Every other Sunday, The Simple Dollar reviews a personal finance book.
I picked this one up at the library because of the title – The Complete Cheapskate sounded right up my alley. I flipped through it, quickly found a long list of frugality tips, and took it home, expecting it to be a compendium of money-saving ideas.
Instead, it turned out to be much more of a general personal finance book, albeit with some interesting claims. The book largely centers around Mary Hunt’s five principles – giving, saving, living debt free, preparation, and restraint, giving each a lengthy chapter of focus.
Is the advice inside worthwhile and typical, or does Hunt add enough interesting material to make it worthwhile? Let’s take a peek and find out.
Been There, Done That: My Story
Hunt opens the book with her own story of personal finance recovery that’s not all that much different than mine – a long chain of bad financial choices leading eventually to a near-meltdown and then a learning period tied to the beginning of financial recovery. From my own experience, I can say that this is a very familiar story – I hear echoes of this story in many, many emails from my readers.
Are You a Good Money Makeover Candidate?
Are you in debt? That’s basically what this chapter boils down to. Hunt offers up a lot of different stories and scenarios that revolve around different personal debt scenarios, but her argument is pretty clear: if you have consumer debt, you need to be looking at making some changes. For the most part, I agree with this – if you’re carrying consumer debt and don’t have enough cash to just pay off all of it right now, there’s a problem and you need to take a serious look at your situation.
Developing Healthy Money Attitudes
Honesty. Responsibility. Emotional control. Openness. Rejection of debt and the need for more stuff without the money to pay for it. Those are the healthy attitudes that Hunt refers to here, and they are ones that all of us are well-served to apply in our own lives.
The Debt Mess
This chapter is really about facing your reality and taking the first step towards resolution of it, which is simply record every single transaction you make, then study them carefully when you’re in a comfortable environment for reflection. It’s a lot easier to see the spending mistakes you’re making (and you are making some if you’re racking up debt) in a more neutral environment with all of the data in front of you.
The Principle of Giving
Mary makes a brief case here for giving away at least some of your income up front – the traditional 10% tithe. While the idea is right, the case she makes is brief and simplistic enough to make it easy to skip over and forget. My personal feeling is that you can’t tell someone to give – giving comes from within. No amount of reminding and cajoling will make someone uncomfortable with giving become a giver.
The Principle of Saving
Here, Hunt encourages people to build up an emergency fund before you do anything else. It not only teaches you the psychological basics of saving, but the emergency fund itself protects you from financially dangerous situations. If you have an emergency fund, for example, a car breakdown isn’t a major disaster – it’s something you can easily handle and then move on with life.
The Principle of Living Debt Free
Here, Hunt makes a strong case for setting debt freedom as your major personal finance goal. She goes through the basics of constructing a debt repayment plan and makes a strong case for debt freedom from a psychological perspective – it feels good to be debt free, does it not?
The Principle of Preparation
A freedom account? The central theme of this chapter is that it’s worthwhile to set up a “freedom account,” a second checking account that you use to pay off irregular bills and also store irregular income as well as a regular automatic deposit from your main checking account. You use this account to handle things like tax bills or insurance payments, things that you don’t normally pay every month, and you get money into this account via a very regular automatic transfer from your normal checking account. A very solid idea – a little bit of a twist on an emergency fund that could prove useful for people who have things largely under control but struggle with irregular bills.
The Principle of Restraint
Budgeting 101 is the name of the game here. Hunt spells out in detail how to construct a functional budget for yourself. This kind of thing appears in most general personal finance books because it can be very important early on during a person’s financial turnaround.
Here, Hunt focuses a bit on three topics: self-employment, negotiating with creditors, and bankruptcy. For me, the self-employment section was the most interesting, as that basically describes where I’m at with my money. Her suggestion is to collect all self-employment income in one account, then write yourself a very regular paycheck from that account. So, if you get a bunch of randomly-sized checks throughout the year, put them all in a special self-employment bank account, then each month take a smaller set amount from that account and consider that your paycheck. A solid idea, indeed.
This chapter is simply thirty five pages of non-stop little tips for saving money. Some of the tips seemed to fly right over my lifestyle’s head (“fire the maid”? Yeah. The maid.), but most of them made quite a bit of sense. Many of these tips are pretty commonly known, but they’re spread around so widely because they work. Turning off your lights when you leave will save you money no matter what, but it’s something that many people forget to do, for example.
It’s Never Too Late
The book closes with the astute point that it doesn’t matter what your stage in life is, you can still apply these principles to your own benefit. A retired person can apply frugality just as effectively as a person in their twenties, and both of them will wind up money ahead by cutting corners here and there.
The book includes a lengthy appendix which consists of a bunch of articles from Mary’s Cheapskate Monthly newsletter.
Some Thoughts on The Complete Cheapskate
The “freedom account” idea intrigued me. It makes a lot of sense for people who are trying to stick to a hard and fast budget but have difficulties dealing with irregular bills. In essence, it’s just a clever way to make irregular bills regular, and it’s a great way to use an online checking account like ING.
The next to last chapter, “Cheap Shots,” is largely what I expected the whole book to be. It was a pretty solid little selection of money saving tips, about fifteen to a page. Based on seeing the words The Complete Cheapskate on the cover of the book, I actually expected a 200 page book that was nothing but these little money-saving tips.
Is The Complete Cheapskate Worth Reading?
The cover and title don’t really explain what exactly The Complete Cheapskate is going to be about. I (reasonably) expected to read a book that was advice on how to compress your spending hard, but instead it was more of an all-around personal finance book with a few somewhat unusual ideas (see above).
Thus, from my perspective, I was disappointed. If Hunt had focused on the frugality and ran with some of the more interesting thoughts, this would have been a really compelling book, one that I would have universally recommended.
The Complete Cheapskate comes off like a gem mine. If you dig around in the dust, you’ll find some really interesting pieces that compel you to give your situation some serious thought or look at things from a new angle. If you don’t put in that effort, it’ll just look like an ordinary cave.
This one’s worth reading if you like digging in for little interesting details, or you like the tone of Hunt’s newsletters and other materials.