What makes a cheapskate? And what makes a cheapskate splurge?
To research his book "The Cheapskate Next Door: The Surprising Secrets of Americans Living Happily Below Their Means," Jeff Yeager met hundreds of like-minded skinflints. Some of the insight he gathered:
What did you learn by meeting other cheapskates across the country? They fly in the face of the stereotype. They're not penny pinchers, and they don't spend every waking hour trying to figure how to save a nickel. Being a cheapskate sometimes isn't about money at all. Many cheapskates have strong religious beliefs, and some embrace environmentalism as the underpinning for a decision to live frugally.
What's the common thread? Cheapskates run the range of lifestyles and economic profiles. Some are multimillionaires and others have such limited income they could qualify for public assistance if they chose to. The commonality, regardless of income level, is living on less than they make - sometimes substantially less. They're largely living debt-free. Only 5 percent had any consumer debt other than their mortgage, and among those who had a mortgage, 85 percent said they were working to pay it off early. The vast majority have been living this way a long time, pre-recession. They're not nouveau cheap.
Do they ever splurge? Everyone I asked said, yes, of course. But they do it selectively, and they make certain they want something before they buy it. They splurged on an activity rather than a possession. There's quite a bit of social science that shows possessions disappoint over time,but experiences appreciate in value, in our memories.
What can we learn from cheapskates? Practical advice on how to stretch your money, ranging from small tips to larger lifestyle choices. For instance, cheapskates don't shop yard sales because you often buy things you didn't set out to. They do like thrift stores, which they see as department stores of used merchandise. Cheapskates barter and negotiate for goods and services. They might use an old-fashioned food dehydrator yet they're tuned in to the latest cyber tips for saving money, including checking freecycle.org for giveaways and accidentalwine.com for wine that's discounted when the label is damaged. Some tips are truly bizarre. More than one cheapskate told me that underwear was an optional extravagance.
- Kiplinger's Personal Finance