Paradigms, Spending

Buy One Step Down

It’s natural to want only the best for your money. Anything less and we feel like there’s something better for us out there, and we’re probably right. Unless we’re blessed with unlimited funds, there will always be something better.

Consider the idea of anchoring–when stores, telemarketers, or other sales people tout your savings compared to the “retail” price. In the case of chasing the best, instead of a price as the anchor, you see your ideal, and feel like you fall short.

What a depressing state of mind to constantly be in.

I think that one of the best ways to save money is to stop this mental process, and come to a relative peace with what you’re able to afford. The reason is that the best of anything will always have a disproportional premium to the extra “features” it offers, simply because it’s the best. This applies to nearly everything we pay for, not only technology.

Consider this when evaluating some of the purchases I discuss later in the post.

Reworking Expectations

The first expectation is that you can afford the best, which is rarely the case. The second expectation is that you can afford second-best, which for most people is still rarely the case. That’s why the best will often have a relative definition–what may be best for me may be completely different than the best you can afford.

Finding a relative sense of where the best lies for you in some of your spending categories is the first step to achieving control over always chasing that benchmark. For example, you might dream about owning a Porsche, but if the best you can afford now is a Mustang, the latter is a better route to creating a realistic frame of reference.

But that doesn’t mean you’re going to buy the Mustang. Instead of always shooting for the moon, what if we came down a step–and bought the next-best thing instead? Would we be able to enjoy some of these benefits?

  • It’s still a high-quality product or service; second-best in its class, in fact.
  • It’s no longer the best, eliminating the high price premium.
  • We can afford to upgrade it (if it is something upgradable) more often.
  • We have more funds to spend for things than enhance the primary purchase.

The last expectation is that you can afford to do this with every spending category in your budget, which again is rarely the case. Most people have to selectively prioritize what they want the best of, and what they’re willing to downgrade. It’s in these choices that our lives are often defined, for better or for worse. Consider:

  • Buying the best food you can afford vs. Buying the best car you can afford
  • Paying for the best vacation you could take vs. Buying the best computer you can

What would you select? Why? Examining these kinds of relationships is painful and necessary.

Into Practice

What could this look like when put into practice?

  • Food: The best you could afford is probably local, organic produce and animal products. Next-best? Consider buying “bulk organic” or simply local, as many farmers who don’t have the “organic” label still follow healthy farming practices.
  • Cars: Instead of buying at the top of your income, consider looking at smaller or less expensive models in the same line, or skip the extra package upgrades and settle for the base model.
  • Vacations: If you normally stay at 4-star hotels and can afford them, what if you stayed at a 3-star place this time? Would the extra money give you the ability to enjoy more things on vacation?

Pick your priorities. Determine what the best looks like. Take one step back. Do this regularly enough and you might find your definition of best changes, too!

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Cars, Spending

Why I Would Be Stupid Enough to Buy a Smart Car

At least that’s what people I know tell me. Every time we pass by a Smart Car on the road and I act the least bit interested, I get at least one “you’re dumb” look and the inevitable drawn-out “Why??” Here’s exactly why:

  1. Gas mileage: It’s certainly back on everyone’s mind as gas begins to climb back up. The Smart boasts and impressive 33 city/41 highway, which would rival even many of the hybrids out there right now.
  2. Price: With a starting price at the mid 11,000-s, it’s entirely possible that the Smart is the cheapest car available in the U.S. market today. Only a few of the other sub-compacts come close to this price level.
  3. Size: This is kind of a “duh” point, since just one look at the Smart makes you do a double-take on how small it actually is. I believe my wife actually measured the bed of my father-in-law’s Ford F250, and yes–apparently, it would fit. Jokes aside, I imagine the size of the Smart might come in useful when parking, and turning in tight spaces (think garages, drive-throughs…).
  4. Environment: I have no idea if Smart uses any kind of environmental techniques to build their product. Working in an industry that sees people make those claims regularly, I have a feeling 80% of them are marketing “stretches” anyway. But it can’t be denied that a car 1/3 the size of a typical sedan should consume 1/3 the resources to build. Bonus!
  5. Get people talking: At one time, I went vegetarian for three months because it got people to ask questions and be interested in what I was doing. A Smart, being the unusual car it is, would definitely be a conversation starter.

On the other hand…

There are a couple of reasons why I would not buy a Smart Car. They are:

  1. Flexibility: The Smart is great if you’re driving around one (or two people, at the most), with very limited cargo. The problem is that if you need anything else at any time, you’re screwed.
  2. Safety: The Smart has some impressive safety features that would be overkill in a standard passenger car, but are almost required for this little guy.  But let’s get real–if this car crashes into a pickup running a stoplight, I don’t know what kind of chance I stand, regardless of the claims. At some point, the laws of physics cannot be defied.

What do you think–would you consider buying a Smart Car?

Photo by G. McFly

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