Talane's Coaching Tip for the Week.

ook Review:
The Ultimate Cheapskate's Road Map to True Riches: A Practical (and Fun) Guide to Enjoying Life More by Spending Less
by Jeff Yeager
This summer I read the both hilarious and very sensible book by Jeff Yeager, The Ultimate Cheapskate's Road Map to True Riches: A Practical (and Fun) Guide to Enjoying Life More by Spending Less (Broadway Books, 2008).

Yeager prides himself on being a cheapskate and has been known to not only take his own leftovers home from a dinner out, but also the leftovers of his dining companions! While I'm not prepared to go that far, especially since I don't have a dog as an excuse, he does have some excellent points and the book is a funny and inspiring read with quotes like these sprinkled throughout the book:

“I always stay at the cheapest hotel, so I was surprised to find a mint on my pillow in the evening. Turns out it fell out of the mouth of the guy who slept there the night before.”

“If I hear one more financial pundit tell me I can put my financial house in order simply by giving up a four-dollar cup of Starbucks coffee every day, I'm going to force him to listen to his own audiotapes while I show him photographs of Suze Orman's face photo-shopped onto Halle Berry's body....These types of painless savings schemes appeal to the same people who want to believe that they can get abs of steel by wearing magnetic belts.”

The chances that you will actually take that four dollars you saved from that cup of coffee and invest it at 8% are pretty slim. Yeager points out that if you get the big financial equations right in the first place, you can have as many designer cups of coffee as you want (not that he would ever bring himself to pay that much for a cup of coffee in the first place)! As Yeager says, “In real life it's too easy for the four dollars you saved by not buying your latte this morning to morph into an extra pizza topping this evening.” So true!

He has six golden “nuggets” on getting the big equations handled, for example: One of Yeager's rules is to live within your means at thirty and stay there. How do you do this? First, buy a “starter” home you can live in for the long haul and stay there. So many people have gotten into financial ruin by always buying a bigger house with bigger payments whenever their income increases. They never get ahead as they keep increasing their spending to match their increase in income. In contrast, Yeager bought a “starter” house in a lovely area and has done his own home improvements and extensions over time. (I'm not one bit handy so I hire people to do that sort of thing!) As a result, he has stayed in the same home in a good neighborhood and it has increased in value over time while he has pocketed any increase in income right into savings. And, he also bought a house that he could pay for on his income alone and saved his wife's income. When she wanted to quit her job, he said, no problem because they had been living on one income all along and saving hers. My husband and I do the same. We live on his income and save my income for holidays and retirement savings. Clients of mine figured out that they could be financially independent in ten years if they could live on one income and save the other. A goal well worth going for! The key is to find a lifestyle you are comfortable with and then stay there. Don't keep raising your expenses as your income increases. One of my favorite quotes from Quentin Crisp sums this up:

“Never try to keep up with the Joneses. Drag them down to your level. It's cheaper.”

Another Yeager nugget is to never underestimate the power of not spending. Yeager says, “Spending less is rarely, if ever, a bad thing to do.” He recommends going on a spending fast which I heartily agree with because it is the same advice I've given in my book Coach Yourself to Success—going on a money diet. For thirty days don't buy anything other than groceries and basic essentials like toilet paper and even then you should stock in advance so that you can live without spending for 30 days. Anything that you feel compelled to buy goes on a thirty day list. After thirty days you can review your list and see if you still want those items. I find that either the urge to have it passes in that time or that I never really wanted the thing in the first place or I attract it for free (someone gives it to me). Just this weekend I cleared out all my daughter's old clothes and the drawers were pretty empty and I thought I might have to go out and buy them some new clothes when my friend came and dropped off a huge bag of clothes her daughter had outgrown. I don't need to buy a thing now! Not spending may in fact be a much more effective way of increasing your wealth than trying to make more money.

Yeager points out that the exceptions to his rule that “not spending money is a far more powerful tool for achieving financial freedom than all the books ever written on the subject of how to make more money.” He points out that most people make their money by selling their time, not by investing or leveraging their money or using it to launch a business. And therefore, for the vast majority, spending money is the fastest way to lose money. Right on!

I heartily recommend Yeager's book—full of practical advice and loaded with humor and a strong message to focus on the things that really matter in life—spending time with your friends and families and doing the things you love.

Enjoy!
Talane

P.S. Here is the link to his book if you are interested ... Jeff Yeager, The Ultimate Cheapskate's Road Map to True Riches: A Practical (and Fun) Guide to Enjoying Life More by Spending Less (Broadway Books, 2008)