Broke Bob, Dollar Doug and Frugal Fran – Their Story

In a land far far away where the polar bears wear toques we have our 3 Canadian friends: Bob, Doug, and Fran. Well actually, we’ll call them Broke Bob, Dollar Doug and Frugal Fran. On the surface it may look like they’re just regular folks, but if you look a little more closely you’ll notice something different about each of them.

Meet Broke Bob: Like any good Canadian Broke Bob has a canoe. The thing is…this canoe has many many holes. A large volume of water is pouring in each hole but with the help of his massive bucket Broke Bob is able to stay afloat. With each scoop Bob collects and pours out a lot of the water. He’s on the verge of sinking but as long as he doesn’t develop any new leaks or lose his bucket he’ll be okay.

Meet Dollar Doug: Doug’s canoe also has holes but far fewer than Bob’s. Each hole is letting in a small amount of water but with his average sized bucket he is able to keep the rising water level at bay. There’s one important thing you should know about Dollar Doug — he has 2 canoes. The one he’s currently sitting in and bailing and another in perfect condition carrying a couple cases of beer!

Now meet Frugal Fran: Fran has a perfectly good canoe with no holes at all. How big is her bucket? It doesn’t really matter as she has no water to bail out. Fran is very quick to have any holes repaired as soon as they develop.

Okay, okay, enough canoe talk – what does this all represent?

1. The canoe. The canoe is your financial situation. The state of your canoe represents the state of your finances.
2. The holes. The holes are the interest you’re charged on debt. The more holes in your canoe the more sources of interest. The larger the holes the greater the charges.
3. The bucket. The bucket represents the amount of money you earn. A large bucket represents a large salary. Small bucket, small salary.
4. The extra canoe. The extra canoe is an emergency savings account. It’s a spare that you can use when you need to.
5. The cases of beer. These are assets and they can be sold when needed.
6. The shallow rocky waters. These are rough financial times.

How do you think each of our friends will fare in shallow rocky waters?

Broke Bob:

Another little hole in Broke Bob’s canoe may be all it takes for him to start falling behind. As the holes get bigger and bigger the size of his bucket becomes irrelevant as he simply won’t be able to keep up with the inflow of water. And heaven forbid he loses his bucket!

Translation:

Broke Bob has many loans and credit cards and each are charging interest. He earns a huge salary but his charges are so high that he is barely keeping up. One more charge is all it may take before he’ll start to fall behind. If he loses his job or has his salary reduced he may be in for hard times.

Dollar Doug:

Dollar Doug will fare better if he gets a new hole. He has some options: he can ignore it and continue bailing water or he can sell a case of beer and hire someone to fix the hole. Worst case, he can let his canoe sink and hop into his spare. He’ll be able to withstand the shallow rocky waters a lot longer than Broke Bob.

Translation:

Dollar Doug has some debt and earns an average salary. He is more than capable of paying the loans back including interest. He earns less than Broke Bob but Dollar Doug spends his money wisely. He’s saved up an emergency fund and has other assets which he can sell if times get tough. He’s in a good financial situation and is better able to weather financial troubles.

Frugal Fran:

How about Frugal Fran? She hates holes so if she gets one she’ll be very quick to fix it. With this attitude she can stay afloat for quite some time. Maybe even longer than Dollar Doug but definitely longer than Broke Bob.

Translation:

Frugal Fran has no debt at all. It doesn’t matter how much she earns because she’s able to live within her means. She’s better equipped to weather financial storms and will probably be able to handle a cut in salary better than Dollar Doug or Broke Bob.

And the point is…

Ideally, we would be a combination of our 3 friends: Frugal Fran’s aversion to debt, Dollar Doug’s mindset about emergency funds and assets, and Broke Bob’s large salary. With all 3 we could be in the best situation of all and be better suited to cope with rough financial times.

Broke Bob has a huge salary but it doesn’t matter. He earns more than Frugal Fran but she’s still in a better financial position. There’s little point in working harder to climb the corporate ladder to earn a higher salary if you continue to live beyond your means.

Dollar Doug’s emergency funds and assets give him choices. When times get tough he has the ability to choose between going further into debt, dipping into his emergency fund, or selling a few assets. Tough financial times will still hurt but he has some breathing room.

Frugal Fran knows that less is more. By living a modest lifestyle she ends up in a better financial situation than those earning higher salaries. She doesn’t have a large take home pay but she doesn’t spend a lot. This leaves her in a healthy financial position.

And that’s the story of our 3 Canadian friends. What’s the state of your canoe?

See also:
Our Frugal Lifestyle
7 Money Saving Ideas From The Kitchen

Photo courtesy of: Inaz

***********************************************************************

It’s Frugal Friday here at Serene Journey! Every Friday we will address the topics of frugality and finances. If you have any suggestions or particular things you would like discussed on this subject please drop us an email or leave them in the comments.