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Frugalism vs. Capitalism III

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Rich Slick over at Get Rich Slick has a rebuttal to my post yesterday. To continue the debate, here's a rebuttal to his rebuttal...
1) By "that dollar will be taxed", I mean that a dollar saved is dollar in your net worth. A dollar earned could be only 72 cents in your net worth. Trust me, I want to pay a ton of taxes. I'd like to pay 1M or more in taxes a year.

2) Yes there are risks to everything, but saving a dollar is not a risk. So the capitalist takes a risk, while the frugalist typically doesn't. Yes, risk is a fact of life, but there are degrees of risk.

3) It's the "without too much concern for the price or cost of an item" that leads to over-extending oneself. Yes, it's not a guarantee, but it's a risk of not concerning oneself with the costs of things. The frugalist doesn't run this risk.

4) The "wasteful nature" that I was talking about was related to buying new cars with the idea of helping the economy. Meanwhile perfectly good cars go into landfills.

5) Yes we agree that a car isn't an investment. I realize the phrase "depreciating investment" is an oxymoron, but it's common vernacular to say, "I invested in new shoes today." If this missed you then... (sigh and shrugs shoulders). Would you have preferred, "A frugualist doesn't waste money on new cars and uses it to make more money?"

6) Do you want to teach me? Ben Franklin said a penny saved is a penny earned. Perhaps this could be a post in and of itself. I would really like to understand the math behind it.

7) For each Bill Gates how many people have filed for bankruptcy? Millions and millions? What if you just took $100 and played roulette hoping for black (or red) to come up 15 times in a row. I'm guessing you'd throw away a lot of $100 chips, but if you get it right you'll have over $3M. Or you could just invest your life savings in some penny stocks. Do it wisely and you'll join those names Rich Slick mentioned.

In the end, Rich Slick makes the perfect argument I was intending to make from the outset. Warren Buffet and Sam Walton were frugalists AND capitalists. Of course they didn't make their billions by being frugal, but they are examples of how it is possible to be both.
Did I make a lot of assumptions about capitalists? Indeed. Did Rich Slick make a lot of assumptions about frugalists? Indeed.

Last updated on July 25, 2011.

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4 Responses to “Frugalism vs. Capitalism III”

  1. Rich Slick says:

    Bloody hell man…you are a persistent bloke. Well done and good show. I won’t respond because I’m busy researching investment opportunities ;) and I’ll start holiday in exactly three minutes.

    Cheers & Happy Holidays,
    Rich Slick

  2. Lazy Man says:

    You know, I was thinking a similar thing. We could probably go back and forth on this for quite some time. In the end, we’d spend a ton of hours with little to show.

    Plus, I had a new business idea last night, and I have to research about developing it. More on that in a future post.

  3. Foobarista says:

    I have one standing gripe about this whole dialog: it’s comparing apples to oranges. The tycoons listed are not “investors writ large”, but actual businesspeople. In other words, comparing how someone runs their business with their choice in cars or whatever is rather silly.

    That said, the real discussion is how one spends one’s “money time”. As a general “top-liner”, I agree one should spend one’s “money time” working on the top-line. But some attention to bottom-line spending can help greatly, particularly since it typically doesn’t take all that much time once you start doing it. And an eye on seemingly trivial expenses helps build the cash hoard needed for funding investments.

  4. plexluthor says:

    This is a little outdated, but if you want more data for the next exchange along these lines, consider picking up a copy of The Millionaire Next Door if you haven’t already. Two PhDs write about surveys of millionaires, and their findings that while most are small-business owners with good incomes, they usually lean more to the frugal side than the capitalist side. The book has interested stats, such as “The most you ever paid for a {watch, shoes, car}” or “How long since you {bought a new car, traded a stock}?”

    If you want to be a billionaire, you almost have to have a huge income. If your aim is a little lower, though, frugalism is probably a better bet.

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