A single-income DC area family with 13 kids in one of the most expensive areas is ‘living large’ by ‘spending small’
The Washington Post had an excellent article a few days ago about “How one family is sending 13 kids to college, living debt free — and still plans to retire early,” here’s a slice:
Rob and Sam Fatzinger, lifelong residents of Bowie, Md. [a suburb of Washington, D.C. in adjacent Prince George’s County], lead a single-income family in one of the country’s most expensive regions. Rob’s income never topped $50,000 until he was 40; he’s now 51 and earns just north of $100,000 as a software tester.
They have 13 children (see photo above). Which means they require things like a seven-bedroom house and a 15-passenger van. Four children have graduated from college, three are undergrads and six are on the runway. Yet they paid off their mortgage early four years ago. They have no debt — never have, besides mortgages. And Rob is on track to retire by 62. This family gets the gold medal for being frugal. This family is the Einstein of economical. The family shops at sales or secondhand stores and checks out the Freecycle Network, a site for giving away belongings. These days, frugality is not about clipping coupons. It’s about rethinking your finances, and maybe your life.
About 10 years ago, Rob got the job testing software. Earnings of $40,000 gave way to $60,000 and are now about $110,000, counting a few thousand from mowing neighbors’ lawns and other tasks. Back in 2000, they bought a five-bedroom house out of foreclosure and later added three bedrooms. Nine children, including the youngest, who is 4, live there now. The good news: The home cost $150,000. The Fatzingers paid down $50,000, saving interest on the 15-year mortgage.
Years later, they enlarged the kitchen, using two zero-percent finance offers good for 12 months. Eleven months later, they paid off the loan, without paying any interest. The project cost $28,000, with family members doing much of the demolition, painting and decorating. Now they have two refrigerators, two stoves, two dishwashers and a welcoming, comfortable home. (Even the clothes washer is a champ. Sam estimates that the family cleans 42 loads a week, but never on Sundays.)
Since the mortgage was paid off in 2012, Rob and Sam have turbo-charged their savings rate, now investing about $3,000 a month. Even so, they don’t go without. Sam has a $10 monthly gym membership, and Rob and Sam go out for lunch on the 20th of each month, maybe at Red Robin Gourmet Burgers and Brews in Bowie, marking the day of the month they got married.
The article brings up some interesting issues about life in America. We constantly hear the narrative that Americans are struggling to live the American Dream today, and how even two-earner households have a hard time making ends meet, especially if there are several children involved and a couple faces the high cost of childcare when their kids are young and maybe even higher costs later when those children attend college. And yet this story of the Fatzinger family presents a counter-narrative of a married couple in a single-earner household with 13 children, living in a very high-cost area of the country, who are apparently demonstrating that the American Dream is alive and well for those who live sensibly, prudently and frugally.
The Fatzinger story illustrates something else about life in America today, and presents another counter-narrative to the gloom and doom story of declining living standards for average Americans. As Jarrett Skorup (of the Mackinac Center) commented on Facebook about this WaPo story: “It is my belief that it is easier to live frugally today in America than ever before.” Certainly the Fatzingers might represent an extreme (but admirable) case of frugality, but their low-cost approach to living, while maintaining a lifestyle that is certainly consistent with living the American Dream, is an approach that any of us could follow. While it is certainly the case that 51-year old Mr. Fatzinger makes a good living earning $111,000 annually now (although he never made more than $50,000 until 2005 when he was 40 years old) that’s actually just slightly above the $106,000 median household income in Bowie, MD where the cost of living is 26% higher than the US average. Q: If the Fatzinger family, with 13 children, can achieve a fairly high standard of living on a single income that is close to the median household income in their community, with one of the country’s highest costs of living, then doesn’t that mean that the American Dream is accessible throughout the rest of America to households with median incomes in their communities, mostly in areas with much lower costs of living compared to Bowie and almost always with many fewer children than 13? Especially for any of us who are willing to live frugally, which is now easier than ever before as Jarrett Skorup suggests.
For example, to feed 15 people (when everybody’s home) and stretch her food budget as far as possible without sacrificing quality, Mrs. Fatzinger shops at Aldi’s, which has to be America’s grocery store chain with the greatest consumer value ever. Based on personal experience, the quality of Aldi’s groceries are comparable to the highest-cost, high-end supermarkets, and yet their prices are lower than any competitor, including Walmart. You simply can’t find better service, better prices, or better quality than Aldi’s — and not just for groceries, they have a rotating inventory of non-food household items at “impossibly low prices” for cookware, appliances, toasters, blenders, food processors, cutlery, etc. Check out some of Aldi’s “impossibly low prices” (or “almost free”) in its weekly ads here.
And it’s not just Aldi’s where you’ll find bargains and great value for food. Now that Walmart and Target offer groceries, in competition with traditional grocery supermarket chains like Super-Value, Krogers, and Winn-Dixie, there’s probably never been a better time in US history to be “food-frugal” and economize on food spending. According to data from the Department of Agriculture, aggregate spending on food in the US has been below 10% of disposable personal income in every year since 2000, compared to an average food share of nearly 19% of personal income in the 1950s and 15% in the 1960s.
It’s also easier to live frugally today than in the past because of the prevalence of discount retailers for almost anything we purchase: a) Home Depot and Lowe’s for home furnishings, hardware, tools, plants, appliances, lawn mowers, BBQ grills, etc. b) Best Buy for home appliances and electronic goods, and c) Office Max and Staples for office supplies and equipment. There’s also an increased availability of competitively price goods available for sale online, offered by everybody from Amazon.com to Ebay to Etsy, and by many of the big-box retailers like Walmart, Target, Home Depot, and Best Buy who now sell online. You can also find bargains through Craigslist. In short, if you’re a bargain hunter trying to save money and live as frugally as possible, there’s never been more shopping options, nor has there ever been a better time to be alive than today.
The chart above provides additional evidence that it’s easier to live frugally today than ever before — it shows how much Americans as a group spend on “life’s basics” — on food at home, automobiles, clothing, household furnishings including home appliances, housing and utilities, and gasoline and other energy goods. In the first half of 2016, Americans collectively spent only $1 out of every $3 of disposable (after-tax) personal income on “life’s basics” — the lowest share in history. Up until the early 1960s, American spent more than half of disposable income on “food, shelter and clothing” and that share didn’t fall below 40% until 1991. The increased affordability of manufactured durable goods like home appliances, furniture, electronic goods, and cars, along with increasingly competitive prices for food, clothing and energy have brought the share of spending on life’s basics to the lowest level ever in recent years. In terms of being frugal when spending on “life’s basics” — food, shelter, clothing, and household furnishings — it’s the Golden Age of frugality.
Another data point: Spending on “energy goods and services” as a share of total consumer spending fell below 4% of total consumer expenditures during the six months of 2016 for the first time since the BEA started collecting data back in 1929 (see chart above). That means that energy affordability (“energy frugality”) has been greater in the first half of this year, when measured by energy spending as a share of total consumer spending, than at any time in US history
Bottom Line: The story of the Fatzinger family living on one-income (at just above the median income for Bowie, MD) with 13 children in one of the country’s most expensive metro areas is a powerful reminder that the American Dream is alive and well in the USA for those who are willing to: a) live within their means, b) avoid large debt levels, c) shop ruthlessly for bargains, sales, discounts, and low prices at places like Aldi’s, d) be willing to buy used and secondhand items to save money, and e) get serious about living very frugally. The Fatzingers demonstrate that it’s totally possible for Americans to be “living large” today, as long as they are willing to be frugal and make “spending small” a priority. And if you agree that living frugally in America is easier today than ever before, then “living large” should be easier than ever. When people say the American Dream is no longer easily attainable, what many of them are really saying is that they personally don’t want to practice the values of thrift, frugality, parsimony and savings that would allow them to reach that dream. Here’s my advice as the first step to start “living large” by “spending small” — starting shopping at your local Aldi’s for your groceries and household items.
Update: In the comment section, Daniel points to a post written by Rob Fatzinger on the Mad Fientist blog “How to Retire Early with 13 Kids.“
First published at AEIdeas.org on August 15, 2016.