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    Extreme Frugality

    A needed mindset for the age we live in
    by Chris Martenson

    Friday, June 28, 2019, 3:41 PM

If you prefer to listen to the author read this article, Click Here.

We didn’t have a lot growing up, as my mom had to single-parent three kids. Most anything I wanted required disciplined frugality.

I bought my first fly rod from Orvis at the age of 13, which took the better part of a year to save up for. I hand-tied the first flies drifted from its lines from the hackles of roosters I raised expressly for that purpose.

In my later teens, I took a long cross-country climbing/working road trip where I lived on $5/week (1980s). Doing so was an art form involving dried beans and camping for free on federal lands, including the time I woke up to a large bull pawing and snorting a few yards from my tent.  I knew nothing about the behavior of bulls, and still don’t; but I knew that wasn’t a good sign and so I backed away using the tent as a shield and climbed a tree.

Sleeping on the ground, or on sofas doesn’t bother me. I am a remarkably un-picky eater. I’m just easy that way.

All of which is to say that being frugal and ‘making do’ with what’s on hand comes naturally to me.  Don’t get me wrong, I can enjoy spending money, and have indulged in some expensive hobbies in my life. But I can also zipper the wallet and not skip a beat.

I’m glad I can, because being frugal is an extremely valuable skill to employ as we get ready for a future of ‘less’.

System Failure

Sometime, much sooner than we’ll be ready for, the systems upon which we rely will fail us.

The weather system is already becoming intolerably wonky. Heat in Europe, crop-ruining rains in the US farm belt, and unprecedented heat in the arctic are all telling us that something is terribly amiss.

In fact, at this moment on an 80-degree late June night, in New England, I’m typing next to an open window, no screen, the room lights on, and there are exactly zero insects flying about the room. Not a single one.  I’m old enough to remember the swarms of beetles, moths, mosquitos, and other bugs that such a night would have brought.  That they aren’t here tonight is extremely unsettling to me.

Anyone who can read or access the internet and has at least minimal curiosity can detect the signs of the deep stress all around us — in our environment, in our society, and in our economy.

It’s critical to realize that everything in the financial sphere — from the lofty prices of stocks and bonds to the fiscal solvency of nations — depends on the future economy being exponentially larger than it is currently.  But this expectation is flawed; you can’t extract ever-increasing exponential growth from a finite system.

A ‘credit recession’ almost destroyed the global economy last time (2008). Yet now there’s an even larger one primed and ready to burst.

But you’d never know that by watching the nightly news or reading the major media outlets. Because the more dangerously-lopsided things become, the more urgently the entire interlocking system of narrative control works to convince the masses that everything is fine.

But curious critical thinkers like you and I know that’s not true.

Our knowing is in the ecological data, which is horrifying.  Plastic pollution now virtually everywhere, vanishing insect and amphibian populations, steadily declining phytoplankton levels, weather anomalies shattering records across the globe, food chain disruptions in the oceans leading to massive bird and whale die-offs, and coral reefs disappearing with frightening speed.

It is in the cultural and sociological data, which show that the epidemic of obesity continues to worsen, suicide rates are hitting record high levels, multiplying increasing feelings of isolation, and record levels of being miserable and unhappy around the globe.

It’s in the economic data, which shows the widest wealth and income gaps in history, 62% of millennials struggling from paycheck to paycheck, desperate central banks able only to conceive of ever-more stimulus (easing) efforts, massive and rapidly growing debt piles, the misery of households that do not have any emergency buffers to draw upon, and in the US alone, over $200 trillion of underfunded pension and Medicare promises that can’t ever be met.

Even if we could set all of the above aside (and we cannot), a looming net energy crisis tells us that the future will be terribly different from the past.  Most people are unaware — falsely lulled by the recent US shale ponzi — that oil production will indeed peak and then decline.  Or that total net energy output from fossil fuel is already falling steadily now that all the easy oil and gas are gone.

Our economic and population arrangements were made back when huge 100:1 net energy returns from fossil fuel were routine.  Comprehensive planning and mitigation strategies have to be made right away if we are to transition to the lower ~5:1 returns offered by shale oil and solar.

Forty to sixty years are required to effect a smooth energy transition.  Meanwhile it looks like oil output may well peak in the US around 2025 (a lot depends on easy credit and a high price for oil), has already peaked and gone down in 18 countries since 2005, and the world remains heavily dependent on the output from a small handful of ageing super-giant oil fields discovered and put into service more than 50 years ago.

In other words, we don’t have 40 to 60 years. We may only have ten. Yet no urgency can be detected in the official policies of the world’s major nations.

Industrially-farmed soils are going to be completely exhausted within 40-60 years, requiring ever larger fossil energy inputs to keep them transiently supplied with nutrients.

Add all that up and what do you have?  A very strong case for a very uncertain future.

My interpretation is these are the warning signs of a global culture that has grown past its natural carrying capacity and has yet to face that reality.

Which is why the sociological data tells me that people are very worried, even if they cannot exactly explain why.

Extreme Frugality

Given all that, everybody wants to know: What should I do?

It turns out there’s one fairly robust response that any individual can employ that will help address the developing predicaments identified above: Extreme frugality.

Don’t have much money?  Then spend less. 

Have money and want to protect it?  Also, spend less.

Want to protect the natural world?  Then consume less. 

Want to be happier?  Then spend less and gain more free time.

Worried about money?  Then spend less, save more, and have more.

Want to resist corporations’ endless grabbing of your money?  Then be frugal.

Want to retire earlier?  Spend less and save more.

The answer to many of the challenges we face are directly addressed by spending less and consuming less.

Taking a cue from an old Saturday Night Live skit with Steve Martin, if you cannot afford it, don’t buy it!

There’s a lot to be said for frugality and especially extreme frugality.  By cutting out all unnecessary expenses, you align your concerns with your actions.  It helps you regain control over your financial life, especially if you are on (or over!) the edge.  Statistically speaking, that’s most people out there.

This won’t work for everybody; some people just don’t have the psychological make-up to be frugal. They’re too addicted to the instant gratification, “buy now, pay later” consumerism that corporate retailers and credit card companies do their best to hook us on.

But the concept of extreme frugality doesn’t frighten me. Or seem like deprivation. It just fits with who I am.  I’m perfectly happy scoring a used, dented item at a tag sale or on freecycle.org as long as it suits my needs.

And it shouldn’t frighten you. Frugality is one of the fastest paths towards relieving the ever-present money worries that plague most of us. It’s a freeing act.

The less money we require, the less control money has over us — how we spend our time and our level of happiness.

I’m not saying we all have to become ascetics and embrace a life of poverty. What I am saying is that frugality helps re-center our priorities away from the superficial and material and towards true substance — fulfilling relationships, meaningful activity, our connection to nature.

Henry David Thoreau captured the gestalt of extreme frugality well when he penned:

Quote: I make myself rich by making my wants few

And as we as individuals reduce our level of consumerism, collectively, we reduce the demand our economy places on our strained ecosystems.

Given all that’s at stake, seems like we should be willing to give this a try.

Getting Started

Looks, the world is changing rapidly, and nobody knows how long the current good times will last.  And we’re well overdue for some kind of clearing event — the next recession, more record-breaking weather, a debt crisis, an implosion of the current credit cycle. The list of candidates is long.

At Peak Prosperity we’ve been staunch advocates of keeping your money safe, building multiple streams of income, and being as thoughtful as possible in your financial affairs.

Given the extreme state of the world, and given that tighter times almost certainly lie before us, it only makes sense to explore and adopt as many sensible frugality measures as we can, while we can still do them on our own terms.

One of the great killers of the last big bust in 2008 for many people was their too-slow dialing back of expenses.  They lost their jobs but kept up the same level of spending.  Kids stayed in private schools, eating out continued, and every subscription and cell phone plan remained in place.  When the unemployment rate kept rising, and the savings were finally gone, many families experienced the deep trauma of sudden, forcibly-imposed austerity — which was not fun. Not fun at all.

Learning the skills and habits of being frugal will be important for the future of “less” that’s coming.  Indeed, as wide-scale layoffs are starting to happen again, for many it’s already arriving.

Those looking to kick-start a more frugal lifestyle can begin with these straightforward steps:

  1. Create a good set of ‘books’ for your finances. Have a solid income statement and balance sheet.
  2. Identify all expenses that can be trimmed and cut as many as you can. Then set a budget and stick to it.
  3. Identify passive income streams that you can build over time. We created a detailed report here on the topic. Also,  our excellent educational webinar series on investing in income-producing real estate has been praised as extremely valuable.
  4. Whatever money you have invested in the markets, be sure it is being managed prudently by professionals who understand the growing risks of a damaging market decline. Feel free to schedule a free portfolio crash audit with the financial adviser Peak Prosperity endorses.

But if you already have a good handle on these (as many Peak Prosperity readers do), there’s an exploding global community focused on extreme frugality to plug in to.

In Part 2: Live Frugally, Retire Comfortably we look at the major strategies recommended by the leading resources in this community for reducing your ‘money footprint’ and advancing the date when you achieve financial independence.

There are many levers to pull, on both the both the income and expenses sides of the ledger. Your task is to determine which are best for you.

But the key here is to do the math and then take informed action. Your future resilient self depends on it.

Click here to read Part 2 of this report (free executive summary, enrollment required for full access).

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20 Comments

  • Fri, Jun 28, 2019 - 9:47pm

    #1

    David Huang

    Status Bronze Member (Offline)

    Joined: Jan 20 2010

    Posts: 70

    6+

    Wealth and security exist in the gap

    Excellent article!  I especially love the list of things that can be effectively addressed by spending less.  I’ve been into frugal living for a long time myself and have found it to provide me with a pretty awesome life in general.

    Earlier this week I actually posted a blog entry that ties in with some of the things you bring up in this piece.  I even referenced a certain book called “Prosper!” so I could introduce my readers to the 8 forms of capital. 🙂  The main thrust of my piece is developing security and wealth not by focusing on increasing income, nor on reducing expenses.  Rather, trying to focus on where wealth and security really reside, the gap between income and expenses, also known as a savings rate.  Though I do have to point out that there are extra benefits to increasing this gap by seeking to reduce the expenses through frugality.  You gain more money to save/invest, you require less money from investments/work to live, and you generally reduce your ecological footprint.

    We tend to think of frugality as something only within the financial capital realm, but I tentatively start exploring how the gap might manifest in the other forms of capital too.

    If anyone is interested here is a link to that blog post.

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  • Sat, Jun 29, 2019 - 12:40am

    Reply to #1
    GerryOz

    GerryOz

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    Children and frugality

    The most frugal thing anyone can do is not to have children, or have only one child. Each child costs a fortune to raise and educate, and there are no discounts on bulk (they all cost the same).

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  • Sat, Jun 29, 2019 - 6:46am

    #2

    LesPhelps

    Status Silver Member (Offline)

    Joined: Apr 30 2009

    Posts: 487

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    Excellent Article

    Years ago, I read a book called, “Your Money or Your Life.”  It stressed the infrequently understood concept of enough.

    I sometimes get a smug feeling when I paddle the kayak I built from a kit for $1,200 past a $70,000 ski boat.  I think about the ski boats fuel consumption and the cost and effort involved in transporting and maintaining it.

    But the truth is I’m currently past the median point on the extravagance/frugality curve, but I’m actively working on decluttering.  Most of the stuff I’ve accumulated was acquired a number of years ago.

    I think I just managed to start dealing with my addiction to insanely expensive Apple tech.  Sadly, I managed to crack the screen on the MacBook Pro I purchased a couple of years ago for three times what an equivalently configured non Apple laptop would have cost.  So I dialed the Apple Support line on my ridiculously overpriced iPhone to set up a repair.  After 10 minutes of very friendly conversation, the Apple support technician indicated that Apple would replace my cracked screen for $738.

    I’m guessing that Apple’s manufacturing cost for the screen is South of $100.

    It took me a couple of days to gain perspective on this event, but I’m now looking at it as a positive.  It will save me big bucks on future Apple purchases.

    Also, I’ve found that I don’t have to completely abandon Apple Tech.  The MacBook Pro purchase I mentioned above was to replace a very powerful MacBook Pro that I had used and loved for 6 or 7 years.

    My older MacBook died.  The thing is, I loved the older MacBook far better than the one I replaced it with.  Apple had made some “upgrades” that I was not happy with.  While waiting for my replacement screen to come in (I’m replacing the screen myself for less than $738), I found a used MacBook Pro on Craigslist identical to my old MacBook Pro, in perfect condition, for $300.

    I’m typing this comment on the 9 year old 15″ I7 MacBook Pro I purchased used.  I love this darn thing.

    Anyone want a 2 year old 15″ I7 MacBook Pro with a brand new screen?  I may be selling one.

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  • Sat, Jun 29, 2019 - 7:27am

    Reply to #1

    LesPhelps

    Status Silver Member (Offline)

    Joined: Apr 30 2009

    Posts: 487

    5+

    Cost of Children

    Gerry brought up the unpopular topic.

    I remember reading that your first child consumes 1/3 of your income and every additional child consumes another 18%.

    Sadly, that is on top of the subsidies that our society provides for children.  The subsidies are not insignificant.

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  • Sat, Jun 29, 2019 - 10:17am

    Reply to #1

    shastatodd

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  • Sat, Jun 29, 2019 - 10:57am

    Reply to #2
    NickAdams10

    NickAdams10

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    I sometimes get a smug feeling when I paddle the kayak I built from a kit for $1,200 past a $70,000 ski boat.

    How do you think I feel as I paddle past you in the used kayak that I bought for $70? 😉

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  • Sat, Jun 29, 2019 - 11:57am

    Reply to #2

    LesPhelps

    Status Silver Member (Offline)

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    How do I think you would feel?

    I have no idea.  Most kayakers recognize the amount of effort I was willing to put into the sport and get a kick out of seeing our boats.

    I’d have paid a heck of a lot more to get an equivalent manufactured kayak, if one existed.

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  • Sat, Jun 29, 2019 - 5:01pm

    #3
    Uncletommy

    Uncletommy

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    Three acres and a little sweat?

    Thanks for that, Les. We have five kids and no debt. Where did we go wrong?

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  • Sat, Jun 29, 2019 - 10:47pm

    Reply to #3
    Belmontl

    Belmontl

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    Exponential human growth

    Love my kids..can’t imagine my life without them…but More then 2 (really 2.1) accelerates Population bomb, not to mention If born in the West…Consumer Bomb

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  • Sun, Jun 30, 2019 - 8:50am

    Reply to #3
    Jitiy

    Jitiy

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    children are a blessing

    “We have five kids and no debt. Where did we go wrong?” You didn’t go wrong at all. Children, and all people, are a blessing. The problem is selfish, greedy people. The title of the article, “Extreme Frugality: A needed mindset for the age we live in” says it all. We don’t need less people; we need a decrease in demand for non-essentials, and people (human beings) are not non-essentials. If it weren’t for people, we wouldn’t be discussing this right now. 🙂

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  • Sun, Jun 30, 2019 - 9:28am

    #4

    Mark_BC

    Status Bronze Member (Offline)

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    But if I don’t consume it, some person from China will. Nothing against the Chinese in particular since they still per capita consume less than N. Americans, but they are on an economic tear. Practically everyone, including economists, believes that resources (particularly oil) are “produced” (even this web site still calls it oil “production” which is highly misleading since the whole point here is that oil is not produced and is finite). And therefore, consuming more of it is good for the economy because it stimulates GDP and gives someone else a job. Until that misperception changes (it won’t) we are doomed. A first step would be to advocate eliminating the use of the term “oil production” and replace with “oil extraction”.

    I agree that being frugal is good for one’s own personal finances, life organisation, and satisfaction. But it isn’t going to do anything to help conserve resources.

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  • Sun, Jun 30, 2019 - 5:23pm

    Reply to #4

    Mots

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    if I don’t consume it, some person from China will

    Mark, I got a laugh out of this…….  I have visited China 6 times in the last 18 months and each time I ask people (particularly young people) what do they think about global warming, CO2 emissions, and the future.  No one cares about CO2 and sometimes people laugh at my questions.  The middle class there is big, perhaps bigger than the middle class that has vanished from the US. Young people are buying houses and consuming energy.  The people are very proud of their country and look forward to a better future.
    The key to the planet’s future is not in American politics or government regulations…… We need to acknowledge reality.  This internet chit chat crapping is unmoored from reality and merely accentuates the problem by diverting our time that we can spend on personal, family and community resilience.  In that regards, I greatly appreciate the personal history recounting of details that CM recently gave, and personal experiences of blog members who increasingly become incrementally more resilient.  Viva la resilience!

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  • Sun, Jun 30, 2019 - 5:45pm

    #5

    Mark_BC

    Status Bronze Member (Offline)

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    You mean people laugh because they don’t really know what you’re talking about (climate change, resource depletion) or because they think it’s silly to be concerned about such things?

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  • Sun, Jun 30, 2019 - 6:42pm

    Reply to #2

    SagerXX

    Status Gold Member (Offline)

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    I sometimes get a smug feeling when I paddle the kayak I built from a kit for $1,200 past a $70,000 ski boat.

    How do you think I feel as I paddle past you in the used kayak that I bought for $70? 😉

     

    How do you think I feel as I swim past you, in a borrowed bathing suit?  8 )

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  • Sun, Jun 30, 2019 - 9:59pm

    Reply to #5

    Mots

    Status Bronze Member (Offline)

    Joined: Jun 18 2012

    Posts: 86

    or because they think it’s silly to be concerned about such things?..............

    Thanks Mark

    The detailed answer I usually get is something like: “I understand global warming, but you need to understand that nothing is more important than the economic growth of the PRC….”  I think that there is an assumption that the CCP (Chinese Communist Party) is looking out for the big issues and the people only take responsibility for their local personal (to do otherwise is very dangerous).  In that context I note that the CCP seems indistinguishable from religion over there.  The CCP assumed ownership of the population problem and forced the population down by commanding a limit of one child per family.  Once the CCP takes ownership of the CO2 issue (at a convenient time when fossil fuel suddenly becomes restricted permanently?) then a sudden command may issue from party headquarters.

    Regarding the CO2 issue:
    1. we already have experience with ameliorating chemistry induced global climate change when addressing removal of halocarbons with respect to the high atmosphere ozone problem.  The manufacturers took the responsibility.  That was effective and fairly quick to implement.
    2. it is ridiculous to go after 7 billion users of extracted carbon (and billions more of machinery users) when there are merely thousands of well known point sources of fossil fuel extraction which have the secretaries in place and ALREADY measure/account for how much carbon they extract.  If the “globalists” (large corporate powers that transcend political boundaries) and govt such as kuwait and saudi arabia who do the extractions had any responsibility or cared, they could implement a carbon tax immediately almost overnight at much much higher efficiency and potency than harassing every human being on earth for money based on behavior and personal buying habits.
    Clearly, the “powers that be” (globalists and governments) dont care about CO2, because they already have a simple and proven path.  However, they DO care very much about controlling everyone and micromanaging the affairs of the people.  The ongoing construction of a new feudal society based on big data and on IoT is more important than climate change and they are only willing to do something if that something fits their ongoing neofeudal conversion of society.  At some point the CCP’s use of social scores and the West’s use of google/facebook/NSA/CIA may converge and their combined tyranny will be trained on stopping the poor and politically unconnected (but not the elite) from burning extracted fossil fuel.  At that time, facebook/CNN/CNBC/wechat etc. will teach us, the sheep to love their control of us because such control will save mankind from destroying the planet.  This seems to have started already…………..

     

     

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  • Mon, Jul 01, 2019 - 5:10am

    #6
    chipshot

    chipshot

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    Frugality Regarding Transportation

    Considering how much people spend on cars–never mind the environmental cost–think this country will regret not embracing more frugal forms of travel/commuting.  Golf carts, scooters (motorized and manual), e-bikes and mopeds could save lots of money and put a major dent in congestion, oil consumption, and greenhouse gas emissions.

    The automobile may be an engineering miracle, but driving ourselves around in vehicles weighing 10-20 times their cargo  (typically one person) is highly inefficient and foolish, especially considering the environmental devastation caused.

    When 75% or more of car trips are solo, and a similar % involve distances of 15 miles or less, the alt vehicles mentioned above are not only feasible, but practical.  Doubly so in urban areas.

    Most of the world relies on two/three wheels for most of their transportation needs, yet in America they are viewed as “third world”.  In the meantime, much in part to our trickle-down capitalism, working people struggle more and more financially but continue to get around in the most expensive, inefficient, environmentally destructive way possible.  And I’m guessing the majority don’t even realize how much their cars/trucks cost year after year.

     

     

     

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  • Mon, Jul 01, 2019 - 7:16am

    #7

    newsbuoy

    Status Bronze Member (Offline)

    Joined: Dec 10 2013

    Posts: 169

    2+

    Wet bulb induced frugality

    When the temperature and humidity are high enough and there is neither AC or the power grid has collapsed under the strain of cooling, people will become extremely frugal because they can’t move. Pakistan has already reached wet bulb temps this year and Europe is in and bracing for another long hot 500 yr. summer heat wave (last time 70,000 people died). Living underground because the surface is too hostile some number of weeks during the year will also force frugality.

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  • Mon, Jul 01, 2019 - 9:32am

    #8

    Matt Holbert

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    Joined: Oct 03 2008

    Posts: 74

    2+

    Vanishing insect populations and Henry David Thoreau...

    It is interesting that although there are far fewer moths at the door, the coddling moths have infested many of the apples in our organic mini-orchard. Has anyone had success in deterring coddling moths in a natural way. (I tried the University of Minnesota plastic bag method and the results are not encouraging.)

    I read recently that Henry David Thoreau’s mother did his laundry for the entire time he was living at Walden Pond… It reminded me of my grandmother driving 70 miles one way to do my uncle’s laundry while he was getting an engineering degree. Supposedly, he finished second in his class. Behind every successful writer/engineer is a mother willing to go above and beyond… : )

    I would love to see some form of carbon tax replace property taxes. Paying property taxes in the coming years will make it difficult to be frugal.

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  • Tue, Jul 02, 2019 - 1:36pm

    #9

    tourcarve

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    Posts: 12

    2+

    Mr Money Mustache Blog Adding to Emotional Resilience

     

    Mr. Money Mustache, while generally about frugal living as a path to financial freedom, has a great blog post for emotional resiliency:

    What is Stoicism and How Can it Turn your Life to Solid Gold?

    It turns out that the common understanding of Stoicism is a misunderstanding. MMM’s blog post has useful ideas about working with difficult emotions.

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  • Tue, Jul 02, 2019 - 1:38pm

    Reply to #2
    mjtrac

    mjtrac

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    Posts: 8

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    i think i win

    How do you think I feel as I swim past you in my birthday suit.  Top that!

    Good article, regardless.  We judge ourselves against what our neighbors have.  When one of us adopts a more frugal lifestyle, it enables others to do so as well.  The less people care about things, the more they are able to care about others.  The more they care about others, the less chance we have of electing people who cage children, love dictators, and deny the climate crisis.

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