Our last companion had just left Budapest, and we were finally traveling solo again. “We need to be more frugal with our food and dining expenses,” Daniel and I agreed.
Rather than go out for another restaurant meal, we walked to a nearby grocery store and shopped for dinner. At the deli, I chose a colorful package filled with a variety of cured meats. We grabbed a piece of brie – that delicious soft cow’s milk cheese – imported from France. “This one looks interesting,” we said, also adding a Slovakian sheep’s milk cheese to the basket. Finally, we picked up a loaf of fresh-baked bread, large enough for dinner and several meals more.
Total price of this gourmet meal for two: 1,200 Hungarian forint. About $4 US.
“Frugal,” right? What’s that for a couple wealthy Americans like us – a few minutes’ wage?
Joe Veix’s humorous New Yorker article “Why I Quit My Job to Travel the World” caught my attention last month. “I couldn’t bear being chained to my desk in a stuffy office any longer,” Veix’s character writes, “so I decided to quit and travel the world, bringing only my passport, a small backpack, and my enormous trust fund.”
The short essay is full of comedic gold, from quips about minimalism (“You don’t need to own a lot of ‘stuff’ to be happy, especially when you can buy whatever you later realize that you need with your massive inheritance”) to the trappings of modern life (“All those bleary-eyed suckers packed into the subway… wasting their whole lives to afford useless things like ‘rent’ and ‘health insurance’ and ‘student-loan payments.’”)
Ha ha – oh, the privileged lives of the 1%.
But are we really that much different?
It’s easy for us to anchor on the lives of our peers and assume that we’re about average. If we happen to be saving more money than the people around us, it’s because of our rigorous frugality, right? After all, we’re still an order of magnitude away from the wealth of the elite one-percenters.
But when we look at the real distribution of wealth across the world, the picture is pretty different. By assets, $500k (a lot of money, but at the low end of most FIRE goals) would put us in the top 3% of the world. By income, a mere $32,500 annually makes us “the 1%”.
Would my own story sound any less ridiculous than the New Yorker write-up to someone earning less than $1,000 US per year?
“After growing up as a white male in a safe, affluent American suburb, I enjoyed a four-year vacation at a prestigious university without going into any debt. I took a high-income job that was occasionally stressful (woe is me!), but I couldn’t take it any longer. So I decided to quit and travel the world, bringing only my partner, a small backpack, and the safety net of my enormous investment account.”
Wow, what a daring and revolutionary adventure we’re on.
As freelance graphic designer Janelle Quibuyen reminded us in her recent blog post titled “Quitting Your Job to Pursue Your Passion is Bullshit,” we’re not doing anything more brave or courageous than “the migrant worker picking your strawberries to send remittances to family in their home country,” “the recently-graduated millennial who works in a cubicle 9 hours a day to pay off massive student loans,” or “the working class mother with three jobs who feeds her children.” On the world scale, we’re just rich people, doing what rich people do.
Here in the personal finance community, we often pat ourselves on the back for our supposed frugality. And it’s true that our minimal spending relative to our peers has been one of the major factors in allowing us to pursue this life of full-time travel and adventure. But in the context of the average human being in the world today, I have a hard time accepting that our lives are even remotely frugal. Did I have to make any real, consequential sacrifices to get here? Not really.
What did I do to reach financial independence in my twenties? I earned a sizable income. I rejected a handful of trivial splurges: expensive housing, new cars, cable TV, gym memberships, and the like. And thanks to a flexible job, some well-off friends, and a bit of travel hacking (enabled by my good credit), I was still able to travel and live like a multimillionaire.
When we start talking about cutting cable as a “sacrifice” or plentiful, tasty, nutritious food as a “struggle meal,” we’ve really lost touch with reality.
“Oh wow,” I could imagine someone from the bottom half of the world wealth spectrum telling us, “You’ve survived how many years without 400 channels of live video entertainment streamed directly into your home? Tell us more about your suffering.”
Let’s face it: we’re awfully spoiled by our modern, western standard of living.
I’m not condemning technology or the complex global economy. Our lives are immeasurably better than those of our pre-industrial ancestors. But we might appreciate what a ridiculously fortunate position we’re in – and that we should probably be speaking tongue-in-cheek any time we describe ourselves as frugal.
I’ve never paid a bank fee for an overdraft or a low balance in my life; banks pay me for the privilege of keeping my money. I’ve never used a payday lender; in a pinch, I could always tap my emergency fund or a well-off friend or family member. I’m able to wait for good deals on the products and services I consume, and when things do come on sale, I have enough money to buy big quantities at a discount. I have enough in savings to pay for large purchases up-front, rather than financing things like phones and furniture with expensive monthly interest payments. And I have near-constant access to the internet and a smartphone, allowing me to do research and get the best price on everything I buy.
The better off we are financially, the easier it is for us to save.
On top of the flexibility we enjoy thanks to our wealth, let’s not forget that our legal and regulatory systems are rigged in our favor, too. From burdensome occupational licensing to regressive taxes, you’d be hard-pressed to argue that things aren’t set up in favor of the well-to-do and to the detriment of those in poverty.
I pay a lower percentage of my income to local governments. I have the financial flexibility and knowledge to reap the benefits of tax-advantaged investment accounts and tax-loss harvesting. My capital gains and dividends are taxed at a lower rate than ordinary income. I don’t have a mortgage, but if I did, I would sure be capitalizing on that sweet mortgage interest tax deduction.
In early retirement, even my healthcare will become more affordable. Next year, Daniel and I might both qualify for Medicaid, a state health insurance program originally intended for the least well-off financially. Even if we exceed the income threshold, we’ll surely enjoy a rich government subsidy on the exchange while working families pay inflated premiums for employer-sponsored plans. How’s that for a kick in the teeth?
When we consider how well-off we really are – and all the ways we’ve been set up for success – I have to wonder: are we really “frugal,” or are we just a little savvier than average at optimizing around all the advantages we enjoy?
I don’t intend to dismiss the frugality movement. We certainly live by many of its tenets.
I also don’t intend to mock the reasonably well-off for still finding it difficult to save money in the face of peer pressure and societal expectations.
But I do think it’s worth remembering that our circumstances – and even our so-called “frugal” practices – would look a lot like the New Yorker trust fund life to most other people in the world today. We owe ourselves that regular reminder of how fortunate we really are.
Photo credit: qasic via Flickr