Comment by patio11 | Hacker News Reader

Comment by patio11 | Hacker News Reader

I spent more than a few years scrimping to the bone earlier in my twenties. The notion has an intrinsic appeal to me. Just so you know the context when I say:

For what it's worth, if you're a HNer, I'll tell you something Ramit Sethi says often which would have been useful to internalize, oh, five years earlier: it is very hard to cut expenditures in such a meaningful fashion that your financial situation qualitatively changes. (There's only a few big wins there, and lattes or "stop buying books" do not qualify.) By comparison, the amount of impact you can have by moving your salary up is quite substantial indeed, particularly because there's just a crazy dynamic range in our industry and, well, most of us by default do not make choices which tend to land us on the top tiers of that range.

Seriously: I get people who email me on an almost weekly basis saying they got $5k ~ $15k a year just by asking for a raise. You know how many trips to the library it takes to move your financial situation by that much? You won't accomplish it in your lifetime. And that's between a few hours of work or, literally in some cases, minutes.

I think much of the utility of frugal living is the mindset it ingrains in you. It becomes a valuable life skill that has a much wider impact than simple finances. You gain a reflexive ability to determine the true value of a purchase, both in the now and in the future.

Say you have 2 people earning $30k/yr. One is trying to live frugally, the other is not. Suddenly the latter gets a $10k/yr raise "just by asking". I'd wager that the person with the deliberate, frugal mindset will still have more discretionary cash the day before payday than the one who got the raise.

Good point, to an extent is a vicious cycle.

If you want to get that salary raise, at some point it has to be backed by somebody actually buying something.

If everybody becomes super frugal then the economy shrinks and unemployment gets worse. I guess this is because we're at a point where we don't need anything close to 100% employment to cover everybody's 'basic' needs.

This is a REALLY good point. The benefits of being frugal are increased when the majority is not. It's sort of the same thing with the birth rate. Our economy will grow as long as we keep replacing the workers.

Yes, the best position to be in is to be the guy who only owns a bicycle but sells ferraris. It becomes difficult to be frugal when other people are because business and government don't actually want to let that happen.

I remember when the recession started in the UK, there was a lot of advice going around to the effect of, "When you go shopping, don't buy brand name foods instead by the supermarket value brand equivalent'.

The supermarkets seem to have responded by simply taking a lot of the value brand products off the shelves or making them only available in bulk quantities.

This has a negative effect on equality. If your business is struggling because the lower and middle class aren't buying your products you must either decide to take lower margins or you will focus your products instead on the remaining people left who do have disposable income and start producing high end products only.

If you can get a raise, that's fantastic, and congrats! My experience however is that without asking "why do I buy the things I do", people tend to raise their spending to their new salary level. Why not two or three latte's per day? That's what $15 per day, or about $4000 per year.

> Why not two or three latte's per day?

Because that's close to 900 calories.

I question how effective the Ramit Sethi tactics would be here in Sweden. Has anyone here tried and gotten a raise?,

It's certainly easier to make an extra couple thousand by asking for a raise than by scrimping on lattes, but I'd argue that a frugal mindset is every bit as important. Unfortunately, spending every cent of $200,000 a year is exactly as easy as spending every cent of $50,000. There are plenty of people whose approach to financial management is to simply... spend their money. Doesn't matter whether that's a little bit of money or lots of money. If they make 50,000 a year, they spend 50,000. If they make 200,000, they spend 200,000. If they come into an inheritance, they spend the inheritance till it's gone.

I'm a student who's never had a full-time job in her life, and I have more money in savings than many well-paid professionals I know, simply because I actually put money into savings.

Just to add to this, I spent roughly the first two years of my career with 80% of my attention on reducing expenses at 20% on earning more. I got about the same amount of money from both. Later on I shifted that ratio, and significantly increased my income over the next two years. I did increase my expenses, but I'm saving much more as both a percentage of my income and as an absolute quantity.

It's also helpful because the same technique that helped me earn an X% raise has worked over and over again, with roughly the same results. So when you learn to negotiate, you're changing the rate at which your income grows, as opposed to a one-time increase in income. That has a massive effect in the long term.

On difficulty of cutting expenditures: It also means it is very painful to shift down to a lower salary and more satifying (or less stressful etc) job. Income lock-in.

Reply on news.ycombinator.com