Saving moneyIt is early summer and my intake of iced coffees is increasing by the day. A grande at Starbucks is $2.78 in New York City, and on a good day, I can knock back two. That's $5.56 more than I usually spend each workday, or almost $30 a week. It's justified, I tell myself, because no one makes iced coffee at home. But how much should I be sweating these small purchases?

The home economics of coffee is a popular theme among personal finance writers. Who doesn't cringe when thinking about spending in the neighborhood of $1,500 a year to feed a caffeine habit? The debate goes like this: How much should we be minding our small purchases versus focusing on big gains, like earnings, in order to stay out of debt and get rich? I turned to some of the blogosphere's most popular personal finance writers to learn more about the save versus earn debate.

The Simple Dollar: 'Don't Trust Your Gut Reaction'

Trent Hamm, creator of The Simple Dollar blog (and author of the book by the same name), has chronicled his own journey from financial Armageddon (his word) to solvency. His appeal is as an anti-hero of personal finance, and his down-home strategies like DIY-laundry detergent are legendary. But his emphasis on frugality may put some on the defensive. Who can compete with a man who blogs cheerfully about finally wearing out sports sandals that he has worn since 2003? Eight years in the same sandals? Mine get ripe after three months.

Being frugalHamm's position on the save versus earn debate is centrist. Saving on small things is a great way to put out a fire if you're in a financial crisis, he told me, but in the long term, increasing income is important.

"You have immediate effects from the choices you make every day. Turn off the lights in your basement. That is a choice I can right now to save 50 cents," he said. "I can make a good presentation at work, but I am not going to earn more money right away."

Yet as we continued to discuss the question, it became clear that it wasn't the obvious things, like coffee or lipstick, where my real savings might come from. It was from the things I wasn't even thinking of.

"A lot of people think certain things are 'must have,' and they don't even think they can get rid of them. The best example is your car. You can't imagine not having it. But can you can use public transportation and get everything you need by your house?" Hamm continued. "You need to look at everything and ask if it is really untouchable."

His advice for frugality newbies is to take savings behavior -- riding the bus, buying one less coffee -- for trial run and see how it feels. "Don't trust your gut reaction," he said about getting over initial resistance. Right now, my gut reaction is still clinging to my twice-daily joe habit.

Get Rich Slowly: Mental Balance, Conscious Spending

Next I called up J.D. Roth, another inspirational hero of frugality, who created the blog Get Rich Slowly. As we spoke, Roth was making the two-and-a-half mile walk home from the gym, part of his personal campaign to drive less. Like Hamm, he pointed to the immediacy of savings that cutting back on 'extras' can bring you. However, Roth also acknowledged that saving has its limits: People can only cut out so much spending in their lives.

"There is a point where you can't cut out anymore and you are still not able to make ends meet or save," he said. "Then you have to boost your income."

Roth's personal finance formula has combined both saving and earning more (through writing), which helped him get out of $35,000 in debt over the last five years. He takes a Zen-like approach to his financial life and mentions both mental balance and conscious spending as core principles. Roth said one reason he racked up so much debt is that he didn't know what was important to him. "I just bought what I thought I could get away with," he said.

His financial soul-searching led him to prioritize. Now, his savings philosophy is to cut back hard on the things he doesn't care about so he can focus on what's important to him, like travel. On Get Rich Slowly, he writes about how starting small in your spending cuts is a way to strengthen your frugal muscle. From there, you can move to bigger savings, such as cutting out recurring monthly bills, like the cable or subscriptions.

"It's a matter of practice and accepting the fact that you fail from time to time and you make mistakes," he said. "But you learn not to let them derail you."

Ramit Sethi: 'You Can't Out-Frugal Your Way to Being Rich'

Lastly, I called up Ramit Sethi, who has built a small empire around his best-selling book and blog I Will Teach You How To Be Rich. Sethi's personal finance campaign didn't start with a mountain of debt, but rather a strong drive to make money. Now he teaches others how to do it.

"I love making fun of stupid latté advice because it requires incredible will power and produces very little results," Sethi said. One the big problems with saving $6 on iced coffees today, he told me, is that the same $6 is usually spent elsewhere on another consumer product tomorrow.

Negotiate salaryHe compared frugality to a fad diet. "It seems to be within your control ... and the strategies are really simple. A lot of people will make great changes. ... But they will change for a week and then yo-yo back," he said. "It can make sense about containing expenses, but you can't out-frugal your way to being rich."

Deep down in our psyches, Sethi argued, is a lack of willpower that makes it difficult to sustain a frugality campaign, like giving up daily lattes (or iced coffees). "One of the best ways to meet money goals is to earn more money," he said. "It's more challenging to get started earning more money, but the rewards are huge."

He offers three quick pieces of advice that are especially important for new graduates: negotiate your salary, get the right bank accounts, and start investing early. "Don't wait for the mythical day when you will be rich," he said.

"The ultimate question is what does rich mean to you? We found that the No. 1 reason people want to make money to have the 'option' to quit their job."

So what did all this information on the save versus earn debate mean for my iced coffee habit? My new strategy is a hybrid of all three bloggers' advice: I'll try drinking one iced coffee instead of two, rethink my financial priorities and perhaps invest the money I save. I might even switch to iced tea. And make it at home.
Which behavior is most successful to "get rich?"
Emphasis on frugality1 (16.7%)
Conscious spending1 (16.7%)
Only spend on your top priorities1 (16.7%)
Compound interest1 (16.7%)
Investments1 (16.7%)
Negotiating salary and pushing for larger roles1 (16.7%)

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June 23 2011 at 4:33 PM Report abuse rate up rate down Reply

The best way to make money in this economy is to take advantage of the once in a lifetime opportunity trading Oil, you can make $200 to $5,000 a day trading Oil if you know the secret behind it. Are you ready to join the financial revolution? If so, just google "Oil Trading Academy" and change your life forever.

June 22 2011 at 10:59 AM Report abuse rate up rate down Reply

If I had been smart enough to start saving in my 20's instead of around 40, I'd have retired rich - or earlier. Instead I retired at 56 very comfortably and I did it by saving and wisely investing in Buffett-type slow-growth companies.

Along the way, I learned that "rich" doesn't mean happier. I can't afford to take round-the-world, 3-month cruises - a least not regularly- but I can afford to take trips all over the world when I want. I don't own a yacht but I have a 21 foot pleasure boat on the Chesapeake with a cabin and a port-a-portapotty. It would hurt my budget to buy $60K cars, but that does not affect my ability to drive wherever and whenever I want. I don't have enough room to grow an acre of veggies or raise chickens, but I'm retired - do I want to get tied down with that when there are so many other things I'm doing?

I think, today, if you have $2M per person in retirement - counting the value of pensions and social security, etc. you can live as happily as someone with $10M. You need to be exceedingly rich and be able to fly around the world every month, etc. to live significantly differently.

June 21 2011 at 7:31 PM Report abuse rate up rate down Reply

This is a no brainer for most. The only option they have is to save and put 1/2 in high grade bonds/high grade equities. Regular investing is no longer an option. The markets are for the pro's as we have seen over and over again. Most people should not even consider starting a business. Easy to do, but most are not equipped and I am not talking about education. Have had some great employee's over the years, but no luck with them in succession plans. They remained great employee's, but just could not manage a business. Wish I could explain it.

Save your money, stay out of debt and life will be good.

June 21 2011 at 4:17 PM Report abuse rate up rate down Reply

By far the second best to way to millionaire success is to start your own business, but, if you are 21 an put away $60 a week into your S & P 500 mutual fund earning an average 7.5 % a year you will be a millionaire when you retire at 65. I did both nand retired at 56 - 3 yerars ago. I wanted to retire at 55 but was having too much fun. The easiest thing in the world to do is to become money rich - anyone can do it with $60 a week.. All you need are the hundreds of good character attributes required for success and avoid the 3 that cause failure. Fear, pride and ego.

Never foregt the best way to get something is to give up wanting it so much and do the things it takes to get it instead.

The best things in life can not be bought no matter how much money you have and the things you can buy with money are not worth owing.

June 21 2011 at 3:21 PM Report abuse rate up rate down Reply

Screw coffee. Fretting over coffee is for losers.

Avoiding a bad marriage is probably the #1 thing. Staying healthy and health insured is another.

June 21 2011 at 2:31 PM Report abuse rate up rate down Reply

I have a question for everybody. How much do you consider rich? Net worth?

June 21 2011 at 10:40 AM Report abuse rate up rate down Reply
2 replies to j99benz's comment

It all depends on the life style you want to live. I've been middle, middle class my whole life and so was everyone in the family. I've gotten used to being like and around those kind of people and would probably be uncomfortable with the truly wealthy crowd. I'd certainly feel rich with a couple of million in the bank and a decent middle class income on top of that. It's all relative.

June 21 2011 at 2:57 PM Report abuse rate up rate down Reply

5 million liquid. At least 5 million more solid. By solid, mean it is just not liquid. CD's, treasuries, etc that are tied up in 401k, 403b, annuities, etc.. If you have those 2, then you probably have another $10-20 million in real estate, and other investments that might be worth $5-30 million in five years. Just so long as you have the first 2, you are rich. The 3rd increment could go to zero and you are still rich.

June 21 2011 at 4:21 PM Report abuse rate up rate down Reply

The best way isn't even mentioned in the survey?... Start your own business and run your personal finances like a business too!... This is by far the best way to wealth.
(Except for being a bankster, where even if you fail you are rewarded!... This is the best way if you prefer the "dark side" of the force! Lol).

June 21 2011 at 9:10 AM Report abuse +1 rate up rate down Reply
LEE Resolution

Earn and investing shortcuts unless you think you're a 'player'.

June 21 2011 at 8:18 AM Report abuse -1 rate up rate down Reply

Years ago, I read that for the first ten years of your working life, you should work two jobs, one full time and one partime; bank / invest the money from the parttime job. also you should not spend money, freely, on yourself and nonthing on others. Then one should be able to cutback to one job thereafter and when you do retire you should be well off. By working hard and doing without during your early work life, while it is easier to do when you have energy and are healthy! It was too late for me to be able to try this or maybe benefit from it. Having children early in life is not a good idea either, as once you have children, your life is changed forever, as you have another person to feed cloth and educate and in this day and age, you could go to the poorhouse trying to provide them with what is required to make it ,in the" New American Normal!

June 21 2011 at 7:50 AM Report abuse +2 rate up rate down Reply