I would consider myself a frugal person. I live well within my means and never make a purchasing decision without painstakingly going over the details to make sure I really “need” the item and that I am getting the best absolute price. However always looking to save money can lead you to tread a fine line when it comes to being frugal vs being cheap OR being frugal and being unethical or even worse. I want to discuss some of these borderline issues, give examples of where maybe I stepped over the line, and hopefully get some feedback from my readers as to where they think the line is on these issues.

Giving to charity (Frugal vs Greed)
I know this one personally has been a tough one. Not that I’m greedy and want to keep all the money to myself, but I often find myself having this little argument in my head in regards to giving now or giving later. Always goes something like yeah I can give a little bit now, but maybe it would be better for the charitable cause that I take that money and invest it myself and because I’m such a great investor I will be able to give them LOADs more money down the road after I’ve achieved my financial independence (part of which would include having ample money to give away to causes I so choose). I mean why give a couple hundred dollars now when down the road I could give them tens of thousands of dollars. I mean do you know how valuable a dollar is at my age is?

It’s not clear cut but if I took an honest assessment of myself from afar I might come to the realization that I’m being a little greedy in many of these situations. Don’t get me wrong I give to charitable causes, am a Lion, volunteer at church, give to my church and its school, but probably not as much as I have the means to do. FreeMoneyFinance has touched on this subject a number of times and depending upon your belief system I think he’s got a pretty definitive answer.

Another problem I sometimes have giving cold hard cash to charities is that I have it hard grained into my mentality the value of a dollar and I always want to get the most value for my dollar. As you know lots of people don’t share this ideology and it’s frustrating sometimes giving money to an organization where they in turn use it to purchase something and well don’t use the money wisely and end up over-paying or purchasing the wrong thing for the need. It’s probably because I am a control freak with money but no matter what the situation I want to make my dollar go as far as possible and sometimes I have trouble giving up that control.

I’m not exactly sure where the frugal vs greed line is when it comes to charitable donations, but my guess is in many cases I’ve probably crossed that line. Yes I give much of my time and money to charitable causes, but probably not as much as I could and probably could do better in the cold hard cash versus providing my services and time (see FreeMoneyFinances thoughts on this subject too)

Ethics (Frugality vs pushing the ethical envelope)
This topic can span many different areas, but how many times have you done something unethical or illegal just to save a buck. Obviously I’m not talking about robbing a bank or walking out on a check at a restaurant, but little things that well lots of people do and well for which you have a little chance of being caught. Are you being just resourceful or are you acting unethical?

Examples:

How many of you have “borrowed” the cable from the cable company without paying, or got a hacked DirectTv card, split DirectTv with a neighbor, “borrowed” the neighbors wireless internet? I’m sure many of my readers have probably done this at one point in time in their life. The price those cable/satellite/phone companies charge is ridiculous, so you find a work around. You probably won’t get caught and you are saving money in the process. Frugal or unethical?

Here’s one that I’ll be shocked if a majority of my readers haven’t done. How about downloading mp3s from the internet. I’m sure just about everyone at one point in time has had kazaa, limewire, napster, etc. installed on their computer so they could download songs, movies, etc from file sharing networks. Saves you money but is it crossing that line?

How about pirating software. It’s not that hard, especially for us tech geeks. Why pay $500 for Microsoft Office when I can go download a key off the internet?

How about those tax deductions? Have you ever made a questionable deduction? Pushed the envelope a little far to “fully take advantage” of the tax law? Is working a loophole (even if it’s perfectly legal) just being frugal?

How about piling as many promotions and coupons together as possible to get the best deal on a product? I know some sites out there are great and finding the best deals and using crazy combinations of coupons and promo codes to get you the absolute best price, even if it wasn’t the store or manufacturers intention that you were able to it. Just taking advantage of the system to save a buck, it’s their fault if they didn’t think it entirely through, right?

What about those 0% balance transfer offers? Does the bank really want to give you that money just so you can deposit it in a savings account reap the interest for a year and then pay off the card and cancel it. What about working the system like this? Is Jim being resourceful or unethical? – notice the first comment on that post 🙂

I’d have to say in the past I’ve probably swayed more on the aggressive side of the scale to save a buck, but in some of these cases it’s not exactly clear cut. Taking advantage of those poor banks, I mean come on the things that they do to poor people in debt and the interest they charge them is probably one of the most unethical things you can do, stick it to them at their own game, take advantage of the system while you can, right? What if it wasn’t some big faceless money grubby bank? What if it was some local mom and pop shop in your city who donates lots of money to charity, is it ok to work the system in that case too?

I guess what I’m saying is if you are really frugal it’s probably pretty tempting to put the ethics on the back burner for a bit while you save or make yourself some money. Certainly some of my examples above are pretty low-key and some probably aren’t unethical at all. At the same time some of them certainly are illegal and some people would never dream of doing some of them, on the other hand many people would and do. Which one’s from my list are ok?

Frugal vs Cheap
Then there is the whole frugal vs being just plain cheap argument that I won’t get into too much here, but I will just point out that the better you get at being frugal the closer you come to being cheap. You get in such a regimen of saving money that it gets out of control and all of a sudden you are taking advantage of friends and family and their pocket books just because you have become cheap and greedy with your money and won’t spend it for any cause.

I think that I could maybe put some perspective on my view of where the line lies in being frugal vs cheap. In my opinion being frugal means being smart on what you spend your money on and making sure that you get the most bang for your buck and as much money as possible is going towards things that are truly important to you and your family, without hurting or embarrassing other people that are important to you.

At the same time when I’m at a bar with some friends and I normally wouldn’t be there paying $4 a drink if I had a say in the matter, but want to spend some time with friends. People offer the buy you a drink and you don’t want to be rude and accept, but am I that cheap meiser who doesn’t buy a round of drinks later just because I’m cheap…err I mean frugal. I know I’ve struggled with this one in the past. I’d probably says it’s being more cheap than frugal at this point, especially if I accept their drinks, but damnit the bars are such a huge waste of money and I’m not a huge drinker so why should I subsidize my buddies expensive drinking habits all night. If getting shit-canned at the bars is what is truly important to them and what they want to spend their money on by all means go ahead, but I’m saving my money for my early retirement. Again I’m usually not this guy, I’m not cheap, I’ll spend money in these situations, but sometimes it’s not easy when you got the frugal mindset and sometimes I think I could be the cheap guy.

Anyway sorry this post got so long. Probably should have split it up, but I’ve never finished a multi-part post in my career so I didn’t want to start another one. So what do you think, where is the line. How ethical are you. Does your conscience outweigh your frugality or does the almighty $$$ win out?