Best Money Saving Tip For Me

cowboyindAugust 2, 2003

A while back someone said this to me, and it's been the best money saving tip I've ever heard. Whenever you are thinking of buying something, first think of this: Imagine that for one hour you could walk around your house and touch any item in the house and magically turn it back into the money you spent to buy it. Most of us would have a VERY nice pile of cash after doing that for an hour, since we buy so many things that we either never use or just basically do not need.

Thinking about this before buying something can really cut down on impulse buying and "sport shopping" where a person buys something just to have something to do.

Another thing to do is look at the price of the item and then think of how much money you earn an hour, and compute in your mind roughly how many hours you had to work to buy that item. If you make $10 an hour and are looking at a $60 item, was it worth six hours of your life to have it? If so, get it. But often you realizze it is not worth that much of your time.

Ken

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joyfulguy

Six hours?

Sorry - more like 7 - 8 hours.

Which, after paying income tax, leaves you with the six hours net return to pay for the chosen item.

Which is why it pays better to save $100. in goods not purchased than it is to get $100. raise in pay.

What's this about buying stuff just for something to do?

Have a joyful weekend, all.

ole joyful

    Bookmark   August 3, 2003 at 9:41AM
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kittiemom

Ed:

Thanks for reminding everyone about the after-tax issue. A lot of people tend to forget about the taxes because they're taken out of your paycheck so you never actually "see" the money. After owning a business & having to make estimated tax payments, my DH & I decided that would be a fast way to tax reform: If everyone had to write their own checks & make them payable to the government. It does seem more painful when you have the money in your acct. & have to make the check out yourself instead of having it deducted.

I've always calculated the cost of items in after-tax money.

    Bookmark   August 3, 2003 at 3:00PM
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cowboyind

Sorry, it was just an example. Obviously I meant if you earn $10 an hour after taxes. Incidentally, there's also a typo in the word "realize."

Ken

    Bookmark   August 4, 2003 at 7:06PM
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joyfulguy

cowboyind,

Here I thought you were just getting a "buzzz" out of it. (;^))

Hadn't noticed that, as a matter of fact.

Whether your message was hypothetical or not - the issue of the number of hypothetical hours remains the same. We earn "before-tax" money, but buy (most, i.e. non-deductible) goods with after-tax money.

Which makes the concept of whether we want to exchange that amount of effort for so much money to buy certain goods even more relevant, for the number of hours is (almost) *always* larger.

Another good idea along this line is, if we think that we really do want to buy the item, to ask ourselves whether we might be able to arrange to get the item at even less expense using another channel.

For example, buy a (used) item at an auction, estate sale, etc. where there are quite often some really good bargains to be found.

But - take care. Be sure that you know the market value of items that you desire before going, and keep your emotions in check. Sometimes, in the heat of an auction, people get their egos involved and bid items up to higher than retail value.

Linens and some household accoutrements often go for next to nothing at auctions. With, often, a number of other itmes in a box - that you may be able to sell individually later in garage sales for more than you paid for the whole box, originally. So, you got what you wanted free - didn't you?

Who can beat that?

Unless you can get someone to pay you to take certain items off their hands. How often have you run on to such offers?

Garage sales are a good source, as well. I bought a couple of (snmall) radios last year for $1.00 and $2.00.

Good wishes to you and yours,

ole joyful

    Bookmark   August 4, 2003 at 7:59PM
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