After going through the Great Recession of 2008 to present, I couldn't suggest any better book to read than The New Frugality: How to Consume Less, Save More, and Live Better. For anyone looking for radical change in their life after realizing they've consumed too much and are in too deep of debt prior to the Great Recession, then this is the book for you. The New Frugality gives a fresh post-Great Recession perspective on how living beyond our means for the past half century has finally caught up with us and people are going to be forced to change. Along with this, resources on the earth are being strained and with the buzzword of Global Warming being so popular, Mr. Farrell believes that a new type of frugality is coming about. It's one that isn't by choice, but one of necessity. With savings at zero percent, the average credit card balance at $15, 788, and lots of families already requiring dual-income providers he writes, “this time is different.” Meaning…people can't be stretched any further. They can't have a third income provider. They can't continue to save into the negative and people's credit cards can't sustain much more damage. Drastic change is needed and this change is “The New Frugality”.
What is “The New Frugality”:
It is a blend of being frugal and being green. It's creating a margin of safety in all circumstances from mortgages, to emergency funds, and to retirement savings. It's about consuming less or “an embrace of a sustainability ethic or outlook.”
Book Rating by ThreeThriftyGuys.com:
I rated it four out of five stars because he did a great job of showing how our history has brought about needed change in this generation. A change of thrifty and green-ness. One that buys on the thrift, but considers the impact on the environment. It does a great job of not getting into the “quick tips” or “do like I do”, but shows how the choices of our past are forcing us to live more environmentally and financially sound. I probably would have rated the book higher but I felt after about Chapter 6 it felt a little too similar to the books you read by Suze Orman or David Bach about 401k's, mortgages, and saving for college. I thought he could have continued to focus more on similarities between the Great Depression and the Great Recession and how the change will be similar to the post-Depression generation.
Who should read “The New Frugality”:
People who are struggling with making ends meet after the Great Recession or who haven't ever created a margin of safety in their decision making. If you think being “green” is a hippy term. If you want to live a different life than everyone else. If you don't think sustainability and thrifty are synonymous.
Key take aways or quotes I enjoyed:
- “personal finance is really about deciding how to live your life, figuring out what you really cherish and value, then putting your money behind those goals and beliefs.”
- “The Great Recession marks a major inflection point in managing our money. Our love affair with consumer debt is over.”
- “The New Frugality signals that a half a century of people spending with abandon and borrowing as much as possible is done.”
- “The country has drifted away from the concept of thrift to our detriment” quoted from Robert Frank
- “The New Frugality….managing our finances with a margin of saftey in mind.”
- “The New Frugality reflects a growing embrace of sustinability ethic or outlook.”
- “being frugal and being green are synonymous.”
- “this time its different”
- “The signs of a new world are all around us. The time the epicenter of change is the household. The age of excessive consumption supported by consumer borrowing is finished.”
- “The Great Recession has taught all of us that it's financially dangerous to carry too much debt.”
- “Make frugality a habit.” “Don't spend more than you earn.”
- “Compound interest is how the financial turtle can beat the money hare.”
- “The combination of frugality, sustainability, planning, and thoughtfully developing the money-saving habits that reflect your values will prevent the “Don't spend more than you earn” perspective from turning into cheapness.”
- “Sometimes you need to make a bigger break in your spending pattern to boost saving or pay down debt. The answer: downsize.”
- “Consumption signified the wasting disease of tuberculosis.”
- “Living debt free is wonderful.”
- “Make debt reduction a priority…. Remember small steps add up over time.”
- “Remember the concept of compound interest? It's the saver's friend. It's the borrower's enemy.”
- “the quicker you are able to live debt free the greater your margin of safety.”
- “You can't beat the market, so join it.”
- “the best way to fall short when it comes to stock market returns is to pick an actively managed mutual fund, socially conscious or not, over a broad based index fund.”
- “Diversification both reduces investment risk and increases the odds that you'll earn a decent return over time.”
- “The real benefit of dollar-cost averaging is that it takes emotion – fear, greed, and panic – out of investing.”
- “One of the biggest money mistakes people make is to simply turn their money over to professionals and assume they'll do all the work. That's a recipe for trouble and disappointment.”
- “The returns on getting started early are enormous, and not only because savings compound with time, as do the financial and environmental gains from sustainable frugality.”
For me, having grandparents that went through the Great Depression and seeing their daily example, I thought “The New Frugality” was already established by that generation. I heard many stories of my grandpa scavenging the junk yard for “slightly used car tires” that he would repair because new tires were expensive. Or how grandma would make her own laundry and dish soap. I remember hearing the lecture of eating everything on your plate, and how the Great Depression changed their eating habits. Or how you could reuse old socks, shirts or dresses to make dish rags for common kitchen use. And heaven forbid if they'd throw away a bread bag which could be reused for some other purposes. For my grandparents, living frugal and green is a common practice after living through the Depression. They were green before it became cool or before Al Gore “invented it.” Chris Farrell does a great job of blending modern day topics, like debt, sustainability and the Great Recession into 21st century lingo that should be embraced by more people today than ever. If you are looking at creating a margin of safety in your life and learning how consuming less is more, then this is the book for you.
To enter to win a copy of The New Frugality, Three Thrifty Guys wants to hear from you!! You can enter to win by commenting on this post about, “How your life has changed since the start of the recession.” What are you doing differently? Have you lost a job? How are you being more environmentally conscious?
Comment by this Thursday for a chance to win. Winners will be notified on Friday.