A Rebuttal

August 22, 2012

(To this, specifically.)

 

This man once wrote a blog post entitled “The Value of Personal Appearance.” No joke. 11/16/06.

 

Dear CYC,

I just read your “article” and boy I am steamed.
I am more steamed than the steam that powers my at-home micro-generator (Hey, thanks for asking! Did you know that a tea kettle, a steel hamster wheel and a small magnet can generate enough power to recharge a AA battery in only 7 days? So long, Big Electric!)

Back to the topic – I cannot believe what a waste that article was. I don’t mind the hour that I spent disecting it – as we know, time has no value – but after a few more hours crunching the numbers, I realized that you cost me $0.0012 of electricity for my computer monitor. Thankfully that is much less than most people would pay (Hey, thanks for asking! Did you know that if you set your monitor’s brightness to its lowest level, then light a few homemade candles, you can nearly make out the words – while saving almost $0.00001 per hour? So long, Big Computer!)

Even so, $0.0012 is no trifling matter and I demand reimbursement. I’m sending you a self-addressed stamped envelope and I expect a speedy response. Or less than speedy. Either way, really – after all, you can’t put a time value on money.

I know you may be tempted to ignore this message, but that would be unwise. Unfortunately this isn’t the first time someone of lesser status (and by that, I mean someone with fewer page hits) decided to attack me. So, I have my own lawyer, who I got for the low cost of $9/hour (Hey, thanks for asking! It turns out that if anyone knows how to negotiate for small change, it is that guy who lives between the 1-train grate and the 9th street dumpster. Even better – like most of the homeless folks in this city, he has a law degree from a “boutique” law school! So long, Big Law!). He’s already spent 28 hours on this case, so he is more than ready to take you to court unless I see that $0.0012 pronto!

OK, with that ranty-rant of my chest, I’m a bit more calm. But, I still think you need to learn a lesson. So, let’s turn the tables and see how you like a little razor-sharp satire:

Hi! I’m Control Your Cash. I talk about my fancy dinners paid for by the poor renters of my many properties. And I waste money on things like driving and showers that last more than 90 seconds. Plus I just buy gas wherever I feel like it, even if the station across town is .099¢ cheaper. I think people should buy things like rental properties and stocks and “assets” – which are really expensive, by the way – instead of safely stashing money in their hand-carved piggy banks. I wouldn’t know how to make my own toothpaste if my life depended on it, and I’ve never even HEARD of fecal reclamation. Yet I try to tell people how to handle their money. Funny, huh?

Worst of all, I am mean. Just plain mean. For example, I never, ever encourage people’s dreams of being the first in their family to obtain 7 degrees, or of completing the liberal art trifecta (English major, master of art history, and an unplanned pregnancy). And I make fun of those who pay down their smallest, lowest-interest loan first even though SCIENCE has proven that a debt snowball is the best way to make someone feel better about themselves.

And I just wrote an entire article mocking plus-sized people just because they like a little candy and pizza with their workout. And I wasn’t mocking them for buying corporate candy instead of making their own from tree sap and orange juice – that would actually make sense. No, I was mocking them for trying to get into shape while having a little fun and a lot of burritos. That is a judgment. And people don’t want to hear judgments or opinions on blogs – they want recipes for homemade bubble gum (Hey, thanks for asking! Did you know that the easiest way to make your own bubble gum is to boil 15 pieces of used bubble gum along with a dash of glue for 10 minutes? I didn’t know that because I’m not Trent, so can’t say So Long, Big Bubble!). Telling plus-sized people that they won’t get in shape by drinking a Frappuccino while watching other people exercise hurts their feelings.

But I don’t care about that, because I have no feelings. Which is a shame, because that is what money is all about – feelings. But I wouldn’t know that, because I’m not Trent. I am CYC.

See, it doesn’t feel so good, does it?

Unless you want more of that, perhaps you should go pick on someone in your own league, like that uppity lady at AffordAnything.com. I have better things to do than keep talking to you.

Now, if you’ll excuse me, I’m going to go hand pick the grass on my front lawn (Hey, glad you asked! Did you know that a gas-powered motor costs almost $0.30 per mowing? Even a goat costs almost $0.15, and the composting benefit they provide is worth at most $0.05. Meanwhile, I can do the job for free while getting the same $0.05 composting benefit. So long, Big John Deere!)

Toodles,

Trent

(Note: Guest contributor Pseudo-Trent is an international vice president with a famous multinational firm who has way too much time on his hands. Follow him on Twitter @DubaiAtNight.)

Filed Under: Bad Examples, Personal Finance Tagged With: , , , ,

The Limits to Frugality

October 21, 2011

What, are they saying white women are cheap?

 

Note: This post appeared in a vastly different form on Adaptu, where Greg contributes. Really, the only similarities are the message and the title. Go there and read it, after this.

In the 1930s, people made ends meet during the Great Depression by moving out of the Dust Bowl and eating possum stew. Today, people ravaged by the worst financial crisis since then are valiantly fighting economic stasis with…scissors and paper clips.

With the rarest of exceptions, coupon clipping is penny wisdom and pound folly. For all the effort the average coupon clipper puts into saving a few quarters on toaster pastries and bottled water, there are better and more financially rewarding ways to spend one’s time.

(Oh, and by the way? “Coupon” is a noun, not a verb. Now excuse me as I resume paragraphing.)

The jar of pickles that your coupon reduced from $2.99 to $2.59 is not a 40¢ saving. It’s still a $2.59 outlay. Food producers aren’t in the habit of leaving money on the table, any more than anyone else is. Rather, they’re just testing multiple prices on the same public and seeing which guinea pigs bite, as it were. If a manufacturer issues a coupon and thus reduces its profit on each jar by a few pennies, but the result is that significantly more people each buy a jar than otherwise would, then the manufacturer’s learned some valuable information about its clientele.

Of course, we’re more interested in coupons from the consumer’s perspective, not the producer’s. From the consumer’s perspective, the time involved in achieving that miniscule saving is almost never worth the effort rendered. Especially when there are so many easier ways to save money, and especially when people insist on confusing spending with saving.

Take the recent multitudes lining up to buy the TouchPad, Hewlett-Packard’s dead-on-arrival competitor to Apple’s ubiquitous iPad. The rush on TouchPads didn’t start until HP announced they weren’t going to make any more of them. Ever. No improved model down the road, no software updates. Just the opposite, in fact.

TouchPads went for $500 the day before HP announced they’d stop making them, $100 the day after. To the common gullible consumer, that means an extra $400 in his pocket. But here’s a truth that’s so obvious that it’s easy to miss:

Buying a consumer product – any consumer product – doesn’t make you money. It’s not as if each customer is skipping out of Best Buy, triumphantly waving four $100 bills that he wouldn’t have if he’d never entered the store.

Retailers dropped TouchPad prices 80% out of necessity – unsold inventory is no fun – and the masses did what masses do. Given how quickly smartphones and tablets lose resale value (my own HP Pre went from $550 to a $30 eBay cut-and-run sale in under 2 years, an inevitable byproduct of technological progress), even $100 for an end-of-line product can be a lot.

Why do people spend beautiful Sunday afternoons indoors, sorting through flyers when they could be out enjoying life? Or waiting in line for a durable good that will almost certainly be a paperweight in a couple years’ time?

They fall victim to the oldest psychological trick in the retailer’s playbook, anchoring. Instead of offering a product at price x, offer it at price x+y with a y discount. It sounds so simplistic that you’d think it couldn’t possibly work, but it does. In the early 2000s a sewing supply shop in CYC’s hometown took out the same tiny ad in the local paper, every day. The ad stated that you could bring it in to buy a particular sewing machine for $168, or pay $899 without the ad. This example is more blatant than most, but it’s an important reminder that a coupon has no intrinsic value. It’s not worth 40¢, $1, or in the case of the sewing supply store, the price of a flight to London. If you’re altering your behavior to spend money because of a perceived saving, think about the 100% saving you’d enjoy if you didn’t spend the money in the first place.

Speaking of psychological tricks, say you can buy a certain shirt at a store across the street for $40. But the exact same shirt is available on the other side of town for $10. Would you drive across town to buy it? (Or to phrase it differently, Would you still buy it across the street for 4 times the price?) Most people who like the shirt, and even some who don’t, would make the trip for a colossal 75% saving. Sounds reasonable, right?

Okay then, would you buy a new car for $29,658 across the street, when a dealer on the other side of town is selling it for $29,628? Most people (who haven’t been exposed to the previous question) would prefer to stay close to home, rather than waste time and fight traffic to take advantage of a measly .1% saving.

Hopefully I don’t need to point out that the two scenarios are equivalent. To be consistent, you should say yes either to both or to neither. A $30 saving is a $30 saving, regardless of how expensive the underlying item is.

Why are coupons so popular? Because taken at face value, they appear to be one-sided marketplace victories gained without effort. I got one over on the grocery store. But more often than not, using a coupon means buying something that you’d otherwise have been ambivalent about at best.

Instead of spending valuable hours saving microscopic amounts, go for the big fish. Every year, buyers leave billions on the table because they’d rather spend their time dealing in impersonal printed discounts than learning the fundamentals of negotiating. The same people who devote one day a week to clipping coupons are by and large the ones who are terrified to try to talk a house seller or mortgage lender down a few thousand dollars.

If you’re buying necessities, and don’t have to change your behavior to acquire them, coupons could make sense in theory. (You’ll notice that your power company and water utility aren’t in the habit of issuing coupons.) If you’re buying frivolities, things that only caught your eye because of the reduced price, then you’re not saving money no matter how hard you justify doing so. And if you’re buying expensive necessities – a house, a vehicle – the amount you’ll save by learning how to stand your ground and walk away if necessary will dwarf anything you’ll save by making the supermarket clerk scan Universal Product Codes.

This popular article is featured in  the following carnivals:

**The Carnival of Financial Planning: Edition #209**

**The Totally Money Blog Carnival #42**

**The Carnival of Financial Planning Edition #211**

Filed Under: Bad Examples, Consumer Debt, Estate Planning, Healthy Living, Making Smart Choices Tagged With: , , , , , ,

A Friday post? What gives?

April 8, 2010

 

Our heroine Hetty Green, looking exceptionally sexy for the photographer.

This morning, we heard from the FruBlogger at CESIDebtSolutions.org (it stands for Consumer Education Services, Inc.), who wanted to know how we developed the saving and spending habits that are now second nature. So, doing our part to spread the gospel of financial independence and hopefully saving you the trouble of making the same mistakes others made, here’s our questionnaire, answered by Greg. Enjoy.

What’s your “frugality story?” In other words, how and why did you
become frugal?

I’d recently graduated college and was resigned to spending the next few years living in a dismal little apartment and making subsistence wages en route to eventually establishing myself. I was astounded when I saw my classmates, whom I’d assumed were as poor as I was, buying cars and houses. I suddenly realized that all the nonchalant, “discretionary” spending I’d been doing had added up in a bigger way than I’d imagined. And that maybe I should look at my bank statements once in a while.


What, if anything, tempts you to overspend, and how do you resist?

Convenience. If something’s right in front of you, and easy to take possession of, it’s hard to think of reasons not to buy it. It can take a while to master, but discipline is the only way around this. It’s the equivalent of the recovering smoker not buying the cigarettes. (Of course, those folks have it relatively easy. They only have one item they have to avoid.)


What personal finance or frugality habits were the hardest for you
to adopt and why?

Forcing myself to examine my income and my net worth regularly. I’d always deposit my paychecks without ever checking the balances. Same deal when I used an ATM. I was always scared that the actual numbers would be lower than my estimates, which would depress me for the rest of the day. Also, I reasoned that my balances would seem to grow faster if I consciously ignored them. But in the real world, the opposite happens.


Have you ever taken frugality too far? How so?

Recycling a birthday gift for an ex-girlfriend was one I’d like to have back. Then again, she dumped me a week later and I ended up with the woman of my dreams, so I guess these things have a way of balancing out.


What resources (blogs, books, websites) would you recommend to
someone who’s newly frugal?

LenPenzo.com, a financial blog by a non-financial professional whose innate common sense remains uncompromised. SmartMoney, which boasts the clarity and insight that its parent, The Wall Street Journal, is famous for. (And of course, my new book, Control Your Cash: Making Money Make Sense.)

Filed Under: Personal Finance Tagged With: , , , , , ,