Archive for May, 2009

A coffee pot is not an "investment"

May 22, 2009

Last week, I wrote a post called “Focus on needs, not products,” that talked about a way to save money by thinking differently: focus on what you need your money to do, not a specific product that you want to buy. If you think about your needs rather than products, you can evaluate a broader set of choices and wind up saving a ton. I gave an example of buying a charcoal grill instead of a gas grill I’d been lusting after, and how I saved 90% of the cost by caring more about grilling than a particular type of grill.

I saw something on Boing Boing Gadgets today (a blog I read and generally like) that made me think about this again. All of the “gadget” or “new toy” blogs are incredibly dangerous if you’re trying to save money, since they’re designed to talk about how this cool new product is just so completely, amazingly cool that you simply must have one right now — now usually being right as it is released, when it is more expensive than it will ever be again. (Joel Johnson’s rant on this topic (warning: eyeball-searing levels of profanity herein) is well worth reading.)

The Boing Boing Gadgets post was about a cool French press you could buy. Here’s what they had to say:

MontanoFor our special theme day on coffee, I decided to review the Bonjour Montano French press — not because it’s new (it came out in 2007), but because it was by far the coolest looking commercially sold French press out there. I was digging the brushed stainless steel leaning-tower-of-Pisa look. It makes eight cups of coffee, which was perfect for when I had a pancake birthday party for my dog Malcolm last weekend. At $70, it’s on the high end of the French press market, but think of it as an investment into the overall coolness factor of your kitchen appliance collection.

I use a French press every morning, and love it, so this one definitely hit too close to home for me. Ooooh, a cool new French press. I’ve had mine since college…..maybe a new one? But fortunately my resistance to thinking like that is pretty high these days. Let’s think about this for a second:

  1. I already own a French press. I’ve had it for over 15 years now and it still works great. Unless I break the glass carafe, it could easily last for decades more. What problem would I solve by buying another one?
  2. This one has a cool shape. Um….why do I need to spend money on a cool shape?
  3. The post suggests that you think about it as “an investment into the overall coolness factor of your kitchen appliance collection.” What would be my expected return on that “investment”?

Yeah, I don’t need to buy this, I thought (quickly). The “need” — morning coffee — is already met by something I own. Save the money for something I need and don’t have.

Maybe you don’t already have a French press, and want one. Should you buy this one? Perhaps, if you have people over for breakfast and coffee all the time, and want to impress them with your sense of style. Or, say, if you film a cooking show in your kitchen. 🙂 But otherwise, you should focus on your desire for a morning coffee, and not “the brushed stainless steel leaning-tower-of-Pisa look” that makes this pot “by far the coolest looking commercially sold French press out there.” Cool looks, brushed steel, and resembling Italian architecture will not help make better coffee for you in the morning.

I went to Amazon and looked for the cheapest, new French press I could find. It turns out you can buy a 3-cup French press from the same manufacturer as our leaning-tower-of-overpriced-coffee option for a mere $12.90 — a $57.05 savings. It’s like an 82%-off sale you can make happen just by thinking about it! Somehow I’m willing to bet that the coffee you get from either model is exactly the same. Let’s paint a picture of the savings:

French press choices
(Coffee cup pictures from Refracted Moments™ and Teo. Used under Creative Commons license.)

So, yeah. While I love the boingers, I hate having fallen into this temptation even for a second, and despise being told that a coffee pot is somehow an “investment.” An investment should make you money. The best way to have money you can actually invest, or save, or use for something you really need, is not to spend it. Removing temptations to spend — unsubscribing, for instance, from blogs that are all about cool new products you can buy — and focusing on your needs instead, is the best way to do that.

Money-Saving Tips Galore in WiseBread's New Book

May 18, 2009

Congratulations to our friends at WiseBread on the launch of their new book, “10,001 Ways To Live Large On a Small Budget.”  The book is authored by a talented group of WiseBread writers (including Wesabe advisors JD Roth of Get Rich Slowly and Trent Hamm of The Simple Dollar) who believe: “the key to financial wellness isn’t a ramen-eating, vacation-skipping, fun-depriving life. Far from it. The best way to ensure that readers will stick to a budget, especially in tough economic times, is to help them create a lifestyle that is as much fun as it is practical.”

Wesabe gets a nice shout-out in the book as one of the best money tools (thanks, WiseBread!).  Read more about the book here or head on over to Amazon to place an order.

Focus on needs, not products

May 11, 2009

One mistake I see people make a lot is to think of their money as a way to get particular products or services they want. I want to buy this particular television because it has the cool new feature thingy and I just can’t live without it. A very common mistake — one I make all too often myself.

Why is this a mistake? Isn’t it great to have a particular goal and to work towards it?

It certainly is great to have a particular goal, and sometimes focusing on that goal with a specific picture or product in your mind can help get you there. For instance, (Wesabe advisor) J.D. Roth has a great story about saving for a Mini Cooper that shows how this can work — in his case, spectacularly. The very first big purchase I made as a kid (a Vectrex game machine, for the record) worked the same way for me — keeping that thing in mind kept me saving.

But in many other cases, fixating on a particular product can bring out all of your worst financial habits. This is, in fact, exactly what marketing and product catalogs and television ads and promotions are all designed to do: to get you to want to spend more because you believe it will bring you something special. I was flipping through the Design Within Reach catalog today and saw a pair of water hose spray nozzles for $70.00. Wow, I thought, “Within Reach” of whom? Why would I ever need to spend $70.00 on spray nozzles, no matter how well-designed? The catalog told a story about elegance and efficiency and clean design, and by absorbing that story, one might be tempted to spend $70.00 on a product that sells for $5.00 at the local hardware store. (For the record, I was not tempted — in this case, at least.)

Some of your needs or wants will always have a newer, better-seeming product available. Shaving products are hilarious this way: since shaving is a pain and many people hate it, every year a new product comes out with more and more blades or lubricants or whatever else they can think to add. (Check out How Many Razor Blades Do I Really Need? for exhaustive research on this topic.) Each one costs more, and maybe each is a little better than the last. Should you just upgrade every year, and spend more and more and more shaving as time goes by?

A great way to budget is to flip around your way of thinking. If you fixate on a product, the only financial question is how to get the best price for that product. If you fixate on the need, instead, you can ask, what are the range of products available to meet this need? Would a low-end or mid-range purchase meet my needs in this case? If so, great! You just saved money, probably a lot more than you could save by shopping for the best price on a high-end purchase.

I saved a ton of money with this way of thinking when I went to buy a grill for our back yard. I started out fixating on a high-end Weber gas grill I had seen at a friend’s house — available on Amazon for a mere $700.00 (gas not included). Think how quickly I could be grilling! How much space I would have to grill! Maybe I could find a really good used one for $500.00, if I spent a bunch of time and got lucky. But then I stepped back and thought, what do I really need, here? I want to be able to cook over an open fire in the back yard. Do I really need that much space, or that much speed? I wound up buying the classic Weber “One-Touch” charcoal grill for $70.00 — a 90% savings. (Given how durable they are, I probably could have gotten one on Craig’s List for nearly nothing.) It’s perfectly good enough for my needs — any time I want to grill, an extra half hour heating the grill while I prep the ingredients is no big deal.

Buying a high-end product can be fun and can be rewarding and a motivational goal. Sometimes it can be worth it. Just don’t tell yourself it’s anything else, and try to make lust for a particular product be the exception, not the rule. If you focus on the needs you want to fulfill with your money, you’ll find you have a much wider range of choices, and much greater opportunities to save.