Money tips from the ‘Ultimate Cheapskate’

It used to be that “stuff” made you cool. That is so 20th century. Jeff Yeager, the man dubbed the Ultimate Cheapskate by Matt Lauer on TODAY, offers a completely fresh take on personal finance, teaching us how to enjoy life more by spending less. Here's an excerpt:

Fiscal fasting: Introducing yourself to your inner miser
Where does all the money go? I don’t recall ever reading a personal finance book — at least one that paid even cursory attention to the spending side of the issue — that didn’t include advice (and usually an official-looking worksheet) about charting your monthly expenses so you can better understand where your money goes. 

That makes sense, since you need to know how you currently spend your money if you’re serious about things like controlling spending, getting out of debt, saving money for some special purpose, or adopting a household budget.

Now, do us both a favor and pick up a copy of one of those books by some Master of the Obvious at your local library or download a free spreadsheet from the Internet, and we’ll move on to something that really might help you answer the question and change your life forever.

Throughout my adult life I have periodically practiced a financial management technique — almost more of a ritual, really — that I call fiscal fasting. As the name implies, fiscal fasting is the act of denying yourself the use of money for a specified period of time, usually a week or even longer. Yeah, that’s right, totally doing without legal tender for the sake of tenderizing your nonmonetary soul.

When I tell people about this penny-pinching pilgrimage of mine, I inevitably get one of two responses:

1. “No way!  It can’t be done, even for a day. You can’t function in this day and age without spending at least some money every day.”

2. “No problem! That’s easy. I don’t spend any money most days anyhow, or at least I don’t think I do.”

It’s the folks who give the second answer who are usually in for the rudest awakening. They’re the ones who have absolutely no idea how much cash is passing out of their hands every day, let alone where it’s going. But an occasional fiscal fast can be a constructive constitutional for just about everybody, including those of us who have already embraced their inner misers.

Like a traditional dietary fast, the benefits of a fiscal fast include:

• Purging your system: Your financial system, that is. Your head will clear, your creativity will soar, and your perspective on life will change when you go money free. And obviously you’ll save some bucks during the fast itself, although that’s minor compared with the other benefits of fiscal fasting.
• Tapping your reserves: By cutting off your intake, you’ll start using up reserves of foodstuffs, cosmetics, and other household items you probably forgot you even had. And when it comes to free time and entertainment, you might finally open that watercolor set you bought five years ago after you toured the Monet exhibition.
• Reflecting and understanding: Most important, a fiscal fast forces you to think about the impact money has on your life day in and day out. By doing without the convenience and luxury of a ready bankroll, you’ll gain insights into your spending habits that no fancy budget worksheet could ever impart. You’ll be livin’ in a virtual spreadsheet, where you’re bound to run into your inner miser. Who knows? You might even like him once you get to know him; he has a lot to teach you about what’s really valuable in life.

Here’s how to play
Sure, you’re free to set the terms and conditions for your own fiscal fast, but here are the Official Ultimate Cheapskate Rules for Fiscal Fasting:

1. The fiscal fast should be at least one full week in length, with the starting and ending times determined in advance.

2. Everyone in the family should play. If everyone is not playing, nonplayers are prohibited from interference of any kind, including making purchases on behalf of players or luring them into compromising spending situations.

3. In regulation play, ALL SPENDING IS PROHIBITED, regardless of type of expense (e.g., food, clothing, entertainment, routine bills, commuting costs) or form of payment (e.g., cash, check, charge card, debit card).  Yes, in most American households it is truly possible to play by regulation rules! (See Fiscal Fasting tips and Techniques, on page 30). However, some families may choose to establish agreed-upon exceptions before starting the fast. For example, commuting costs for working adults or writing a check for the scheduled mortgage payment might be permitted. That’s OK if you must, but make sure you agree on the specific spending exceptions in advance and stick to them. It’s better if you can swear off spending entirely and even plan your fast during a time when routine bills don’t come due. (Experienced fasters like me will sometimes up the ante by going without electricity or using other utilities for the week, but that’s hard-core play and not recommended for beginners.)

4. No hoarding in advance! Intentionally stockpiling extra food and other supplies prior to the fiscal fast is strictly prohibited and is grounds for disqualification and/or punishment by listening to forty-eight hours of uninterrupted Suze Orman audiotapes. Topping off the gas tank in the family car prior to the start of play is generally permitted.

5. In order to benefit fully from a fiscal fast, during the fast keep a household diary in which all players are required to make at least a short daily entry regarding:
• Challenges of getting through the day without spending any money
• An estimate of how much money they would have normally spent that day, and on what
• An observation (positive or negative) about their fiscal fasting experience that day

Fiscal fasting tips and techniques
“Live for a week without spending any money?” I can’t do it! I bet you can, and if you can’t, it should tell you something even more important about the life you’re leading and how you’re wasting money.

I remember as a kid being snowed in for five days when a surprise blizzard struck northwestern Ohio one winter. We were without electricity (including heat and running water) the entire time, and we had had no chance to stock up on food and other supplies before the storm. Once the initial excitement of the massive snowstorm wore off and we realized that it might be days before we had contact with the outside world again, even my brother and I were gradually consumed with a mild sense of alarm.

What would we eat? How would we stay warm? Most of all, what in the world would we do to entertain ourselves in this cloistered environment, our incongruous family of four, including two gangly teenagers who had recently come to the conclusion that their parents were the dullest, most embarrassing people on earth?

As we fell asleep that first night on the living room floor in front of the fireplace, any feelings of excitement or adventure had long since faded. I remember feeling, well, scared and fairly miserable. I was too old to cry, but not by so many years that I couldn’t silently whimper a little bit to myself as I tried to forget about my cold nose and fall asleep. I considered it at the time one of the unhappiest moments in my young life.

Then, five days later, the power came back on, and that truly was the unhappiest moment in my young life. I guess that was the moment when I unknowingly became a devotee of fiscal fasting. What I discovered during those five days ― and through all my self-imposed fiscal fasts in the years since ― is that getting by with what you have can often be far more fulfilling than getting whatever you want whenever you want it.

FOOD: Despite our initial sense of panic when we realized that we were snowed in that winter without additional provisions, our anxiety began to dissipate as we took an inventory of our kitchen cupboards, refrigerator, and freezer. We were a typical middle-class family, and even though we lived in a rural area, we weren’t country farmers who had a meat locker full of beef or a freezer full of farm produce. But we discovered as the housebound days dragged by that not only did we have plenty of food on hand to survive, but as the pickings got slimmer, our creativity blossomed and our menus got even tastier.

In fact the finest meal we had during that five-day siege was on the final night, the night before the electricity came back on. We feasted by candlelight on a long-forgotten package of previously frozen spicy Italian sausage, kept cold in a snowdrift outside the front door and grilled in the fireplace. Mom served it on a bed of canned spinach, pasta, and the last of the sour cream, flavored with garlic cloves roasted in tinfoil over the charcoal embers. My parents even discovered a dusty bottle of homemade elderberry wine in the very back of their liquor cabinet, and we all toasted the long-dead relative who had given it to them many years before. I think that dinner, not just because it was a true Epicurean delight but because of the family warmth and laughter around the table, was one reason why I was not the only one whose eyes welled up with tears when the lights came back on the next day, when we once again had the luxury of getting whatever we wanted whenever we wanted it. 

Even though times and families have changed, I still contend that most American families should easily be able to survive comfortably on a weeklong fiscal fast on the food they already have squirreled away in their kitchens. If you can’t, it’s probably because you’re eating in restaurants or dining on fast food way too much, or you’re not shopping efficiently or cost-effectively for groceries (a later chapter deals with that).

Obviously you’ll not be eating out during your fiscal fast, unless you happen across a coupon for something free. You’ll be brown-bagging your lunches and putting on your thinking cap when it comes to creative ways to combine the ingredients you have on hand. And you know what? As I discuss in Chapter 4, I’ll bet that your family’s fare will be more enjoyable than ever, since you’ll actually be thinking about what you’re cooking, not just cranking out the same old recipes.

If you have to break your fast early because you truly run out of food, so be it, but buy only a few staples, not carryout, to see you through. And, as a penalty, you must read a selection from the Recommended Fiscal Fast Reading List on page 29 before you throw in the towel and buy groceries. That’s just to make sure you understand the difference between a “want” and a “need” when it comes to food.

CLOTHING: If you can’t go a week without buying clothes, you have a serious spending problem. If you break your fiscal fast by shopping for clothes, you are in dire need of an economic enema. That’s a tough love alternative for those spend-thrifts incapable of a self-imposed fiscal fast. (Because of its graphic nature, this subject will be described in greater detail in a later book.)

In fact a fiscal fast is the perfect opportunity to empty out your clothes closet and rediscover all those terrific garments you’ve forgotten about. Miser Adviser and reformed clothes-horse Sally J. reports that after her first fiscal fast, her subsequent spending on new clothes dropped to near zero for almost a year. “Whenever I got an urge to shop for clothes during the fast, I’d instead pull out a storage box of clothes I already had and try them on. By the end of the week I had so many new — well, new old — outfits that I didn’t feel like shopping for months.” Thankfully Sally J. will be spared the economic enema.

SHELTER: The last of the Big Three, food, clothing, shelter. As mentioned before, if possible, schedule your fast for a period when you won’t need to make a mortgage or rent payment, helping to maintain the purity of your money-free experience. But also use your fiscal fast to drill down on and really understand what your shelter is costing you, and ask yourself whether that’s a good use of your money. Do some math and record it in your fiscal fast diary. How much is your mortgage/rent on a daily basis? Also, figure out your daily average costs for electricity, water/sewage, heating/cooling costs, property taxes, homeowner’s insurance, and other shelter related expenses.

While you continue to incur these expenses during your fiscal fast, even if you’re not writing checks for them, the important thing is to use the fast to begin to understand the true costs of the life you’re leading. As a result of undertaking this mathematical exercise as part of my fiscal fasts, I found that it began to translate into real lifestyle changes and savings. For example, I became more conscious of the money I could save by conserving water and electricity, not just during fiscal fasts but all of the time. And when I used a fast as a chance to dig into my homeowner’s insurance policy, I discovered that I could save hundreds of dollars a year by adjusting my coverage and moving the policy to another carrier.

TRANSPORTATION: Okay, this can be a tough one to abstain from, particularly if you have work-related commuting costs like gasoline, parking tolls, and bus fares. But sit down and really think about it before you say it can’t be done. Also, skip ahead to Chapter 6, which deals with transportation, and read Chris Balish’s book How to Live Without Owning a Car (Ten Speed Press, 2006), then see what you think. Can you carpool with coworkers during your fast, or walk or ride a bicycle to work? Is telecommuting an option? Again, even if you decide to exempt commuting costs from your fiscal fast, use it as an opportunity to figure out what transportation is really costing you — car payments, insurance, gasoline, maintenance, etc. — and ask yourself if it’s both truly necessary and worth it. And if your kids are used to driving or being driven to school, it’s time to reacquaint them with the school bus or their bicycles — no exceptions.

BUT WHAT ABOUT —— ?: You name it, and you can do without it or find a substitute for it during your fiscal fast. Cigarettes, booze, lottery tickets? Use your fast to kick your habits, at least for a week. Cosmetics and toiletries? Try rationing what you have; there’s enough shampoo in those little hotel-supplied bottles to wash the average male head of hair every day for a week. Household cleaners? When all else fails, try baking soda (see page 113). Paper products? Use real cloth napkins, dish towels, and old rags — not just during the fast but to save money and the environment year-round.

ENTERTAINMENT: You don’t need to spend money to have fun, as you’ll see in Chapter 8. In fact, if you break your fiscal fast by giving in to spending temptations intended to keep you entertained, I’m willing to bet that you’re someone who ultimately leads a very unhappy, unfulfilling life, despite your spending. Am I right? If so, don’t despair, but keep reading; by the end of this book I hope you’ll find your own on-ramp to the Highway to Happiness.

If for no other reason, the impact a fiscal fast can have on your family’s entertainment choices and spending patterns makes the exercise worthwhile. Case in point: Miser Adviser Doug M. says that his family rediscovered “together time” and “simple pleasures” during their first fiscal fast, to the point where they now regularly impose an entertainment-only fast on the weekends, a way of forcing the family to dream up free, fun things they can do together.

“If we let ourselves buy movie tickets, inevitably everyone goes their own way at the multiplex. Same thing with going to an amusement park or renting videos or giving kids their own fun money. The options that involve spending money seem to discourage time together, not encourage it,” Doug M. says. “Just the things we’ve found buried in our garage — fishing poles, ice skates, a badminton set, you name it — have given us days of free fun time as a family. If you limit yourself to using what you already own, it makes you think and actually inspires you to do more, things you’d never think up if all options were available. I think everyone in the family would agree that our best weekends are the ones where we say to ourselves, ‘We’re not going to spend any money on entertainment this weekend.’ That’s pretty ironic, isn’t it?”

Reprinted from THE ULTIMATE CHEAPSKATE’S ROAD MAP TO TRUE RICHES by Jeff Yeager © 2008 by Jeff Yeager. Reprinted by permission of Broadway Books, a division of the Doubleday Broadway Publishing Group of Random House, Inc. All rights reserved.

MORE FROM BOOKS

Books Section Front

A look at intimate moments with jazz artists Ali Vincent on going from fat to ‘Biggest Loser’ Andre Agassi: I have the body of an old man Former Miss California: I was smeared How dog poop led to love for Paula Deen Racing to save Earth’s most endangered species   Harden unveils ‘Big Book of Dreams’ Lupica’s latest book: ‘Million-Dollar Throw’ How one mom learned to translate baby cries Grisham back in ‘Ford County’ for short stories Books Section Front   Add Books headlines to your news reader: