Frugalwoods and Taxes


Frugalwoods employed low-fee index funds to invest their savings and build an audience – creating a country house in Vermont and starting their blog, respectively. Their blog now has thousands of readers.

But their story ties neatly into a classist myth held by millions of Millennials: it puts too much focus on expenses rather than income. It thus ignores essential factors such as above-average income or access to information.

Expense Ratios

Many Millennials believe frugality is critical to financial independence; this isn’t the case.

The Frugalwoods don’t discuss their income directly on their blog, but financial clues indicate that their rise from poverty doesn’t start there. In 2014 they purchased a four-bedroom house near MIT that they now rent out for $4400 monthly (generating approximately an extra $27,000 of revenue), plus they have amassed an impressive investment portfolio.

While their story may be inspiring, their advice isn’t. Most significantly, they fail to address high investment fees – a crucial mistake as fees eat into returns over time. On the other hand, low fees are critical components of investing success; thus, investors must understand the expense ratios of each fund they purchase, as this percentage equates directly with management expenses and other operating costs.


After the 2008 recession, Millennial Frugality Experts emerged as a self-help gurus. These evangelists relay their personal success stories to young people, such as Broke Millennial of New York, who offers anti-entitlement advice, or Millennial Money Man, who offers live income reporting online.

Liz and Nate Thames, known as The Frugalwoods, achieved financial independence through extreme frugality. Their story gained widespread recognition with fans around the globe as they became financially independent despite living frugally for several years before signing a HarperCollins book deal and guest spots on many money podcasts. Now living on a 66-acre homestead in Vermont together, their children call it home too.

Their expenses have been controlled through various strategies, including insourcing (doing things themselves instead of hiring out) and searching for bargains online. Their frugal lifestyle even enabled them to pay for a college education with 529 plans and the savings generated from living frugally, yet their story remains mysterious to outsiders.


The Frugalwoods have amassed an immense following due to their self-help book, HarperCollins deal, and guest spots on money podcasts. Additionally, they’re adept at saving and investing – saving and investing has brought them plenty of financial success – yet taxes may pose some difficulties.

Both are pretty cautious about their income; however, they did purchase and rent out a $460,000 four-bedroom house in Cambridge for around $4,400 monthly rental rate. They may also have maximized their 401K contributions and created a healthy investment portfolio.

Although they’ve accomplished much, they remain determined to reach financial independence within ten years. Their focus has been on cutting expenses by purchasing cars from used-car lots and undertaking DIY projects themselves instead of hiring contractors; cutting cable bills by making homemade laundry detergent, making their detergent, and giving each other haircuts; but there lies another issue here – spending too much time focused on expenses rather than income; this is an ineffective recipe for financial independence.


This case study was submitted by a reader hoping to become more frugal and devise an improved savings plan. Frugalwoods readers are welcome to offer advice and encouragement via the comments below; However, Frugalwoods doesn’t provide investment advice or recommend specific funds; readers are advised to track their net worth using Personal Capital and use a password manager such as 1Password for safe savings management.

Frugalwoods is a viral blog chronicling Liz and Nate Wood, two Millennials living a frugal lifestyle in Vermont. Their story has amassed them a broad following, garnered an offer from HarperCollins publishers, and landed them multiple guest spots on money podcasts.

But something is missing in the Frugalwoods story; like other financial evangelists, it neglects one crucial factor – above-average income. While expenses do matter when it comes to reaching financial independence, income plays a much more significant role when it comes to doing so. To do this, debt reduction, retirement savings plans, and investing in low-fee index funds effectively make it possible.