Could I be cutting myself short?

I am on a path to becoming debt free by living frugally; shop at thrift stores, menu plan around grocery sale ads, make my own coffee, pack a lunch, etc… But, by not spending am I cutting myself short?

Investor Junkie did a guest post, You are already wealthy, stop complaining! at Financial Samurai’s blog. He replied to my comment by saying, “Hey I have no issue with greed. Being greedy can help with overall good”. It made me think… am I cutting myself short by living a nonexistant life to pay off my debt?

I mean, could I pay off my debt by actually spending money to create additional cash flow (Steadfast Finances wrote a good post on Digging Out of Debt by Improving Cash Flow)? Investor Junkie states on his about page, “Most of the other financial freedom blogs discuss…live frugally (is living very minimalistic really living?)”. My response: No, it really isn’t ‘living’ but it is the way I know and has minimal risks associated with it.

Investor Junkie’s life projects a good lifestyle to back up creating additonal cash flow and/or a passive income to generate extra income; his family is in the top 5% of the US population, has a business, retirement accounts, a rental property, and savings. And offers a great set of Rules of Wisdom that provides some validation to this subject.

Take Lillian Hochberg, many of you know her company by the name of Lillian Vernon the catalog merchant. She started out by using $2,000 of her wedding-gift money to buy a supply of purses and belts and placed a $495 ad in Seventeen magazine. The result: the ad brought in $32,000 in orders.

I live frugally, but am not ‘broke’. I may have to start on a shoestring budget, but I can start investing $500 – $1,000 for a start-up, whether it be investing, a small business, etc… I can continue to pay my snowball scheduled payments while investing into creating additional income. So the risks are not relative in the is matter. Meaning if I lost $1,000 in this investment I do no harm towards my journey of becoming debt-free; that path is still maintained.

I am curious to hear your thoughts on this subject. What would you do with that money? Do you believe in spending money to make money?

For more information on making additional income, you may enjoy:

*Sorry if I reiterated IJ’s lifestyle so much but I am kind of keen to it right now. It is my intentions to project that Investor Junkie and wife worked hard to get the results they have. I can see how someone may interpret this article as ‘living it large’ or snobbery. This is not my intention. My intention, is to show that working hard & smart for your money can produce some pretty cool results! πŸ˜‰

24 thoughts on “Could I be cutting myself short?

  1. Investor Junkie

    Hmm… I have to comment on this since I’m mentioned πŸ™‚ I’m not gonna lie, my wife and I have worked very hard. There is no easy road in life. For me it’s taken many hours of working late night, high stress times and making sacrifices to get this point in our life. It’s been said overnight successes usually take ten years. I couldn’t agree more with that statement. The past year has been a real eye opener for me on many levels and for me personally can see the light at the end of the tunnel.

    We are in a different place where you are in which is ok. Each person is on a different path and different stage in their life. I’m NOT saying we are better than you are. I can’t say personally I’ve had as much consumer debt you are currently dealing with and I feel for you. I for me at least, being completely debt free makes me more insecure. I’m not referring to consumer debt, which I do agree is bad. But debt like a mortgage has some advantages if used properly.

    I can give you the advice of “baby steps”.. Think big but start small. Every day you make a step towards your big goals eventually you will get there! It sounds simplistic, but it works.

    I hope my about page doesn’t make it sound like I’m “living large”. We don’t and the grass is greener over here. Keep in mind we live in NY where the top 5% is just upper middle class. Oh we have our life and money issues like everyone else.

    I created my web site to offer some counterpoints from all of the other web sites and hopefully offer some insight and what got me to where we are today.


    1. money funk

      Oh no, I hope I didn’t make it sound as if you are better than life or ‘living large’. Your page makes it clear that you worked hard and smart to get where you are and obtain what you have. That is why I take your blog as an inspiration.

      I feel for me. LOL. But, it is both my husband and I that landed us in this debtful predicament. And we will work to get us out of it, too.

      I have to agree with you Think big but start small. And I am learning that on this debt-free journey I am out to obtain. It is all starting with a dollar here, a payment there… and slowly but surely we see the progress.

      Thank you, I was looking forward to your comment. πŸ™‚

      1. Financial Samurai

        Hey you two! Nice to see you a relationship blossom between y’all from IJ’s guest post, Money Funk’s comment, and IJ’s rebuttal! Very neat!

        Money Funk, just feel good that it’s 70-75 degrees in LA in the middle of winter. That, to me is worth at least $100,000/yr! πŸ™‚

        What about not spending money on anything other than the income from the site!

        Spending money to make money is just called investing.

        Best, Sam

  2. Little House

    I definitely believe that spending money can make one money. But there is also timing and good business choices involved. There are plenty of people who start a business only to fail miserably a few years later. My husband started a business 10 years ago and he does okay, but he is no where near where he thought the business would take him. So to answer your question about what I would do with that $2,000, I think I’d put it in savings for now. Great ideas only come to my mind once in a blue moon! πŸ™‚

    1. money funk

      True that there is many factors in play.
      Why do you think your husband is not where he thought it would take him? Maybe re-evaluate the business plan? Look at it outside the box or even gain some blogger’s prospectives on it? πŸ˜‰ And I understand if it could just be due to this miserable economy right now.

      You’re right, a business can fail. There is plenty of risks associated with it. But as financial bloggers, we know that we have a better chance if we have a solid plan to follow.

      And that is in a high-yield savings account, right? lol.

    2. Investor Junkie

      I forgot where I heard this statement but it rings true. Take calculated risks, and fail often.

      Worst case you get a valuable lesson out of it. I’m moving into the blogosphere and discussing finance. Completely different than my background and what I’ve done previously. I think I’ll do well but have no idea. Sometimes you have take a leap of faith. If it doesn’t work out or work out as expected, try something else.

  3. Matt SF

    You are absolutely not selling yourself short by living frugally. However, if you are living a “non-existent” life, that may be a bit extreme. So in my humble opinion, there is a happy medium between living to excess versus allocating a mere $20/month for fun money.

    I should know, since I admittedly painted myself into the “mortgage poor” department in the link you kindly included. The extreme frugality worked for a while since I found other things to do (outdoor basketball, happy hour at home, etc), but that mode of life just wasn’t for me. Not to mention, I was also a single 25 year old guy who liked to socialize on the weekends.

    Also, just to clear up any misunderstandings, I didn’t actually spend money to make money, but spent money and realized I was 1 unanticipated bill away from being broke. So it’s not like I bought the house as an income property, but decided to take in a roommate out of necessity. Completely poor planning on my part and might be one of my best lessons ever learned!

    1. money funk

      Do you know how hard it is for me to part with a $20? LOL. I do need to find a happy medium. Especially making a decent income.

      Extreme frugality…hence the reason I make it a game. Better outlook on needing to live frugal than complaining that you have to be frugal. And there are plenty of great things to do on the frugal side. But I understand being 25. Hey, at 37 I still feel the same way!

      We all learn from our mistakes. As Winston Churchill quotes, “Success consists of going from failure to failure without loss of enthusiasm.” One of these days were gonna get it right!

      1. Investor Junkie

        @money funk: I’m trying to make a point with the live frugal movement that seems to be very popular in the blogsphere. I’m not saying live like you have daddy’s credit card, the posts I see on how to save a few pennies is mind numbing. I saw one blog post on how to save money in xmas wrapping by using newspapers (boom! – that’s my brain exploding)

        While trying to save a few pennies people are missing picking up (or even better making) the dollars. Life is too short to sacrifice so much that it will make your life miserable.

        Yes one of the keys to becoming wealthy is save more than you earn (I call it the “no duh” statement), I think it comes down to how much is too much to save?

        Excuse me if I’m wrong – I don’t think you are past the getting rid of the consumer debt first? If you are still in debt then like I state in the “The 4% Rule to Investing”

        If it’s high interest rates, then it should be considered an “investment” because the likelihood of beating say a 15% annual rate on a credit card is almost nil. I myself have some debt in my business that right now is very low (4% annual rate) If in Feb they rates jack up (because of the ruling) I will be paying them off ASAP. Right now it’s cheap money that I have put to other uses in my business.

        Hope this helps..

  4. Girl Starup

    I guess it’s just being able to shift your thinking. Two years ago I would of never of thought of investing in my own start-up business…but I would of been happy to spend $2000 on a TV. Now I would rather invest in something than can help me in the future. So now I think twice about buying things material things and say “well actually help me get to where I really want to go, and could that money be used to invest in something that will create more value for me down the track?”

    “Meaning if I lost $1,000 in this investment I do no harm towards my journey of becoming debt-free; that path is still maintained.” I have this mentality now as well. What’s a $1,000 in the scheme of things…and you will learn so much.

    1. money funk

      LOL. I understand what you are talking about – TV versus something that can help you in the future.

      I like your start-up and think there is a lot of potential. I look forward to staying updated on your journey.

      You’re an inspiration for me wanting to do a start-up. Now if i just can think of what? I will have to make a list of my current skills and identify where I can go with each of them. Hmm…. πŸ˜‰

      1. Girl Startup

        Rolf I made no sense in my last reply!!! Talk about bad grammar (or grandma ;))

        For me it has been quite a long process/journey and I still have no clue if what I am doing is right, but I am closer to where I want to be, that’s for sure. I have in the past put together sites which I was not really passionate about (which I am currently writing a blog post about). For me that really was a bad decision…but also a great one, as I learnt… for me personally I have to do something I really love/enjoy. As they say “there are no mistakes, just lessons to be learnt” (learnt is the way English/Australian way of saying learned by the way ;))

        I’m glad I am inspiring you πŸ™‚ I wish I could find more blogs that document someone startup though.

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  6. Forest

    If I had more cash I would definitely splash a little more here and there but to be honest I generally enjoy living a simpler life. Less possessions and less stuff in general is just less stress…. However I do love eating out at restaurants… The more cash I have the more that will increase. Also I will likely look to some form of investment if I ever have spare cash, just not too much.

  7. April

    Boy, it is too late in the afternoon to answer at length, but my first thought is “define living.” Or “non-existent life.” Are we talking wanting champagne on a beer budget and sulking because the dollars aren’t there? Or trying on a lifestyle (frugality) and then taking it to such an extreme that now we are miserable when we don’t have to be?

    For start-up stories, try Inc. Magazine. Go to and take a look. I don’t know how much you can read online without subscribing. It is a magazine dedicated to start-ups and entrepreneurs.

  8. Brian

    I think a healthy balance between the options is in order. You can live minimally while spending money to make money, and pay off debt. Its just about allocation. Now, *TIME* is what may become the problem.

    I think you are right with the idea of investing $500-$1000 into the market or into a new venture, with the idea of much greater returns in the future. Best of luck as always.

    1. money funk

      True, true…about time. There never seems to be enough of that.

      And I think, about living minimally while spending money is a good fit for me. Thank you for the luck. I have a feeling it will be in no time that one of my “brilliant’ venture ideas will be tried (with hopeful high returns). πŸ˜‰

  9. Lauren

    My husband and I will finish paying off over $32K (that’s right, 32 THOUSAND DOLLARS) of credit card debt in the next two months. It took an absolutely DRASTIC change in my spending habits – so I can totally relate to what you are saying. I started taking the bus, buying all my clothing at thrift stores (or trading with friends), growing out my hair (instead of cutting/highlighting every two months), eating at home/leftovers, etc., in order to do it. Now, we’ve learned to live on a tiny budget. Our strategy is to invest in real estate. We currently live in a 4-plex that my husband purchased before we met. It almost pays for itself, and if we buy a couple more properties, we will be making income. We’re planning to tough it out for the next five years (budget-wise) and be able to retire at the ripe old age of 35. The rest of my passive income strategies are just gravy on top. πŸ™‚

    1. money funk

      Yeah to Lauren & Husband. I wish I could take the bus but I work a zillion miles away. I tried the train, but the costs were about the same as driving and it took up more time to get home. That is great the things you and hubby have done. But look at the travels you’re taking. I would totally live on a tiny budget to do that.

      Wow, retire at 35? Makes me feel old. LOL.

      I thought about buying an small 4-plex myself. Would your husband say the time & effort to maintain the building and residents is worth the investment? Curious.

      Happy to have found your blog. Look forward to following your adventure.

  10. Lauren

    We live in one of the four units, so it’s nice to be on-site. We’ve remodeled three of the units so far, and it wasn’t exactly fun. I think we’d pay someone else to do it next time. We have great tenants, and we offer incentives for signing longer-term leases. You really can’t beat having your rent/mortgage paid!

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  13. LeanLifeCoach

    It’s been said above, it is balance. Anyone serious about their long-term financial well-being and anyone that finds enjoyment in the rewards of building wealth should look toward additional income opportunities. However it appears to me that even wealth builders often discount the opportunities that are inherent in frugality.

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