Friday, December 19, 2008

How Cheap Is Too Cheap?


Come on, guys. The blog has been a little quiet this week. Can we talk about this? Just how cheap is too cheap? I am frugal. Have become a lot more frugal over the last couple of years. My family jokes about my "cheapness." I think it's unfounded, but what the hey. Perception is reality. Which brings me to Neal Templin, the Cheapskate over at the Wall Street Journal, who wants us to take the mourning test.

From the story:

If the question is whether I ever completely forget about money and just do whatever the heck I feel like -- no matter the cost -- the answer, I'm afraid, is no.

We've raised three kids on one salary, and it seemed wrong to me to spend money we don't have. On top of that, I hate waste. And paying too much for something makes me a little ill.

Being cheap isn't always a virtue. My family can tell you stories of the times I've bought bargain steaks at the supermarket that were so tough they were almost inedible. Or when I cast a pall on some outing by fretting about how to do it on the cheap.

Is it close to the point where they won't mourn my death? I sure hope not.

I can tell you right now that I am not that cheap. I know for a fact that my family would mourn my death. I think. Probably. Right?

Are you guys cheap? How cheap are you?

Read the story and come back and tell me exactly what you do that makes you cheap. Also, is there anything wrong with being cheap? Can it be unhealthy? Is it bad for relationships?

Here is the story (link).

22 comments:

  1. I'm generally not a cheap person, however these last few months have been rough, so I'm not spending like I usually do. It has put a strain on my relationship as I refuse to go out of the house on my days off and DB gets somewhat upset. I can't handle money...I'm either spending too much or saving too much. Trying hard now to find a happy medium! {maybe I'll finally grow up?}

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  2. I think the key is to be frugal, not cheap.

    It's a fine line to tread, but I like to think I'm sensible with my money, yet still willing to spend it on things that I think will imrprove my quality of life (or the quality of life of people I care about).

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  3. I'm with Jonathan.

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  4. For me and my DH, this is an easy one to answer. He is cheap, and while I am a bargain hunter, I dont mind spending the money when I know it is something we NEED or something that I know we have been putting off buying for a while (like furniture). My DH grumbles and complains when he has to buy a new pair of shoes, even when the old pair is actually falling apart and he really, NEEDS a new pair, and even then he picks some of the cheapest shoes (which is probably why they fall apart so easily). With me, I want quality in what I buy, and I dont mind spending the money to get that quality. And then there are my dogs. No expense gets spared on them. Though for the most part, we balance each other out. I am there to help him spend money when he would "cheap out", and he stops me from spending too much, he is my voice of caution. When he is on deployment, it gets harder, but then I seem to do ok, keeping my fico score in mind helps.

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  5. I spend within my means. However, when I purchased a classic car and opted to restore it, I went into MAJOR debt - but I dont mind. I could never sell this car for what I put into it, but I likely couldnt replace it. My wife is the frugal one (never spends a dime) and I spend lots. I guess thats a good balance. Cause if your both spenders - trouble awaits and if your both frugal - you likely still have a 70s avocado blender-

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  6. I'm definitely cheap. But, I have to be. I'm a full time student who is focusing on grades. I might not have considered it when I was younger, but I squandered a full scholarship back then and am now about to turn 30 before I graduate because I decided to correct my mistakes later rather than sooner.

    Did you know there's no SOL on bad grades? Haha!

    The change in lifestyle has been dramatic, but it's taught me that I can live on much less if I need to, and I think that's a good lesson to learn.

    There's a problem, though, when people who pay close attention to what they spend and try to reduce their spending in order to maximize savings for the long haul are seen by others as "cheap" and dismissed without much thought. There's no reason that our happiness as individuals and as families has to be tied to how much we haphazardly consume.

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  7. I like bargains, took advantage of AmEx's $20 off two $40 purchases at Walmart.
    We'll see if I still have a Platinum next Christmas :-)

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  8. There is nothing wrong with a '70s avocado blender if it still works! I have 3 kitchen mixers, two from the 60s and 1 newer one. Guess which ones get used.

    Instead of buying a $400 Dyson plastic piece of crap, I found a 1971 Kirby for $10 on ebay. Another $30 to ship it, and another $70 for an overhaul at the Kirby shop. The thing will suck the nails out of hardwood floors and it'll still be around long after the Dyson has been recycled into diapers.

    I will shop for months for something that I need until I find it at the price point I'm willing to pay. I look at longevity as well as price and I'm willing to pay more for something that will last longer.

    I make things LAST. I'm not of the mind to throw something away when I think it can be repaired. I do most repairs myself.

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  9. Here is the extent of my "cheapness."

    I used to be a clothes hound. No more. I'm now wondering if I can wear these clothes for the rest of my life. That's the goal. I have so much that I am thinking that I will never have to buy clothes again. And I am looking forward to trying it. There can be little doubt that people who know me will think that I am wearing the same stuff all the time. And they'll think that I am poor, too, because I wear the same stuff all the time.

    For me, that was the big turning point. I no longer cared what people thought of me. If they thought I wore the same stuff over and over (I don't; I just have a lot of duplicates), so be it. I can't concern myself with what others think. I believe that much of our spending has to do with trying to impress others. I finally broke that kind of thinking a few years ago (I was guilty of it).

    If I could get away with it, I would not buy a single thing this Christmas. But I can't. Still, I will keep it to a minimum. I want nothing and I have put everyone on notice. We'll see how that works out.

    Am I happy? I am. My happiness is not based on the items I accumulate. My purchases do not define me. What I do buy, I buy for myself. It's liberating.

    Outside of my immediate family, I don't have a lot of financial responsibilities (so it makes my lifestyle a lot easier to pull off).

    I'm someone who looks for a bargain but I will also spend more for a quality item. The bottom line is that it has to suit my needs.

    I graduate from law school in a few months. My income will likely increase substantially. But I will not -- absolutely NOT -- start spending more just because I can. Indeed, that's one of the biggest traps ever. Most people just become broke on a higher level. I refuse to do that. Instead, I will continue to live just as I currently do. I'll be banking all excess cash.

    My sacrifices now will pay off later. I have this strange feeling that I'll live to be 100 (most of my relatives have). Therefore, I will need as much cash on the backside of my life as possible.

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  10. Hi Marcus-- Great blog -- I was just contemplating the very same notion. I have never been a "cheap" or frugal individual. I have always had a taste for the "good" stuff and never thought twice about gifting for others the same way I would want for myself (even if they couldn't appreciate it). I use to shop at Neimans, Saks, Bloomies, etc because I trylu appreciated fine craftmenship with regards to clothing. I, too, am a clothes hound. Then I got married and everything changed! We are now expecting our first child in a few months and while I still love the better things in life, I now know where to find them at bargain prices :)
    Here are some of my best kept secrets. People who know me know that I love the expensive Italian labels, but now, I get a kick of telling everyone how I do it and it feels quite good. Should have been a buyer...
    Outlets are key--you can find awesome deals at Neiman Marcus Last Call, Off Fith (Saks' Outlet store) Nordstrom Rack and much more. Subscribe to the stores email lists. I have purchased Loro Piana casmere sweaters, Brioni, Gucci and others for upwards of 90% off!. My favorite is my 4,000 Brioni suit I picked up for $149.00. If you love timepieces as I do, check out Watchery.com. AMAZING!! While most people who know me are perplexed how I can love such extravagent things but not carry myself in a snooty way, I kinda feel bad about it, especially given the way the world is and all. But, I can not change, I like what I like, I give generously and support charitys and such whenever I can, but man, I get the biggest thrill when I find a smoking deal! Even if I became a billionaire, I would still shop clearance and outlets. Besides, if you knew the cost to make this stuff (I'm talikng about the good stuff), you would be shocked. I have a cousin who works for prada in Italy. It costs $15.00 to make a $2,500.00 bag!! All my best--Jon

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  11. Jon, I have a lot of Ralph Lauren stuff. A ton, actually. Once I figured out the cost on that stuff, wow. I stopped buying. Even at RL, the markup is HUGE. Not as bad as that Prada bag example you just used but bad enough to make me wonder what the heck I was thinking.

    The markup on a lot of the stuff is 400%. That smacks of greed to me. These companies would do just fine with a more modest markup.

    But I do not begrudge RL. I just don't shop there anymore. They've made their choice. I made mine. Last time I bought something from there was this past summer. I'm done.

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  12. I used to love Ralph Lauren stuff (and still do- Purple Label to be exact). But for the same reason, I moved on becasue I realized I caould get amazing stuff from the top Italian designers for a lot less! Cjeck out Watchery. Good people over there. --J

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  13. This comes from a reader -- who is stuck behind a firewall.

    I used to be very generous, to a fault. I overtipped everyone, bought meals for friends, and shopped at to dept stores (Bergdorfs, Neimans) for holiday gifts as well as all my clothes and furniture. Needless to say, I ran up huge cc bills and got into lots of trouble, since my salary never matched my grand tastes.

    So now I'm very, very frugal, and some may even say cheap. I handle the family finances (God help us) and have a strict budget to the penny. I know exactly what we can spend each month on what, and I search around for bargains on everything. I'll take a nice day/evening at home with a low fire (gas fireplace lol) over a day out spending money anytime. I cook with crock pots so I can use cabinet scraps, bring my lunch to work most times, wear very inexpensive but good makeup and skin cream (and I do look at least 10 years younger than my 40 years), and keep hubby on a short leash, as he'd just as soon drop hundreds of dollars on something silly like a designer leather jacket. Yeah. Maybe in his bachelor days, but there's no room for that now with a house, mortgage, two cars, yada yada.

    Oh, speaking of all that, one reason I work so hard on our credit is to refinance our mortgage to the lowest rate possible. I'm also currently struggling to get our overinflated tax assessment lowered to further reduce monthly payments. And when our car lease ends, we should be in shape for a good low interest CU auto loan. I still give good tips, four years of waitressing in my teen years ingrained that permanently, but they are no longer excessive.

    My budget is in google docs and I update it several times a day, shaving here and there, wherever possible. So, that's me.

    Take care!
    MelNYC

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  14. Never buying clothes again is not quite realistic, unless you're 90. First, things go out of fashion. That may or may not matter - depending on your work. As a lawyer... fat chance. Believe me, you can spot that someone is wearing an Armani from the 80's, and it just won't cut it in a professional environment. No go. In some industries, there's a dress code (and a car code and so on), and you'd look like a freak - in a bad way - if you decided not go against it. Wearing a tux that's 20 years old - maybe. A suit that's 20 years old - no way... unless you want to stand out as a clown. Even when there is no "dress code" as such (suit & tie etc.), there are rules. In my business, you can wear whatever you like - casual wear... except you cannot wear stuff that's obviously lamely behind the times; so, vintage - good... yesterday's fashion - bad. And so, you'll always have to buy clothes. Unless you're 90 of course, or a plumber.

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  15. I'm cheap, but not in a good way. I buy clothes on sale, then don't like them and don't wear them. We've had the same hand mixer for 25 years! I keep thinking it's time to get a new one, but it still works.

    On the other hand, I've been doing depression spending (retail therapy) for the last decade and more. Our finances are now at the point where I'm been scared out of depression spending! I guess there's a silver lining in every cloud.

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  16. Tom!!! No!!

    Haha. You're telling me that I'll have to keep buying new clothes. But most of my stuff is Polo. Classic. I don't think Ralph Lauren has changed that look since RL launched in 1967.

    As for suits, you've got a point there. I have 12 suits. A new suit every five years is pretty likely. Shoes will be replenished too.

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  17. Anon, haha. That's great. Love the anecdotes.

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  18. Too cheap is easy -- when being cheap actually costs you money. Either in increased costs down the road or lost potential profits down the road or hurts your future growth, be it personal or financial/career/business growth.

    Case in point: One of the clients I have is terribly cheap. To the point that is costs them dearly. I had proposed a $200k capital improvement for the facility to replace some of the more unreliable systems while adding other systems that would enhance revenue. Total time for the upgrades to pay back was 1.5 to 2 years, with expected increases in profits directly from the upgrades to be $100,000-$300,000 yearly. They wouldn't bite.

    So, they've lost about $30k-$40k so far with repair costs on their current systems, which has meant job security and overtime for me, but I hate putting band-aids on mission-critical, revenue-generating systems. Similarly, the same client relies upon a 10 year old PC to process credit card transactions.

    Now THAT'S cheap!

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  19. Sean, now that's a good point. Something I'll remember.

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  20. It fits inline with what Collin and you have touched on. Sometimes the most expensive item/highest quality item is actually the cheapest in the long-run. Then there's times when price has no correlation to quality [cough]fashion[cough].

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  21. I have become very frugal but not cheap in the last year. It is more a game in my head...how much of my money can I keep or save for myself and family. My family has two incomes and two kids but we also have expenses and a dependent parent. I cut coupons, power cook, work the CVS system and save immensely for retirement. I try to live now like no one else so I can enjoy retirement later like no one else. :) That being said, I do think quality of life is very important. Material things do not make my quality of life better but certain expenses are well worth the money paid.

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