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Video: How to be a cheapskate (and retire early)

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    >>> pennies just to get by. according to the self-proclaimed ultimate cheapskate , there's another benefit. being cheap might lead you to a better earlier happier retirement, his book is how to retire the cheapskate way. good morning. good to see you.

    >> good morning, happy 2013 . the year of the cheapskate .

    >> is it? for you, every year is the year of the cheapskate , right?

    >> right.

    >> let's talk about you say right off the bat this is not a get rich quick book, how to be happy with what you have.

    >> i don't write books how to get rich and how to get happy perhaps with what you already have and when you look at people's retirement dreams and expectations.

    >> talking about retirement, one of your cheapskate principles, as you say, help us live within our 3450emeans but below our means.

    >> it's inextricably important. only about 30% of americans do that including my cheapskates and allows you to live below your means on a 45% basis and allows you to avoid risky last minute investing schemes to maximize your returns.

    >> the basic idea is do things the cheapskate way and put that money towards your own retirement.

    >> become your own cfo, chief frugal officer. you interviewed some of your cheapskates and pretty proud of some of the things they've done. this is stacy , a single mom . here's what she had to say.

    >> hi. i'm stacy barnett from illinois and i am a cheapskate . one of the things i was spending the most money on was beauty products . so i started doing some research online and found not only great cheap products but also products that you can make at home. it saved me so much money.

    >> stacy has a great story. she worked her way out of i think $165,000 worth of debt. what is she doing right? she did. the important thing about stacy 's story is she's finding little incremental ways to save on things that add up over time . do you know if you live close enough to where you work, could washing everyd walk everyday, over the course of your career you'd save half a million dollars during the course of your career and have a great looking pair of legs.

    >> and before you retire yourself, let's listen to what this family had to say.

    >> hey, we're jonathan and sherry from jackson, mississippi.

    >> our retirement plans include being 100% debt free including our house by the age of 40, only four years away and understand how easy it would be to enjoy retirement to the fullest without a big house payment over our head es. we also have ap joint checking account to pay our utilities but use cash for everything including groceries.

    >> they are superstars. can you really expect to pay off your house before you retire?

    >> amen. according to the cheapskates unless you're debt-free, you're really not qualified to retire and how to keep debt out of our lives on an ongoing basis the average adult will spend $600,000 of interest in their lifetime. the cheap skates are spending a fraction of that and live by the rule, if you can't afford it now you simply can't afford it.

    >> let's hear about this family's experience.

    >> hi. i'm dan, am in 69. i'm liz , age 65.

    >> we built and accessory dwelling unit underneath our house, about 900 square feet and a 400 square foot guest cottage. with a regular house on top. i'm building a food garden all around our lot and going to can and freeze and dry food, so i am hoping that we can grow most of it right where we live.

    >> so they're pretty special, they're growing their own food.

    >> first, i have to say, i have a great case of mustache envy with that guy. they're using their time in liz liz 's case to raise food that supplements their budget because it is a passion for them as much to occupy their time as to populate their bank account . the other great lesson is they're leveraging their home to create a rental unit that will provide additional income in retireme retirement.

    >> great ideas. thank you so much.

    >> stay cheap.

    >> the book is called how to retire the cheapskate way.

By
TODAY books
updated 1/23/2013 2:54:23 PM ET 2013-01-23T19:54:23

Jeff Yeager still has a few years until retirement, but says he's been “functionally retired” for nearly a decade. In "How to Retire the Cheapskate Way," Yeager says the key is smart spending. By doing so, he says, most Americans can have a "joyous, worry-free" retirement. Here's an excerpt.

Retirement: The Times They Are a-Changin’

If you’ve thought about retirement at all in recent years, you know the news media are a-buzz with reports and surveys about how the recent recession has decimated so many Americans’ retirement plans and dreams. I’m not trying to minimize the very real, very negative impact that the recession has had on most Americans’ finances. Whether your financial priorities are retirement planning, affording a decent home, sending your kids to college, or just putting bread on the table, the recession has been a major kick to the money groin of most families.

It’s interesting, though, when you look at a number of different surveys (all circa 2011) about the impact the recession has had on people’s retirement planning and expectations. In reviewing three of those surveys in particular, I was reminded of a favorite observation of a friend of mine. He’s fond of telling people (inaccurately, perhaps) that the Chinese word for “crisis” consists of the corresponding characters for “danger” and “opportunity” combined.

Whether or not my friend’s Mandarin is up to snuff, or whether it’s just the sake talking, it strikes me that you can interpret America’s changing trends and attitudes toward retirement in the same way.

At one extreme, you have recent surveys like the Gallup poll mentioned earlier and one commissioned by the National Institute on Retirement Security, which showed that more than 75 percent of Americans feel that the average worker in the current economy cannot save enough on their own to guarantee a secure retirement. That same survey showed that 84 percent of respondents said that the current economic climate had adversely impacted their ability to achieve a secure retirement. Surveys like these clearly paint a picture of the “crisis” Americans are facing—or at least feeling—when it comes to their retirement plans. Then there are a number of other surveys, including a fascinating one from the SunAmerica Financial Group and Age Wave, that look more closely at how Americans are responding to the “dangers” the recent recession has posed to their retirements. In large part, the response has been a marked shift in attitudes and expectations about retirement, almost a redefining of what “retirement” means. Among older workers participating in that survey, 54 percent now say they view retirement as “an opportunity for a whole new chapter in life.” When the same survey asked that question in 2001, almost two-thirds of respondents said they viewed retirement as a continuance of what life was or a winding down of life. The new retirement is one centered around continuing to be productive, making a meaningful contribution in life, and even reinventing yourself.

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In light of those shifting attitudes, it’s not surprising that the SunAmerica survey also showed that 65 percent of respondents said that, ideally, they would like to remain employed (at least part-time) during some or all of their traditional retirement years. Sure, for some, the decision to delay retirement or continue working part-time is not a matter of desire, but rather a financial necessity. But for a majority, it isn’t: 54 percent said they wanted to continue some level of employment during their retirement years for the “stimulation and satisfaction” they get from their jobs.

And, finally, a survey intriguingly titled The 2011 MetLife Study of the American Dream highlights what are some of the “opportunities” emerging out of the crisis known as the Great Recession. It brings us back to the question, What do you really, really want out of life and retirement?

The MetLife study states: “Emerging trends show Americans are less concerned with material issues, and that life’s traditional markers of success do not matter as much today. Rather, achieving a sense of personal fulfillment is more important toward realizing the American Dream than accumulating material wealth. This is a significant shift, as it reflects that Americans value close relationships with family and friends as more important than money, and that being content with what they have and balancing work/life issues are more important than ‘living large.’ Today, material possessions matter less, and personal relationships matter more.”

If that’s true—or at least if it’s true in your own life—then I’m more certain than ever that retiring the cheapskate way is for you. Because I know for a fact that there are far more opportunities for you to enjoy retirement than there are dangers or other barriers keeping you from doing so, despite the crisis we’ve all just weathered. Remember, retiring the cheapskate way is not about sacrifice or deprivation. It’s all about choices.

A LITTLE EXERCISE TO GET YOU STARTED

“It sounds simple, but it really made me think.” Bruce Jackson, one of my favorite cheapskates, whom we’ll visit with in Chapter 6, is telling me about an exercise he participated in many years ago that’s always stuck with him.

Three Rivers Press

We’re having dinner on a linoleum-topped table at a pizza parlor a few blocks from his home in Lewisburg, Pennsylvania (Bruce even bought, after a few rounds of “Two cheapskates go out for dinner . . . ” jokes), and I’m having a déjà vu moment. It’s a flashback to sitting on that park bench with my friend and mentor Bob Johnson. Because the exercise Bruce is recalling is ultimately about “what you really, really want” and—just as important—“what it really, really costs.”

Bruce is right: it is pretty simple, but also pretty interesting. Take out a piece of paper (or several) and just start writing down everything—and I mean everything—you enjoy doing in life. Don’t get bogged down by trying to keep it organized, or profound, or something that will ever be seen by anyone other than you. This is intended as a stream-of-consciousness exercise, not an IQ or memory test. And you don’t need to finish it in one sitting; in fact, keep coming back to it later as you think of more things to add.

Now, once you’ve compiled your list of favorite activities, go through it and put a dollar sign next to every item on the list that costs money to do. If you really want to get fancy or if you have interests that run the gamut from “Dollar Store Cheap” to “Saks Fifth Avenue Expensive,” develop your own system for using multiple dollar signs to rate the relative costs of doing different things on your list.

After you’ve finished, sit back and take a careful look at the whole list. It should tell you a lot about how much money you’re really going to need to enjoy retirement. Who knows, you may even discover that there are not that many items on your list with dollar signs next to them, and that you may already be a lot closer to the level of financial independence you need to retire. That’s what Bruce Jackson discovered when he made his list . . . and decided that he could happily retire at the ripe old age of thirty-nine.

Excerpted from the book HOW TO RETIRE THE CHEAPSKATE WAY. Copyright © 2013 by Jeff Yeager. Published by Three Rivers Press, an Imprint of the Crown Publishing Group, a division of Random House, Inc.

© 2012 MSNBC Interactive

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