Book Review and Giveaway: The New Frugality by Chris Farrell

People who live in big houses have problems too. This is what I tell myself every time I start to feel cooped-up in this little 700-square foot house the 4 of us share. Sometimes we need to be reminded why we live the way we do and sometimes it’s good to remind others that quality of living doesn’t have to be compromised when we make a decision to reduce spending.

I have often been asked, “How do you live in such a small house?” But then I tell them what my mortgage is every month and the look of shock on their face usually makes me feel a whole lot better. I know they are considering their own mortgage versus mine and maybe even wondering to themselves if it might not be worth it after all. Other people are content to live in debt up to their eyeballs in order to have the things they have. Personally, I enjoy living without all that stress.

I think most Americans are trained to want the big house, big car, big boat, etc. and so when they find themselves struggling to pay the bills they are confused because really, this way of life has become so ingrained in our culture that we don’t know any different. It’s necessary to take a step back every now and then and really evaluate what is a need and a want, to evaluate frugality, our commitment to our health and well-being and our stewardship of the land. If we need a little reminder (or the education in the first place), we can turn to books. One of the more recent books I’ve read on this subject is The New Frugality: How to Consume Less, Save More, and Live Better By Chris Farrell.

According to Farrell, being green and being frugal are synonymous. I couldn’t agree more. Farrell encourages us to make choices based on what is affordable and sustainable. For example, my husband and I reduce our use of the car significantly during the Spring, Summer and Autumn months. We tote ourselves and kids around on bikes using a bike trailer. It made sense for us to shop for a bike trailer that was inexpensive yet safe and durable. Taking the time to research the right choice rather than jump in the car and run downtown to buy the biggest, fastest, flashiest model falls in line with Farrell’s ideology that frugality should also be sustainable. The item purchased needs to be inexpensive, yes but it also needs to last. Otherwise, what’s preventing us from having to go down and buy a new one when the cheap one falls apart after one summer of heavy use? Having to buy two cheap ones in two years costs more than buying one durable one in the long-term and is better for the environment because there is less manufacturing and shipping involved. Has anybody else ever wondered if certain companies make their products flimsy and crappy on purpose so that we HAVE to buy more?

Here’s a little secret that a lot of people don’t know. Once you get used to living frugally, the smallest things then become “big deals” and happiness comes easier. This is where the Live Better part of the title comes in. Think of a child who gets ice cream everyday. After a while, is the ice cream a treat or is it just routine? What then needs to be done to give that child a treat, to bring happiness? A banana split? Triple-decker cone? When does it become enough? By limiting some of the things that were once considered “special” (a time before people just busted out the credit card out of habit), we are able to allow ourselves that happiness in a more frugal way and the stress is gone. It may sound difficult at first, but by adopting the new frugality mentality you can really improve your quality of life. Reading Farrell’s book is extremely motivating. After reading it, I want to see how much I can save and challenge myself to be as frugal as possible.

The book does have useful information for people from various economic classes but the majority of advice seems to be directed to those in the upper classes. I do not fit into those classes but it doesn’t mean I can’t learn from the same book. It is a little frustrating to read that an ideal savings would be the amount one would need for an entire year’s living expenses. I can’t even fathom saving up that kind of money, and if I could I would probably consider moving someplace warm and third world but I guess it is an ideal I should strive for someday.

Really this book is for anyone just starting out that knows nothing about finances or for the person with a larger net worth but who knows nothing about living frugally and wants to start. For people who have been living green and managing their own finances (people who understand what a Roth IRA is) for years now, it might not be the right book. I only say this because I let my dad read this book and he fits the latter profile and said as much to me in a quick paragraph.

Who this book would be perfect for:

-People like my brother who make a fairly good chunk of change but have no clue what to do with it and have never thought much about sustainability.

-People like my husband and I who need a reminder every now and then why we need to keep saving and keep living green.

-People like the folks down the street who are newly retired and thinking about becoming more green but want a little more motivation, resources and information.

-People that I work with whom have enough money they can consider paying for their kids’ college with cash, charitable gift annuities, make major investments, etc.

It’s a pretty wide cross-section.

Perhaps my favorite section of the book is the one titled, “Investing in Yourself”. Farrell writes, “Our most important investment is in our education and career, skills and knowledge- what economists call human capital.” He goes on to explain that we are only worth as much as we are able to create, produce or otherwise bring to the market. He emphasizes with a quote from Fischer Black, “A raw human being has about as much economic value as an uncultivated piece of land in the wilderness.” This isn’t depressing to me, it’s motivational!

I am giving away one copy of this book.

In his book, Farrell mentions the benefits of renting over owning in today’s market. For example, when one rents, it is much easier for one to “pick up and move” in order to chase after a particular job.

In order to win, please leave a comment below answering the following question:

Do you believe it is better to rent a home than to own in today’s economy?

You can enter more than once by tweeting this giveaway (please let me know you did so in a separate comment below).

Good Luck!

Fine Print:

Winner will be chosen via Random.org. The book will be mailed to you from the publisher, however the review here is the sole opinion of mine and was not influenced in any way by the publisher. They simply allowed me to read and review the book and have agreed to provide one copy to a lucky winner at my request. The contest is open to U.S. and Canadian residents only.  The contest will close at Midnight on March 10th. I will contact the winner and announce it here.

UPDATE:  Congratulations to Devona, winner of this giveaway!

19 Comments

  1. Posted March 3, 2010 at 5:17 pm | Permalink

    I still believe that owning is the best thing. The caveat – own something that fits your financial lifestyle and makes it possible for you to save every month!!

  2. Posted March 3, 2010 at 5:21 pm | Permalink

    This sounds like a great book and something perfect for me right now. I’m adding it to my Amazon wish list just in case I don’t win 😉

    And to answer the question – while I felt differently 5 years ago, right now I believe it’s better to rent than to own.

  3. Posted March 3, 2010 at 5:24 pm | Permalink

    I Tweeted about the giveaway!

    http://twitter.com/browneyedbaker/status/9945922295

  4. Posted March 3, 2010 at 5:25 pm | Permalink

    wow, I would love to read this book!

    personally, I believe it’s better to own…but I’m not all that educated on rent vs. own, this is just what my husband tells me 🙂

  5. Caitlin
    Posted March 3, 2010 at 5:38 pm | Permalink

    I still believe that owning is the best thing.

  6. christi
    Posted March 3, 2010 at 5:40 pm | Permalink

    Retweeted

  7. chiquita
    Posted March 3, 2010 at 5:43 pm | Permalink

    I also think that owning is the way to go…although we currently rent our home (due to hubby getting relocated every few years), we do own a small town house in SoCal which we rent out, and hopefully won’t have to give up.

  8. chiquita
    Posted March 3, 2010 at 5:43 pm | Permalink

    P.S. I tweeted about the giveaway too 🙂

  9. christi
    Posted March 3, 2010 at 5:44 pm | Permalink

    Owning is best, even if you don’t live in the property you can always rent it out.

  10. Posted March 3, 2010 at 6:56 pm | Permalink

    As Ojibwe people, my husband and I have a deep affinity for the land. It is innate. I remember, with some embarrassment, the crying Indian commercial of the 70s. If you’ve never seen it, here is a YouTube link: http://www.youtube.com/watch?v=m4ozVMxzNAA This commercial came about in the Keep America Beautiful efforts of Lady Bird Johnson.

    From the Indian point of view, it was the coming of America that destroyed the beauty and resources of the land that had sustained us as we had sustained it for thousands of years and many generations of people.

    If you are old enough to remember the 70s, it was an “awakening” time for the Indian people. The American Indian Movement came into the spotlight in 1973 when they occupied Wounded Knee. Until then it wasn’t “cool” to be Indian. Most of us were in a “limbo” – being neither wolf nor dog – half-breeds stripped of our language and culture.

    We were in the beginning years of reclaiming our culture and the beliefs that go along with it. They were angry years often acted out in rage, hating who and what we had become; wanting to return to the time when honor lived big among us.

    Most Indians today have come to peace with who we are, finding that our culture still fits us, believing that we have a place and purpose in this world.

    To my amazement there are still people who believe in evolution. If it is true, why have we come to the place that we find ourselves and the state that our world is in?

    To me, being “green” has been the color of our lives. It has only become “cool” to the society that is looking doom in the face. Being green is not so much buying the “right” products, recycling, using up or making do. Green is the color of life. When human life in its completeness – body, soul, and spirit – becomes our priority, respect and honor will return to our society. Without respect for life itself, there will be no respect for the things that sustain life.

    Human beings were made from the dust of the earth and the breath of The Eternal. We were given the care of the earth because it is the earth by which our natural life is sustained. When we fail to care for that which has been entrusted to us, we fail to care for ourselves.

    The Indian people make decisions based on how it will affect the next seven generations, not on how it will benefit me and satisfy my need of the moment. Selflessness is only found in love; love for my fellow human being and love for the awesome world we occupy. This is being GREEN.

    The experience of poverty is beneficial insofar as it allows one to hold on to the things that are of true value in life: family,love, peace, truth, integrity, honor, hope, faith. None of these things can be bought with money, and they are the true blessings of life. It is the strong spirit of a man that sustains him in hard times.

  11. Posted March 3, 2010 at 7:13 pm | Permalink

    I believe in any economy it is better to own, just as long as you live within your means and still have a savings account with a few months worth of bill money.

    Too many people have a decent paying job, but spend just as much, if not more, than they make.

  12. Posted March 3, 2010 at 7:15 pm | Permalink

    I retweeted the giveaway @dat757deeva

  13. Marlene
    Posted March 4, 2010 at 9:09 am | Permalink

    trick question! speaking from someone who lives in the midwest & in a city whose ranking is #2 on who’s been the least affected by this recession, I can say owning is the best option…assuming it’s a standard 15/30 year mortgage so you don’t get in over your head with a balloon or interest only mortgage. That I feel, is what got our housing market where it is today.

  14. Posted March 4, 2010 at 9:59 pm | Permalink

    I would love to win!! My love and I are working on ways to save!

  15. Leslie
    Posted March 7, 2010 at 8:59 am | Permalink

    I don’t think one can make a blanket statement one way or the other-there are so many variables. I’m fortunate enough to live in an area with moderate housing costs, and I own. But I’m waiting for values to climb again so I can sell-my house is too big for me. Renting is good if you want flexibility or are building up savings.

  16. Angie
    Posted March 9, 2010 at 6:09 pm | Permalink

    It’s always hard to step back and think that what you have really is enough and possibly even more than enough. Thanks for the reminder!

    Renting vs owning is a hard question. I lean to owning though I KNOW I spend more money on bills now than when I was renting. If you rent, you are paying the landlord’s mortgage so might as well buy your own.

  17. jilljay05
    Posted March 9, 2010 at 7:14 pm | Permalink

    I have been thinking about this for a while. I think it is a very complex question.

    Most people don’t realize how expensive it is to sell a house. You have to pay realtor’s fees, taxes, closing costs (possibly other things that are escaping me at the moment) and all of those things can add up to or more than what you would have paid in rent, if you only live in the house a short period of time. That’s assuming your house is worth more than when you bought it. If it is worth less, than you also have to come up with the difference. I strongly believe you need to live in a house a minimum of 5 years, actually at least 7-10 in order to make it worth your while.

    You also need to budget in the cost of buying a house. Yes, you can get a loan, but there are moving costs involved. Whether you rent a u-haul or pay movers for the physical move, if you have to take time off to move, coming up with money for the inspections before you move in as well as the down payment and possible closing costs, you may also need to buy appliances as most people do not leave theirs behind when selling, plus the cost of turning on your water, electricity, etc because most companies want a down payment to do so. These are things most buyers don’t think about.

    Also, before choosing to buy you need to consider many other things. Is your job stable? Have you been there for a few years to know for sure if it is stable? If there is a chance you could get laid off due to budget cuts, etc, you should not buy. If there is a chance you could be transferred to another location, you should not buy. It is not just income, but the fact that you may need to be mobile in order to find a new job, and that is not so easy to do when you own a house. It is expensive enough to break a lease!

    It is also very expensive to maintain a house when you own it. I am not talking about the cost of getting new paint and window treatments, I mean actual maintenance that comes up while owning a house. What if you need a new roof or furnace? What if a window breaks and you need to replace it? What if your plumbing backs up and you need to replace a pipe? You cannot call the landlord to fix these things, because you are the landlord when you own. Can you afford to fix these things, plus pay your mortgage? If not, you should not own. (And a mortgage includes insurance and taxes, which most “mortgage calculators” that you find online do not take into account, so you basically have to double whatever they tell you your mortgage will be.)

    Another thing that I see a lot is people doing is getting approved for a loan for say $300,000 and then they go out and look at houses listed for $300,000 or above, hoping to negotiate down to $300,000. Just because you get approved for X amount does not mean you need to spend that much. You could very likely find a house for WAY less that has all your criteria.

    So, to answer your question, each individual case is different. If you have a stable job and know you will be in the house for at least 7 years, and you have shopped around to make sure you are getting the best deal possible when buying the house, and have saved up a substantial down payment to avoid extra insurance and it can also help with lowering your (fixed) interest rate (which is a big deal, by the way), plus have worked out your budget to know you can afford the house, yes it is a good idea to buy. You can find a great deal in this market. But if you are unsure of your job stability or have not been working very long at your job and are unsure whether you are going to live in the house for any length of time, it is WAY smarter to rent. Buying (and selling) a home can be throwing your money away, and even more expensive than renting in certain situations.

  18. Kourtney V.
    Posted March 9, 2010 at 7:52 pm | Permalink

    Sounds like such a great book!! I believe that owning is better, especially emotionally. I have so much more investment in our old house than I ever did with any of our rental places. I believe that you take much better care of something that you own.

  19. Posted March 9, 2010 at 11:07 pm | Permalink

    Just refinanced my home for 20 years…but I don’t see myself living here in 10 years. Waste of money 🙂