The Dark Side of Frugality

This story starts back in November 2013.  We were still only about a year removed from college, and were working our way through the beginning phases of striking out on our own financially.  At the time we had a hefty AT&T bill coming every month, and knew that in order to more efficiently pay off our new place (we had moved in a few months prior), it would be a good idea to find a way to trim that expense.

We wanted the mortgage gone, ASAP.  Although we knew switching cell phone plans wouldn’t be a monumental shift in our budget, it would matter, and ultimately save us a lot of money as the months rolled by.  Around the same time, I had already been exposed to the personal finance scene online but had just gotten around to discovering Mr. Money Mustache.  His review of Republic Wireless and their offerings really opened my eyes to the other types of phone services that are out there.  It was amazing to me that this was so unknown to the general public.

As I write this is the spring of 2016, rate competition in the cell phone business has definitely gotten fiercer than where it was in 2013.  Now, you’ve got the big boys (AT&T, T-Mobile, Sprint) competing heavily for customers, sometimes offering to cut their competitor’s rates in half for signing up with them (Verizon is still the pricier big company the last time I checked – I guess they get away with it because they tend to have a reputation as a higher quality network).

However, this was not so in 2013.  It was quite common for your average Joe to be paying $100+ per month for their cell phone usage (text, talk, and a decent amount of data).  You can imagine my delight when I discovered that, with two Republic Wireless phones, Mrs. Mase and I could pay under $50 for unlimited service!

After a little more research, we took the bait and signed up for Republic Wireless, ending up with two of their Motorola Defy XTs.  Sadly, they went out of production not long after that (early 2014 I think). They’re not the best looking phones but they get the job done.  But man, compared to today’s standards, they are kind of dorky looking phones.  See for yourself:

RepublicWirelessMotorolaDefyXT

Source: http://www.prepaidphonenews.com/2013/06/with-new-phones-on-way-republic.html

Even when we got the phones delivered, they were pretty much ending production runs.  At the time however, it was the only phone that Republic Wireless offered, and it was pretty inexpensive, so we went with it.

So here we are, almost two and a half years later and we’re still rocking these bad boys.  They suffered some drops, been exposed to a lot of dirt, and surf the internet with 3G speed but hey, that’s better than the phones we had before the switch.

The charging connectors even broke on both of our phones – first on hers and then mine.  At first to compensate I would just charge up a battery via my phone and then stick it in her phone, then charge up a battery for myself.

This worked pretty well for a while – until my charging connector broke too.  Despite my best efforts, I could not get either of our phones to charge at all.  So, we now have four batteries in total that we charge using an external charging device, and we swap out the batteries routinely.

That’s a lot of hassle for some people, and understandably so.  Let’s look at the cost savings though.  If we had kept going with AT&T, our costs would have been at least:

29 months * $100/month = $2900 spent on cell phones

This is a conservative scenario, assuming no rate increases, etc.  Here’s how much we’ve spent in total over the past 29 months (about $20 included because of the extra phone batteries and charger we bought):

$1115.99

That is a difference of $1784.01.  That is statistically significant.  That is more than some people’s mortgage payments.  Is it an absolutely huge win?  No, but it’s a win nonetheless.  If that money were stuck in a good investment and left alone for 40 years (and we actually are going to be investing that savings, now that the mortgage is paid off), it would be worth $80,743.27 with a long term 10% rate of return.

And, the longer we continue to use these phones, the greater our savings are.  We actually planned to upgrade the phones when the mortgage got paid off, but we kind of looked at each other and said, “Eh, these are still working.  We’ll get new ones later.”

“Ok you guys saved some money.  So…what’s the bad part of this story?”

Let me explain.

Several months ago Mrs. Mase and I met a cool couple, not very different than us, in our various social interactions around our city.  We hung out a few times and really hit it off, and before long we considered them squarely in the “friend zone.”

As time went by we started learning more and more about each other, and they were even nearing the point of being in our inner circle of friends.  Now you see, these friends were similar to us in many ways (hence why we tended to gravitate toward each other in the first place), but spending was not one of them.  It became clear we had a very different set of priorities when it came to where to allocate our money.

When they learned that neither the Mrs. or I are on Facebook, the guy friend thought it was intriguing. When they learned that we bought our condo for super cheap, he was impressed by our savviness.  When they found out we have super simple phones that don’t accept picture messages, he laughed a little and poked a bit of fun.  Knowing that I am an engineer, and knowing that engineers are commonly known as making above minimum wage, and knowing my wife also has a solid job as well, it was strange to him that we wouldn’t just pony up and get a more up to date phone.  Ok, fine.  I can see how that’d be strange from most people’s point of view.

The problem with being in the “friend zone” phase and not the “inner circle” phase of friendship is that it is often unwise to disclose your more deep desires, dreams, and philosophies.  This could risk the friendship, as it is in a more fragile state.  Envy, judgment, or misinterpretations could easily follow without much hope for reparation, and without considerable communication between both parties.

There is no way we were going to reveal to these guys that the real reason we have such cheap phones is so that there would be that much more money available to throw at our mortgage so we could be debt free in a radically short period of time.  And, even if we didn’t have such a radical goal, low levels of consumption in and of itself can be a virtue, as can be simply wanting to avoid the constant distractions (read: endless notifications, apps, and social media) that newer technology would provide.  So, in response to this small joke, Mrs. Mase and I just laughed it off with him and continued our evening of fun and socializing.

We kept hanging out and some time later, the guy friend brought up our phones again, poking fun at it. Again, not really taking it to heart, we didn’t respond with much else other than a chuckle and a remark how we kind of liked our phones and that we considered them satisfactory.

The other night we were chilling, having a good time out in the city.  It was getting late and time to head home.  When Mrs. Mase went to pull out her phone and call an Uber for the four of us, the guy friend, out of nowhere, started laughing at us for still carrying around these dorky phones and not upgrading.  I let out a sigh of disappointment because this guy just couldn’t drop it, or at least come at the situation in a more approachable way.  He could have said, “Hey, I noticed you guys still use those phones, is there a reason you don’t upgrade?”

I’m sorry, but when someone repeatedly makes a joke about your choices that you repeatedly don’t really find funny, it becomes an annoyance.  At a certain point it becomes disrespectful because someone else is repeatedly being critical of you, and that can only be tolerated for so long.

Before I had the chance to even breathe in again after my sigh of disappointment, Mrs. Mase responded calmly but firmly, “Please, I’d appreciate if you didn’t place your societal expectations on me.  Thank you.”

That really got our guy friend going, and he went on about how we couldn’t take a joke.  To exacerbate the problem, he refused to inquire about our spending patterns in this area of life in any sort of inquisitive, humble way.  He didn’t inquire at all.  He simply continued to declare that we had out of date phones that were behind the times, and it clearly made him upset.  In fact, he actually said, “Yeah, I’m calling out all my friends right now that don’t have iPhones.  If you don’t have an iPhone by now…”

The female friend didn’t say anything, but Mrs. Mase and I tried to talk some sense into this guy and get him off of our backs over something that would otherwise be so silly to argue about.  He didn’t take it well though.  To him, we were just two cheap people who couldn’t take a joke and who didn’t want to bask in the sun rays of American consumerism.

Ultimately, he was disturbed by our unwillingness to pay for something flashy that we clearly could have afforded.

Frustrated with the conversation, he ended up leaving the three of us standing where we were, and walked off.  He ended up missing the Uber that we had called…..from my wife’s phone.  Oh well.

Alas, there is a dark side to frugality.  Neither Mrs. Mase and I have spoken with these friends since (I half expected an apology text the next day, but I guess pride is a powerful thing).  It is unlikely that we will ever be friends again.  Even if we do repair the friendship, there are some fundamentally different beliefs between us that, in spite of all of our other shared interests and similarities, will stagnate our relationship.

It truly is a shame, but it goes to show that sometimes, people just won’t get you.  They won’t get your goals, dreams, or aspirations.  And many times, they won’t even care enough to try to find out, or to honestly know the reasons behind them.

Take a look at the comments on personal finance articles in the mainstream media sometime.  When a big media outlet posts something about a couple who became millionaires by 40 or something like that you will have: a small percentage of people who think its awesome and will happily applaud, a larger percentage of people who think its cool and have some honest questions or concerns, and then a majority who scream about how “it’s not possible” or “they must have inherited their money” or some other unsubstantiated nonsense.

People believe what they want to believe, and they feel how they want to feel.  In our case, I’m glad we didn’t tell them that we had just paid off our mortgage and that switching cell phones was one of the small reasons we were able to do it so fast.  They might have feigned encouragement and admiration, but there would have been some criticism as a follow-up.

When you’re working toward financial independence and trying to live a more awesome life in general, you don’t need people pulling you down.  Being truly curious about another person’s lifestyle is one thing, but criticizing while making lots of assumptions is another.

Giving Feels Good

Source: https://commons.wikimedia.org/wiki/File:Giving_a_gift.jpg

Source: Wikimedia

We recently had the opportunity to do some unexpected giving, and it kind of took me by surprise. We were selling an item on Craigslist, and after communicating with the buyer a few times we finally met up at end of the day.

He was so grateful to be getting the item on short notice, he ended up handing me more cash than the full retail value of the product. I was sitting in my car with Mrs. Mase about to drive off, and I looked at thr money in my hand. “It was a fair trade” I thought. Then I turned to my wife.

I began to describe what the gentleman had told me as we exchanged goods for cash.  He told me briefly about his life situation and why he was buying that particular item from us (it was a gift for his daughter).  It became clear to me that this guy could use the item way more than I needed his money, even at full retail value.  He was also so grateful to be able to buy the item from me at a price beyond what I would have normally taken.

Yet, even with all of these things going on, there was still the coldly rational par of my brain that was telling me, “go home, pocket the cash, it was a perfectly fair trade”.  Indeed, it was.  But I knew there was something more going on, something that my subjective brain could not ignore.  After I told my wife more about our interaction, she could see the look on my face.  “Call him back – we can’t take that guy’s money.”

It was something I already knew deep down but was struggling to recognize consciously.  I’m so thankful that I’m married to someone who can encourage me in that way, to spur me on to do good things even when my logical brain is telling me to just make a transaction and move on.  I have to say it is one of the true benefits of being in a fruitful marriage – the ability to honestly rely on someone else’s encouragement when you yourself are struggling.

After calling the guy back and giving him his money back, I stepped back into the car to drive away.  Mrs. Mase and I felt this this wave of awesome gratitude come over us.  It is something I have not experienced in a while.  It simply reminded me that giving with an open heart to someone that is a willing and grateful receiver of the gift, is one of the most powerful things that you can do for another human being.  For the next few hours I was totally on an emotional high.  It is amazing to me how much you can change someone’s life when you do something so radically simple as taking some time out of your day to give!

So, let this serve as a quick reminder – don’t forget to always give generously.  It opens up your heart to seeing beyond yourself in the world, and, I believe, will actually accelerate the process of wealth building in your own life.  Having an abundant mentality and constantly reminding ourselves that it is not all about us is a powerful way to go through life.

50 Day Fast: Alcohol

Alcohol can help enhance a good time, right?  Right.  But too much is almost always a bad situation for everyone involved.  It’s good to keep this vice in check.  Last fall, i read a great book by Darren Hardy called The Compound Effect.  It’s basic premise is that every small decision in life, when compounded over time, produces huge, significant results. This applies in both positive and negative ways.

One part of the book that i like is when he talks about managing your vices. He states that although there’s certain things he enjoys, like a good glass of wine, he’ll occasionally give it up for a while in order to kind of refresh. I like when he says that temporarily giving up a vice on a periodic basis is a good way to remind yourself that you are in control of your actions. Think about it – how many times have you heard people say, “i could stop now if i wanted to”, whether they are referring to drinking, smoking, or watching too much TV.

A few weeks ago i decided to challenge myself to give up all forms of alcohol until Easter, which ended up being a 50 day period (aka during Lent).  Right now i’m exactly 25 days in, or halfway toward my goal.  I chose alcohol b/c well, I often enjoy a good beer or a glass of red wine.  However, there are negative health effects of doing so (mainly with beer and hard liquor – red wine is good for you!).  Also, drinking is a total killer of productivity.  Some people claim they write way better when they drink, but I am just more sluggish overall.  In college my then-girlfriend used to sip wine while writing essays, but I could never do the same when working through problem sets!

I’ll be honest, the first week it was a little weird not having a beer at all on the weekend.  Now, it feels pretty normal to mainly be sticking to water in juice.  I suppose sometimes the body just needs a little reminder of what it’s not like to be digesting alcohol for awhile.  It’s good to give the liver a break 😉

All this talk about alcohol draws my mind toward alcohol stocks.  Did you know that, as a sector, alcohol companies have vastly outperformed most industries?  There isn’t as much data in the U.S. because of prohibition, but in the U.K. alcohol stocks have returned 11.4% annually, a full 200 basis points over the broader U.K. market.

Source: Global Investment Returns Yearbook 2015 - Credit Suisse

Source: Global Investment Returns Yearbook 2015 – Credit Suisse

To me, it’s a little funny to see Engineering as the lowest returning…I think the way it is classified it probably includes industries that are highly capital-intensive.  The outperformance of alcohol stocks starts to make sense when you think about it – the margins are high, the product is always in demand (people drink a lot in good times and bad), and the brand names associated with some of the bigger companies have been known for decades, sometimes centuries.

It reminds me of when we went to Dublin for our honeymoon.  One of our favorite stops during our trip was the Guinness brewery.  It was amazing.  Walking through St. James’ Gate and taking a sip of one of the best beers ever – priceless.  We also checked out the Jameson brewery.  It is really amazing to learn about the history of the distillers and brewers.  These are companies that have provided timeless products for generations.  Mark my words, one day Diageo and Brown-Forman will certainly end up in my family’s portfolio.  I mean, who wouldn’t want to be receiving dividend payments every time someone takes a sip of one of these:

diageo_brands

Source: Diageo.com