Jan
24
It pays to be cheap
Filed Under mortgage, personal finance, real estate | Leave a Comment
I just finished reading an article called How Cheapest Family in America Saves Cash. It’s about a family that lives cheaply. They’re so cheap, the father considers himself the Cheap Economizing Officer of the family. The article goes on to say they basically plan their expenses and execute their plan.
Living cheaply doesn’t mean that you’re poor. It means that you know what you’re spending your money on and you don’t make hasty decisions. Warren Buffet may be bullish on Wall Street but he’s notoriously cheap. Just ask the heirs to his massive fortune.
I often think of people I’ve worked with in the past who’ve whined about how their bills piled up and they just can’t seem to get ahead. Economic pundits call it “living paycheck to paycheck” or “keeping up with the Jones” and it affects the affluent as well as the poor. Sometime I just wish people were cheap.
I’ve seen people own timeshares mainly because they believe they deserved yearly vacations. At a mere cost of $300 a month. I guess during the aggressive timeshare pitch they never thought that $300 per month would greatly impact their daily life. After viewing a timeshare program in Hawaii I can honestly say that they’ve got to be the dumbest investments ever! The sales pitch was to “preserve my family’s vacation dollar” or something to that affect. If I really wanted to preserve my family’s vacation dollar, I’d skip hotels and strictly use vacation rentals by owner. The rates are competitive and I can get a condo instead of a hotel that way I wouldn’t have to eat out all the time.
I’ve also seen people drive really nice cars. Does driving an Audi or a Lexus really define who you are as a person? Probably not. A car is a depreciating asset. It does nothing for your net worth. Over time it gets old and you’ll be wanting a new car because it’s the toxic ethylbenzene (the new car smell) that got you hooked in the first place. If you’re going to buy a new car, do your homework. Not every car has good resale value and you’ve got to really consider why a Ford dealership is unloading their Ford Escapes at a fraction of the cost when Honda dealers rarely budge on their Accords.
I’ve seen people with credit cards up the wazoo. I’ve heard every story as to why people have a lot of credit cards and they just don’t fly. One or two is more that enough. I’ve always viewed credit cards as a loan from guys with names like Vinny and Vito, if I can’t pay it off in 30 days, it aint worth the beating I’m going to get. (If your name is Vinny or Vito, Come stai paesano!)
Don’t even get me started on the homes people buy. During the last few years the American dream of buying a house with a white picket fence turned out to be a nightmare.
In conclusion, there’s a certain comfort in living below your means and while being cheap is not sexy, it’s not stressful either.