Be Cautious and Realistic with Money

Frugal living requires that you be cautious and realistic as well as wise when it comes to decision making.

An old saying saying tells us that "a fool and his money are soon parted." Until you've been a fool with your money, you just don't know how true that saying is.

Take it from a former fool, the saying is spot on! There are other sayings that I've "lived" in order to verify them, and I'll let you know about them when the time comes.

If you're a frugal person, you'll be cautious as well as realistic in your day-to-day dealings. Let's take a look at what we mean by cautious and realistic so we get a good idea of how it might help us.

Be Cautious

Being cautious means taking your time, thinking things through, and making wise and deliberate decisions. It also involves anticipating problems, scams, pitfalls and hidden costs.

For example, a friend of mine bought a lakeside cottage in Texas earlier this year. I'm glad he did because now I have a place to go fishing in the winter months. Anyway, his purchase was made with caution.

One of the cottages he saw on his first day of looking was one that he really liked very well. Being cautious, he placed $100 at risk to have the owner take the property off the market for 14 days while he went to look at other lake property in hopes of finding something of even greater value.

As it turned out, he never found anything that even compared when it came to value, so he engaged the services of a home inspector who was known to be very thorough. The home inspector was known as a "deal breaker."

Armed with trustworthy information about the condition of the structure, he negotiated a reasonable deal with the owner and made the purchase. Immediately after the sale was completed, he scheduled to have the roof replaced and foundation work done as these were the two major items noted in need of attention by the home inspector.

Being cautious and realistic for my friend meant that he went into the negotiations with his eyes wide open (cautious), and he knew that after the sale he was going to have to invest in some overdue maintenance and repair (realistic).

Be Realistic

Being realistic means matching up claims and expectations with what we know to be reasonable and true. It's resisting the temptation to buy into exaggerations and hype.

How many people do you know who have purchased a vacuum cleaner for more than $1,000. I know several who have.

Let's consider that it's just a vacuum cleaner. It vacuums floors, furniture and household objects. And people have (and are still paying) over $1,000 for one of these devices that are common at neighborhood garage sales.

How is it that such a common household appliance could sell for so much? I believe it's because people aren't being realistic when they consider buying it. They buy into the hype about "deep cleaning" or "high efficiency" filtering or something else about the vacuum cleaner that is exaggerated or seems unique.

I bought one of these expensive vacuum cleaners at a garage sale one day for $25. It came with all the accessories in a separate box. It was hardly used. The woman who sold it to me said that she was embarrassed to tell me how much she paid for it. Apparently so, because she never told me how much.

Summary

Not many people have money to throw around foolishly. I certainly don't. If you intend to be a wise and frugal individual, you need to be cautious and realistic when you're considering making purchases.

Take your time and thoroughly understand what it is you're thinking about buying and why. Don't fall for the hype and exaggerated claims. Don't have unrealistic expectations of condition and performance.

Be wise with your money. That means being cautious and realistic.

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