Defining Differences: Cheap vs. Frugal

Michelle Singletary
Thursday, June 4, 2009; 10:28 AM

What's the difference between being frugal and being cheap asks retail reporter Ylan Q. Mui, who calls herself a spendthrift.

In her Small Change blog she wrote: "I routinely pulled cash out of the ATM only to wonder a day or two later: Where did it all go? Coffee, lunch, happy hour, Ann Taylor Loft -- my money just seemed to disappear."

But during recent attempts to curb spending, Mui said she's been struggling with the concept of frugality versus being a miser.

So what do you think?

Is skimping on a friend's birthday present being frugal? Or is that just cheap?

What about insisting on only paying for your meal when dining out with a large group of people? Frugal or cheap?

To answer her question, Mui solicited advice from her favorite bloggers:

David Weliver of, told her: "In a nutshell, I would define being frugal as protecting your hard-earned money by looking for ways to save on the things you need and want and getting the highest value from everything you buy."

Julia Scott of BargainBabe answered: "Being frugal feels good. Being cheap leaves a bad taste in your mouth (and it ain't the wine)!"

This leads me to the Color of Money Question for the Week: What's the weirdest, cheapest, or most miserly thing you've done to save a buck or cope with this recession? Write me at Please put "E-letter Question of the Week" in the subject line.

Talk To Me

Let's chat today. It's just you, me and your personal finance concerns or comments.

Join me at Noon ET to discuss whatever financial issues are on your mind. If you need to vent (at the economy not me) come on by.

You can submit a question now or during the discussion. If you can't make the chat, be sure to read the transcript later.

Leftover Q&A

My last chat was very interesting. I hope you were able to join me or at least read the transcript. My guests were Deborah and Gerald Strober, authors of "Catastrophe: The Story of Bernard L Madoff, The Man Who Swindled the World."

As usual there were lots of extra questions we didn't have time to answer. Here are some of those questions along with my answers.

Q: I have always heard you should save at least 15 percent of your salary for retirement. Is there any guideline on what you should save for a college fund?

A: Lots of people want to nail down a percentage you should save for retirement. Just makes things easier. What you've heard is one such percentage. Others say at least 10 percent. Really rather than focusing on a percentage, it's best to know "how much" you will need in retirement.

Take a look at, a Web site that can help you figure out how much you will need based on what you've already saved, expected Social Security monthly benefit, any pension you might get, as well as some other assumptions. Take the time to work through the calculator.

As for how much to save for college, a lot depends on the age of your children, where he or she might go to a private or public school, if there's an option for them to live at home, etc. As with retirement planning you need to get at least a rough estimate of how much you can afford to spend and how much the college will cost so that you can have a goal of how much to save. So more research I'm afraid. Take a look at these links for more information:

* Make the Grade in Paying for Child's College Career (Color of Money, Jan. 25, 2007)

* Don't Put College Aid Cart Before the Savings Horse (Color of Money, Feb. 16, 2006))


Q: Michelle, I have two adult siblings (in their 30s) with college degrees who have both lost their jobs. My parents are retired and the siblings have moved back home. My mother has asked if I can take my toddler out of day care and pay her instead. I know they need the money, but it irks me that I am supposed to take my child out of a day care that I love so that she can watch TV all day at my parents house while my siblings continue to mooch off my parents. I don't have any extra cash I can kick in. Any advice on how to deal?

A: Well, you should first and foremost do what's best for your child. If you aren't comfortable with the level of care and stimulation your child will get by being cared for my your mother, then don't do it. And don't feel guilty about your choice.

It's not your responsibility to take care of your siblings. Do what you can do. Help your siblings find a job by reviewing their resumes, scouting any jobs you may know about or giving them contacts.

And if your mother is truly interested in watching children for extra income, encourage (and even help) her get a license. Once properly trained and with a license she can generate income without pressuring you. Hey, you might even feel comfortable sending your child to her if she has a structured day care environment for her grandchild.

I know its rough to watch family suffer financially, but you can't let them drag you down too or put you in a situation that isn't right for your family.

Q: I have 401(k) and profit sharing accounts from old jobs that I have never rolled over into an IRA. Two are for a job I left nine years ago and the other six years ago. My question is should I roll them over now, which would transform my paper losses to real losses or wait for the market to rise and then convert them to an IRA?

A: Here are two columns from my archive that should help you with understanding how to move 401(k) money:

* Leave the Job, and Maybe the Retirement Money (Color of Money, Aug. 9, 2007)

* Hands-Off Approach to Retirement Savings

Q: When would you recommend someone pay additional money to decrease the principal on their mortgage, versus putting the money in retirement/college savings for kids/personal savings? We have more than the recommended amount set aside as an "emergency fund," contribute 10 percent of our salaries to our 401(k), contribute the max to our Roth and contribute to college savings accounts.

A: Sounds to me like you're a very disciplined saver. Good for you. If you have all other bases covered -- emergency fund, life happens fund (to pay for the things in life that happen such as major car repairs), retirement savings and college fund, then I would begin to aggressive pay down my mortgage.

You are welcome to e-mail comments and questions to Please include your name and hometown; your comments may be used in a future column or newsletter unless otherwise requested.

Charity Brown contributed to this e-letter.

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