The Simple Dollar and I Will Teach you to be Rich are two of my favorite personal finance web sites. Both have great writers with valuable information. They are probably sites that you have visited at one point or another and learned tips about saving, frugality, credit cards or a number of other topics. Trent and Ramit are the administrators of The Simple Dollar and I Will Teach you to be Rich, respectively.
A few days ago, Ramit posted an article called “Trent says the Scrooge Strategy is Short-Sighted”. Let me give you some back story. “The Scrooge Strategy” is Ramit’s answer to being frugal. He doesn’t buy in to the belief that using less toilet paper or changing light bulbs will make enough of a difference in your finances to warrant the time and effort that goes into these practices. Ramit argues that frugality requires bigger steps to reap more lucrative benefits over time. For example, The Scrooge Strategy encourages calling credit card, cell phone, cable, and other monthly billed companies to negotiate lower rates. Earning more and cutting costs are also accented in The Scrooge Strategy.
Trent’s “short sighted” comment was a small part of a mailbag post of questions from readers. Here is the entire question and answer:
Are you familiar withâ€“or perhaps even participatingâ€“Ramit’s (from I Will Teach You To Be Rich) Scrooge Strategy? He has a whole different approach to saving money that avoids most frugality tips. Instead he focuses on things like calling to get your cable/phone/insurance/etc. bills lowered and tackling those major spending habits. His argument is that small frugality tips (those that â€œonlyâ€ save $5-$10 per month) take too much effort when trying to implement several at a time over a long time; an argument that I believe is completely valid. Anyways, I just wanted to get your opinion on Ramit’s view of frugality [or lack of]. Personally, I don’t believe there is any right or wrong way to save money, but do find Ramit’s method to be my preferred choice. Thanks.
I think it’s good in concept and attractive for people looking for the big quick fix, but it’s shortsighted. Let me give you an example. Let’s say I can swap out the incandescent bulbs in my house for CFLs and drop my electric bill about $8 a month. This activity would take me about twenty minutes, just once.
Under the philosophy you describe, such an activity would be a waste of time. Yet, over the course of three years, that activity saves $288 for only 20 minutes worth of effort (actually less than that, since with CFLs you don’t have to change bulbs nearly as often).
There are countless examples like this – little frugal steps that don’t save much money per month, but don’t take much time either. As a result, these efforts pay a huge hourly wage. Ignoring them because the immediate result isn’t splashy is a pretty big mistake, in my opinion.
Since Ramit’s commentary encompasses an entire post, I will not copy the entire text here. You can read the entire post HERE.
The most entertaining aspect of both of the aforementioned posts are the comments of readers. Heated debate ensues about which writer is right, and if you read through all of the comments on the I Will Teach you to be Rich post, readers seemingly want some sort of showdown between the two writers. Many of them are out for blood. The truth is that both of these guys have immense respect for each other and would never resort to a fistfight over something the other has written.
These posts do open eyes. It goes to show that everyone looks at saving differently. Both writers make great points and continually serve up great posts on many subjects, including frugality. It is completely irrelevant as to who is right. It is simple. Both are correct. Trent and Ramit both have different methods of frugality which include different paths to obtain savings. Neither is wrong. The best way to settle this “debate” would be to let the readers try both and submit hard numbers to compare results.
It makes me very happy to see such heated debate over the subject, but at the same time, it is slightly disturbing that so many people fail to see that both methods will yield results. They are too quick to jump all over the writer whose methods do not work as well for them, and may not be considering that not all suggestions apply to all who may read them.
I know just by their demeanor and overall attitude toward the subject of personal finance, that Trent and Ramit are both really good guys with oodles of excellent ideas to share with their readers. By no means am I trying to get in the middle of their debate or interject my own opinions on the subject. Hell, my only real post thus far regarding frugality is FRUGAL vs. CHEAP, and that post offers up few methods for saving. What I’m saying is that these guys are light years ahead of me. I can only aspire to become the writers that they are. (Not to mention that their readership dwarfs mine by the millions), no exaggeration!!