Frugal vs. Cheap

In the great transition from Clueless Consumer to Badass Mustachian, a person must first overcome a significant obstacle: the perception that Frugal, Cheap, Tightwad and various other words all mean the same thing, and that they are all nasty conditions that we should try to avoid.

So I’ve been meaning to lay down the law on this issue for some time. If you’ve read “Frugality is the New Fanciness“, you know that being frugal just means displaying some skill and good judgement in the way you spend your money – and thus it is a mark of status far greater than conspicuous consumption. Only about 1/300th of the US population has read that particular article so far, but once they do, our country’s desire to show off by making unnecessary purchases will be cured. No problem.

But that still leaves the issue of cheapness to be dealt with. What about Ebenezer Scrooge? What about the new reality TV series that a reader forwarded to me called “Extreme Cheapskates“?

Since you’re probably too busy to watch the actual video, I’ll give you the executive summary: In the linked episode, an unfortunate-looking man with really bad hair is profiled in his various money-saving adventures around town: scraping food off of the plates of other restaurant diners, asking for extra ketchup packets so he can refill his ketchup containers at home, and washing and reusing paper napkins, which he leaves hanging all over his kitchen.

Peppered throughout the show are voice-overs like “Roy estimates that over the last ten years, he has saved nearly $2000 by reusing paper towels”*.

Now, I’m not one of the standard douchebag consumers who derides any attempt to save money as pathetic. I’ve read plenty of misguided shit that internet commenters have made about my own lifestyle, and it is clear that the complainers do not get it. So I suspect that Roy is actually having a pretty good time with his little tricks, and whether his math is right or not, he’s doing pretty well overall.

But I would also guess that anyone who follows his lead might suffer severe social stigma for being “cheap”, and for many of us that is not an acceptable outcome.

Being cheap works perfectly well for many people. If you’re older, safely protected from the dating world from within the confines of a long-term relationship, and employed in a field where the cheapness doesn’t hold you back, you’re set. As your age and wealth grows, you may naturally give less of a shit about any irrational preferences of younger society.

But I’ve made the entire journey from teenager to greybeard with a strong appreciation for the value of money, but an even stronger desire to be part of society, to have friends, girlfriends, fancy jobs, and some social status. For better or for worse, I like being part of a social scene, and while I have no problem with doing things my own way, I try not to let my quirky preferences get in the way of these lifestyle goals.

Imagine a high-school or university student who is in a rich city and looking for love. In this situation, squeezing out ketchup packets, wearing stained green 1980s sweatpants from a thrift shop, or refusing to go out on the town with friends can seriously cramp your chances of success.

Or perhaps you’re a young professional worker in the financial industry. If your boss and coworkers wear crisply ironed blue shirts and suit jackets around the 54th floor office, while you insist on freebie conference t-shirts and Wal-mart jeans, your cheapness is not helping you get ahead.

Even in married life, canvassing the tables of the other restaurant diners to ask if you can take home their leftovers while your wife covers her eyes in shame, is an exercise in penny-wise and pound-foolish behavior.

But yet, there are other ways where frugality (rather than cheapness) is a win/win situation: the student who walks to campus instead of driving, or the finance professional who foregoes an expensive wine-collecting hobby, or the married Mustachian who lifts weights in his basement instead of joining the $200 per month health club downtown can save money with frugality without suffering any downside.

What makes the difference between frugal and cheap? Mr. Money Mustache has some guidelines to help you walk the fine line.

It’s (almost) all in your Mind:

Many of the worst spending addicts are buying things because of purely imaginary fantasies about the social status they will get. A specific brand of $400 purse or a Mercedes GL550. At this level, they are well beyond the lower threshold of what is required to fit in socially, and may even be popping out of the other end of normalcy, where people will wonder why the hell they buy such expensive stuff. I know several CEOs of multimillion dollar companies who are perfectly content to be seen in a Honda CR-V, and plenty of fashionable Los-Angelesy people who do not follow fashion brands at all. The key is that these people still understand social norms, but they are confident about not needing to stand out at the high end of them. And that confidence earns them far more respect than expensive products could ever attract.

Frugal does not mean Owning Mostly Crap:

A cheap person may live for decades with the sorriest old fridge he could find on Craigslist. A frugal person might have a relatively new and even rather luxurious fridge, and yet spend less money owning and operating it. Similarly, the frugal person might own a more expensive bike or pair of shoes. The key to this counter-intuitive trick is to factor in things like energy consumption, longevity, time saved by owning a more effective product, and even life satisfaction derived from having a few very good things that you use every day. Frugal people still get to own and enjoy top-quality assets, tools, and investments.

Don’t spend excessively on yourself, but don’t be afraid to spend on others: 

When you’re on a first date or out with friends, it may be perfectly appropriate to pick up the tab, spontaneously buy pitchers of beer, and otherwise burn off a week’s worth of grocery money in four hours. And do it without worrying a bit, because you know you can afford it in the long run. If you do it right, you’re buying experiences you’ll remember for a lifetime and building friendships of similar longevity.

The key is in what you do between these lifetime experiences. If you attempt to re-create them in the same way every weekend, you’re just building your career as an alcoholic. If you also pamper yourself with iPads, massages, and salon haircuts on the off days, you’re just creating a person who needs Pampers. So you can selectively spend to capture those fleeting Good Times… but live more like a spartan warrior when nobody’s around.

Make fun of Yourself, but don’t Embarrass Others:

On a typical day, I can be seen biking around town in a paint-splattered lumberjack shirt, patched jeans, and work boots, pulling a bike trailer full of groceries and/or power tools. To me, it feels more showy than a Mercedes, because I’m out riding in the sun while everyone else works. But the Mercedes drivers passing me may think I’m an unemployed hooligan. Occasionally, I’ll show up at the school to meet my son in this condition, and I find the other parents are dressed in their office worker or doctor or teacher clothing. Nobody seems to care at all, and I get a huge running hug from the boy when I arrive.

On the other hand, if I had a teenage daughter giving the valedictorian speech at the high school, I might not show up in my painting clothes. And at a restaurant, I never ask strangers for their leftovers, no matter how yummy they might look. It’s because these actions would embarrass others, and so my frugality would be inflicting pain on others even if I enjoyed it myself. It would become cheapness.

Use Social Responsibility as a Guide:

If you forego German SUV ownership, you’re not hurting society. In fact, you’re probably helping by eliminating a bunch of mining and fossil-fuel burning. On the other hand, if you dump your trash in the forest to avoid paying the city’s garbage fees, or haggle endlessly with the manager at the big-box store to get things for free, you’re not helping anyone but yourself.  Canceling TV service and taking up the more productive hobby of reading library books is Frugal. Saving the same amount of money by voting down property tax funding for your local school system is Cheap.

Physical fitness is a nice Substitute for style:

As a close companion to the first point about mental conditioning, comes the issue of your physical form. If you’re already so confident about yourself that you don’t care what the outside world thinks, good for you – you can skip this step. But for the rest of us who could benefit from a reassuring ally in life, solid physical fitness is a nice one.

Although it is a form of discrimination, fit people are considered more attractive in our culture, and attractive people get hugely unfair benefits in all areas of life. Dating, business hiring and promotion, and even presidential elections are strongly influenced not just by how competent people are, but also on the purely physical impression they make. You can totally game this system just by giving yourself a generally athletic form. The boost in self-confidence combined with the actual change in how other people view you can create a virtuous circle. You will earn more money, even as you can confidently get away with more Frugal tricks without taking shit from your friends and coworkers. And all this shallow appearance stuff is of course just the icing on the cake of living a longer and more energetic life in general!

Artsy-ness Makes Cheap Stuff Cool:

My mom is an artist and my younger brother is an indie rock musician. They’re creative and eccentric and great, but they don’t make a lot of money with that talent. So both of them have scraped by for many years on incomes that most people would consider inadequate. But when you visit them, there is not a sense of cheap deprivation in their homes… instead there is just really interesting coolness. Bizarre found objects get adopted and shaped into stylish pieces of artwork, unsightly nooks in an old brick wall get painted and become chic shelves you wish you had at home, and scribbly drawings and tour posters somehow work just right for the audience. I’ve seen my brother, wearing old thrift store discards and 1980s pinstriped suit pants, rock a packed venue of hipsters until tears streamed from their eyes. The lesson is that artistic expression is an excellent substitute for using money to be appreciated.

Choose Wise Friends, not Vacuous Consumer Drones:

Although these tips are designed to keep you on the good side of society as a whole, you can also fine-tune the crowd with whom you choose to hang. There are still some circles of people caught up hopelessly in consumer lifestyles – those who jet out for trips to the shopping mall between episodes of reality TV shows. But luckily, there are plenty of people who are not like this, and they want to be your friends too. The battle to maintain a better lifestyle will be much easier if you pick the right crowd.

So let’s draw a line between frugal and cheap. You can be as badass as you want about frugality, and yet you can still shed society’s scornful comments about what it means to be cheap, all while being confident that you are doing the Right Thing.

*which sounds like bad math to me. Would you really spend almost $200/year on paper towels? I probably spend less than $10.00, and that includes a few bucks for washing and replacing luxurious dish towels and cloth napkins as needed.