What exactly is being Thrifty Rich?
To answer that, let me give you some context. I have been lucky enough to have had great jobs. I started my career in the Telecom space as an analyst. I figured if I had to work I was going to do the best I could. I found ways to impact my boss, then my boss’s boss, and eventually the company. The strategy paid off and I quickly went from an analyst to managing over one billion wholesale minutes with 15 employees. If you made a call to Mexico in the late
As I moved on, I started a family, bought a house, the usual things you would expect including the high debt.
Why I Need To Be Thrifty Rich
Here is the simple answer, I had a goal to retire by 30 and I missed it because I lost focus. I enjoyed my work, wanted more, spent more, and something hit me. Where does all my money go? But even more importantly, if I had simply kept focus and changed some habits, and been “thrifty rich” I could have met my goal with no other changes than just being conscious of the end state.
A New Lofty Goal
I decided to make a new goal to replace my job income with investment paying income, become debt free, and build my dream to open an off grid surf resort in Tonga. I have given myself five years to do it.
Those are lofty goals, I know. It hinges on every dollar I make going as far as it can and maximizing the return on every dollar I invest. That is how the concept originated, I need to be reminded every day that the $5 I spend on a single cup of coffee ads 1 or 2 days longer to reach my goal.
Being Thrifty Rich
So what is being Thrifty Rich? Simple, it is knowing that each choice you make today impacts your ability to reach your goals tomorrow.
That might sound
Here is a great example, the average American spends $1,100 per year on coffee and yet the average American has less than $12K saved. Using compound interest, a $3 cup of coffee a day will cost you $90K over thirty years. Let that sink in. Breaking it down even further, each cup you buy today for $3 is really $18 over thirty years.
I figured for me, just one simple habit of drinking soda cost me over $50K and it is the first thing I eliminated. Saves me money and improves my health. Double Rewards.
So, knowing the impact is important but we still have to spend money and we will still always want things for today. That is ok, but knowing how they impact our future gives us the incentive to find the most ways to save. Each dollar we save on a purchase by reverse logic is $6 saved for the future.
Finally the last part is taking action. Whatever it is you are spending today is your baseline. Your goal is to find savings everywhere you can, when you do that money needs to be paid to yourself in a savings, investment, or other income producing
For example, if through the week you used $10 worth of coupons, skipped a lunch you normally would have gone out to, and bought one less coffee move $20-23 over to your income account. This is the key, most of us (myself included) would simply just keep the money in our checking. Here is the problem, you lose track of how impactful your efforts are and just spend the money saved on something else. I can hardly remember what I ate a few days ago let alone all the ways I might have saved money that week.
If you are successful, here is the magic that happens. At the end of the month, your spending account might have far less money in it but your income account will have a lot more in it. Here is the defining moment of truth, without your efforts that money would have been spent and your account would be the same as you are looking at now. But you worked at saving and are rewarded with a balance of real cash in your income account. You are now in control to decide what that money does and the power is back in your hands.
If you can keep it and put it to work, your savings will grow faster than you ever would have thought.
For me, Thrifty Rich is a system is a set of tools to help me get the things I really want that were lost in the noise of the consumer world we live in today.
I will continue to post what I have found to save money and the things I find to raise savings.