Thursday, July 22, 2010

The Cheapskate Next Door

Just read a guest post on one of the Dollar Stretcher blogs from Jeff Yeager, also known as the Ultimate Cheapskate. In it, he cited some of the findings from his new book, The Cheapskate Next Door. Yeager claims to have interviewed hundreds of cheapskates to get these results (although I don't know how he selected them; he may just have included anyone willing to apply the term to himself/herself.) You can go to the post to read all of them, but here were a few I found interesting:
  • Only 10 percent of cheapskates have a household budget. Yeager calls this finding surprising, but it didn't come as a great shock to me. Most financial advisers seem to treat a household budget as an absolute necessity for managing your finances, but as one of Yeager's interviewees put it, “We live our budget. It’s second nature. We don’t waste time writing about it.” This resonated with me, as I have always lived within my means without ever needing to adhere to strict instructions about how much I'm allowed to spend on this or that. A budget, it seems to me, is like a diet: a set of rules you follow to force yourself to keep your consumption under control. But for me, controlling my spending is a matter of reflex; I don't need a set of rules to make me do it.
  • Less than 15 percent of cheapskates have a designated "emergency fund." Here, again, I'm with the cheapskates and against the financial community. Like most cheapskates, I have a good chunk of money put by, but I treat all of it more or less the same. I don't make a rigid distinction among the money I use for day-to-day expenses, the "savings" I'm allowed to use for rare purchases such as a new piece of furniture, and the "emergency fund" that's not to be touched except in case of unemployment or medical crisis. To me, my savings is simply a sum of money that's there to be used for whatever I need, whenever I need it.
  • More than 90 percent of cheapskates say that "they think, worry, and stress-out about money less, not more, than their non-cheapskate peers." I don't know whether this applies to me or not. I certainly do spend a fair amount of time thinking about money, in both abstract and concrete terms (after all, it's what I've chosen to blog about, at least in part). I pay attention to prices and shop around for the best deals, and that takes a fair amount of time. But on the other hand, I may actually stress about money less because I know that I live within my means, and I know that I have a cash cushion to see me through a financial crisis. That doesn't mean that I never fret when business is slow, or when the threat of a job loss hangs over our heads. But I stress about it less than others might in the same situation, because I know that I have money in the bank—and I also know that I have the skills to get us by on even less if we have to.
So I guess I can proudly count myself among the cheapskates of the world. Oh, and there's one other thing: apparently being eco-conscious isn't a concept that most cheapskates find foreign or counter to their goals. Yeager notes that "Nine out of ten cheapskates say that their decision to live a more frugal life isn’t about trying to amass a big savings account; rather it’s primarily grounded in some higher ideals, such as religious beliefs or environmentalism. That’s why, of the cheapskates polled, they donate nearly twice as much to charity as the average American."
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