A Lesson in Frugality

An old friend and billionaire himself, Harold Simmons, was also a small town boy done good.

Harold grew up in Golden, in East Texas, before gaining financial expertise that helped him develop the acquisition concept known as the leveraged buyout, which he used to acquire many corporations in his illustrious career. He is no longer with us but I still think of him often. We had a lot in common, including the fact we both carried our humble roots with us in our careers.

After achieving Forbes-list success, Harold wore $3,000 Brioni sport coats in a nod to his wealth but Wal-Mart underwear so he would never lose sight of his frugal upbringing. 

I go shopping for clothes about one time every three or four years. I even have a pair of dress shoes I bought in the 80s that I’ve had resoled a number of times. You can be foolish and spend money needlessly, but that’s not me.

My family weathered the devastating Depression era in tiny Holdenville, Oklahoma, rather well. We didn’t have a lot, but my mother and father both worked, and I benefited from a strong family support group. Throughout my youth, I was taught lessons that I believe helped me find success in the world and remain firmly in my thinking and strategy decades later.

My grandmother had great influence in the family, but hers was quiet. At some age, I noticed how everybody seemed to check in with her before any big decisions were made — they wanted to get my grandmother’s opinion on which way it should go.

My mother’s family, the Molonsons, could stretch a dime pretty far. My grandmother had a big garden, which supplied the primary goods she cooked, canned, and helped feed us year round. She also often counseled me on the value of money and the importance of being frugal.

I can still remember her marching me back into a room in her home, pointing to the wall, and saying, “This is the light switch. You see that switch turns the light off and on. When you come in, if you can see well enough, you don’t turn it on. But one thing if you do turn it on, when you leave the room you turn it off. Next month, if you continue to walk out of rooms and leave the lights on, you will get the light bill. And I will expect you to pay for it.”

That made an impression on me that remains today. I don’t leave my office at night without turning my lights off. If I’m in a conference room and about to leave from there, I will walk around the room to the switch to turn it off. It’s behavior that my employees have adopted as their own.

I often encountered my grandmother sitting on her porch next door as I was hurrying off for a typical Saturday morning— a haircut, a showing of one of the cowboy shows, Bob Jones or Tom Mix or Ken Maynard, and perhaps a Three Stooges comedy at the Dixie Theater.

I would be running down the gravel driveway, and I’d see her and slide to a stop. I know this conversation took place a number of times. She’d ask where I was headed, and I’d explain that I was going to get a haircut at Apple’s Barber Shop, and then to the show. And she’d ask if I had the money, and I’d reply yes that I had 50 cents, that my haircut was 25 cents, the movie 10 cents, and I’d have a nickel for popcorn. And she’d say, well, “A fool and his money are soon parted. Don’t you ever forget that.” And I’d say, ‘OK, grandmother. You told me that last week, and I’m not going to forget.’ She always wanted me to know that she thought I should return home with that extra 10 cents.

And I remember sitting on a stool in my grandmother’s kitchen another time when she counseled, “Don't ever carry inventory. If you need one tube of Ipana [a popular toothpaste brand of my youth], don't buy two or three, or you're carrying inventory for Charlie Amos [a local druggist at the time].”

I wasn’t clear on what inventory meant, and asked her to explain. “You can get an extra week out of a tube of toothpaste by just rolling the tube up at the end, and then you have two more days to squeeze at the top. That leave you plenty of time to go pick up another tube. Don’t give him your money, put extra tubes on your shelf, and let them sit there for two or three months. That money is then his and not yours for all that time.”

I’ve never forgotten the lessons I received in Holdenville. My business strategy has always involved a relatively small, tight-knit team that closely watches controllable costs, squeezes every bit of product out of the tube, and seldom carries someone else’s inventory on our dime.