Is it frugality... or extreme cheapskate?

[ZLoth]

I was reading the article Children of cheapskates share their parents' most outrageous penny-pinching hacks, and it got me to thinking about how some of these "frugal" people can be downright plain annoying. Some examples come to mind:

• The people who insist on paying CA$H for everything. I understand the undertones behind this habit... if you are handing over cash to pay for items, it makes you more cost-conscious of what you spend your money on. Having said that, I prefer to use my credit card to pay for my purchases including the recurring bills, and, most importantly, pay it off every month so that I don't pay interest. Since I have a rewards card, I'm saving up the year-end cash-back to pay for some appliance replacement, and more importantly, build up my credit rating so that I was able to purchase a home. Which brings me to my next point...
• The people who crow about paying CA$H for their home. All well and good, until you look at the details. The house is a big small, and doesn't meet their needs. They are out in the middle of the country, meaning they have to travel a significant distance to the store, further to the warehouse store, and even further to get to work. That's a problem that was underscored the past several months when gas prices hit record levels making every mile hurt in the wallet. And, the Internet connectivity, being that it is "wireless Internet", isn't all that great and expensive which poses a challenge working from home. But, hey, they paid CA$H for their home. Meanwhile, I have a decent home where I can work to work, shopping is very close by, and I have gigabit Internet in both upload and download speeds.
• The "mommy fixes" where the repair usually consists of transparent or duct tape, all just to save five-ten bucks from purchasing a new replacement. Note that I'm not lumping the "self-repair" people in this category, as they are actually watching the YouTube HowTo videos, ordering the parts, and doing thew repair themselves.
• The folks who do anything to avoid the delivery fee even though their vehicle is ill-equipped to handle the item purchased which has lead to some very amusing pictures posted on the Internet.
• The folks who purchase the absolute cheapest products who, by nature, may lack features and functionality, and because of the lower quality, promptly falls apart a short time after the warranty expires.
• Likewise, the folks who life's mantra is "if it ain't broke, don't fix it". Slight problem... the item they are utilizing is so technologically obsolete to the point where they are hunting FleaBay to find the replacement parts that are no longer made by the manufacturer. I should emphasize that the actual replacement is both cheaper to operate and increases productivity, resulting in long term savings to offset the replacement cost.
• Not spending the little bit of money for preventative maintenance, including regular computer backups and oil changes. Nope, nope, don't have the time or money for that, but SURPRISE when there is a major repair or restoration bill that costs more and puts you out of action for days!

[Max Rockatansky]

My parents weren't cheap but I ended up being more so.  I never found having more "stuff"  than necessary brought me much more than added stress.  Having less clutter and consumer goods always equated for me to more happiness, to each their own...

That said, I did purchase a car for cash which I knew would be technologically obsolete in a decade.  But then again, said car becoming obsolete was kind of the point. 

[1995hoo]

I saw this sticker in New York the other night and it fits this thread.




What gets me is being cheap to the point where it interferes with life. One of my mother's friends lives in Reston. Her husband was a law school classmate of my father's and they are longtime family friends of ours; I bought my first car from him. He died a few months before my father did and, weirdness of weird, they are inurned very near each other at Arlington Cemetery. Anyway, he was exceedingly cheap. Insanely cheap. He refused to use the Dulles Toll Road under any circumstances, no matter how much time it saved him, and he wouldn't let his wife do so either. She still won't use it now, despite riding that way when my mother was driving and being amazed at how much faster it was. There are all sorts of other things she won't buy because her late husband wouldn't buy them–despite money not being a problem. It doesn't make sense to me, but I guess in a way maybe it is similar to Stockholm Syndrome.

[hotdogPi]

I pay cash for pretty much everything.
One place I saw said to use debit over $22 and credit under $22. (This was in New Hampshire, where there's no tax.)

Regarding saving money: keep in mind that driving costs 35¢ per mile (thanks Alps for correcting me). A closer restaurant can be cheaper even if the prices are higher. Same for grocery stores.

[1995hoo]

Only 35¢ per mile? The current GSA rate, effective July 1, is 62.5¢ per mile (even recognizing gas prices have dropped these past few weeks).

[Ted$8roadFan]

For really large purchases, or if I'm buying online, i use a credit card. For more routine purchases, i tend to use cash. Credit cards are usually easier, but not always cheaper, esp. w/fees.

[ZLoth]

I never found having more "stuff"  than necessary brought me much more than added stress.  Having less clutter and consumer goods always equated for me to more happiness, to each their own...

There is something to the saying "Don't let the items you have own your life."

[Max Rockatansky]

I never found having more "stuff"  than necessary brought me much more than added stress.  Having less clutter and consumer goods always equated for me to more happiness, to each their own...

There is something to the saying "Don't let the items you have own your life."

[Max Rockatansky]

Only 35¢ per mile? The current GSA rate, effective July 1, is 62.5¢ per mile (even recognizing gas prices have dropped these past few weeks).

Amusingly my travel claim forms still display 58.5¢ per mile.

[jp the roadgeek]

Only 35¢ per mile? The current GSA rate, effective July 1, is 62.5¢ per mile (even recognizing gas prices have dropped these past few weeks).

Amusingly my travel claim forms still display 58.5¢ per mile.

Next year, you'll have 2 mileage lines on Schedules C, E, and F: one for mileage before 7/1, and another 7/1 and after.

[J N Winkler]

The people who crow about paying CA$H for their home. All well and good, until you look at the details. The house is a big small, and doesn't meet their needs. They are out in the middle of the country, meaning they have to travel a significant distance to the store, further to the warehouse store, and even further to get to work. That's a problem that was underscored the past several months when gas prices hit record levels making every mile hurt in the wallet. And, the Internet connectivity, being that it is "wireless Internet", isn't all that great and expensive which poses a challenge working from home. But, hey, they paid CA$H for their home. Meanwhile, I have a decent home where I can work to work, shopping is very close by, and I have gigabit Internet in both upload and download speeds.

I think the cash-on-the-barrelhead approach (which I have followed for cars but not for houses) has as much, if not more, to do with avoiding getting locked into a monthly payment.  It doesn't have to mean living in the country.  I have known people who have done it by living in a trailer park, by living in a prefab house on a city lot they own, or by buying a fixer-upper at auction.  These are all people with steady employment who had the financial capacity to carry mortgages but chose not to do so.

[Rothman]

Yeah, I know people that don't have mortgages and live quite well without the narrow stereotyping mentioned in the OP.

OP sort of reeks of jealousy in that regard, or trying to make himself feel superior to those without mortgages or a monthly payment. "But my house is better and in a better location" just doesn't represent the population.

[ZLoth]

I think the cash-on-the-barrelhead approach (which I have followed for cars but not for houses) has as much, if not more, to do with avoiding getting locked into a monthly payment.  It doesn't have to mean living in the country.  I have known people who have done it by living in a trailer park, by living in a prefab house on a city lot they own, or by buying a fixer-upper at auction.  These are all people with steady employment who had the financial capacity to carry mortgages but chose not to do so.

Perhaps. The example I cited factors in the cost of gas to drive to your needs, the additional wear and tear on a car due to the longer distances and the resulting need to more frequently replace the vehicle due to the milage, and the higher insurance costs because of all that driving to and from work. Plus, the cost of moving again. All that offsets the savings from having a "I paid CA$H" home.

Believe it or not, I was in this situation at the beginning of 2019 when I was job relocated to the North Dallas area, and thank goodness before the real estate market became a surreal estate market. One neighborhood caught my eye being especially close to my workplace, and when I looked at the surrounding area, the more I liked it. Nearby medical center? Check. Light rail to downtown DFW? Five minute drive to the station-NICE! Multiple shopping areas within 10-15 minutes. And, it's a nice neighborhood within walking distance to my workplace. I later on discovered that it is on the same electric circuit as the fire station and the medical center, thus a priority for power restoration. And, it was within my target price range. My mother thought that I paid "too much" for the home, and could have gotten something better and cheaper elsewhere. Probably, but it neatly fit my criteria. I wasn't looking for a "show home", just some modest place that is fairly easy to maintain. So, a small mortgage was going to be involved in the end. Flash forward to now. Because of the down payment made at the time of purchase, plus the money from some nice gains from selling stock, I was able to reduce my mortgage principal by a significant amount. I was also able to refinance to a 15 year fixed at 3.25%, and by paying extra on the principal, I should have my mortgage retired in seven years. Meanwhile, three years later, I'm looking at the nearby apartment rental rates, and I'm paying less in principal/interest/escrow than someone who is renting a two-bedroom apartment with half the square footage than my four bedroom home.

Yes, I realize that there are folks who get a home, but are barely able to afford it with just the monthly payments, and who would be hurting if a major repair occurs. And, yes major repairs will occur. Having said that, the mortgage interest and property tax is tax deductible from Federal income tax. The point I'm making is that you shouldn't just consider "having a home paid off" as a primary factor in choosing a home, but having a home that you will be happy in.

[wanderer2575]

Only 35¢ per mile? The current GSA rate, effective July 1, is 62.5¢ per mile (even recognizing gas prices have dropped these past few weeks).

Depends what you're looking at.  The standard mileage rate of 62.5¢ is intended to cover not only fuel but also vehicle maintenance and wear/tear.  The mileage rate for relocation (qualifying active military servicemembers) and medical, which covers only fuel, is only 22¢.

Amusingly my travel claim forms still display 58.5¢ per mile.

Generally your employer may reimburse any amount it wishes, up to the rate limit.  If they reimburse less, you can claim the difference as a business expense on your income tax return.  My previous employer's reimbursement rate was always at least a dime under the current IRS rate.  Cheapskate.

[jeffandnicole]

I pay cash for pretty much everything.
One place I saw said to use debit over $22 and credit under $22. (This was in New Hampshire, where there's no tax.)

That's probably for the store's benefit, not yours. I'm guessing that's the point where fees become cheaper for them when people elect to use a card.

[Max Rockatansky]

Only 35¢ per mile? The current GSA rate, effective July 1, is 62.5¢ per mile (even recognizing gas prices have dropped these past few weeks).

Depends what you're looking at.  The standard mileage rate of 62.5¢ is intended to cover not only fuel but also vehicle maintenance and wear/tear.  The mileage rate for relocation (qualifying active military servicemembers) and medical, which covers only fuel, is only 22¢.

Amusingly my travel claim forms still display 58.5¢ per mile.

Generally your employer may reimburse any amount it wishes, up to the rate limit.  If they reimburse less, you can claim the difference as a business expense on your income tax return.  My previous employer's reimbursement rate was always at least a dime under the current IRS rate.  Cheapskate.

I'm a Federal employee, the amusement is our travel department hasn't given us new forms with the current mileage rate. 

In my past employment in the private world my mileage reimbursement rate was usually between .48-.52 cents on the mile circa 2010-2013. 

[Scott5114]

The running theme of the OP in this thread feels like "just have money, why is that so hard?" to me.

The people who insist on paying CA$H for everything. I understand the undertones behind this habit... if you are handing over cash to pay for items, it makes you more cost-conscious of what you spend your money on. Having said that, I prefer to use my credit card to pay for my purchases including the recurring bills, and, most importantly, pay it off every month so that I don't pay interest. Since I have a rewards card, I'm saving up the year-end cash-back to pay for some appliance replacement, and more importantly, build up my credit rating so that I was able to purchase a home.

I try to pay cash for everything I can. Most of this is not for my own benefit, though, but rather a desire to allow the merchant to avoid credit card fees. (As a small business owner myself, they are a bane of my existence. I take them into account as part of my pricing, but on the rare occasion where someone pays with actual cash, it's a pleasant surprise to get a few dollars extra in profit.)

For cases where I can't pay with actual paper money, I try to use the debit card. I try to avoid the credit card whenever possible because I am afraid of getting myself into a situation where expenditures are greater than income and the deficit turns into a long-term balance. The interest charges more than offset whatever meager cash back can be accrued on the same amount. It's all well and good to say "well just don't spend more than your income", but that is hard to do when you budget for an expected income of X and it ends up being less than that because a member of the household was ill, because payroll screwed up their check, because sales figures didn't meet what was projected, etc. If you are paying upfront you have more control to adjust spending on the fly.

The "mommy fixes" where the repair usually consists of transparent or duct tape, all just to save five-ten bucks from purchasing a new replacement. Note that I'm not lumping the "self-repair" people in this category, as they are actually watching the YouTube HowTo videos, ordering the parts, and doing thew repair themselves.

Some people don't have the five-to-ten bucks to effect a proper repair. Five to ten bucks adds up if you have a bunch of stuff break at once. There is also the opportunity cost of spending the time repairing it properly; if a repair costs me five dollars but takes two hours to do, and I value my time at $20/hour, then the true cost of the repair is $45. This is of particular import to those who are self-employed (as I am), because any time I spend on this sort of thing is time I can't spend making money.

There's also the problem that acquiring the skills and tools needed to effect repairs often takes time and money. Sure, it's a simple five-minute repair that you can fix with $2.50 worth of wood screws...if you have thirty years woodworking experience and $7500 worth of power tools at your disposal.

The folks who do anything to avoid the delivery fee even though their vehicle is ill-equipped to handle the item purchased which has lead to some very amusing pictures posted on the Internet.

I've found that the best way to avoid delivery fees is to be in good graces with someone that owns a truck. After they help you, order a pizza for them. This may or may not be less than the delivery fee, but you get to hang out with your friend and eat pizza afterward.

Speaking of pizza, I've taken to ordering carryout lately. (Apologies to Zachary, should he read this.) I live near enough to Pizza Hut that I figured out that, even at the IRS mileage rate, it's faster and cheaper for me to go get the pizza myself than to have it delivered. (The only exception is if something's going on at the house where I don't want to leave; e.g. we have people over).

Not spending the little bit of money for preventative maintenance, including regular computer backups and oil changes. Nope, nope, don't have the time or money for that, but SURPRISE when there is a major repair or restoration bill that costs more and puts you out of action for days!

Sometimes there literally isn't enough money. My backyard fence is falling apart, but any amount of yelling "I need to spend a little money on preventative maintenance!" at the bank doesn't cause them to deposit anything in my account.

[jeffandnicole]

At least for a few of the items you mentioned, I don't see how this is being a cheapskate.

I was reading the article Children of cheapskates share their parents' most outrageous penny-pinching hacks, and it got me to thinking about how some of these "frugal" people can be downright plain annoying. Some examples come to mind:

• The people who insist on paying CA$H for everything. I understand the undertones behind this habit... if you are handing over cash to pay for items, it makes you more cost-conscious of what you spend your money on. Having said that, I prefer to use my credit card to pay for my purchases including the recurring bills, and, most importantly, pay it off every month so that I don't pay interest. Since I have a rewards card, I'm saving up the year-end cash-back to pay for some appliance replacement, and more importantly, build up my credit rating so that I was able to purchase a home. Which brings me to my next point...

There can be reasons for this, such as they have bad credit and can't get a rewards card.  Cash Back and Points cards tend to be available to those with good or excellent credit.  People that can qualify for a rewards card are missing out if they don't get one.  This could be because they already have a card and don't want to bother applying for a card, or don't understand how they can work to their benefit.  But either way, it's not being a cheapskate, but rather probably being a little uneducated as to the benefits of having one.

• The people who crow about paying CA$H for their home. All well and good, until you look at the details. The house is a big small, and doesn't meet their needs. They are out in the middle of the country, meaning they have to travel a significant distance to the store, further to the warehouse store, and even further to get to work. That's a problem that was underscored the past several months when gas prices hit record levels making every mile hurt in the wallet. And, the Internet connectivity, being that it is "wireless Internet", isn't all that great and expensive which poses a challenge working from home. But, hey, they paid CA$H for their home. Meanwhile, I have a decent home where I can work to work, shopping is very close by, and I have gigabit Internet in both upload and download speeds.

Is this opinion or fact?  Are these people saying they paid cash but now they're pissed their stuck far away from everything in a small house?  Or is it you looking at it thinking they should be living closer to whatever you consider is closer?  There's a bit of give and take with this one.  They may be stuck further away, but they're also not paying hundreds a month in interest charges on a mortgage.  That's a lot of gas they have to buy, even at $5 a gallon, to make up for that money given to the bank.  Roughly speaking, for every $100,000 spend on a house, over $100,000 is spent on the interest over a 30 year loan.  There's a bit of a tradeoff paying cash if it means living further away, but that's ultimately quite a bit of money saved.  If they like living further away, again, that's not being a cheapskate; that's simply a life choice.

[SectorZ]

Regarding the discussion of buying a home with cash, I feel like living around Boston that buying a house with cash is so foreign due to needing to be fairly well off to do so.

Heck I just had a former neighbor refinance a 30 yr. mortgage on his condo at age 70. The bank didn't bat an eye that he has pretty much a 100% chance of not being alive by the end.

[1995hoo]

I was doing some home repair yesterday and this thread makes me think of how there's a difference between doing something low-cost but effective and doing something just to cheap out that will fall apart. We live in a townhouse that has settled a bit over 30 years and two doors were out of plumb. A cheap and easy repair is to use hinge shims to straighten them. Took maybe 10 minutes to do both doors. That's easy and simple and effective.

Similarly, at the moment my car's driver's door has an issue where the handle you pull on the inside to open the door isn't working. I haven't gotten around to taking it in to get it fixed, so I roll down the window, reach outside to open the door, and then roll the window back up. Dumb, I know, but in the short term it works.

On the other hand, the guy who owns the house next door to us (he rents it out) is a do-it-yourselfer who is not as competent as he thinks he is. I shudder at the memory of the day he was up in a tree with a chainsaw trying to trim the tree instead of paying someone to do it. It wound up all lopsided and ugly because he didn't know how to trim it properly. (Thankfully it has now been replaced.) He replaced cabinets himself and the former tenant told me they fell off the wall one day. Sometimes it makes more sense to hire someone to do the job properly.

[Max Rockatansky]

At the moment we have the cash on hand to pay off our home.  However doing so now will destroy our retirement accounts.  At this point it isn't worth doing something like that for our super low $1,200 dollar mortgage.  Given inflation ticks at 3-4% annually I don't really think it will be worth it to just up and pay off the loan, we might as well just like the mortgage pay out naturally. 

That said, we do find ourselves in a home with a rapidly rising value.  The city we live in is becoming a popular escape for the Bay Area, the single-family home supply is artificially being kept small regulations and a new school district is in the process of being built.  I have 14 years until I can take full/penalty free retirement from work and I believe my wife is about 12 away.  We probably can write our own meal ticket and pay cash for a home somewhere else if we manage to stay employed. 

[bing101]

https://www.investopedia.com/terms/f/financial-independence-retire-early-fire.asp

https://www.businessinsider.com/personal-finance/joining-fire-movement-navy-2022-8
Interesting how much of this frugal and cheapskate statements seen here are tied to this one the Financial Independence, Retire Early movement aka (FIRE Movement) this is a series of tips to succeed financially and live without debt. Note I don't know if this is possible in your situation but it is possible for those living without credit and wealthy.
https://www.businessinsider.com/warren-buffett-modest-home-bought-31500-looks-2017-6

https://www.cnbc.com/video/2022/04/30/we-will-always-have-a-lot-of-cash-on-hand-says-warren-buffett.html
I understand some in the frugality groups look at Warren Buffett financial model as their framework to succeed in life.

[ZLoth]

Heck I just had a former neighbor refinance a 30 yr. mortgage on his condo at age 70. The bank didn't bat an eye that he has pretty much a 100% chance of not being alive by the end.

Hopefully, the neighbor was able to refinance before the interest rates shot upward earlier this year. Still, I would hate to enter retirement without a paid-off residence.

I was doing some home repair yesterday and this thread makes me think of how there's a difference between doing something low-cost but effective and doing something just to cheap out that will fall apart. We live in a townhouse that has settled a bit over 30 years and two doors were out of plumb. A cheap and easy repair is to use hinge shims to straighten them. Took maybe 10 minutes to do both doors. That's easy and simple and effective.

I need to do that on one set of doors in my Texas home. Definitely not a "mommy fix".

At the moment we have the cash on hand to pay off our home.  However doing so now will destroy our retirement accounts.  At this point it isn't worth doing something like that for our super low $1,200 dollar mortgage.  Given inflation ticks at 3-4% annually I don't really think it will be worth it to just up and pay off the loan, we might as well just like the mortgage pay out naturally.

Just as a point of clarification.... does that $1,200 mortgage payment include the escrow payment for the property tax and homeowners insurance?

My own fiscal priorities is to fully fund my retirement accounts each year, followed by paying off my home by just adding an additional payment on the principal each month. The mortgage interest is deductible from the federal income taxes if you itemize. While I could pay off the mortgage now, I lose some of that opportunity cost of having that money to invest.

That said, we do find ourselves in a home with a rapidly rising value.  The city we live in is becoming a popular escape for the Bay Area, the single-family home supply is artificially being kept small regulations and a new school district is in the process of being built.  I have 14 years until I can take full/penalty free retirement from work and I believe my wife is about 12 away.  We probably can write our own meal ticket and pay cash for a home somewhere else if we manage to stay employed.

If you are talking about the San Francisco Bay Area... there have been many retirees who have moved to other states in order to afford to retire. I know that with California companies relocating to Texas, that has helped drive up real estate prices where people are overpaying on homes (and with CA$H) too. Texas may have no state income tax, but it's made up in the property tax assessments (which, thankfully, remain local).

[Max Rockatansky]

Yes, it is a ballpark estimate off the current escrow.  It has tended to be on an upward projection over the years given the assessed property value has increased.  Nonetheless that's about the going rate for a one bedroom apartment in most places I've lived previously.  I don't think that low of a payment is something we can easily replicate given we live in a city of over 500,000 residents (Fresno).  That said, our ambitions for retirement likely have us moving to a more rural area up north either in far northern California or southern Oregon.

Florida had a similar hook with property taxes versus no income taxes.  I seem to recall to be exempt from certain properties taxes in Florida you had to be a part resident (I believe less than six months) and claim your house as a second home.  That went a long way to explain why there is so many transient snow birds during the Fall-Winter seasons.

[Dirt Roads]

Only 35¢ per mile? The current GSA rate, effective July 1, is 62.5¢ per mile (even recognizing gas prices have dropped these past few weeks).

Depends what you're looking at.  The standard mileage rate of 62.5¢ is intended to cover not only fuel but also vehicle maintenance and wear/tear.  The mileage rate for relocation (qualifying active military servicemembers) and medical, which covers only fuel, is only 22¢.

Amusingly my travel claim forms still display 58.5¢ per mile.

Generally your employer may reimburse any amount it wishes, up to the rate limit.  If they reimburse less, you can claim the difference as a business expense on your income tax return.  My previous employer's reimbursement rate was always at least a dime under the current IRS rate.  Cheapskate.

I'm a Federal employee, the amusement is our travel department hasn't given us new forms with the current mileage rate. 

In my past employment in the private world my mileage reimbursement rate was usually between .48-.52 cents on the mile circa 2010-2013.

This may have changed, but I'm pretty sure that Federal reimbursements (for Federal employees and Federally-funded projects) are based on an annual schedule that are locally adjusted (and not modified whenever the IRS business mileage rates change).  One should also keep in mind that the main purpose of the IRS business mileage rates is to collect taxes on those individuals who have very generous travel benefits.  The [Internal Revenue] Tax Code establishes the rules for the mileage rate so that the amount over that rate must be included as taxable income.  Max Rockatansky is correct, it's not a mandate for anyone (including Federal employees) to receive the maximum non-taxable rate allowed by IRS regulations.