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The power of frugality

September 10th, 2009 at 06:28 am

I must say, this summer has been an interesting learning experience for me. As it turns out, my mother has been going into overdrive, talking to my relatives from both in the US AND abroad to consider moving and eventually retiring in our home town here.

Together with a real estate friend of hers, my mom has been going all over the place, buying several houses on behalf of my relatives who are planning to move here. Sometimes, my mom would ask me to tag along because her English isn't very good, so that's how I am finding out about all this.

What really blows my mind is the amount of money that they all seem to have and are throwing around. Typical prices for a single dwelling house in my area is around $150k to $250k, and they're all paying... are you ready for this? They are all paying in cash! Up front!


I'm like, "Mom. How in the world are they all able to do this?" Mom is like, "Well, that's just the way Chinese people are. They scrimp and scrounge for 30 years, they help each other with lodging and businesses if necessary, and they always pay everything with cash."


It's true though. For example, I'll never forget how, growing up, my mom would have us walk around in the house with our winter coats on, but the thermostat is still set pretty low while it's snowing outside. We also lived with my uncle's family while we were helping him out with his restaurant. I didn't realize until later on that this is pretty unusual.

Another thing that leans very favorably for them is that, in my native country, real estate is extraordinarily high. It costs even more than High Cost of Living Areas (HCOLAs) in the states, and anyone living in an HCOLA will tell you even $250k won't get you much.

So, when they found out how much "house" they can buy in our area, it was like, "Oh OK, great! Yeah, let's move and retire there!"

To be honest though, I am also a little worried about how they are going about this. You see, in my native country, real estate is insanely high, but everything else is insanely cheap. Food, clothing, you name it. And they live cheap anyways.

So, their mindset is that if you can get past a house, you are pretty much home free. I don't know if that's entirely true living here in the US.... For example, my native country still has a very high percentage that rides bicycles and motorscooters. And being so densely-packed, you're never that far from a flea market. So, it's very normal to see even the elderly go out and walk to the market, and 20 minutes later, come back with grocery in hand. In the US where I am, you can't do that.

Plus, I am a great believer in diversifying your money. What they're basically doing is putting most of their life savings straight into the house. Some also don't have retirement savings besides whatever they have socked away in the bank. Again, it's that old school mentality... yeah.

But I tell you what though. So long as they band together, I'm pretty sure they'll work it out. After all, having a fully-paid house isn't exactly the worst kind of financial problem to have....

Anyway, the point of this story is that, sometimes it's easy to feel down and feel like we're not getting anywhere with all the scrimping and saving, and we may even wonder if we ever will. I know I do. But when I look at the checks they cut, and when I step into the houses they've bought-- in cash!-- and realizing that many of them are just simple people with modest living, it really sinks in just how powerful frugality can be!

Insane! Big Grin

13 Responses to “The power of frugality”

  1. creditcardfree Says:

    Excellent post! Great example, too.

  2. gamecock43 Says:

    yes it is true. Being frugal now gives you a lot of leverage later.

  3. Joan.of.the.Arch Says:

    The power of frugality? How about the power of your Mom's persuasion?! Wow, your Mom is a mover and a shaker!

  4. Nika Says:

    BA, you are an ABC?
    I would have never guessed. Smile

  5. Broken Arrow Says:

    No kidding, Joan! Watching her run around makes me tired. Big Grin She's loving all this house-shopping though.

    Nika, are you saying I am an alcoholic? Big Grin Yeah, for better or worse, I am Chinese.

  6. miz pat Says:

    Perhaps it would be good if you send your relatives pictures of the places where they are planning on living and let them know about differences in pricing. Send them newspaper advertisements and translate the dollars on sale items, and send them maps telling them where markets are and what kind of markets are available.

    It sounds like your family is very wise, though. And what a wonderful feeling it must be to be able to make these purchases.

    You make me feel very encouraged. I'm having to refinance my home because of a divorce, and I'm literally right back where I started. But this time I'm getting a 20 year loan and making additional payments. My mortgage banker tells me if I make one extra payment a year I can pay the house in 11 years. She also is prepaying all the PMI insurance up front, which is another savings on interest.

    Congratulations and rich blessings to your family.

  7. Maismom Says:

    I noticed that about Chinese people. They work hard and save hard.
    One of my neighbors moved out. The couple is Chinese and I heard they bought a bigger and better house, and renting the old house. I'm sure the new house they bought was a killer deal they couldn't resist. In general, Chinese people seem to be very smart about money.

  8. Broken Arrow Says:

    Hang in there, Miz Pat. If it means anything, and this may be more of a male perspective, but I've actually found comfort in frugality. Because I know that's something that I can have control over and improve upon. Whereas you really can't control an ex-spouse. For better better or worse, they'll do whatever they want, and it's best that we just let them go. But anyways, I'm sure that things will improve, given the time to heal. Smile

    Thank you for saying so, Maismom.

    I know that the Chinese are culturally-ingrained to save money, and are fairly frugal by nature. But that comes as a result of having been economically improverished for so long. So, the culture is one born out of necessity. In only very recently have they started to experience western styled prosperity, and as a consequence, consumerism. It will be interesting to see how this latest generation of Chinese handle consumerism (but also their form of government).

    I should also add that I'm technically Taiwanese, not mainland Chinese. It does make a difference, especially when we talk about real estate prices being at a premium.

    Finally, and in all fairness, while the Chinese do have good saving habits, they tend to not have good investing habits. Again, I believe that comes from having been economically poor, and therefore not having much to invest in the first place. A lot of Chinese have recently dabbled in the Chinese stock market, but also lost a lot of money in that process.

    Being a fully-Americanized Chinese, it is my goal to take what I feel is the "best of both worlds", to not just embrace frugality, but to augment it with the American can-do attitude of investing and even entrepreneurship down the road.

    We'll see how that works out. For the most part though, my parents are happy to see me finally "see the light" and manage my finances responsibly. Big Grin

  9. scfr Says:

    But legally, how will they do it? My in-laws wanted to move to the US (for the lower cost of living and to be near their son), but legally they couldn't. I'm not allowed to sponsor them. My husband would have to get citizenship.

  10. baselle Says:

    I think about my grandpa, who never made any more than 20K when he retired in 1980, saving and investing like a demon. He and grandma made it to expensive assisted living, then he died, and grandma survived him by ten years of expensive assisted living. After grandma died, I really thought that, tops, maybe sister and I would get 20K each, the last dregs of the savings. We each got about 10x more than expected. It wouldn't have surprised me if at its height the portfolio was at a cool 2M.

    The Chinese and US midwesterners have a lot in common!

  11. Broken Arrow Says:

    scfr, do you mean emigrating to the US? I don't have any details about that part. I know some are already in the US, and others are still back in Taiwan. I only know about house-buying part. Don't worry, they're legal. Big Grin

  12. scfr Says:

    Sorry, yes, that's what I meant.

    I wasn't questioning the legality, just curious how they were able to manage it. Sounds like there are plenty of family members here already who can be sponsors.

    The only way my in-laws could come live in the US would be if my husband became a US citizen and sponsored them.

  13. ralph Says:

    That IS a stunning demonstration of frugality - cash for a house!!

    I never knew you were Chinese. Funny how I project images of people I only know online or by phone. I guess usually I imagine them just like me, male or female. Smile
    And I'm glad your parents are pleased with you now!

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