How to be an Extreme Saver – A Quick Primer

Although I’ve written a couple of posts already about Extreme Frugality [see: Is Extreme Frugality for You? and 3 Types of Extreme Savers], I thought I’d write a brief primer on how to be an extreme saver for anyone curious about this way of living. I define Extreme Saver here as someone who sets aside 60%-90% of their income for a specific period of time for some other purpose (savings, investments, debt payoff, etc). These tips are written assuming you are single with no children, so adjust accordingly if that assumption does not fit you.

Extreme moniker aside, my points are actually somewhat moderate. I don’t have anything here about being voluntarily homeless or dumpster diving. I advocate a life re-design that is based on simplicity, not on risk-taking.


1. [YOUR PLAN] Before you begin your foray into extreme saving, you must have a plan and a goal/time limit for ending this lifestyle. Know why you are doing this. Is it to get out of extreme debt, to retire early, or for a personal challenge? This will help you explain your actions to those you care about. If they understand that this way of life is for a specific period of time and for a specific goal, the more support you can get from others.  If your goals frequently change, then set a time limit of between 1 – 10 years to do this. Regardless of your goals, you should not do this for more than 10 years. Beyond that, you are on what Dave Ramsey calls a ‘Deferred Life Plan’. Remember that life is for living. You want to have plenty to time for fun while you can enjoy it.


2. [YOUR HOUSING] Rent a Room – That’s right. You don’t need to own a house. You don’t need to rent an apartment – at least not by yourself. If you want to be an extreme saver, you must cut down drastically on your major expenses.  Rent a room in someone else’s house – the smaller the better. Save a ton on housing. Eliminate the hassle having to deal with utilities by having that built into the rent. The next best option is to rent a room in an apartment with multiple roommates. You don’t need to be comfortable in this small space because you should be living (working/playing) outside anyway. You may be able to get free or low room rent in exchange for part-time cleaning, handyman, or care-giving work.


3. [YOUR STUFF] Become a Minimalist – No furniture. No storage. No property insurance. Get a room that is already furnished in someone’s home. The less stuff you have, the smaller (and cheaper) of a room you can get. It is very freeing to be so mobile. Do some serious de-cluttering, selling, and donating. There are many sources online that will walk you through the process. Read up on minimalism first to make sure that you are prepared for the journey. It’s not just about getting rid of stuff, but its about making room in your life (physically, emotionally, financially, time-wise) for only what is important to you so that you live with purpose. Less is more. This includes removing people and situations from your life that are not adding to it.

Read This:  How to Become a Minimalist – This article boils it all down and doesn’t mince words. (Warning: Contains a sprinkling of four-letter words.)

It would be an easy assumption that the vast majority of extreme savers practice some combination of minimalism and simplicity, so there is a lot of overlap here.


4. [YOUR SOCIAL LIFE] Live life cheaply. The best things in life are free. Hang out with your friends and plan activities, not events ($). If you live in a large town or city, it is likely that you have access to Meetup groups, where you can do a lot of free activities. If you have a hobby that requires gear you can access them through groups like these for a small fee.


5. [YOUR FOOD & HEALTH] Eat simply but NOT cheaply. Eat a diet high in fresh organic vegetables and low in sugar. Stay away from anything in a package. Food is a budget item that most of us struggle to keep under control – including me.  Stay healthy and exercise to avoid medical expenses. Unexpected medical bills are the #1 cause of bankruptcy. If you have insurance, go get those annual checkups (physical, eye, dental). Don’t let an illness take a bite out of your wallet.


6. [YOUR TRANSIT] Take public transit and walk where you need to go. Rent your room within walking/biking distance from work. Public transit is possible if you live in a medium to large city. Take advantage of it. Ditch the car completely. They are a money pit.  You can rent a car by the week, day or even by the hour (ZipCar) if you really need wheels.


7. [YOUR INCOME] Make more money and tell it what to do.  You should always be working at least two jobs. Preferably you should have one full-time job, one part-time job, and an additional intermittent side hustle that focuses on generating passive income. Make sure that you have a spending plan for your income. Automate your monthly investments and bill pay where ever possible.


8. [YOUR SUPPORT SYSTEM] Find others online or IRL (in real life) who understand what extreme saving is about, yet can give you a sanity check every now and then. Communicate with these people to make sure that you aren’t going off the deep end and sacrificing too much or losing relationships because of your choices.  There are extreme saver bloggers out here (myself included) who are supportive and eager to help others.


9. [YOUR RESPONSIBILITIES] Don’t have children – at least not now. This is not for the faint of heart, but remember that you will only be in extreme mode for a limited amount of time. If you are fairly young, early 30’s and younger, you still have time to wait. The rest of us will have to make some tough decisions. Some may choose not to have pets during this time.


10. [YOUR SPENDING]  Stop buying crap. Your spending should be very limited at this time. If you haven’t already, get rid of your television (also known as the Idiot Box or the Electronic Pacifier). This will remove a LOT of advertising and materialist messaging from your day-to-day life.  You will be spending according to your spending plan, so make sure that you are only buying things that serve a truly needed purpose (nutritious food, a winter coat etc.). Stay away from any stores and malls unless you are going there to get one or two needed items. No more shopping as a past-time. You should be working instead.

That’s it.

This was my super quick 10 point primer on extreme saving. MUCH much more information is available on each of these areas. Perhaps I will dedicate some future posts to examining them in more detail.


“Debtor’s prison is real, and opportunity cost is a bitch.” (DDSW)

5 Reasons Why People Practice Extreme Frugality and / or Minimalism

I’ve been considering why some of us are drawn to (extreme) frugality and/or minimalism. I have identified five reasons or triggers for these practices. You may identify with all of these possible causes or none.  If we maintain this way of life for many years, we may move between these reasons as our circumstances change. I am not a psychologist or behavioral economist, so these are just my personal observations and opinions. Note that frugality and minimalism are NOT the same thing. I pair them here for the sake of simplicity.


#1. Reflexive Resentment

You couldn’t turn things around now you’ve lost it all. Your debts and financial situation have caught up with you, and you can’t run and hide anymore. The facade has crumbled.  You’ve hit a low point and need a way to cope with your situation. You turn all that sadness, disappointment, and embarrassment into anger and resentment.  You had to sell a lot of your possessions. The things you have left mock you. As a reflex and as a way to protect your ego, your sense of self, you begin to see the things that you no longer have, the things you could no longer have, as a useless waste. In your mind, if you can’t have it, then you don’t want it.  You dislike owning things now. You see stuff as weight that keeps you tied down. You dislike spending money. You may not even have much desire to travel anymore when it used to be all you thought about. You reduce your living expenses and lifestyle in a way that rejects what you used to value and spend money on.

For instance, some people practice minimalism as a way to reduce anxiety and stress by reducing the number of things in their life. That means, fewer things to search for, buy, store, clean, insure, and maintain, etc. It can be a way to assert control over one’s environment, particularly if it is felt that other parts of life are out of control.

In addition to resenting things, you also resent yourself for thinking that you had a shot at a better life. You resent yourself for being so financially ignorant and gullible with regard to money. While you may love your family, you may resent them for not teaching you to protect yourself from financial predators. You resent that you, without knowing any better, allowed yourself to be financially taken advantage of.

You don’t want status symbols and stuff anymore. Some may call it sour grapes. Others may call it a symptom of depression. I’m not a psychologist, but it seems that while this may help one cope in the short term, if it goes on long term, it may not be the healthiest perspective and could slip into mental illness if not regularly measured against healthy boundaries.


#2. Psychological Trauma

Similar to #1 (reflexive resentment) but more sudden and severe. Whereas #1 may take place over a period of months or years where one’s financial situation deteriorates, #2 psychological trauma, happens suddenly. Usually a job loss, a large negative legal judgement or expense, divorce, or a grave and costly medical diagnosis turns your life upside down in one moment.

Your safety net and security are snatched from underneath you before you can steady yourself or put plans in place. You may find yourself  days or hours away from being homeless, or you may find yourself actually being homeless. These experiences can cause psychological trauma that can last a lifetime. In its extreme form, the result can be an unhealthy relationship with money and ownership of things.

We all know the story of Kate Hashimoto from “Extreme Cheapskates”. Her obsession with not spending (“wasting”) money was triggered when she lost her job during the bust. This must have been a traumatic event for her because now, even though she makes a six-figure salary with a big accounting firm, she refuses to spend money on anything. [To anyone who has traveled outside  of  the U.S. and Europe, the things she does to save money are actually commonly done in many parts of the developing world, and are not “weird”.] What is concerning however, is that she and others in this category do some things that put their health at risk when they have more than enough money to not have to do that.


#3. ROI – It’s Business 

You find frugality and/or minimalism to be a strategic financial pathway to achieve some life goal, such as extreme early retirement.  You have calculated that if you reduce your expenses and possessions for a period of time now, you can divert that money to savings and investments that will allow you to retire early, start a business, or travel the world for years.


#4. It’s Trendy 

You are not experiencing financial hardship. However, with the economy not being what it used to be, and with so many people cutting back, you want to fit in. Perhaps, thanks to a documentary or famous blog, you undertake a 1 month or even a 1 year challenge to buy nothing new, or only spend X dollars, or only own X number of things, or live on minimum wage. For you, it’s about adventure, and accomplishment.


#5. Enlightened Self-Awareness

You embrace frugality and/or minimalism by choice and practice it as an outward manifestation of your own inner peace and self-acceptance. For you, practicing frugality and/or minimalism is not a means to an end. It is not something to be endured. It is a way of life. You have no desire for designer labels, and the accumulation of stuff. You only keep those things that bring you the most value and benefit, and reflect what is most important to you.


There you have  it. Those are my five reasons why people are drawn to practicing (extreme) frugality and/or minimalism. Did I forget any? Why do you think people are drawn to this way of life?


“Debtor’s prison is real, and opportunity cost is a bitch.” (DDSW)


Bitterness and Resentment –
Meditation –

2013: Out with the Old and in with the New


This will indeed be a new year. This will be the first year of my financial future. After my rude awakening with respect to my finances and debt, I FINALLY started to make some real changes in my life.

I moved to this West Coast city two years ago to start a new job. Instead of continuing to live like a grad student, I inflated my lifestyle. Life mistake #412. I moved into a posh apartment building in the heart of downtown. I couldn’t afford furniture or a car or travel or nice clothing, but I didn’t care. I loved my posh digs. It took me two years of living paycheck to paycheck to buy furniture for a studio apartment. And the kicker, I’ve had my student loans in forbearance this entire time. Yes, I put my massive student loans in forbearance, accumulating interest continuously, so that I could buy nice furniture for an overpriced shoebox apartment. The stupidity!

Today I marvel at how much my thinking has changed and evolved. This has undoubtedly come from reading many personal finance blogs and listening to the gurus. I had the head knowledge of what I should be doing with my money, but I wasn’t uncomfortable enough to change.  I wasn’t fully realizing what I was giving up to live like that (opportunity cost). All I could afford to do was work and come home to my posh apartment. Occasionally, I’ll have a rough day at work – taking crap from clients, my manager, etc., and I’ll fantasize about leaving and finding another job, but I quickly realize that I can’t take the risk of leaving. I  am wholly dependent on my employer for my livelihood. So I keep my mouth shut and my head down in those situations at work. I hate it.


I have been reading blogs such as Man vs. Debt. Bloggers like these have been able to travel extensively (my passion) and lead a lower stress life thanks to lack of debt and financial freedom. I realized that I would never be able to live that type of lifestyle while shackled to this mountain of debt. That made me sad. What made me angry was the realization of how much interest I’ve paid to make others wealthy and not myself.

I finally got uncomfortable. I got angry. I’m still angry. I’m done being a tool. I’m done being a profit center for corporate fat cats. I’m done funding everyone else’s retirement but my own.

When I am out of debt I vow to never pay another red cent in interest for ANYTHING.

I do not own a car, but in the future when I am able to afford one, it will be used, very small, economical, and paid for in full, in cash.  I don’t know if I’ll ever own a home or if I’ll ever want to, but if I do I will pay for that with cash, as it too would be very small, simple and functional.


I’m done with consumerism and materialism. I’ve come to embrace simplicity, minimalism and frugality. While I still like nice things, my definition of nice has changed from what it once was.

I now realize that no fancy apartment or electronics or furnishings are worth what I’m losing. What am I losing? I’m not funding my retirement. I’m 37. I have no emergency saving, so I have no peace of mind. I can’t travel. I have old clothes that are so out of fashion that people stare at me sometimes. The list goes on. And #1, I don’t have control over my own life. It’s too risky to try for a new job in a new city or a different country. And when you can’t stand up for yourself or push-back in the workplace because you are entirely dependent on that job, a bit of your self-esteem crumbles away, little by little. To the financial powers that be. You can have your treadmill back. I’m done with all of it.

So, out with the old and in with the new!

It’s time to get on track and trying my best to catch up with my finances.  In my next post I’ll give a rundown of my current state and my goals for the new year.

What are you glad to leave behind in 2012? What are you ready to gain in 2013?


“Debtor’s prison is real, and opportunity cost is a bitch.” (DDSW)