What kind of frugal you want to be

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I ran across an older piece in the Toronto Globe and Mail, a typical "here's how readers cut costs" round-up, but one insight is worth passing along:

There are actually two kinds of frugality. The first is active, where you control spending by choice to save more and stay out of debt. The second is reactive, where debt or other circumstances force you to cut back.

I liked the distinction because it recognizes that not all frugality is created equally. It's the difference between wanting to be frugal and having to be.

For example: A friend and coworker once spent a year living on half her take-home pay. She had a system: the first check of the month had to last her all month, and the second was put in her "Quit my job and go to Europe" fund. My friend overhauled her life -- no more drinks with coworkers several times a week, calculating the rare meal out down to the penny allotted for fun, not buying new clothing. And in a year, she had enough in her fund to quit her job and spend eight months bopping around Europe.

And once she came back … she cast about for her next goal and began saving all over again. (Hint: It involved an extended walkabout in Australia.) My friend sees her frugality -- all that saying "no" to expenditures lots of people don't think about twice, like beverages at restaurants -- as a way of saying "yes" to the things she really wants to do.

As for the reactively frugal, when you're forced by circumstances to cut back on spending, it feels like you're always saying no. And in many ways, you are: No more living beyond your means, no more spending money thoughtlessly, no more spending money carelessly. Those aren't bad things to say no to.

What I want to know from you, dear readers: If you've been forced into reactive frugality, was there a moment when you shifted from thinking that you were saying "no" to everything and began believing that you were really saying "yes" instead? Tell me the story at dollarsandsense@sfgate.com.

Posted By: Lisa Schmeiser (Email) | January 13 2011 at 09:19 AM

Listed Under: Wallet-friendly habits