Pinching Pennies Or Squeezing Big Returns: Which Is The Ultimate Path To Wealth?

Just a few weeks ago, an old-fashioned friendly rivalry developed in the land of personal finance blogging.  One of the heavy hitters, Ramit of issued a challenge to another top blogger, Trent of At stake was $1,000 to the winner’s readers’ favorite charity.  At odds were the two writer’s ideas on saving money and building wealth.

Ramit’s Take

Ramit encourages readers to focus on the big stuff – things like reducing fees and interest rates at your bank, and negotiating/shopping your car insurance.  Makes sense; after all these are often the “big” expenses that really add up in our budget.  Shaving 20% off of these types of expenses can lead to big savings.  And the effort required to find these cost savings might be better placed here than in some lesser expense category, such as food or household utilities.  As Ramit puts it:

I don’t have any issue with frugality, except that I think Americans are horrible at it and, for my audience, it’s a hopeless battle of telling them to say no to things — “no more lattes! no more eating out! no more enjoying life!” — which never lasts.

Ramit’s take is a popular one. His book, I Will Teach You To Be Rich, became an instant #1 best-seller at when released a few weeks ago. His advice resonates with young people, particularly those fresh out of school and looking for ways to save big and earn big.

Trent’s Take

Trent takes a different approach, overall, even though both bloggers have many ideas in common.  At The Simple Dollar, Trent often shares frugal tips such as how to make your own laundry detergent, homemade bread, and a number of other goodies.  He also shares many tips for finding ways to live cheap.  In fact, his book, 365 Ways to Live Cheap, is a mini-encyclopedia of cost-cutting tips.

Many of these tips require some time to pay off.  For example, Trent and I both advocate installing a programmable thermostat to reduce utility costs, particularly at night or when the house is empty during the day.  Programmable thermostats are not cheap, and they require a bit of time to install.  However, the benefits continue to pay off as long as the thermostat is in service – which should be for many years to come.

My Take

In short, I believe both bloggers are correct, and by combining their philosophies one could become very wealthy over the course of a lifetime.  It’s also worth noting that those of us who chose to live frugal do so for reasons beyond fiscal fitness.  Frugal living is about using less, or just enough, and recognizing the feelings of contentment that frugality generates.  It is about being better stewards of our resources – all of our resources.  It is about assigning value in the form of life energy to the things we purchase.  It is not a financial plan; it is a way of life.

I continue to be a fan of both sites, and their writers (and their philosophies).  While the “challenge” was diffused after Trent’s response, the arguments live on in the personal finance community.  Save more or earn more?  Be cheap or be frugal?  I say, take a little of what’s best from both.

With that I’m off to enjoy a latte – and yes, I’ll be using a coupon.

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