something like $10/month, if that.

Everyone knows that saving money is a good thing to do to build wealth. However, with inflation at 8.5% as of March 2022, saving money just isn’t the way to go anymore. You HAVE to invest the money. However, frugality disease will force people who suffer from this disorder to save and hoard as much cash as they possibly can.

It’s just not the right path way forward. Investing is the reason so many people are wealthy today, not saving money. They’re so afraid to take risks that they let the money erode in value to inflation. Year after year, without fail. Investing is a risky venture but not investing is an even riskier venture.

Even at the onslaught of the 2022 bear market, I still consistently invested my money into the S&P 500 through my 401k’s and Roth IRAs. It hurt. The downturns stung like nothing I’ve ever experienced before. However, I know that the long term, I will be just fine.

Saving too much money is a recipe of living a wealthy yet unproductive life. Yes, if you save so much money, you will build wealth. Even though it will be at a slower pace than if you invested the money, it’ll still be a way to build wealth. However, frugality disease does so at the expense of your happiness and sanity.

It’s just not worth it to save an extra $1 if it takes five hours of mental power to achieve it. Especially in times such as these where automation exists. It’s a mental disorder. Whether we want to admit it to ourselves or not. It has to be cured because it will ostracize people from society if not. Social activities are a good thing.

There’s nothing wrong with going to a $100 concert every year or every six months or so with friends. We live to enjoy our lives, not to hoard as much money as possible. Additionally, at a certain point, earning an extra $5,000 per year is easier than saving an extra $500 per year.

Frugality disease lowers the quality of life than it increases it. There’s a show about extreme cheapskates. In the show, there are some millionaires who literally served her husband cat food. What! A multimillionaire is serving up cat food to a human being. That just doesn’t sound right.

Frugality is good but extreme frugality warps your sense of mind and reality. At a certain point, you can spend money in order to have fun. Not worry about the future but care about taking care of your present life. Then the quality of your life goes up, which should be everyone’s goal.

• Frugality disease means you skimp out on the essentials
• You focus on the price, not the value
• You don’t go to the doctors
• There’s no room for fun in the budget
• Saving pennies feels joyful
• Outdated technology
• There’s too much money in the savings account

Source:

https://filledwithmoney.com/frugality-disease/

January 9, 2023

Many people struggle with saving money. A question not everyone thinks about is whether they are saving too much money. Not everyone realizes that in some cases, saving too much money can create other financial problems. However, if you find yourself struggling with bankruptcy, then consider asking a Kingsport bankruptcy attorney for help.

Knowing how much money to save is key to preventing financial problems from saving too little or too much money. This depends on your financial goals and reasons for saving money. Common reasons for saving money include:

• Building an emergency fund
• Retirement
• Other reasons

Having an emergency fund is important for anyone at almost any age to have. Without an emergency fund, people can find themselves trapped in debt or blocked from their goals. Retirement is a process that takes a lifetime to save up for and depends on how much money you want and when you plan to retire.

Other reasons for saving money may include vacations, paying off debt, moving, and life transitions. Each of these reasons for saving money comes with different amounts of money that need to be saved. For an emergency fund, the rule of thumb is to save between six to nine months of your income.

Saving up to six months of income is recommended for people with stable and consistent incomes. Whereas saving up to nine months of income is suggested for people with inconsistent incomes. The amount you feel you need to be saved up may depend on what emergencies you anticipate whether they be medical or vehicle-related.

For example, you may need to save more money after a serious diagnosis than you would save for a new car. People can anticipate future expenses when their car keeps breaking down or their student loan repayment is about to start while they are moving out. Use this information to calculate how much money you need for these future expenses.

Once you know how much money you want to be saved by a certain time, you can start taking steps toward this goal. The most important steps for saving money include:

• Creating deadlines
• Balancing spending with saving
• Automated savings

Deadlines are important for keeping yourself on track. Without a deadline, a savings goal may not be reached due to delays or forgetting to save. Balancing spending with saving is just as important. When spending outweighs saving, reaching a savings goal can become blocked.

One way around this is to separate needed expenses from unnecessary expenses. Then start cutting out expenses until you reach your savings goal. Automated savings can be the solution for avoiding saving money. Once automated savings is set up, you do not have to contemplate whether to save money.

Filing for bankruptcy can be a stressful and often confusing process. You can call us at Tom Bible Law by dialing (423) 424–3116 for a consultation today about your financial dilemma. Our team of Tennessee bankruptcy lawyers is ready to help you explore your options for bankruptcy. We are located throughout the Tennessee cities of Chattanooga, Kingsport, and Tullahoma.

Source:

https://www.tombiblelaw.com/blog/2023/january/am-i-saving-too-much-money-/

By Kevin Mercadante, September 6, 2023

Before you keep a large stash of cash at home, consider the drawbacks of leaving this money under the mattress vs. in a high yield savings account at a bank.

Millions of people keep cash home rather than a savings account. For most, it’s a normal part of their financial lifestyle.

But there are dangers of keeping too much cash at home, and it’s likely they don’t give much thought to what could happen.

There may be certain benefits to holding a small amount of cash at home for whatever purpose. But there are risks involved in doing so, particularly if it’s a large amount of money.

In fact, it’s not an exaggeration to say the greater the amount of cash at home, the greater the risks involved.

Some are motivated to do so by a number of different potential outcomes:

Natural disasters, like Hurricane Katrina and the recent tsunamis, have motivated people to keep some cash at home.

They fear a disaster will cause banks to close, forcing reliance on cash for basic necessities.

With the entire financial system connected electronically, there’s concern of a meltdown involving either the Internet or the electrical grid.

The potential for a terrorist attack on either causes people to keep a certain amount of cash at home.

With a history of negative interest rates in Japan and some European countries, some savers may fear that interest rates could go negative.

If they do, you’d actually have to pay the bank to hold your money, rather than earning interest.

Some 7,000 banks failed during the Great Depression, and tales of the mass closures continue to circulate. However, there was no FDIC in the early 1930s.

We may have had a similar situation during the much more recent financial meltdown, but the FDIC functioned as it was expected to, and prevented a similar outcome.

Some people may prefer making small purchases in cash. It reduces the possibility of identity theft.

As a result, they may keep a certain amount of cash at home.

Purchases made through bank accounts or by credit cards create a paper trail. Some people may prefer using cash on at least some purchases for privacy.

None of these concerns are entirely invalid. But they may not be sufficient to overcome the potentially greater dangers of keeping too much cash at home.

For every argument in favor of keeping cash at home, there are at least as many dangers connected with the practice:

Since it’s tangible, cash can easily be destroyed by fire (it’s actually extremely combustible!).

In a flood, it could be carried away, and in an earthquake it can simply disappear into an obscure crevice.

Keeping it in a safe doesn’t guarantee its existence. Cash held in a safe can still be incinerated in a fire, or buried in an earthquake.

When thieves break into your home, they’re looking to steal anything of value — including and especially cash.

And though we don’t like to think about it, theft is sometimes an inside job. It could be undertaken by a friend or even a family member, or someone close to them who’s been invited into your home.

If your cash is destroyed or stolen, it will be gone forever. Even if an insurance policy did cover cash, it’s usually limited to no more than a few hundred dollars.

And then there’s the central question — exactly how do you prove to the insurance company how much cash you had at home?

If money in a bank is lost as a result of the banking institution, it’s covered by FDIC insurance for up to $250,000 per depositor, per bank.

There is no similar nationwide insurance coverage for cash held at home.

If you’re saving cash at home because it may be an amount that’s in excess of $250,000, you can always work around that problem by opening an account with a different bank.

In theory, you can have $2.5 million stashed in equal parts in 10 different banks, and still be fully covered by FDIC.

Should you save a large amount of cash at home and decide you want to move it to a bank, you could run into problems with the IRS.

Since cash has no paper trail, the IRS can decide it’s undeclared income. If you deposit at least $10,000 into a bank, the bank is required to report that to the IRS.

Even if it’s less than $10,000, they’re still required to report an unusual pattern of cash deposits. This could have the IRS knocking at your door.

There are an increasing number of merchants and vendors who don’t accept cash payments.

In fact, it’s virtually impossible to use cash to make an online purchase. And that’s where an increasing amount of business takes place.

You could end up with plenty of cash at home, but nowhere to spend it.

And then there’s the biggest danger of all…

Long-term, this is the biggest risk because you’re guaranteed to lose money.

If you make a practice of keeping several thousand dollars in cash at home, it’s effectively dead money. Not only does it not earn interest, but it actually declines in value.

Inflation is a fact of life, and it eats away at the value of any investment that doesn’t earn interest.

For example, if you make it a practice to keep at least $10,000 cash at home, the real value of the money will drop to less than $8,000 in 10 years, with a totally predictable inflation rate of just 2% per year.

By contrast, many online savings accounts and CDs pay very high interest rates. Not only can the value of your money keep up with inflation, but it can even exceed it.

And that maintains the real value of your savings in a way that cash at home can’t.

The purpose of having any significant amount of money should be first and foremost to grow it. If you put $10,000 into a CD paying 2.50% APY, in 10 years it will grow to $12,789. By keeping too much cash at home you literally deny yourself the opportunity to grow your money by nearly $3,000 in the next 10 years!

You don’t even have to do anything to earn that kind of money.

It’s the perfect passive investment, and it will at least enable your money to retain its value against inflation.

If you prefer to not lock up your money in a CD, an online savings account will do just fine.

Many financial advisors will recommend that you keep at least some cash at home.

You may need some available in case the power goes out for a couple of days in your area, and you can’t access your bank account. Or you might just need a few dollars in cash to pay the pizza delivery guy.

But how much is too much cash at home?

Some sources hold that you should have enough to meet anywhere between two week’s and a full month’s living expenses. On the surface, that makes sense.

It would enable you to survive for at least a few weeks if for any reason you can’t access your bank account.

But there are two basic flaws in that thinking:

1. The larger the amount of cash at home, the greater the risks of having it, and
2. Even in an emergency situation, it’s won’t you’ll be able to pay certain basic living expenses in cash, like your mortgage, your car payment, or your utility bills.

On a more practical level, anything more than a few hundred dollars in cash puts you in a position where the risks will outweigh the benefits.

It will do you little good to have several thousand dollars in cash at home for an emergency situation where you won’t be able to spend more than a few hundred dollars of it.

Even in an era of electronic banking and the Internet, it still makes sense to have a little bit of cash at home.

But if it’s any more than a few hundred dollars, you may be exposing your money to greater risks than you’re aware, as a way to deal with potential problems that are unlikely to be as bad as you might fear.

Let’s face it, most of the reasons that motivate people to save large amounts of cash at home are actually no more than possibilities. In reality, there’s very little probability you’ll face those circ*mstances.

What you’re more likely to face are the risks of either destruction. loss or theft of cash at home. Then there’s the guaranteed, ever-present reality of inflation, that’s certain to steal your money even if you hold it in the strongest safe in the world.

Keep a small amount of cash at home, but the vast majority should be in the bank. That’s where it will be protected against the threats that have the greatest probability of happening.

Source:

https://www.mybanktracker.com/savings/faq/keeping-too-much-cash-home-290029