New Frugality How to Consume Less, Save More, & Live Better [HC,2009]

by Chris Farrell

As the recession deepens, with a downturn in spending, rise in defaulting mortgages and throttling of credit, a Go-Go economy has transitioned to a Uh-Oh economy. How did we get here and what does it mean for individuals and families? The New Frugality lays out how Americans have overspent-and offers a way out through consuming less and saving more-showing that living simply is not just living "cheaply."What is required is a paradigm shift. We need to learn to live more modestly by cutting back on spending, actually attempting to live within our means and increasing savings. Farrell outlines creative new ways of thinking that can help us to accomplish this, not just by reverting to earlier financial models, but by innovating new solutions that are appropriate to the times we live in. In some ways, The New Frugality is the fiscal equivalent of the green movement; and indeed, going green is also part of the project. In The New Frugality Farrell will show where the economy is going, how it will affect regular families, and how they can weather the storm.

Genres: Nonfiction, Finance, Money, Audiobook, Personal Finance, Self Help, Economics

Unknown Binding

First published January 1, 2009

Reviews

[Becca · Rating 2 out of 5]

Here's the sum-up:
The bubble burst, guys. Sorry. We need to readjust our priorities and lifestyles if we want real, long-term stability and a happy life that includes healthy finances but isn't dependent on scads of money.

Along the way, you'll live a "greener" lifestyle as a byproduct of simplifying your financial life!

Only two stars because most of the ideas are really obvious, and the one chapter on investing is completely indecipherable.

Still, the good bits.

34, quoting Saul Griffith: Spend money on services not on goods. Eat less and better. Exercise. Lose the car. Spend time with family. Live closer to work, family and school. Get higher quality products that will last rather than oodles of disposable junk.

41: keep a margin of safety, like Aristotles Golden Mean, that "lies between excess and deficiency." For example? Get a Roth-IRA.

45: High risk: options, futures, collectibles. Medium risk: real estate, equity mutual funds, corporate bonds. Low risk: gov't bonds, bank savings accts, CDs

48: bad mistakes: going without a will, not having life insurance or disability insurance

57: Pay 15-20% of your income-- into an emergency fund in CDs and mutual funds-- and into tax-sheltered retirement plans like 401K and irA

78: Saving on car insurance: compare, get a higher deductible, consider dropping collision/comprehensive coverage. Get low-milage, safe-driver, and good credit discounts

83: life insurance: "term" is death benefit and is ideal for most (not super-rich)families

88: Don't buy a home if it means stepping outside the margin of safety and putting all of your financial eggs in one basket.

110: close unused credit card accounts, but not right before you're going to need a perfect credit score.

117: rules of investing: trading=expensive. manage risk. Keep low low fees. Own low-cost, broad-based index funds. Own quality "full faith and credit bonds, bills, savings bonds. Blue chip corporate bonds and tax-exempt securities are good.

128: Get no-load mutual funds, rather than load funds.

130: "The solution is to invest in index funds. Forget about putting your money in actively managed mutual funds. You don't need to bother with them. Keep it simple." They are low cost, low taxed but high performing.

139: best govt bonds for investors: TIPS. OFfer fixed interest rates above inflation. avoid taxes by owning tips in a tax-deferred retirement account. Also, you have to buy them through a broker.
I-bonds-- no commission costs, tax-deferred.

146: "You're essentially deciding how to divide two pots of money. One is broad=based equity index funds, domestic and international. The other is your fixed-income securities."

148: the investing basics: buy and hold. Use dollar-cost averaging. Rebalance your portfolio regularly-- once a year.

174: "data going back to the 1850s suggests the long-term after-infalation return of real estate is about 2.5 to 3 percent." Homeownership should be more about a lifestyle choice rather than a financial choice.

193: save money for your kids' college. The earlier the better. BUT pay yourself first-- the emergency savings and the retirement. You can fund college from those (broad-based stock index funds, like Wilshire 5000, Russell 3000, or S&P 500, and tax-deferred inflation protected I-bonds for the safety portion) accounts.

194: 529 plans are good.buy directly from the state. see savinforcollege.com

[Holly · Rating 1 out of 5]

I cant really say I read this, I would say skim is more like it. I was very interested in reading this book after seeing it mentioned in Time magazine, but I just did not like it or think it was helpful. I thought it would give me some fresh ideas on frugality and how to cut expenses, but there really was not anything new in here. At least 3 times, the book said to turn down your thermostat and wear sweaters in the winter time. Really? This is not a fresh idea, and I just cant take this book seriously when it has that suggestion listed so many times. We already do that. Any other ideas. I also really dont find it helpful when books tell you to get rid of your car and walk, bike, or take public transportation. We would gladly get rid of our car if that were an option, but I think most people who live in cities where there is great public transportation already dont have a car and use public transport so this also is really not a fresh idea. It is just not possible for most Americans to get rid of their cars and I wish these books would realize that. I have a 2 1/2 year old and twins on the way very soon, I dont see how walking or biking with them 5 miles to go to the grocery store is a good, safe solution since there arent any bike paths located from my house to the grocery or really anywhere else I want to go or walking a mile to catch the bus and then having to switch buses 3-4 times to go anywhere I want to go is acceptable. Plus, I dont even think I could get the massive stroller I have for 3 kids on the bus! If you want some good ideas on how to save money and cut costs, dont read this book.

[Meghan (Wilker) · Rating 1 out of 5]

I can’t tell what this book is trying to be. Sometimes, it reads like a how-to and at other times like a history lesson. It fails at both. It’s oddly specific about the history (do I care about the history of credit dating back to the 1700s? NOPE.) and then oddly vague about the how-to (breaking news: we should spend less than we earn!). Overall, it’s too wordy, too long, and doesn’t leave the reader with much in the way of clear next actions. The author also has a frustrating lack of opinion. Everything is “worth investigating.” He was clearly trying not to give any financial advice but the result feels confusing and wishy-washy.

If you’re looking for a concise plan for *how* to actually spend less than you earn, from a (very) opinionated author, I’d recommend Dave Ramsey’s Total Money Makeover. You may not agree with everything he says, but at least he takes a position and gives the reader a simple, clear plan.

[H.M. Gooden · Rating 4 out of 5]

Pretty good- although geared toward people in the states, much of this information should be common sense. Although most of it was a refresher for me, I was newly galvanized to focus on costs and the long term. Financial advice made easy told in an interesting and conversational style.

[Elena Rothfuss · Rating 5 out of 5]

At first I thought this was going to be a lot of "duh, no sh*t" advice about finances, (like "you shouldn't use a credit card to pay off your debt on another credit card? whaaa?") but it steadily became a book that is immensely useful for those of us who are still paying off college loans, new to saving, interested in investing, or at some financial milestone in their life. I checked this out from my local library and am considering buying a hard copy because it has a lot of great information and makes financial decision-making easy to understand.

[Brianna Idleman · Rating 3 out of 5]

Libby Audio. A good overview on how to look at money from a frugal perspective. Many ideas were not new and many chapters still made me feel like I'll never have enough disposable income. But still a worthwhile read.

[Kristen Northrup · Rating 3 out of 5]

The usefulness of the personal finance advice depends on how much you've already read on the topic -- he doesn't (and shouldn't) break new ground. Specific to whether the New Frugality will actually happen, I remain unconvinced. There was nothing to indicate what makes this time different, versus any other recession (I've lived through a few) where people's consumption habits are predicted to dramatically improve post-recovery, and then don't. He does acknowledge that pundits always say that, and are almost always wrong, but then doesn't give a strong argument why this time actually really is different. It was also very distracting to keep seeing reference to the Great Recession (news to me if it's the official term) and always in the past tense (it doesn't feel past yet). He asserts we've all discovered and discussed how experiences turn out to be more valuable than things, without seeming to notice how much money many of us spend on our experiences. The chapter on green = frugal would be much more productive (yet just as valid) if he'd dropped the references to global warming; that just turns off the readers you most need to reach. Preaching to the choir doesn't have nearly the same impact. I did appreciate the discussions of the difference between cheap and frugal, the historical context of credit in the U.S. vs common misconceptions, consumptive debt vs productive credit, the scope and impact of stagnant household income, and the non-financial benefits of delaying retirement. Unlike nearly all financial planning books of the recent era, he addresses the risk of inflation. However, some parts of the investment section were so briefly sketched as to be incomprehensible, especially the sections on bonds and on relative taxation. He's the first supporter I've seen of cash value life insurance; most guides tell you to shun it, and I'm still not sure why he feels otherwise. And I disagree with many aspects of his chapter on attending college, especially the assertion that higher education makes you not just more employable but a better human being. That notion has always struck me as akin to the one that all atheists lack a moral compass. And the fact that more positions are requiring a degree does not mean that they have become so complex as to actually need it, as he concludes. The perceived failure of the K-12 system and the adoption of classification/compensation formulas are much more common reasons. There is no bibliography or notes section.

[Patricia · Rating 3 out of 5]

In some ways a run-of-the-mill financial planning book. Its main difference is that the advice comes from the "consume less" angle rather than the "budget and hope for the best" angle. There was a very good chapter about home ownership and how to figure out what the author calls your P/R ratio, the "Price to Rent" ratio. This chapter might be good to read for people who are currently renting and frustrated with it.

There is also a lot of talk about living long and prospering, a subject that I believe we who read a lot of financial planning books will see more of in the next ten years. The author points out that we all will probably not have the retirement our grandparents have and will keep working and working, at least part time until at least our 70s. He points out that our "retirement jobs" can be half time work and contain the best parts of our "career" jobs without all the baggage. Farrell gives the good advice to start to volunteer with organizations you care about in your forties, so that when you retire they know you, your strengths and you can work together.

[Patty · Rating 3 out of 5]

I decided to read this book based on the author. It's not bad - straightforward, to the point, with good info for someone starting out or redoing their financial habits. It's not great though either - and offers very little for those who already are somewhat frugal and savvy in their investing strategies. I generally enjoy reading books pertaining to finances and typically feel like there is always something more to learn, so from that aspect, another perspective is always welcome.

[Mmiller400m · Rating 3 out of 5]

I don't really agree with the author on a few ideas he has in the book, but I don't ever claim that my ideas on personal finance are the be all and end all. I took a few areas of the book out word for word for handouts for a finance class I taught. There were many useful tools throughout and it helped guide me through the insurance process.

[Laura · Rating 3 out of 5]

Farrell gives a decent overview of personal finance in his offering The New Frugality . I feel that the title is somewhat of a gimmick though (as in many self help books). There's only so much that can be said about good financial habits, so the authors/publishers come up with great sounding names to set the new books apart.

With that being said, there are a few things that set Farrell apart from Ramsey and a few of the other authors I've read. First, he takes a rational stance towards credit cards (and debt in general). He advises against going into debt for consumer type purchases (items that don't build value or are temporary), but says that loans can be helpful for investing in yourself or your household. Examples he gave were mortgages, student loans (within reason), and home improvement (that builds equity). He also doesn't completely vilify car loans, but suggests trying to stick to a 3 year or less loan at reasonable interest. He cautions against borrowing to invest in the stock market, and he also cautions against getting a home equity line of credit. He does mention a friend of his who got a store card from several home improvement stores (with 0% interest on purchases for up to 1 year), bought what he needed to remodel his kitchen, and then made monthly payments geared towards paying the cards off within the one year time frame. That's a use of credit which makes perfect sense to me, and it's one of the reasons I don't understand Ramsey and camps' complete avoidance of credit cards of any sort. He also mentions a friend who puts the bulk of his purchases on a credit card, pays the balance in full each month, and uses the reward airline miles to visit his grandchildren.

Second, he has a hefty chapter on investing. Many self help books stick to advise on getting out of debt, but don't offer tips on what to do with your money once you aren't making credit card payments. His tips are especially useful for anyone who has a 401k, and wants advice on what the funds should be invested in. Also included is a long list of useful websites and books for further reading to learn how to invest wisely. He introduces the term "margin of safety", and suggests applying it to every aspect of one's financial life....from decisions on whether or not to borrow, to how much house to buy, to the size of an emergency fund, to investment strategies.

Finally, he introduces the concept of "partial retirement". He mentions that those in intellectual, non-manual jobs may find fulfillment from continuing to work at least part time past age 65. This re-writes the whole numbers game. He says that traditionally workers "busted tail" to save a large sum of money to retire, and then never looked back at the workforce. He questions whether it is really worth it to work 50+ hours per week in one's prime to retire fully at 65 versus working a more rational week in one's younger years, spending time with family, and then retiring a bit later. It's an interesting concept, and will probably get discussed a lot more as the uncertainty around social security continues.

Bottom line: There isn't any new, earth shattering advice in Farrell's offering, there's precious little in the book about consuming less (other than not consuming on a credit card--duh!), and overall the book feels geared more towards those in the middle to upper-middle class who have the ability to save large amounts of money. With that being said though, the above topics I mentioned make this a worthy book to check out from the library for a good look at personal finance. Given a rating of 3 stars or "good".

[Rochelle · Rating 2 out of 5]

If you are just beginning your frugal journey, then definitely go ahead and read this book. However, if you are like me and have been on this journey for a while, have read many books, created systems for reducing your impact on the planet, while protecting your wallet and have been around the 'frugal block', then this book is a definite waste of time.

There was absolutely nothing new or novel in these ideas.

The reason I gave the book two instead of one star was because I used the book as a refresher course into frugality and decided to use it as a cheat sheet to test my exiting frugal tactics and systems in an attempt to tweak them further.

If you are new on this journey to frugality, you will definitely extract immense value from this book. However, I would like to state that all of the information contained here, can be gleaned online. Of course, this book will save you hours of scoring through the internet to find all the suggestions made in this book. So here's what you should do. Instead of buying this book outright, borrow it from your local library, read it, renew it and re-read it, then renew it again and set up your frugal tactics and systems, and you will be well on your frugal journey.

[Lawrence Nah · Rating 3 out of 5]

As it is with most books about personal finance written by U.S based authors, alot of the advice given centers around US based citizens who can take advantage of government tax-incentivized programs (401K, ROF IRA, 529 etc.) to save and invest. Therefore, a good number of the content isn't relevant for international readers.

Broadly speaking, it is a good read for anyone who wants to learn basic principles about savings and investments. The author attempts to influence his reader to adopt a varied interpretation about Money and our relationship with it.

In a nutshell, save more, invest in index funds, and put some into fixed income securities as a hedge. It'll save (no pun intended) you time to read the book.

[Bryan · Rating 1 out of 5]

I got about a third of the way through this book before I gave up on it. So far it is the only economics/finance book I have not finished.

While there is some validity that buying things used instead of new can be better for both the individual and the environment, it feels like he is going well beyond that. The idea that being frugal and environmentally friendly are interchangeable just doesn't work, and that idea is repeated to the point that it is distracting. Valid points that he makes gets lost behind that narrative.

[Allison · Rating 3 out of 5]

I agree with pretty much everything the author is recommending from a personal finance and frugal living perspective, however, I didn't really learn anything new or gain any new perspectives.

I'm not entirely sure who this book was aimed at reaching. It did not go into enough detail for someone with limited personal finance knowledge, yet it was way too basic for me - and I'm by no means an expert or even an avid reader of this topic.

Another book I've managed to clean off the physical bookshelf during the pandemic!

[Tracy Holmes · Rating 5 out of 5]

Farrel discusses the ideas of purchasing for sustainability, living simply, and keeping a margin of safety. In a society that prices consumerism, more is less. I like his values of living a simple life and investing rather than just buying the cheapest option. He also discusses a few investment options. I agree with his concluding value that while watching money is important, we want to be spending our time on what is more precious than money.

[Amber · Rating 4 out of 5]

Good for general knowledge of personal finance concepts. Always good with these genres of books to seek multiple sources to get a fuller picture. If you’re looking for information on how to manage your money, this is book is more informational than behavioral. He tells you about different options available but why each option may be good or bad. It’s more of a good read than a guidebook, in my opinion.

[Rachel · Rating 3 out of 5]

I liked how the author of this book covered a wide range of financial topics and gave real-life examples for each of the theories he mentioned, making it easy to apply the learnings to your own life.

Although it was interesting and informative, I felt like a lot of it was common sense and it could have been condensed.

It's also worth noting that some of the investment types mentioned in the book are specific ones which are only relevant to
people in America. I found it interesting learning more about the American financial systems though, despite the information not being relevant to me.

[Laurla2]

i skimmed my way thru most of this book, it didn't contain much i didn't already know. "the latin base for frugalis is frux and frug, words for fruit and virtue. frugality signals virtue bearing fruit thru our savings, spending, and giving decisions." "sir john templeton said "the four most expensive words in the english language are 'this time its different'." "benjamin franklin said "the second vice is lying; the first is running into debt."

[Gil Segev · Rating 4 out of 5]

This wasn't what I thought it would be. I thought this would be a practical guide to frugality, but instead it's an entry-level guide to personal finances. This would be a great gift for a high-school graduate who is beginning their financial life, because it details everything from paying for college, buying a home, taking and paying down debt, and more. The main limitations are that it is very US-centric, and a little outdated.

[Arun Narayanaswamy · Rating 1 out of 5]

A totally nonsense book! It shares nothing about frugality. It’s a boring take on various financial topics but nothing to do about frugality. Just goes into all aspects of college fees/loans, investments, donations. It’s a very broad based book and goes into depth of nothing. Overall a total waste of time.

[Jean · Rating 2 out of 5]

I've picked it up as a recommended on Libby, and DID NOT check the year it was published. To no surprise, it is super outdated AND targeted mostly people who is 50+. There are somewhat good thoughts but it is too long for such a simple info. As a backburner audio book is ok, but I did not learn absolutely nothing new...

[Paul · Rating 2 out of 5]

Good basic financial advice. The climate change aspect as a personal motivator and long term trend bending issue felt wedged into the book as a cheap way to sell books. More believable as having a long term impact was the financial crisis of the late 2000's.

[Alma · Rating 3 out of 5]

While there’s nothing earth shattering in this common sense finance primer, I appreciated this refresher in frugality—it’s made it easier for me to articulate my values and money management tools to my teen.

[Steph · Rating 3 out of 5]

I enjoyed the earlier chapters a little more as I found they were a little more general and less specific to American financial systems. A lot of it is common sense but I'm a big believer that it doesn't hurt to have a refresher on common-sense habits.

[Kaitlynn · Rating 1 out of 5]

This isn’t worth reading you’re not living in the USA. It’s all very specific to American finances, taxes, and investing.

There are some recommendations of organization and resources to help with finances and debt, but only for Americans, doesn’t translate well to other countries.

[Jacob Pedersen · Rating 2 out of 5]

I didn't really get it. He went really in depth on the history of certain credit phenomenon but didn't really offer a new opinion on anything. I listened to the audiobook at 2x speed and found myself often skipping chapters.

[Karina Reyes · Rating 3 out of 5]

Nothing new if you're already a saver. Good for the newly frugal or the wannabe frugal.

[Kascia · Rating 3 out of 5]

Was hoping for a more encouraging self help book in finance, but the last half had some helpful things to consider.

[Gwen · Rating 3 out of 5]

Nothing ground-breaking, but some good details about things that I didn't know before, like term life insurance.