Cheapskate Answers to Your Money Questions

When you write about personal finance for a living, lots of folks ask for your advice about their own money issues and problems. That places me in a difficult position because, while I’d like to help, in many cases there are just too many variables when it comes to offering good financial advice to people I barely know. And then there’s the “How dare you!” factor. That’s especially common when you primarily give advice about the spending side of people’s finances, like I do.

How dare you tell me I shouldn’t buy a new Lexus, and pay off my credit card debt instead? I have a reputation to uphold!”

How dare you tell me that my kid should live at home and go to the local community college for two years, rather than the out-of-state school she wants to go to? It doesn’t matter that I never set up a college fund for her, because student loans are easy to get!”

How dare you tell me I should cancel our cable service, even though we’re living paycheck to paycheck? What are we going to do for entertainment?”

>> 10 Consumer Spending Regrets

You get the idea. Apparently, everyone wants to know how to reduce their spending without, well, spending less.

Yet the frantic questions keep coming, which is no surprise given the results of a new survey I just stumbled across. The survey, conducted by the personal finance website GoBankingRates.com, examined people’s greatest fears in life and found that more people are scared of living paycheck to paycheck, falling into debt or becoming homeless because of financial ruin than are afraid of dying! When asked how often they worry about money, 1 in 3 respondents said “all of the time,” which was the single most common response. With so much anxiety, fear and stress over personal finances, it’s no wonder so many people have so many questions. Now, if they’d only listen to the answers.

>> Get discounts on financial services with your AARP Member Advantages.

Whether or not people agree with my cheapskate advice, I love to dole it out in special Q&A episodes of The Cheap Life, the weekly Web show I host for AARP. Check out this week’s Q&A, in which I respond to viewers’ questions about preparing for retirement, going on a weeklong “fiscal fast” and, one of my all-time favorite questions, “If everyone becomes a cheapskate like you, won’t the world economy collapse?”

Leave me your questions here — if you dare — and stay cheap!

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7 comments
jbolyard55
jbolyard55 5pts

I'm on the same page as Gorm50. I have a tidy sum in my IRA which is earning a meager 1.25 %, and would like to earn more, but at age 59.5, I'm not sure the market is the place for me right now. I've seen certificates with rates as high as 3%, but they tie up your money for 6-7 years. I would like to grow my nest egg over the next 4-5 years safely and still have access to it if needed. As a long term investment vehicle, some conservative mutual funds look attractive, but I'm still concerned about an overdue correction. Any general advice or insight would be appreciated.

Gorm50
Gorm50 5pts

Personally, I believe this equity market severely overvalued, especially given the state of ailing major economies, ie Japan, Europe and China, geopolitical threats, demographics, and DEBT.   To that end many seniors have chased yields into emerging markets, dividend stocks and bonds - all which could suffer horrific losses with the next correction, which I believe has been inflated due to artificial Fed stimuli,  meddling.  Please name some candidates for safe and decent returns?

goldye
goldye 5pts

Love the "How dare you" statements which is why I'm happy now.  My family was one of "those people" who lived poor sacrificing vacations, entertainment, expensive toys, even buying a house.  We were scorned for having a boy & girl share a bedroom, renting an apartment, living in a "bad" neighborhood, etc.  Truth is, we could have lived a more expensive lifestyle but the cost would be I would have had to work instead of being a stay at home Mom for 13 yrs. & we wouldn't be able to retire as early as we did (60 & 65 yrs.) 

Today, I can enjoy making fun of and smirking at all the "How dare you" people whose priorities were screwed up and insisted on taking care of their families wants instead of preparing for their future needs.

Wake up people and here's the reality check you should have learned 30 yrs. ago:

1.  There is NO financial aid or student loans in retirement!!  Parents who want to help their kids with college expenses or post college if their kids are unemployed - you better be contributing to your retirement accounts first BEFORE assisting your children.

2.  There is nothing wrong with attending state or lower cost universities if that's all your child can afford.  The exception to this is if your child has a guaranteed job earning $100,000. after graduation OR as in our case, we rented an apartment in a top school district & my son earned 90's + scored high on 3 AP exams.  This qualified him to receive $25,000. in scholarship money at an Ivy League  university.  Our daughter went to a local public college.

3.  From the day you say "I do" then start a family, you should be contributing 15% to your retirement, 30% to housing, 10% to your kids college fund, 10% to monthly bills, 10% to food, 10% to clothing & 15% to all other expenses.  If your income is short to meet these percentages, then you need to reduce your expenses - nothing is wrong with renting vs. owning a home.  Nothing wrong with owning a used car instead of buying new.  But not contributing to your retirement or kids college fund is plain stupid.

2Papa
2Papa 5pts

Most people just can't overcome their desire for material "things".  Like Will Rogers said, "A lot of people spend a lot of money to purchase things they don't necessarily want, to impress people they don't necessarily like".

InsertCleverNameHere
InsertCleverNameHere 5pts

The "how dare you" statements were hilarious.  Never underestimate to what extent pride wins out over logic with some folks when it comes to managing money.

mm8635
mm8635 5pts

Those numbers all subjective. I say get your house paid off, then have zero for housing.