In these times of economic trouble, you may hear the following word (perhaps even in your own head) anytime you suggest that some item which you or others may desire isnt really necessary, or can be purchased in a less expensive form.
The word is...
"cheapskate".
I, as a public service, will attempt to make you feel better about that epithet. A cheapskate, contrary to popular opinion, is not someone who doesnt like to spend money. A cheapskate is someone who has money, but doesnt like to spend it. If you are unwilling to pay for the most expensive version of something because you have other things to pay for, but cant if you buy the really expensive thing, you are not a cheapskate. On the other hand, if you refuse to buy the most expensive version of something because you hate spending more than 50% of the money that you make, preferring to save it all in a dark vault, you probably are a cheapskate.
So, basically...
A person who will only spend 60% of his income and saves the other 40% is probably a cheapskate.
A person who will only spend 90% of his income and saves the other 10% is probably a a very clever person who will be comfortably ready for retirement or disaster.
A person who will spends 110% of his income and saves nothing may want to consider becoming a cheapskate, at least until they pay off that massive debt which they've no doubt built up. Unless they're counting on some sort of salvation from Congress.
Bwa-ha-ha-ha!!!
3 comments:
Wonderful words of wisdom Dave..thats why I heart you dude! ;)
My Ball n' Chain™ isn't a cheapskate then..and I need to quit calling him one daily. ;p
I don't think it is fair to call someone who saves more than 10% of their income a cheapskate. Maybe highly motivated or ultra resourceful.
There really are very few needs and so many wants. Distinguishing between the two and putting off those wants for a little while(until you have saved for them) can cause you to realize you don't really even want the thing to begin with most of the time.
I do agree that a person who is living without the essentials or uncomfortably because they save so much is a scrooge.
I thing it is better to live as well below your means as you can, not only so you can have a nice stash of cash for purchasing a house or taking a good vacation(And saving for retirement), but also because it isn't all that uncommon for life events to cause you to lose 50% or more of your income. If you are already used to living off less the stress of whatever happened to cause the loss of that income will be enough to deal with without adding money worries to the equation.
If you are spending 90% your income and your lose 50% of your income you are already in debt as soon as your income is cut. 10% is a good starting goal but you should really try to save as much as you can without sacrificing the things that are really important to you.
I wasnt calling anyone who saves more than 10% a cheapskate, I was calling someone who saves more 40% a cheapskate. And there's not necessarily anything wrong with that, either, though I think such behavior unnecessarily denies yourself (and your family) a level of enjoyment that would be possible if one was not so tight.
The important thing about saving 10% of your income is not so much the saving part, but the denial part. That is, denying yourself the current pleasures of spending every last dime you have in exchange for deferred pleasure (sometimes just the deferred pleasure of eating and having a roof) in the future.
In this sense it's not as important how much you save as it is that you train yourself to do it at all. If you can save 10%, then switching to 20, 25 or even 50% becomes much easier.
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