Am I a Cheapskate or Just Frugal?

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 Frugality, Saving, Money, SpendingIn an argument with my wife over our holiday spending on gifts, travel and entertainment, I got accused of being a cheapskate because I refused to put aside money/budget worries during the holiday season. “What’s the point of saving if we cannot spend the money on the ones we love?” she said, but the worst line was “If we die tomorrow, our money won’t go with us, so spend some now and have fun”. I responded that given that we are in a recession (and hopefully not dying anytime soon) it is even more important to be careful with spending now, and try to save as much as possible in the advent of a job loss or more dark days ahead. Further, I added that debt stops for no one and that just a few days of over indulgence can cause pain for many months ahead. Her retort was that I was over reacting and that as we had a decent amount of emergency funds, 2 jobs and little debt, a little over indulgence now is okay.

Perhaps she is right. Given the economic state of the nation, investment losses and job security concerns, I admit I am much more careful with my expenses and probably question purchases much more than I used to. Still, being called a cheapskate? That hurt. I like to think of myself as Frugal. I am well aware that hoarding money is unhealthy and have no issue spending money where needed. But unnecessary and impulse spending really frustrates me. For example why pay full price for a great purse, when most likely it will be on sale in a couple of weeks. Patience is a big money saver!

I have no issue spending money on gifts for family and friends. In fact gift giving/receiving is a big part of the holidays, and seeing the happiness you bring to someone with a nice gift is a joy. But surely the most expensive or commercial gift is not the best. As I get older I find it is the time I spend with the people I love that matters, not only the money I spend on them. The exception being my young nephews and nieces. whose loving seems to have a direct correlation with the number of toys I buy them (I put this down to age)!

Being frugal over the last few years has held our household finances in good stead; especially compared to friends who despite outward appearances of success (big house, expensive cars) seem to be living pay check to pay check, always complaining of how expensive things are and how little they have saved. However, I think my best frugal move was “paying myself first” through maxing out my 401K contributions and regularly putting 15% of my pay into various money market and funds. I also set up flexible spending accounts ahead of time to ensure our health care costs were covered. All these actions forced us to live on a lower after tax income, and as I explained to my wife some short term drop in purchasing power will set us up for a much more secure future.

So if I have got my financial future in order, should I completely forget about my day-to-day expenses and just do whatever the heck I feel like – no matter the cost – the answer, I’m afraid, is no. I think living within one’s means, while still “living” life, is eminently possible. It comes to making smart spending choices and avoiding impulse buying. If I want to go out for a night with friends, see a movie or buy a new gadget, I will do that that. Just in moderation and according to a monthly budget.

But has being tight with a dollar gotten in the way of my enjoying life? Yes, there have been times when I wanted the latest electronic toy or to travel first class (instead of coach), but overall I have never felt deprived and having financial peace of mind is priceless. As a society, America has lived beyond its means for many years and the resultant mega-debt snowball we created from this excess consumption is one of the underlying causes of the recession we are now in. As people realize they cannot get access to cheap debt anymore they will have to start watching every penny they spend and like it or not frugality will be the norm. Then I can tell my wife “I am just like everyone else”.

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