Surprising secrets of The Cheapskates Next Door

This is a guest post from Jeff Yeager, author of the newly-published The Cheapskate Next Door. Yeager calls himself the Ultimate Cheapskate — and his wife agrees. Yeager is also a contributor at Wise Bread and on the Early Retirement forums.

The Cheapskate Next Door“Sure, we could afford to spend more, but why would we? It wouldn't make us any happier.” — Those are the words I've spent the last two-and-a-half years traveling the country to hear. It's a simple but rare statement, given that nearly half of all Americans say that they literally live paycheck-to-paycheck and have little if any savings.

How can some people live not only within their means, but substantially below their means — even when their incomes are often less than the national average? And here's the biggest question of all: How can some of those same people insist that they're happier — joyous, really — because of their thrift and frugality?

I traveled thousands of miles — nearly 3,000 of them by bicycle! — and surveyed more than 300 of my beloved “Miser Advisers” to find the answers. In my new book, The Cheapskate Next Door, I share what I discovered about people and families — many of them just like you — who not only know how to stretch their money, but who are more content and happier because of it. The book also includes hundreds of their practical, money saving tips — ideas that anyone can use every day.

Some of what I found may not surprise you. These frugal folks:

  • Despise debt and have found creative ways to eliminate it from their lives.
  • Differentiate between “needs” and “wants,” and between “affordability” and “borrow-ability”.
  • And, yes, most own and still wear at least one article of clothing dating back to the Carter administration (or earlier).

But other findings surprised even me, The Ultimate Cheapskate.

For example, only about 10% of the thrifty people I talked to have a written household budget (“we live our budget — it's second nature — we don't waste time writing about it,” one cheapskate said). While they have savings in the bank, less than 15% have a formal “emergency fund” (“an emergency fund is for people who don't have their financial house in order otherwise,” another cheapskate said). And more than nine out of ten say that they think, worry, and stress-out about money less — not more — than their non-cheapskate peers.

The Cheapskates Next Door are 100+ times more likely to have a dog or cat adopted from a shelter than one purchased from a pet store, are far more likely to own a crock-pot (or several) than an IPod or flat-screen TV, and they divorce at less than half the national average.

These aren't your miserable, Scrooge-like cheapskates. These are folks who know what's important in life, and they skip the rest. Here's a glimpse inside the mind of the Cheapskates Next Door:

  • Cheapskates say, “The Joneses can kiss our assets.” Cheapskates are highly self-confident and proud of their frugal lifestyles, caring very little about what others think of them and even less about things like buying designer brand names and keeping up appearances with the Joneses.
  • Cheapskates are immune from buyer's remorse. Most shoppers eventually regret nearly 80% of the discretionary items they buy; but cheapskates are “premeditated shoppers” and, because of it, are largely immune from buyer's remorse. Nearly 90% of the cheapskates surveyed say they “never” or “rarely” regret a purchase. And they don't shop for “recreation” or “therapy,” which is one reason they prefer shopping at thrift stores (with a more certain selection of merchandise) than wasting time shopping at yard sales.
  • Cheapskates appreciate appreciation (and depreciation, too). Other than when buying a house, most people usually don't think about whether something will increase or decrease in value after they buy it. Cheapskates are tuned into appreciation/depreciation, often preferring to buy antique furniture (like the Amish do) that will retain/increase in value, and buying everything from cars to computers to clothing used, rather than new, so that the first owner pays for most of the depreciation.
  • Cheapskates know that the best Things in life aren't things. Social science has shown that Stuff tends to disappoint us over time, but experiences — how we spend our time — is what adds true value and meaning to life. Cheapskates value their time, and the things they can do with it, more than money, and the things they can buy with it.
  • Cheapskates answer to a higher authority. For most of the cheapskates polled, it's truly not about the money. 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.

While most of the cheapskates I surveyed are lifelong devotees — having practiced frugality since long before the recent recession made it more fashionable — I kept asking myself while I was writing the book whether or not thrift is truly here to stay, particularly for the nouveau cheap. Will conspicuous consumption spring back to life faster than you can say “bailout” or “liar loan?”

I'm not at all confident about the answer. But the very last question in my survey was a hypothetical: Someone drops a million bucks on you tomorrow, how would it change your life? More than 9 out of 10 cheapskates, in so many words, said that it wouldn't change their lifestyles in the slightest.

“Honestly,” one couple told me, “it would just serve to reinforce what we have already learned — that we have Enough right where we are, and we realize that is a gift most people don't ever choose to receive.”

J.D.'s note: Though I haven't had a chance to read The Cheapskate Next Door, I liked Yeager's earlier book, The Ultimate Cheapskate's Road Map to True Riches [my review].

Also: By a happy coincidence, Mr. Jeff Yeager, the Ultimate Cheapskate, passed through the Portland area on his cross-country bicycle book tour yesterday. He and I spent a couple of hours cycling through the Oregon countryside while chatting about frugality and other related subjects. Here's a poor-quality photo of us crossing the Willamette River by ferry:

J.D. and Jeff Yeager, geeky bicyclists

Dig my gigantic helmet and my awesome reflective vest. We sure look like a couple of dorks!

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Nicole
Nicole
10 years ago

Neat!

Awesome picture.

I guess by most of those definitions and characteristics I’m a cheapskate. Except, if I got a certain amount of money my lifestyle would change drastically. And I’m not sure that my spending is because of environmentalism or spirituality etc.

AC
AC
10 years ago

So according to cheapskates, having an “emergency fund” is predicated from poor financial planning and management? I wonder what Ramsey and Orman would think about that. So what do these cheapskates do with their money if they are not spending it or throwing it into a savings account?

Nicole
Nicole
10 years ago

AC:
If they’re like me, it is in longer term investments, like stocks, bonds, or back when interest rates were good, laddered CDs. Possibly some pre-pay the mortgage.

In a true emergency it could be sold, potentially at a loss.

John
John
10 years ago

I certainly identify with this article. I’m with Nicole as I invest in stocks and if it were a true emergency I would sell at a loss. While I don’t like the term cheapskate I do operate in a manner with very similar traits. Sure, my wife and I spend a little more at Whole Foods and I do have some nice things but I simply don’t care what other people think. If I did I would be broke. I have a couple of friends that I try and mentor helping them establish a more prudent philosophy for personal finance… Read more »

Fish Finder
Fish Finder
10 years ago

You look like Dark Helmet from the movie “Space Balls” in that brain bucket. But hey, you’re out there and doin’ it. Party On!

cheapcookies
cheapcookies
10 years ago

AC said [having an “emergency fund” is predicated from poor financial planning and management? I wonder what Ramsey and Orman would think] They would probably say that if you truly have your financial house in order, you already have plenty of available cash. I have been reading this site for quite a while and rarely comment; most everything posted here is good information and most frugal people already know and practice it. Orman and Ramsey are there for those of us not already living well below our means. The only way they push people to succeed is to have them… Read more »

Barb
Barb
10 years ago

I have the book and am loving it, although not all the way through it. I think the point, AC was that cheapskates dont have an “official” emergency fund. They have savings that they can access that simply happened because they lived below their means. While I like some of ramsey, much of it is directed at overspenders or people who spend most of what they make each month-these people would not fall into that demographic.

Rob
Rob
10 years ago

That really surprises me that the majority of what defines as “cheapskates” do not have a budget. I guess I’m not a cheapskate then! Of course I my wife and I do not fit the bill in other areas either – I have a flat screen TV! (paid for with cash at a deep discount on black Friday). But we also have a crock pot. So I guess I’m half a cheapskate.

Robert
Robert
10 years ago

@AC: I think it’s not so much a matter of not having savings as the cheapskates object to terming some of their money as an “emergency fund”. I suspect that many of the things most of us consider “unforsee emergencies” often have some warning signs, but we either miss them or briefly consider them and hope that we can put off responding to them until a later date (when we have more time and/or money to devote to the solution). To one of these cheapskates, ignoring the warnings and then needing to respond to a problem as an ’emergency” rather… Read more »

Kevin
Kevin
10 years ago

Really interesting topic.

Just one complaint: Can we please stop using “flat-screen TV” as a scapegoat for frivilous spending? It’s 2010. All TV’s are “flat-screen” TV’s. Just because someone owns a flat-screen HD TV doesn’t mean they waste money. It just means they’ve bought a TV in the last decade.

NOR
NOR
8 years ago
Reply to  Kevin

I completely agree with Kevin about the TV. In our experience, when we got married in 2003 we got an old TV from my dad and kept it for 5 yrs working in good condition. Then we unexpectedly found out that someone had an extra TV which was “flatter” than our existing one so we sold our old TV and hooked our new TV. I loved flat screens as long as i get them for free!! Now i’ll wait another few years until someone donates me a newer one.

David C
David C
10 years ago

Seeing that helmet made me think of “The Great Gazoo”. Although, I would rather look like a nerd than end up like Gary Busey. Wear those helmets please people. Anyway, great post. Unfortunately, the word “Cheapskate” can have such a negative connotation in some areas. When I was younger I referred to a neighbor as a cheapskate because of his frugal ways. What I did not realize is that he spent wisely and only spent money on what he really needed and what brought him the most value and pleasure. I have to give ol’ Jim credit, he has weathered… Read more »

Sandy L
Sandy L
10 years ago

I laughed at this article because I have 3 crock pots..all purchased at tag sales.

Also, I agree with #10 Kevin’s comment. Our TV crapped out last year and they don’t make CRT’s anymore. So yeah, I begrudgingly bought a flatscreen TV but only because our old one died an un-fixable death. We have a 1 TV rule in our house, so it’s not like we could just move another one from the spare bedroom.

Kim
Kim
10 years ago

We fit the profile of Jeff’s subjects but we don’t have a written budget either. We don’t need one because we’ve always lived below our means.

We do, however, track our spending. There’s a difference.

Babs
Babs
10 years ago

I LOVE LOVE LOVE that these people are adopting pets from shelters instead of buying from pet stores! Good for them!

bon
bon
10 years ago

I’m glad you ran this review — as I mentioned when you were soliciting blog topics, I’d really love to hear more exploring that first point — because I think that high self confidence is SO extremely critical to being successfully frugal.

I wish this was something that was easier to teach or be learned – as I really think that insecurity leads to so much conspicuous consumption. But then I guess that is what we need more of in this economy!

Nancy L.
Nancy L.
10 years ago

I think I’m getting hung up on the use of the word “cheapskate” in Yaeger’s world. There’s a huge difference in my mind between the people I’d classify as frugal (which is what this article seems to refer to) vs. the people I’d classify as “cheapskates”. The cheapskates *I* know are people who destroy many of their personal relationships because they see no problems with exploiting their friends’ assets if it means the cheapskate will save money–to the point where their friends resent being taken advantage of and eventually pull away. The cheapskates *I* know have ended up in the… Read more »

Meg
Meg
10 years ago

I’m with Nancy L. I don’t like the term “cheapskate” in this connotation. Cheapskate implies someone who will mooch off their friends and family so they can say they got an item for free. Frugal – which is how I’d describe the people in the article – implies that you are careful about your money and where you spend it.

I guess “cheapskate” will get more attention than “frugal,” though.

Trina
Trina
10 years ago

I’m another frugal person with no budget or emergency fund. I used a budget in my early years, to keep track of saving, not spending! And just like the debt snowball effect, there is a savings snowball also. The more you save, the more you can take advantage of more savings – stock up on sale items, pay cash instead of financing, put more down on a house purchase, start a business, etc. If you keep living frugally (because you honestly enjoy it!), the more opportunities keep coming to save, eventually maybe even financial freedom, whatever that means to you.… Read more »

HollyP
HollyP
10 years ago

@kevin… not everyone has all flat-screen tvs. A true cheapskate like my husband has a collection of old tvs (and VCRs) in their basement. Every time a friend or family member purchases their new, flat-screen tv to replace an older, working tv, MrP takes it. Whenever one of our old tvs dies, we bring one up from the basement collection. So while our loved ones spend on their new tvs, the P family watches tv for free. (And yes, we also watch over-the-air tv.)

Adam
Adam
10 years ago

Cheapskate is a really negative word. People can live within their means, save enough for retirement, and still buy something as horrific as a “flat screen tv”. And yes, its 2010. A lot of good quality flat 30″ screen tvs can be bought for less money than a mid grade CRT 30″ tvs in the 80s and 90s adjusted for inflation. I really hated the first book, it had many crude parts that didn’t sit well with me; on top of I personally hate the “nickel and dime your way to riches by brewing your own detergent in a crockpot”… Read more »

Becky
Becky
10 years ago

I also associate the word “cheapskate” as a negative term and view that person as a more or less kind of “scrooge”, not a frugal person to be emulated.

I would love for JD to explore #14’s idea about the correlation between self condfidence and the ability to be frugal in spite of what everyone else is doing.

Maharani
Maharani
10 years ago

There is something very dispiriting about articles extolling cheapskatery……It is not a lifestyle I wish to pursue as it seems as if it would take up all my spare time (I have very little as it is). I dont own a crockpot because I can COOK! Cheaply! And I cannot say I find it helpful to keep reading this hoary advice. Also cannot shop clothing from thrifts-it might save $$ but it sure wastes A LOT of already precious time. There is a reason that stuff is so cheap. We have a cheapskate in the family and she mooches off… Read more »

Adam
Adam
10 years ago

“A true cheapskate like my husband has a collection of old tvs (and VCRs) in their basement”

Your husband sounds like a hoarder to me, filling his basement with discarded junk. I’m sure your loved ones are very happy “spending on their new tvs” if it means they don’t have to keep a stockpile of old discarded tvs in their basements.

nmh
nmh
10 years ago

While there is nothing wrong with the article itself it appeared last week on the Dollar Stretcher website. Many of us who read pf blogs read more than one — I usually look forward to original content here, dissappointed to see a copy.

Everyday Tips
Everyday Tips
10 years ago

I truly enjoyed this post, and I ‘get’ what the cheapskates are saying. If you are already living well below your means and it is a core value to who you are, what is the point of fretting about emergency funds and such? Apparently they are saving as much as possible already and their core values reinforce frugality. It is just who they are, so why screw things up with spreadsheets and such. They have money in the bank, so no need to divide it up into an emergency fund, a this fund, a that fund. They only spend on… Read more »

Lisa
Lisa
10 years ago

Yeah, I might have to read this just to see why someone would need more than one crockpot!

Maharani
Maharani
10 years ago

Most of the crockpot food I have eaten is simply gross. I run screaming when I see those things.

Raghu Bilhana
Raghu Bilhana
10 years ago

Cheapskates say, “The Joneses can kiss our assets.”

Awesome quote. Go cheapskates Go.

JD, you have lost a lot of weight man. Keep it up.

I got to read this book, but it will be a while, since our library might not have it this soon. 🙂

Chickybeth
Chickybeth
10 years ago

I read Jeff’s article in AARP magazine. I loved it there and I loved this post, so I think I’m going to have to get the book. (I know I’m in my 30’s, but my mom gets AARP, and it is actually full of great tips on frugality as well as how not to get ripped off. I’d recommend it for anyone.)

Dienne
Dienne
10 years ago

Lisa @ 22

We have 2 crockpots for different reasons. one is that one is very big for larger dishes/meats and the other for smaller amounts. It is also helpful when you want to make 2 different dishes like a meat and a side-type.

And to maharani @ 20, well, having a crockpot IS cooking and not necessarily about being cheap. It’s just longer cooking and helps when both people work and frees up time to go to a museum on the weekend or pursue hobbies instead of worrying about what to eat.

Molly On Money
Molly On Money
10 years ago

I love Jeff Yagers last book and am so excited he’s come out with another!
Growing up we lived next door to a self-proclaimed ‘cheapskate’. His kids (my friends growing up) are also cheapskates while my siblings and I have had a life long struggle with defining what is ‘enough’.

Beth
Beth
10 years ago

My neighbor came over as I was mowing my lawn with a gas-powered hand lawnmower and wanted to know why I hadn’t purchased a riding lawnmower. He asked me if I was cheap. I said no, I was waiting for the end of the season sales. I saw this book (online, I believe) and picked it up at the library just this past Monday. I’m on chapter one. I thought it was cool that he mentioned J.D. I thought, hey, I “know” that guy. I felt like I was part of a community. I will say that Yeager mentions that… Read more »

Meg
Meg
10 years ago

Dienne – crockpots also help tenderize cheaper cuts of meat.

Maharani, I understand what you mean about crockpots. I think you just haven’t had anything good! My DH makes a lovely applesauce in it. You can also tenderize meat so you can make pulled pork sandwiches. Delish!

Cassy
Cassy
10 years ago

Can’t say better than Kevin in #10. Not all who has flatscreens are spendthrifts or those with older TV are cheapskates…or frugal.

Onething for sure is one’s junk is another treasury. so one’s frugal habit may seem vile by another. Are we spending the money and time wisely enough satisfying your core values and necessity?…is all that matters in the end.

TosaJen
TosaJen
10 years ago

Don’t get hung up on the title.

Sounds like The Tightwad Gazette for the teens (2010+). No one wants to be a tightwad either, but the books were hits. I used to own a few copies, and stole the ideas that worked for me.

When this book shows up at the library, I’ll probably take a look, and borrow what makes sense for us.

DH thinks I’m a cheapskate, but I think I’m just frugal. POV, I think!

Brenton
Brenton
10 years ago

Food from a crockpot is nasty. Reminds me of going to Church pot lucks when I was a little kid, where there were 85 kinds of potato salad and no chicken fingers. Anyway, I agree with several of the above comments about cheapskate being a negative word and the fact that owning a flat screen TV doesnt make you some kind of terrible sinner who cares too much about material and vanity. (I actually dont own one, but I’m planning on buying one in the not too distant future.) I especially agree with #20, Adam, concerning his dislike of the… Read more »

Moneymonk
Moneymonk
10 years ago

Reading the book now…….

Lisa
Lisa
10 years ago

I get the feeling from some people who comment here (please don’t get mad at me)they feel that you’re bad or socially less valuable if you buy expensive items. There’s nothing noble about depriving yourself. Yes, living within your means IS commendable. However, buying a high dollar item is not irresponsible IF YOU CAN AFFORD IT. Being financially responsible doesn’t mean never buying yourself nice things that are essentially “wants” and not “needs.” It means saving up for them and buying them without putting yourself in a financial bind.

Carol@inthetrenches
10 years ago

I’ve been following Jeff on Facebook and it’s nice to hear a longer post about him. Look forward to the book that he hopefully will write about his biking adventures. I’m sure that will be interesting also.

Courtney
Courtney
10 years ago

@ AC – I’m guessing that some of it also has to do with the fact that if you are living far enough below your income, if you have a regular ’emergency’ you don’t need an EF because you can just use the extra cash you would have otherwise saved that month.

momcents
momcents
10 years ago

Okay, I absolutely loved the line: “The Jones can kiss our assets.” That’s the point that I’m getting to right now and having a quippy one-liner to describe the feeling is great!

The flat-screens and ipod comment leaves me wondering about the age bracket of his cheapskates. I’m 27 and by the time I finally purchased a television, flat-screens dominated the market. Likewise, digital music was already huge when I was in high school and CD players were outdated by the time I had any kind of purchasing power.

Luke
Luke
10 years ago

‘Reminds me of going to Church pot lucks when I was a little kid, where there were 85 kinds of potato salad and no chicken fingers.’

Well, chickens don’t have fingers naturally 😀

Empty
Empty
10 years ago

I think of our family as reasonably frugal, although we’ve scaled back on that somewhat in recent years as our income has increased–we’ve used that money to buy some extra time with our kids. However I’m a little turned off by the attitude I sense from some of the cheapskates quoted, which seems judgmental and off-putting. E.g. “…we have Enough right where we are, and we realize that is a gift most people don’t ever choose to receive.” People have different priorities, and there’s nothing wrong with choosing to spend money in many circumstances, or with desiring more than you… Read more »

KMJ
KMJ
10 years ago

One thing that struck me about this article is that some people are inherently “cheapskates.” It is not a lifestyle choice or a difficult decision, but it’s who they are and/or how they were raised. In some ways, I feel sorry for them, because if you cannot even fathom spending money on certain things, then you are locked into a boring existence. As financially prudent as it may be to wear things forever and never buy new gadgets, following that maxim too far can make you look like a clown. Walking around wearing a stained shirt from 20+ years ago… Read more »

Ross Williams
Ross Williams
10 years ago

“But the very last question in my survey was a hypothetical: Someone drops a million bucks on you tomorrow, how would it change your life? More than 9 out of 10 cheapskates, in so many words, said that it wouldn’t change their lifestyles in the slightest. ” Let me suggest that “cheapskate” may be the wrong term here. “Ascetic” would be more accurate. Anyone who has no idea of what they would do with an extra million dollars is either completely lacking in imagination or dedicated to self-denial as a value in itself. Focusing on money and material goods is… Read more »

Jaime
Jaime
10 years ago

“Honestly,” one couple told me, “it would just serve to reinforce what we have already learned – that we have Enough right where we are, and we realize that is a gift most people don’t ever choose to receive.” I took a different POV off of this quote than #43. To me, it’s a wonderful illustration about how many aspects of your financial well being are within your control. The choices you make about your spending, your financial literacy, how you live your life and how you perceive your life make huge differences and are all under your control. So… Read more »

Gal @ Equally Happy
Gal @ Equally Happy
10 years ago

I had a similar experience when I first started to move towards a healthier lifestyle. Turned out that the healthiest people don’t track their calories or obsessively go to the gym. They just live and enjoy a healthy lifestyle filled with physical activity and healthy food. It’s taken me a while to get there with health, now I’m working on the money side.

Money Reasons
Money Reasons
10 years ago

I guess I’m more of a Cheapskate that I originally imagined!!!

But it works for me 🙂

I’ll look for both books!

partgypsy
partgypsy
10 years ago

I can understand what they said about having no efund; for the longest time my husband and I did not have an emergency fund; despite job loss, medical emergencies, etc we adjusted our budget during those times to conserve money. One point I estimated our fixed “needs” were 45% of our income so we had room to move if need be. We also never had an explicit budget, yet lived within our means. Now that I am older with children and higher expenses I do want a dedicated emergency fund.

Dave C
Dave C
10 years ago

@22 – Re: “Also cannot shop clothing from thrifts-it might save $$ but it sure wastes A LOT of already precious time.”

[Citation needed]

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