Today I would like to speak about frugality and why am I so frugal.
I have always lived a frugal life, but now as I am transitioning into retirement, I am questioning my frugality.
When I came to Canada, as an international student, I experienced financial hardship, like most college students. I was working under the table because I didn’t have a work visa and I hardly had enough money to pay for my food, my rent, and my tuition. Since then I developed the habit of excessive frugality. I didn’t see how I could earn more money, so I decided to go on the extreme of spending as least as possible.
This continued later on in life, I became a freelancer because I was never able to find a job that paid me a regular salary. Never in my work history I had a regular salary and I was always anxious about money, so I continued my habits of extreme frugality.
Along the way, I learned about the FIRE movement, which is based on only spending a small portion of my income so that I could accumulate enough wealth to retire early. This is exactly what I did, but this goal to retire early continue reinforcing my habit of extreme frugality.
Finally, this year I reached my FIRE number, and I aware that the mentality of extreme frugality is no longer serving me well. Now I have to learn how to spend more money and enjoy life a bit more.
Now let me share with you my spending habits
I don’t follow any budget. Instinctively, I have an aversion to spending. For years, my trick was to pay myself first first. Once I deposited money in my bank account, I would allow myself to spend the rest. Now that I am retired, I withdraw a set amount from my broker’s account every month. If I need more, I just withdraw more.
This brings me to the subject of investing. Most financial advisors suggest that as you approach retirement, you should own less stocks and more bonds. I have mentioned it several times, that investing in bonds is shooting yourself in the foot. I am 100% invested in stocks and my money is growing at a faster rate than I can spend it.
I also feel fortunate to be a man. As a man I don’t spend much money on clothing or cosmetic, as many women do. I see some of my female friends spending money on beauty and fashion and I just shake my head and count my blessings.
I do enjoy spending time with friends, but that’s easy for me. My closest friends live only a few minutes away from my apartment and most of the time we open a bottle of wine and meet at the park. It’s easy and not expensive.
I find joy in the simple things of life, such as reading, writing, eating with friends.
I do have two advantages in keeping my expenses low. My rent is low, and I don’t own a car. I own a bicycle, I take the metro, I enjoy walking, and use a car-sharing service when I need to go far.
Since I mentioned walking, I walk about one hour ever day, that way I stay in shape and I don’t have to pay a membership to the gym.
Another advantage is that I shop at a small family grocery store close to my apartment where the prices are much cheaper than at the big brand grocery stores in Canada.
Also, I make it a point never to buy processed foods. I think that processed foods are poison to our bodies. I cook most of my meals at home. They consist of vegies, frits, and grains. I tend not to eat meat.
I have nothing of value in my apartment, most of my furniture I have is second hand. The only thing in my apartment that I really care about in my laptop and my two computer screens. Since I have nothing of value in the apartment, I don’t pay for apartment insurance. And of course, since I don’t have a car, I don’t pay for car insurance either. Finally, I don’t have any dependents, so I don’t need life insurance either.
I never eat at restaurants or order takeout if I am by myself, I can always prepare a meal in a few minutes. However, I do go to restaurants when I am with friends and that happens about once or twice a week.
I also don’t have pets. Most of my neighbors have cats or dogs, and sometimes I babysit them, which allows me to spend time with animals without the expense or responsibility of owning them.
The cost of living here in Montreal is slightly lower than in other metropolitan areas, in Canada, I call it the French tax because for immigrants to come to the province of Quebec, they have to learn French, something that is an additional burden for many North Americans. However even here in Quebec the cost of living is slowly creeping up.
I see no need to have any luxury items. I hate branded clothes and items. I think it’s dumb to pay extra for a product only because the business paid millions of dollars in advertising and branding. North American marketers are masters at extracting value from branded products. I try to be aware of that and always buy non-branded products.
How do I spend my Money?
I like to travel. I am from Colombia, so every winter, I go back home to visit my family. Recently, I started adding a second trip during the year. This year, I am going to Portugal and every year, I am planning to visit a different country for the rest of my life.
Another thing that I spend money on, is camera equipment. Since I am a part time photographer, every year I upgrade my equipment. However, I never buy the latest photography equipment. I am usually one year behind.
Rewards of frugality
The big reward of my frugality has been my financial independence. We are so lucky to live in a place where, if you set you mind to it, you can become financial independent in 20 years or less. As I told you, I came as an immigrant, with no skills and in two decades I put my life together, created some capital and now I can sip Pinas Coladas for the rest of my life if that’s what I decide to do. This dream is only possible in a few countries, and Canada is one of those countries.
