The Frugal Prosumer philosophy represents a way of living that over the centuries has increased the financial well being of many. One’s financial state is inseparable from other aspects of life. This  philosophy is durable, simple, and give one pause for serious thought. The results can be spectacular. The goal is to maximize the benefits and minimize the expens

Most financial advising uses elaborate systems that feature 401k’s, savings plans, mutual funds, stocks, and a variety of other monetary mechanisms. These systems are expensive to implement and make money for those promoting them. Often, they fail to meet their original goal or are abandoned for one reason or another. We’re not saying don’t use them. We’re not dealing with them here because we are dealing with the foundational issues that must be in place first. 

For the average person complicated and expensive financial systems are doomed from the start. Rather than improving one financial position, these systems tend merely to shift the underlying wastefulness from one resource to another. They tend to shift the impact from the waste of money to the waste of resources needed to maintain a complicated system and lifestyle. For example, depositing money in an investment account may appear to be an efficient use of cash resources, especially for someone who has never established a budget or set spending limits. However, a close look at the non-cash resources could reveal that riding a bicycle to work will reduce gasoline expense by $50 per month, reduce car maintenance expense, and extend the life of the car without having to earn more money. 

The Frugal Prosumer focuses on eliminating wasteful financial systems and concentrates on improving your budget, living within your means, and maximizing resources. These simple ideas are what we have been discovering, practicing, and hoping to pass on to others.

The Problem of debt

I personally don’t like dealing with debt. Yes, I have helped many in that area. But I much prefer helping people to avoid that situation in the first place. Unfortunately many are so hobbled by debt that it is next to impossible for them to be Frugal Prosumers or to get ahead. 

For those in debt the first and most important step to Living Free, is to get a handle on where the money is going and stop paying out so much of the income in interest. Nothing will be as freeing as reducing debt and using the Income & Expense form to help you spend less than you earn. So whether we like it or not, we have to start by dealing with the debt issue.

the first step is to list all one debts and monthly payments. Then list all your income and expenses and uses that to figure out how to reduce your debt. You can use the income and expense form that I have used with over thousand people. It’s available for you on this site  

Live Free

In America, we have life and liberty, but do we really have the ability to pursue happiness? Why do few find happiness, and so many trade away liberty? Time is money and once spent it can never be replaced. Too many people don’t know how to invest their time to free themselves. Instead they are spending it in a way that does not lead to true happiness. Folks are chained to debt while freedom lies within arms reach. Can and will you be open to a new way of thinking? 

A commonly held belief is that money brings you freedom. Most of today’s families will earn a million dollars or even more in their lifetime. That means that all of us have the potential to be millionaires! The “million dollar” question is, how much of that are you actually going to keep?

 Financial freedom is not about how much money you earn. It is about how well the money is managed. Many define wealth by possessions. They consider someone rich if they have a $350,000 home and a $35,000 car. But if both spouses need to work long hours to acquire these things, they may be less free than someone who has less, owes no one, and has a surplus at the end of every month. One can earn lots of money but have their personal freedom compromised through increased expenses and debt. Factor in the likelihood of emergencies and the personal economic fall can be really bad. Unfortunately for many, debt is stealing their freedom and wealth and the debt is being transformed into someone else’s wealth. 

You can be financially free by being a:

1) “Filthy Rich Person”: Have more money than you can possibly spend.

2) “Holy Man”: Having no expenses and no need for money

3) “Wise Man”: Have enough money to cover expenses. Have no debt. Have an emergency fund. 

Few are in the first category. That eliminates most of us. Most think this is the only way to financial freedom. Few come close to the second category and most would not desire it. People in this category are sages, priests, homeless, living primitively away from civilization, and those who are institutionalized. That also eliminates most of us. The question is why do so few achieve the third category when it is obtainable by almost anyone. To do this, they need to understand and implement the following concepts.

Keys to living free:

  • Spend less than you earn. It’s not how much you earn but how much you can keep.
  • Avoid Debt. Take the money you would have spent on debt and invest in passive income. (Passive income is money not earned from working at a job, but from some form of investment). This can give you real freedom and/or time freedom. This lets you be free to do what you want, retire when you want, to leave a job you hate, or pursue a passion.
  • Be a prosumer. Produce a portion of what you consume instead of just purchasing products made by someone else. 
  • Opportunity cost. Calculate what money spent today costs you in terms of opportunity to have more money and time tomorrow. How much money would you have in ten years if you invested it? That $500 spent on that shiny new ‘toy’ invested in some income-producing asset could grow to be thousands of dollars in 20 years time instead of a rusted piece of junk.
  • Personal inflation rate.  This applies only to the things you personally buy. It is not the same as the national inflation rate. If you can increase your income at the national inflation rate and keep your personal inflation rate below that, then you can really come out ahead. Remember, not all things go up in cost over time. You can have more control over your own personal inflation rate than you might think.
  • Life Units. Calculate cost in Life Units instead of dollars. A life unit is the time you spend in your life working for your income. Everything you own has an invisible ball and chain. Add enough of them to your life and you will no longer be free. Consider what the cost of that new “must have” item is in the actual number of hours you must work to get it. Factor in all work related expenses, taxes, repairs, and upkeep. 
  • Associate with those of like mind. To ignore the constant bombardment of consumerism.
  • Avoid the extremes. Balance is important. Being too frugal or a tightwad can enslave you as well.
  • Compounded interest is a fabulous tool and leads to wealth. Wouldn’t you like to be the one who determines who will get rich? Depending on which side of the compound interest rate equation you are on will determine whether it is making you or someone else richer. When we borrow we make others rich. When we put money to work for ourselves, we build our freedom. Be on the right side of the compound interest divide. 
  • Money buys “things” not happiness. But research shows one of the ways money can “buy” happiness. It is the joy of using it to help others.
  • Debt Steals Freedom. Each company or person you owe, owns you and takes a piece of your freedom. Debt tends to dictate such things as: when you retire, if you can afford a good education for your kids, where you will spend your money (or interest), if you get leisure time how much time you can spend with your family, staying at a job you hate, not fulfilling the task for which God put you here on the earth, etc.
  • Truly rich people don’t have to spend money on making themselves look rich. In Thomas Stanley and William Dankos book, The Millionaire Next Door, they observed that most millionaires don’t drive expensive cars, wear Italian-made suits, or live in big houses because they don’t need to impress people with their riches. They are rich! From this book it becomes clear, being financially free is not so much a result of how much money you make, but how little you spend. Spending your money on looking wealthy and rich uses up resources that could make you truly rich. The real measure of how rich you are is how long can you go without working for money.

Understanding these concepts and learning how not to be deceived will allow you to:

  • Follow your passion and work at a job you love. No amount of money can take away the misery of working at a job you don’t love or doing something you don’t feel right about.
  • Make a difference in this world and fulfill your destiny.

Living Free

The choices you make about borrowing and spending can have a profound impact on more than just yourself. Living without debt means you will have greater freedom.

The concepts covered above are simple. They do, however, require a new way of thinking about time and lifetime habits. Changing the way you think can be a stretching experience. It’s worth it because you have only one lifetime. Wouldn’t it be better to spend it following your passion instead of being a slave to other people’s ideas and things?

Balance is the key. We can live free and live well without going to either extreme of totally rejecting the possession-obsessed ways of our society or completely immersing ourselves in it. 

Unfortunately most of the information we have read or heard regarding wealth is from financial institutions that by law are beholden primarily to the stockholders. Their success is not measured by how much they have helped or saved the customer. Sure, success can help them get more of their customers’ money to manage if they do well for them. But the primary concern and what salesmen are evaluated on, is how much money they make for the company and for themselves. Their duty is to make money for the stockholders first and foremost. This applies to stockbrokers and many others who work with your money. Think about it. If you were such a brilliant investor, why in the world wouldn’t you be making those investments yourself instead of for someone else?

Some of the information in this may be new to you. But the basic principles have been around for a long time. So why do people ignore them? The fact is that somewhere along the line we’ve been brainwashed, duped if you will, to some degree or another by the Great Myth Marketing Machine of advertising, that tells us “we deserve it” and can afford it. They want us to be willing to trade future slavery for an illusion of present freedom. They want us to think that luxuries are necessities.

If you’re in financial trouble, blaming someone else is not going to solve the issue. Unfortunately, it’s your problem and regardless how unreasonable or unfair it seems, you have no option but to live on what you earn. Anyone with financial problems can find legitimate reasons for them. Loss of employment, divorce, reduced hours, lack of education, bad economy, predatory lenders, etc. Saying it’s not all your fault can make you feel better, but it still isn’t going to solve anything. Reasons have termination dates. Using blame for a protracted period of time just becomes a weight around your neck. 

Yes, times are tough. The list of legitimate things to blame is endless: predatory lenders plotting to get you, everyone going after your money, the economy, etc.

Be willing to take personal responsibility. Observe what is at hand with anticipation. Resolve to prepare. Begin to make choices. If you do these you will become free to enjoying the ride of your life. Part of growing up is admitting that you played a role in contributing to the problem. Even if none of it is your fault, and that is seldom the case, you have to work with the hand dealt you. Maturity is finding solutions instead of complaining or blaming others. Smack yourself on the head and tell yourself to take courage, learn, and get started. 

So now that you agree that it’s up to you to deal with your financial problems, read our book and articles at for tips and ideas and get going! The only way to get out of the situation you are in is to research all the options and make the hard decisions needed to solve the problem. If you think things are bad, work on changing you. Then help others to avoid succumbing to the consumerism mentality of the Great Myth Marketing Machine. You can do this by becoming a prosumer. Your everyday decisions: where you live, the kind of car you drive, and what you eat, are choices that determine how much money you spend or debt you accumulate. Go over your finances, issues, figure out your part in contributing to the problem, and use The Frugal Prosumer concepts to work out your solution. 

You may think you can’t help it because you don’t earn enough. You can complain about how little income you have and the high cost of living, but you’re the one who can learn how to live on what you earn. I know you can. Our publications and have many ways with which you can tweak your new choices. 

Consider this perspective. There are people near you making less without being in debt. For us who are living in an affluent country no matter what your financial condition we are living better than most of the people around the world. The goal is to curb consumer appetites for things. This is what is so foreign to most people. What you need to do is exchange your values, reeducate yourself, and tweak your attitudes.

The Income & Expense Sheet is a powerful tool. It is the cornerstone to building wealth, being in control of your finances, and getting and staying out of debt. Use it well!

Accumulating wealth has less to do with investment know-how and income and more to do with avoiding debt and living within your means (spending less than you earn).


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AuthorJohn Johnston