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Introduction: The Money Step


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.
—Jeff Yeager, the Ultimate Cheapskate

Rule No. 1: Groceries do not count as Christmas gifts, even if you gift wrap them.
—Denise Yeager, pooooor wife of the Ultimate Cheapskate, giving Jeff the annual holiday gift buying lecture.

Man, money may not be the root of all evil, but it’s a seed that can sprout some pretty nasty shit.
—anonymous barroom philosopher I met in The Bar, Williston, North Dakota, summer 1977, while I was on a cross–country bicycle trip. He was bemoaning the recent breakup with his “old lady,” a rift that grew out of the couple’s winning one thousand dollars in the lottery.


What’s your earliest childhood memory of money?

Close your eyes and think about it hard for a minute, because it's really important. The memory you eventually dredge up may have a shockingly familiar feeling. In fact you may conjure up feelings and emotions that crossed the radar screen of your mind this very day, as you paid for your groceries, wrote a check to the electric company, or shelled out the kid's weekly allowance.

Keep that memory at the very top of your mind as we travel in the pages ahead down some of life’s major byways, byways filled with intersections, with choices. Not just choices about money and how to spend it, but decisions about what you want out of life, what’s important in life, and what money does—or doesn’t—have to do with any of it.

I’ll bet that your earliest thoughts and memories of money are still influencing some of the financial decisions you make today. As you keep barreling down the Road to Riches, convinced, as most of us are, that the intersection with the Highway to Happiness is just around the next bend, it’s worth spending a moment to think about how you got to this point. Like consulting a road map when you're already hopelessly lost, you might be surprised to find out where you really are and that the course you are on is leading you away from your intended destination.

In my case, my earliest memory of money is, ironically, of found money, of a shiny silver dime, probably dated around 1963, when I was five. I found it while playing in our front yard on Summerfield Road in Sylvania, Ohio.

In my case, my first taste of money truly was a taste. By the time my mom sprinted across the yard to see what I was playing with, it was too late. I had already swallowed it. In addition to the spellbinding shine of the coin, I remember the metallic flavor as it traveled awkwardly down my tiny throat. Somehow, through the marvels of the human body and mind, I still get a slight, almost undetectable taste of metal in my mouth at the end of every day when I empty out my pocket change.


Money on the Brain

Like it or not, money is part of our very being. We worry more about money than anything else. We fight with our spouses and families more about money than anything else. We spend more of our waking hours earning and spending money than doing anything else.

In fact I read about a research study a few years ago that showed that people think about money an average of fifty–five times a day. That immediately caught my attention, as I also remembered reading about another study that showed that people (or, rather, men) think about sex an average of every fifteen minutes throughout the day.

When you combine the results of these two studies and subtract out of a twenty–four–hour period the number of hours spent sleeping and the hours spent thinking about nothing at all, if I’ve done the math correctly, you discover something startling. Not only do most people think only about money and sex, but a good deal of the time men are thinking about money and sex simultaneously. On second thought, I guess I don’t find it that surprising.

So with thoughts of money dominating your every waking hour and encroaching on every aspect of your life, you pick up a book about—what else?—money.

But unlike most personal finance books, this book is not about how to make more money. This book is about how to make less money, but how to be happier than if you made more. It’s about how to make money less a part of your life by spending less, so that you can enjoy life more. And it’s not so much about finding the best values in things—although it provides some good advice in that regard—as about valuing the best things, which usually come without price tags.

Most of all, this book is about choices, not about sacrifices, as my moniker, the Ultimate Cheapskate, might make you think. It’s about the choices we make every day about earning and spending money and the priorities we set for ourselves on the basis of those choices.


The Money Step

Ultimately each of the choices we’re going to look at in this book—whether it’s what kind of house you should buy or whether you have enough roughage in your diet—is a choice involving the Money Step.

The Money Step is the little dance of earning and spending we do pretty much every day of our life. It has three beats, like a waltz:


Earning money
To spend money
To get what you want
[…or at least what you think you want]


The Money Step has become the default setting for the world we live in today. It’s now the rule, not the exception. We unconsciously, or consciously, take the Money Step when doing almost everything we do. The idea of getting what we really want by reducing or even entirely skipping the Money Step—a comfortable house without an uncomfortable mortgage, strong health without ever buying a gym membership, the ability to sleep nights knowing that we’re debt free—is a concept so out of vogue in our society it’s nearly extinct.

As we’ll see, questioning the Money Step is as much about deciding what you truly want and need as about deciding how best to get it. By the end of this book I hope you’ll start to question whether the Money Step should continue to be the default setting in your life. And throughout this book, as we look at different big–ticket items in the typical family budget, I encourage you to keep one key question in mind: Can you and your family skip, or at least limit, the Money Step and go straight to the real prize?


The Allegory of the Ax and the Basketball

I first came to appreciate—indeed fixate on—the Money Step during my twenty–five–year career as a CEO and fundraiser in the nonprofit sector. Operating in an environment where money is always scarce and goals are rarely measured just in dollars, I spent my days finding creative ways to avoid, or at least mitigate as much possible, the Money Steps that stood between my organization and the mission it was created to serve.

You might say that my vocation as a nonprofit manager was achieving success without the use of money, or at least without a lot of it. “The nonprofit sector is fortunate to be immune from economic downturns,” I used to tell my staff, “because in the nonprofit world, the economy always sucks.” Much of what I learned during those years rubbed off on my personal life and finances, or maybe the other way around, making my transition to the Ultimate Cheapskate a natural one.

But looking back on it now, I guess I should have grasped the concept of the Money Step years before, as a result of a horrifically embarrassing incident in my youth. The symbolic significance of the episode was lost on me at the time, but I now understand and deeply appreciate the prophetic importance of what I call the Allegory of the Ax and the Basketball.

When I was at the age of sixteen, an age not associated with great wisdom, yet one at which you’ve presumably learned something about the basic laws of physics, my brother, Joel, and I were chopping firewood along the banks of the Maumee River in rural Ohio. The winter ice had just broken, and with the spring melt the water was running high. The driftwood was piling up along the shoreline faster than we could cut and split it.

If you’ve never witnessed an ice breakup on a river of any size, I can tell you it’s a powerful event. Foot–thick chunks of ice churned down the riverbed, sounding like a crushed ice dispenser on the door of an expensive refrigerator. The ice flows packed so much speed and power that occasionally they’d pitch a live catfish or sucker out of the water and onto the shore. You couldn’t live on a riverbank as we did and not mark the year by the day the ice breaks.

When the ice breaks up, it pushes anything and everything downstream—not just driftwood but flotsam and jetsam of all kinds. Growing up, we’d seen it all: pontoon boats, beer kegs, duck blinds, ice chests, furniture, oil drums, refrigerators, a travel trailer, and our most prized recovery, a store mannequin with lifelike breasts (or at least we thought so at that age). This particular day the pickings were a little slim, but a plump basketball eventually came along, just close enough to the shore that we could wade into the icy water and pull it in with a long stick.

Although my brother and I both are well over six feet tall, we are Yeagers and thus far too uncoordinated to actually play basketball. We had little use for the newfound treasure, despite the peril involved in rescuing it. We took turns hurling the ball at each other, bouncing it off some rocks and trees, and we'd all but lost interest in it when my brother had a proposition for me.

“Hey, Gook [his brotherly term of endearment for me], I’ll give you five bucks if you can chop it in half with the ax,” he said, pointing at the basketball. To reinforce his point, he produced a soggy five–dollar bill from the pocket of his blue jeans.

“What is he, crazy?” I thought. “Easy money!”

Without a second thought, I picked up the ax, swung it high above my head, and brought it down on the basketball with all my heft. I wasn’t just going to chop it in half; I was going to obliterate that thing.

Frankly, it never—even for a nanosecond—occurred to me that the basketball might withstand the blow of the ax. All I was thinking about at the time was what I would do with the money and how good I’d feel pulling the five–spot out of my brother’s hand. I was so focused on the money that the possible consequences of the endeavor never crossed my mind.

Gosh, telling the story now, I feel so stupid. Of course the ax didn’t puncture the basketball, and since I’d swung it with such passion, the force of the ricochet redoubled off the taut ball. The ax rebounded instantaneously, the flat back hitting me squarely in the forehead, right between the eyes.

I staggered backward, my lanky teenage frame reeling. My vision blurred as if I were suddenly inside the lava lamp in my bedroom, looking out. The last thing I remember before I passed out and fell to the ground was the sight of my brother falling to the ground first, bent double in a fit of uncontrollable laughter.

After I came to—well, actually, about thirty years after I came to—I realized three important things about this spectacularly stupid incident:


1. I assumed that getting the money would be easy.
2. The possible consequences of trying to get the money never crossed my mind.
3. Because of No. 1 and No. 2, it never occurred to me that maybe I shouldn’t try to get the money, that I should skip the Money Step.


Does any of that sound familiar? Maybe it even hits you right between the eyes?

But where does that leave us as we lead our lives in this era of abundance, with unlimited opportunities to chase after more money and a perennial search for genuine happiness? If more money and more stuff aren’t the key to happiness, is it possible, as I learned when I brought that ax down on the basketball, that their pursuit might actually lead us to greater unhappiness?


Money: It’s Not All It’s Cracked Up to Be

If money talks, then it tells a lot of lies. That’s not just the conclusion I’ve come to in my own life, the reason I’ve decided to embrace rather than shun my Inner Miser, but it’s a conclusion supported by the experience of an increasing number of the superrich, like Bill Gates and Warren Buffett, as they strive to rid themselves of at least some of their wealth. Talking about his ranking as the world’s richest man, Gates said, “I wish I wasn’t. There is nothing good that comes of that.”

Researchers who study such things report that when it comes to the relationship between wealth and happiness, there’s not much to report. There really isn’t one. Daniel Gilbert, a professor of psychology at Harvard, writes in his thought–provoking book Stumbling on Happiness (Alfred A. Knopf, 2006):


Economists and psychologists have spent decades studying the relation between wealth and happiness, and they have generally concluded that wealth increases human happiness when it lifts people out of abject poverty and into the middle class but that it does little to increase happiness thereafter…It hurts to be hungry, cold, sick, tired, and scared, but once you’ve bought your way out of these burdens, the rest of your money is an increasingly useless pile of paper.


My experience as a professional fundraiser dealing with some extremely wealthy people convinced me that Gilbert and other social scientists speak the truth: There is no relationship between wealth and happiness beyond some point just north of the U.S. poverty line. In the nonprofit sector, perhaps more than in any other area, you get a chance to interact with both extremes of the economic spectrum, very wealthy donors and very needy clients. Even though it’s a purely anecdotal observation, I can tell you that the multimillionaires I’ve met have generally struck me as less joyful than lots of folks I’ve encountered on the other end of the teeter–totter and as usually much less content than most of us in between. I think Ben Franklin nailed it: “Who is rich? He that rejoices in his portion.”


Enough Is Enough

How much money do you want? That’s the question I asked time after time as I spoke with people while writing this book. That’s the question I want you to ask yourself right now. Forget about whether it’s an attainable amount or a rational goal, and answer it as you would a word association test, with the first thing that pops into your mind. (If you’re a guy, I know that it’s hard to see past the naked ladies dancing on the stage of your frontal lobe, but go ahead and try.)