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Trent says The Scrooge Strategy is “short-sighted” — I respond with a challenge

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Do you ever wake up in the morning, roll over, and say, “Man, I wonder what my personal finance brethren said about me as I was sleeping?” No? Hm, I guess it’s just me. Anyway, stay with me today as we weave the story of toilet paper, toothpaste, a rudimentary SWOT analysis, and a $1,000 challenge together. It’s really quite compelling.

Yesterday, I woke up to see this Q&A on Trent’s personal-finance blog, The Simple Dollar:

Reader question: “Are you familiar with…Scrooge Strategy? He has a whole different approach to saving money that avoids most frugality tips. Instead he focuses on things like calling to get your cable/phone/insurance/etc. bills lowered and tackling those major spending habits. His argument is that small frugality tips (those that “only” save $5-$10 per month) take too much effort when trying to implement several at a time over a long time; an argument that I believe is completely valid…”

Trent’s reply:

“I think it’s good in concept and attractive for people looking for the big quick fix, but it’s shortsighted.

Let me give you an example. Let’s say I can swap out the incandescent bulbs in my house for CFLs and drop my electric bill about $8 a month. This activity would take me about twenty minutes, just once.

Under the philosophy you describe, such an activity would be a waste of time. Yet, over the course of three years, that activity saves $288 for only 20 minutes worth of effort (actually less than that, since with CFLs you don’t have to change bulbs nearly as often).

There are countless examples like this – little frugal steps that don’t save much money per month, but don’t take much time either. As a result, these efforts pay a huge hourly wage. Ignoring them because the immediate result isn’t splashy is a pretty big mistake, in my opinion.”


First of all, imagine you recently gave birth to a beautiful child, only to hear someone down the street calling it ugly. I hope it’s clear that honor requires me to respond. As a respectable personal-finance blogger, however, my response will take the form of a detailed blog post.

I hope to teach these methods to street criminals later this week.

Now, Trent runs one of the most popular personal-finance blogs on the internet, he is an adviser to Wesabe (as am I), and his blog features many, many excellent tactics for saving money.

But he also caters to a completely different audience than I Will Teach You To Be Rich. He and his readers focus on frugality, on ways to save ever-increasing amounts of money by cutting down on waste, and doing less with what you have. His most popular post of all time is How To Make Your Own Laundry Detergent – And Save Big Money.

I don’t have any issue with frugality, except that I think Americans are horrible at it and, for my audience, it’s a hopeless battle of telling them to say no to things — “no more lattes! no more eating out! no more enjoying life!” — which never lasts.

This is simply basic positioning. Trent has a different focus than I do: He focuses on frugality, and I’ve chosen to focus on helping people define rich and spend extravagantly on the things you love, while cutting costs mercilessly on the things you don’t. I especially focus on psychology and automation because none of us want to be financial “experts” — we just want our money to do the right thing so we can get on with our lives.

So, different strokes for different folks. My tips wouldn’t work very well for Trent’s readers, and his tips wouldn’t work well for mine. We could have just left it at that…

…But then Trent talked about The Scrooge Strategy.

A little bit about The Scrooge Strategy
First of all, to my knowledge, Trent hasn’t tried The Scrooge Strategy, my recently launched premium program for tactical in-depth savings tips. Since he hasn’t tried it, I’m not sure why he dismissed it as “short-sighted.” Especially since I’ve always focused on the long term, and 300+ people are Scrooge members for this very reason.

I could sit here and try to defend the Scrooge Strategy all day, but I’ll let the results from my members speak for me:

“You saved me $600 in interest. I just called American Express yesterday and told them that I just got laid off from work, and they said I can get 0% interest for 6 months, and then about 9% for the next 6 months. Reading your tips definitely gave me the idea to call them and try negotiating. I figured that the worst that could happen was that they would say no, but I would have never expected that American Express would waive interest for 6 months!”

And then there’s Jonathan Bruck’s savings in 2 weeks:

Now come on. I’m Indian, I love Taco Bell, and I use coupons more than twice a week. I know about saving money. But it isn’t just about cutting down on things. “Saving” really consists of Cutting costs, Earning more, and Optimizing your existing spending. And you can’t try to save money on everything.

Focus on the 5 big things, rather than 50 little things
The I Will Teach You To Be Rich philosophy has always been to focus on the long-term, and to focus on big wins that matter. If you start investing early, pick a sensible asset allocation with low-cost funds, save for big events in the next 10 years (wedding, down payment on a house, kids, vacations…), focus on having great credit, and cut costs mercilessly on the things you don’t care about. Do these things and you’ll be ahead of 99% of other people.

But by reducing the number of things to focus on — and picking major, important items — you don’t need to worry about that one-off latte or extra $20 you spent on shoes. If you’re handling your major goals, the minor details fall out of that. Whether it’s spending $21,000/year going out or going out to a nice restaurant, you can handle your goals and use your money without feeling guilty.

What happens if you try to save money on everything?
You can’t. Implementing an ethos of frugality is nice, but it just doesn’t work for the vast majority of people. For Trent’s site, it clearly does — but he has a very, very niche audience relative to most Americans (just as I do…maybe even more so). Yes, we “should” be more frugal, but we’re not. And as you guys know, by focusing on big wins, you have gotten some amazing results on this site.

Like I said, Trent and I have very different styles. For instance, these are some of his recent tips: Baking your own bread (save $104 per year*) or making your own laundry detergent ($70/year).

In fact, yesterday, Trent wrote a post, “The Happy Minimum,” that went like this:

“I began to think more carefully… Did I really need to use that much toilet paper?


Take pepper, for starters. I will put a large dose of pepper almost reflexively on anything I eat that isn’t sweet. The pepper grinder is a mainstay on our kitchen table…I tasted it first, added just two grinds of pepper, stirred, tried it again, and found that I liked the taste. Ordinarily, I would have just ground twelve or fourteen times without thinking about it.

What about toothpaste? I usually put a big glob on the brush without thinking about it too much. Instead, I put just a tiny bit on my brush, spread it over the bristles, and started brushing. Almost immediately, I had a nice bit of foam in my mouth and my teeth felt wonderfully clean afterwards.

Instead of grabbing two or three Kleenexes to blow my nose, why not just grab one and use it until I absolutely can’t use it any more, then get another if I need it?”

Toilet paper? Kleenex? Seriously? Even if you saved 50% on these for the next 20 years (which would affect your quality of life pretty dramatically), you’re still debating minutiae. You could save more in 1 phone call to negotiate your bank’s fees.

I’d rather focus on tips that save me $600/year or illustrate how to turn $20 into thousands using entrepreneurship.

It’s one thing to criticize my tips. But when you haven’t tried them, I’m not sure it makes sense to call my advice “short-sighted.”

The Ramit/Trent Challenge
Again, a lot of Trent’s advice is really excellent (or I wouldn’t even bother writing this), it’s just for a different audience. So, to make this fun, I propose The Ramit/Trent Challenge.

Over a period of 1 month, starting Monday, March 2nd, I say we each pick a group of 50 readers and send them 4 tips. (I’m just going to take the first 50 people that sign up for The Scrooge Strategy.) I propose that we’re also allowed to do one hour of private instruction to them (webcast, phone, email, etc), but no more. We let the tips stand on their own.

At the end, we see which group has saved more — the Scrooge group or the frugality group. And I’m willing to bet, if you are: I suggest the loser pay $1,000 to the charity of their blogs readers’ choice.

Trent — will you take my challenge?

To my readers: Join the Challenge
I’ll wait to hear if Trent accepts, but for you guys, we’ll proceed no matter what.

If you want to join the challenge, follow the instructions below. Whoever signs up today will get the tips and will get to attend the private webcast.

But I’m only taking people who want to win. So if you’re dedicated to following the tips for 1 month (and after that, but ESPECIALLY in the first month), sign up. Otherwise, please don’t ruin my chances at winning this bet in the micro-niche world of personal-finance bloggers. Hey, we all have dreams. Small dreams.

If you want to participate:
1. Sign up at (all signups include a 60-day money-back guarantee)

2. Once you sign up, email with this subject line: “I’m IN for the Ramit/Trent Challenge.”

Whether or not Trent accepts The Challenge, you’ll still get the tips, I’ll invite you to the private webcast, and you guys will save money. And we’ll show the world how much you can save by focusing on the big wins, not every little savings tactic that comes along.

[Edit]: Trent’s response is up.

* * *

* Assume buying bread costs $3 while making it yourself costs $1. 1 loaf/week.

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    I personally hate those kinds of tips – saving a tissue paper here, or saving toilet paper rolls for other purposes.. whatever.

    I only do the things I do, like get rid of shampoo or detergent not to save money, but to save my health & the environment (am a bit of an yuppie hippie mix).

    He has an okay blog, but I can’t imagine beating myself up over spending $2 on a chocolate bar, or using more than one square of toilet paper roll.

    I am not wasteful by any means and have turned into a bit of a minimalist (for zen, decluttered purposes), but c’mon let’s live a little!

    I buy technology at $500/pop or a new mini laptop but it’s all about making choices and setting priorities.

    Being that frugal is a disease, just like being a shopaholic (what I once was) is a disease as well.

    I definitely respond and relate more to your blog and my PF blog is in a similar style.

    She who dies with the most gold in the end, is a fool, I say. It means they worked so hard all the way until their death without really enjoying a single penny of it.

    I’d rather die with $0 in the bank 😛

    Fabulously Broke in the City
    Just a girl trying to find a balance between being a Shopaholic and a Saver.

  2. Ramit,
    While there is some overlap, I would contend that your audience probably consists of people than can make bigger, more sweeping changes to their finances which results in larger immediate gains. My hypothesis would be that you’ll see this in your challenge results.

    My guess is that Trent’s audience has already made many of the more sweeping changes, and are now getting down to the truly nitty gritty details which is all that is left. That’s not to say that both aren’t valuable, they just address different stages in the money-saving game.

    One point where I will give you tremendous credit is your focus on not only saving money, but also on earning more. This portion of the wealth puzzle is often ignored, but is just as important.

    Overall I find value in both sites. Keep up the good work.

  3. LOL – can’t you guys just get along? I subscribe to both yours and trent’s site, and even though most of trent’s tips don’t apply to me, at least he doesn’t get into a dick swinging contest when someone criticizes his site.

  4. I saw that post on The Simple Dollar yesterday, and I thought it was an unfair assessment of what you’re doing on IWTYTBR.

    I like both of your blogs, but I have to agree on the frugal minutiae. The posts like the one on toilet paper and pepper grinds completely lose me. Life is too short to analyze how many squares of tissue I need to “do the job,” so to speak. On the other hand, I liked his post about making breakfast burritos in bulk and freezing them, since I don’t eat fast food and can’t manage to get up early to make breakfast.

    I think if you are already paying attention to the big money-savers, and you are inclined to take frugal to another level, so be it, and cutting back on waste is never a bad thing. But I have to say that I sway more toward the IWTYTBR philosophy of cutting back, then spending your time MAKING money, rather than worrying about pepper or toothpaste.

    I haven’t figured out how to take that next step myself, but it’s important to me to get there.

  5. Wow! Touchy, touchy. No, I don’t think the scrooge strategy is short-sighted. I think, from what I’ve read of it in your posts, it is very interesting and chanllenging and covers most of, if not all of the bases. However, I also agree with Trent about frugality. I have NEVER been a frugal person, but when you’re busted back a few notches as a single mom with a crappy paying job frugality is a necessity. You have to be conscious of the little things. Counting those sheets of toilet paper will help you make it to the next payday when you can actually buy more toilet paper and save you however much per roll. Personally, I try to combine the two. Things that I love, my moring cup of coffee… I still get, just once a week now, and the rest of the week I try to replicate it at home for less than half the price. And as far as cutting your cable cost, what’s cable? That is a luxury for me. I’ve already cut out all of those things and gotten rid of the credit cards and all that stuff. So all that’s left for me are the little things. So if I save $0.70 on a loaf of bread that is $.70 toward the light bill. Of course if I did as Trent suggests and cut out that once a week cup of coffe that would be $16 for the month toward the light bill, but my sanity would suffer. Bottom line everyone has to find their own balance. But I like the challenge idea, and I hope he accepts and I’ll be watching to see how it turns out.

  6. I definitely agree – it’s always better to save money on big-ticket items, especially those you don’t particularly care about. For instance, I’m cutting my rent in half (from $800 to $400!) by moving in with an old Japanese lady in Colma City. Also reducing my gym bill ($75/month to $20/month).

    This makes it possible to save at least half my salary each month without skimping on seeing friends for meals/drinks/etc., which is what I care most about. Also, I’m saving up for travel (trips to Japan and Ireland planned in the near future), nice clothes (because you need them in finance), and my wedding (upon reading your advice!)

    Can’t wait to read your book when it comes out!

  7. Meh. Honestly, I’m getting a little tired of you trying to sell me the Scrooge Strategy. (Sorry, but, I’m allergic to advertising. 🙂 )

    Big, sweeping changes are very useful, as is anything that can increase your income. The problem is, I’ve already done all of those things (which is why the 30-day challenge didn’t do much for me). Over the past few years, I’ve made major life changes in the service of spending less money on BS and more money on the things I care about. I mean things like not owning a car and living close to my place of work, though I’ve also negotiated with credit card companies, don’t have cable, etc.

    You said “a hopeless battle of telling them to say no to things — “no more lattes! no more eating out! no more enjoying life!” — which never lasts.” Umm. Though I agree with you that you should spend money on the things you love, I hate the implication of that sentence. C’mon! Spending money != enjoying life. The fact is, while the big changes are useful, you can only do them once. Frugal habits are a useful piece of the puzzle, too, since the small savings DO add up in the long term. And it’s not a hopeless battle at all — it varies person-to-person, but there are a lot of changes most of us can make without feeling at all deprived. It’s all about wanting to put my money where it can contribute the most to my quality of life.

    And hey, you don’t seem to realize that doing stuff like baking your own bread or making your own laundry detergent can also affect your quality of life in a positive way. There’s a deep sense of satisfaction that comes from doing things yourself. For example, I started learning to cook in order to cut back on the amount of money I was spending eating out, but somewhere along the line I’ve begun really enjoying it — it’s fun to experiment, I like knowing exactly what goes into the meals I’m eating, and I’ve found that home-cooked meals taste a LOT better. Plus, eating out in a restaurant became a special treat when I didn’t do it every other night.

    I don’t know, I just don’t think there’s a need to be so disparaging. I think the two schools of thought are complementary, not mutually exclusive. You both have good tips and both angles are important pieces of the puzzle.

  8. If you’re going to make coffee at home most days of the week, just make it at home every day of the week. Don’t buy a cup of take-out coffee. Then you can buy a whole pack of t.p. with money you would have spent on a tall latte and you won’t have to worry about stretching out the t.p. to make it to the next payday. No one should have to do that. Take-out coffee just shouldn’t be bought by people questioning whether their t.p. will last all week.

  9. I thought this post was hilarious and fabulous. I love the toilet paper image.

    Like posters above, I can see the benefit of both types of saving. My car insurance company recently increased my payments by $40 because I moved 5 miles east of my previous residence. Considering I barely drive my car anymore, I thought this was preposterous. I called another car insurance company, got a quote that was about $15 less than what I was paying for the other guy BEFORE the rate increase, and saved a nice chunk of change. I also recently moved in with my boyfriend which is saving us $800 a month on my rent plus whatever I was paying in utilities/cable/etc. These are big changes that definitely save me money. At the same time, frugality tips also save me on small expenses. If I cut coupons to save even $5 or $10 on my grocery bill, that can add up, too (though I’m going to use as much toilet paper as I damn well please).

  10. I read both blogs and agree your audiences are different. I think the Scrooge Strategy will save people hundreds of dollars, especially if up until now they haven’t done much to cut costs or manage money. I also think Trent’s blog helps the more frugal reader take cutting costs to the next level. Many of his readers probably have already put into practice the tips in the Scrooge Strategy.

    As I happen to be a person that is naturally a saver, I instinctively have cut costs on things that are not as important to me. For example, why buy lunch at work? Work isn’t my free time, it’s work, and I’d rather spend the money shopping or out with my friends. In turn I pack myself a healthy lunch so I can indulge later both in money and in calories and have done this for years. On the other hand, am I the type of person that is overly frugal? Probably not. Admittedly I love to splurge on shopping, but I can do this because I have a budget and track my spending. I don’t mind frugality reading tips, even if they are a bit extreme for some people. I probably won’t be making my own laundry detergent any time soon, but I might try my hand at making my own bread. In the same way that after reading all your posts, I decided to get around to finally calling my cable company to get a discount. ($29 off per month btw)

    I think you’re taking Trent’s comment the wrong way. I was first taken a bit back by it myself. After rereading the blog, Trent is responding to the last statement directed at him from his reader about the fact he or she thought implementing small frugality tips takes too much effort. He’s talking about the philosophy the writer of the question describes, not your posts or strategies. The writer of the question is the one who mentioned your strategy and summarized it. I don’t think Trent has signed up and read the Scrooge Strategy with the intention to contest it or rip it apart. He’s just contesting the fact that he thinks small frugal tips will pay off in the long run.