Thrifty vs. Cheapskate

Is being thrifty the same as being a cheapskate? These are some of the questions I get asked by people I’m helping break out of the debt cycle. Many come to me in dire straits and with no hope of defeating debt. After answering these questions, we do a survey of their spending habits and see where they can cut expenses and start living with a financial management plan (see I did not say “budget”). This is the most difficult part of the program I teach.

We live in a day and age where we all want our “stuff,” and “no one is going to deny me of that” because “I desire it”... Then the housing bust came and many were forced to downsize and reshape their lifestyles. Others experienced unexpected job loss, medical emergencies, foreclosure etc. This forced some people to either change their spending habits or pay the price for all the expensive items they bought during the real estate boom.

Nevertheless, whichever side of the fence you find yourself on, you must change your spending habits. Debt is considered a dirty word in some circles. For me, this was the place I found myself after I graduated from college. Mired with huge student loan debt and plenty of credit card debt, I had to make a change on how I spent money. I read many books, watched DVD’s and attended seminars on getting out of debt. There where an array of methods and techniques, some that I choose to follow, others were really out there. Many preached frugality. Some even taught how they can squeeze a nickel so tight the buffalo starts crying. Still others showed how to chew bark off a tree and make your own paper products etc. Whatever the path, the world never likes cheapskates but honors thriftiness.

Take the example of Ebenezer Scrooge. The village people loathed him. Ebenezer made his wealth by being cheapskate, a tightwad, a miser, an ambassador of frugality; you get the picture. You can become a rich person by being a cheapskate, but you will always be a cheapskate. Society dislikes cheap people. It doesn’t matter whether you are rich or poor. I’ve met some cheapskates that are rich and poor, as well as some very generous rich and poor people. It really does not matter about your economic status; there are cheapskates and thrifty people on both side of the economic quadrant.  You may have friends in your circle that are great until it comes to the subject of money.

I know of a co-worker who had the reputation of being a cheapskate.  This gentleman would take soaps, shampoos, toilet paper, and bags of candy from any hotel or conference he attended.  It was his reputation in the company, even before I started working there.  When I joined the company, I was told about this person, and the things he would do just to save .10 cents or less.  To me, this is sad.  I didn't believe it until I experienced it. Some of you may have a family member or friend who does this.  Have you experienced going to a restaurant with friends and there’s one person that will argue with the waiter and/or manager about the food being cold or took too long only so they can get a free meal? Or the cheap tipper that leaves .50 cents for the server that has worked hard?  This fellow blogger was my co-worker in action. These are the type of people that many grow to despise.  This co-worker inherently believed that he was being thrifty by going to such measures to save money.  However, that is far from the truth. My goal is to differentiate the two. According to Webster’s dictionary, here are the following definitions for Thrifty and Cheapskate:

Thrifty - given to or marked by economy and good management.

Cheapskate - a miserly or stingy person; especially: one who tries to avoid paying a fair share of costs or expenses.

When initiating a cost cutting financial management plan, it is viable to cut expenses but do not go overboard with it. Those who take the plunge and start by being cheapskates, often do not really fulfill the program, or become sourpusses and tough to bare. Being a cheapskate is detrimental to the soul. By stopping all spending will actually hinder a financial management plan to thwart debt.  Be realistic with yourself.

By being thrifty, I mean don’t over paying for products you can find a discount department stores or cutting expenses that will only keep you buried in a financial hole. I don’t imply not enjoying life but evaluating the items you purchase or assets that depreciate in value. When coming up with a financial plan, is it also good to negotiate with cable providers, telephone companies and household consumption items that you can snip and cut off the extra gadgets you don’t really need. By negotiating with these companies, you will most likely be able to lower your monthly payment and continue the service.

One example that I implemented, was my addiction to Starbucks coffee. I was the type of person that would go 3 or 4 times a day. When I was evaluating my financial management plan, I didn’t cut out Starbucks but I did limit it to once a day and sipped it very slowly. Paying down my debt was more important to me than drinking coffee. Another example is the number of times I ate out during the week. I’m a single guy that really dislikes cooking, so my daily eating out budget was about $30 to $50 a day. By buying some groceries and cutting back on the number of times I ate out, I saved money which went towards paying down my credit card bills. To me, this is being thrifty and not a cheapskate. To thwart the perils of debt in our lives we will have to make sacrifices.  We can wish and dream all we want, but until we decide to make a change in our spending habits, this will only be a dream with dire consequences.  What types of cost cutting procedures have you, my fellow blogger, done to cut costs? What innovative ideas do you have for paying down debt?  Are you a Cheapskate or a Thrifty person?  Do you have friends or family members that are like this?

Felix Garcia
Debtnation.org