Path 5: Cheapskate

Resources on the Topic:

Your Money or Your Life by Vicki Robin and Joe Dominguez
The Total Money Makeover by Dave Ramsey
The Complete Tightwad Gazette by Amy Dacyczyn

This is one of my absolute favorite topics to discuss because it is so incredibly easy and often overlooked. Unfortunately it is also so polarizing and unappealing to some that a new ranking category was necessary. This is the first, and possibly only path to receive a 1 out of 5 ranking for glamour. Fortunately it offsets that lack of glamour by being the easiest path for those slackers in this world. It doesn't require education, it doesn't require hard work, and most importantly your success is nearly guaranteed.

First, this path requires a job, but not a special kind of job. The beauty of this path is that you can actually pick a job that interests you, rather than picking a career for the income potential. Artists, teachers, musicians, zookeepers, librarians and all other career paths that typically sacrifice pay for pleasure still have hope! We have become so caught up in "keeping up with the Joneses" that we often forget how few luxuries we actually need to survive. In addition, your time spent outside of work can be focused on the more important things in life, such as family and friends. These "little" luxuries can often bring more joy into your life than the typical luxuries such as cars and houses.

In addition to some type of income, the next element of this path is to spend one month tracking every expense. This will ensure that you understand where every penny is going and can determine if the expenses are really worth it. When I completed this exercise, several things jumped out at me. I was spending far too much money on beer, eating out, cable, internet, and my car. After realizing that I was spending nearly $700 a year on beer alone, I realized that I had gotten lazy. I reduced my beer consumption(and switched to Keystone!), decided to eat out only one time per week, canceled my cable and internet and downsized my car. All of these changes amounted to a nearly $10,000 per year savings!

In addition to cutting costs by the exercise above, there are many other great things that you can do to reduce unnecessary expenses. Some great examples include clipping coupons, selling unnecessary objects(Do you really need to keep that old video game system?), lowering the thermostat in the winter and vice versa in the summer, and renting out a room. These easy changes can really make a huge difference.

So what is the final goal here? It starts with a paid off place of residence and paid off cars. In addition, you need a decent amount of money in the bank. Usually at least $300,000. With this nestegg invested in some safe investments such as annuities, you should be able to bring home $15-20k per year. This should be more than enough to live your cheap lifestyle. If you need a little supplement, you can pick up a part time job, take surveys online for money (email me for more details on this!), or perhaps use some of your skills to make money (ie. handy man, knitting, blogging, etc.).

While this path won't bring you the cars, boats, mansions, and jewelry that most of the other paths will, it will give you the joy of true FREEDOM! Freedom to do whatever you want, visit your family, and enjoy your time on this earth. Ask any true cheapskate and they will tell you, a little extra free time is more than worth the material sacrifices given up for it.

Good luck, and happy coupon clipping!


Keys to Success:

Minimize. Give up the cars, houses, boats, toys.
Buy Used. It is amazing how much money can be saved shopping on Ebay.com, Craigslist.com, and in local garage sales.
Use Items Longer. Believe it or not, you don't need a new pair of shoes every 3 months or a haircut every 2 weeks.
Take Joy in the Simple Things. Believe it or not, family, free time, and cheap hobbies really are better than material possessions.