Thursday, February 5, 2015

Leaving a good tip - frugality meets generosity

"I'm all about the family budget, and being frugal, and not wasting money when you can put it to better use somewhere else. I realize that a tip is not a specifically agreed upon amount; it's a zero sum transaction where every dollar you choose to leave is a dollar the waiter gets and you don't have anymore. But here's the thing: Don't be a cheap bastard."

You've had a good week, the kids did well in school, and you want to take the family out to dinner. You know the budget's tight, but you decide it's worth it, so you load everybody in the car and head out to Applebees.

tipping after a restaurant meal
image credit:

Before you even get to the restaurant, you know you're conservatively going to spend $10 per person on food, $1.50 per person on drinks, and add in about 8-10% for tax. That puts you at about $50 for your family of four. And then comes the big question:

How much should you tip?

Before we answer that question, let's talk for a minute about the whole restaurant process in America. We have an unspoken and unwritten agreement with the restaurants regarding our meal:

  • Restaurant will give us a place to sit down and eat our meal.
  • Restaurant will provide us with high quality food prepared in such a way as to comply by all FDA and EPA standards.
  • Restaurant will employ staff to keep the premises clean, prepare our food, and manage the process of who gets to eat when and where.
  • Restaurant will employ Waiters, whose job is to help facilitate our enjoyable dining experience.
  • Restaurant will pay a portion of Waiters' wages.
  • We will pay Restaurant a pre-specified and pre-agreed to amount, after we're done eating.
  • We will pay a portion of Waiters' wages, in the form of a tip and in an unspecified and not pre-agreed to amount, after we're done eating.
  • Restaurant will clean up our table and wash our dishes after we leave.

The part about the tip being unspecified and not pre-agreed to is important. You can walk out of the restaurant without leaving any tip at all, and no one will call the police. Conversely, you can leave $1,000 for the waiter, and he won't have any obligation to chase you out to the parking lot and tell you that you left too much.

The part about the waiters' job being to help facilitate your enjoyable dining experience is also important. We've all had waiters who are extremely friendly, attentive, and helpful. We've also had waiters who are not-so-friendly, forgetful, or who downright ignore you. And of course there's everything in-between. I don't believe they all deserve the same amount of a tip, and I'm happy to leave more for a good waiter and less for a bad waiter.

But that still doesn't tell me how much I should leave...

15% is a generally accepted rule of thumb guideline - if you leave 15% your waiter won't be overly excited, but he neither will he call you names behind your back after you leave. I know people who routinely tip 20-25% (which seems very generous), and I've seen people leave 10% even after excellent service (which felt embarrassingly low).

I don't think there's anything wrong with starting out at 15%, and then sliding up or down a little bit from there depending on the waiter's performance.

Regarding the waiter:

  • Was the waiter enjoyable to talk with?
  • Was he knowledgeable about the menu?
  • Did he remember to bring you that extra side of sauce you asked for?
  • How did he respond if something was wrong with your order?
  • I would happily slide the tip upwards to 20% if the waiter was really good, and I wouldn't mind sliding the tip downward towards 10% if the waiter was rude or unhelpful. (If you leave a smaller tip, you can leave a note saying you were disappointed with the service too. This lets the waiter know you were willing to pay more, but their service wasn't acceptable. Without a note, they will simply assume they were fine and you're too cheap to leave a good tip.)

Regarding tipping in general:

Don't purposely under tip. A five percent marginal difference on that $50 meal is $2.50. This means the difference between 10% and 15%, or between 15% and 20%, is $2.50.

I'm all about the family budget, and being frugal, and not wasting money when you can put it to better use somewhere else. I realize that a tip is not a specifically agreed upon amount; it's a zero sum transaction where every dollar you choose to leave is a dollar the waiter gets and you don't have anymore. But here's the thing: Don't be a cheap bastard.

$2.50 should not be a lot of money to you. Yes, I understand you're watching every dollar, and that a dollar here and a dollar there adds up to whether or not you're under budget this month.

However, you're the one who chose to go out to a restaurant in the first place. If the difference between $57.50 and $60 is a deal-breaker, maybe you shouldn't have gone out to eat, or you could have gone to a less expensive restaurant.

Waiters rely on tips as the primary source of their income, so when you stiff the tip, you're really asking forcing your waiter to work for a reduced wage. (Do you ever offer your boss a chance to pay you less?) And that $2.50 - while it isn't a lot for each individual family, it can add up to $25 or more for the waiter over the course of the night, if everyone used the same sliding scale. This would allow the good waiters to consistently earn a better living.

In the end

Budget for the tip as part of your meal, and be generous with those who treat your family well. Using the tip as a place to save money is just wrong - it's the difference between frugal and being cheap. And if karma has any say, it'll probably come back to bite you in the butt.

Tip fairly, but tip well.

-Chris Butterworth


Thursday, January 29, 2015

Do you really NEED a new one?

"Distinguishing between needs and wants, and controlling the urge to spend over your budget on the wants, can be the difference between making a recovery and falling back to rags."

do you really NEED a new one?

Your car is old and seems to break down more often than it should. Your smart phone isn't so smart anymore; it glitches, and stalls, and runs out of memory right when you're trying to do something important. You're tired of wearing the same clothes to work over and over again.

You need to upgrade. (or so you tell yourself.)

iPhone options
image from

But do you really need to upgrade, or do you want to upgrade?

Distinguishing between needs and wants, and controlling the urge to spend over your budget on the wants, can be the difference between making a recovery and falling back to rags.

That old clunker

Remember that morning you got ready for work, jumped in the car, and heard that dreaded "click" - the battery didn't start. And then your emotional frustration kicked into high gear: You spent $300 last month because your car needed new brakes and rotors, and $500 a couple months back on a new timing belt. And now this?! Stupid blankety-blank piece of blank car! (this has happened to me more than once.)

Too old. Too many miles. Too unsafe. Too unreliable. Too much money being spent on something you don't like anyway. You continue to dwell on all the things you don't like about that old car, building each one up as a significant reason to ditch it for something new.

And then comes the moment of truth: Is it time to buy a new car?

new car
image credit:

A new car will buy you piece of mind, reliability, comfort, and pride (at least until that new car feeling wears off.)

However, that new car will come with a new car payment - let's say $300/mo for the sake of example. That's $3,600 per year your going to spend, like clockwork. Oh yeah, and in the 3rd year you'll have the extra bonus of buying new tires and brakes as well.

Your old car may be costing you more than usual lately, but I doubt you're spending $3,600 per year on it. Maybe you want the new car more than you need it..? If you're considering allocating $300/mo towards a car expense, you could start by saving $150/mo to build a car repair fund for your current car. It would be easier on your budget, and then these old-car repairs won't be such a big deal - you'll have money available for just that purpose.

My Story

Personally, a couple years ago I was driving a 1998 Toyota 4Runner with over 300,000 miles on it. At the same time my wife was driving a 2007 Honda Accord with about 150,000 miles on it. Both cars were paid for, and both cars were regular visitors to the mechanic shop next door to my office. (2-3 breakdowns per year per car meant that just about every-other month we had a car issue.)

my Toyota 4Runner

We were frustrated with the number and the cost of the repairs, but I couldn't justify adding a new car payment to the mix. On a side note, due to our family's size and the activities we enjoy, we needed to have at least one larger-sized car, so trading the 4Runner for a compact or sedan wasn't an option.

Then we reached a tipping point. The 4Runner started acting funny, and the mechanic diagnosed repairs that would cost about $3,000. (The car was worth $1,000 on KBB at the time.)

We sold the 4Runner for $1,800 cash, and bought a Honda Pilot with a payment we could manage.

The good news is we now have a very reliable car for traveling and for my wife & kids' daily use - I don't worry about them anymore. The lucky news is that the Accord has only needed one small repair since then - knock on wood! The other good news is I was able to reduce our "car repair" budget, since I'm only budgeting for one car's breakdowns right now. The bad news is we're spending money on the car now, each and every month, whether it breaks down or not.

In the end

I'm not here to tell you that you need to live a minimalist lifestyle without any nice or new possessions, or that you're not allowed any luxuries. And I'm certainly not going to point fingers and call names if don't choose the least expensive option at every turn. However...

When you're trying to rebuild your financial life, and you're scratching to save a few dollars here and there, distinguishing between a want and a need can be the difference between getting yourself up into the black or falling back down into the red.

Make good choices, consistently and over time, and you'll get to where you want to be.

-Chris Butterworth

On Amazon - a couple related items you might find useful: