While I like to consider myself frugal, my friend and family tends to view me as cheap. I like to get a bargain, which, as failings go, doesn’t seem too bad to me.
HOWEVER, even though I’m cheap, I like to consider myself quite generous. One of the most insightful things I’ve had a friend say about me is that I’m generous to others, but not to myself. I’ll leave the analysis for my time on the couch (yeah right, as if I’d pay for therapy!!!). Instead I’d like to write today about how it can often cost you money being too cheap.
I tend to wear clothes and use “stuff” as long as I can get away with. I have socks with holes, and just recently was persuaded to give up the winter jacket I’ve been wearing since high school (I’m now in my early 30’s). I don’t put a high value on what other’s think of my appearance, and certainly don’t place any value on displays of wealth, so if it keeps me warm and doesn’t offend people around me, I’ll keep wearing clothes.
For the most part, I think this works to my advantage with clothing. With other items though, sometimes this backfires. I finally bought a high-quality travel mug (Thermos Brand) from Wal-mart for $10 (yes, I’m a big spender). Previous to buy this one, I was using two el-cheap dollar store travel mugs (bought for $2 a piece). The first cheap one started leaking, so I replaced it with a similar make that start leaking almost immediately (it was like a trick dribble glass, when you’re drinking from it, it’d spill liquid down your front). Surprisingly I put up with it from the first mug for a few weeks (gotta get my $2 worth) and finally broke down and fixed the situation when I saw co-workers eying the wet marks on my shirts.
To be fair, it was usually tea, and I buy stain resistant shirts, so once it had dried there wasn’t a mark, but…
Another example of being “penny wise, pound foolish” was I was visiting a friend in the Bay area and decided I wanted a portable dvd player to use on trips. I’d debated the purchase for a few months and finally decided it would be worth it when traveling to be able to bring along a few movies and watch them. I wanted a cheap one, and wanted an external battery (since the built-in play time is quite miserable on most of them). After running around between all the major stores that would sell them (Target, Wal-Mart, Best-Buy, Good Guys, etc, etc, etc) buying one, realizing that the external battery was incompatible, returning it and finally selecting another, we spent an entire day shopping (out of a time limited visit) and I saved $30 (not including gas and wear-and-tear on my friends vehicle) off of the player and battery I saw at the first store we visited. Not my finest hour.
I think a fallacy many people fall into is not valuing their own time. I viewed my friend’s and my day as worthless, when in actual fact it was worth far MORE than $30. In real-estate people often brag about their profit on a property, but don’t include their own time and labour on the project (magic fairies did the paint job and other renovations I suppose). Again, they’re not valuing their time, if they factor it in the project might not compare that favourably to getting a second job and investing in stocks.
The other fallacy I often fall into is “Sunk Cost“. When money is spent and there’s no way to get it back, often the best way to make a decision is to ignore anything that’s already been spent, make the best decision from your PRESENT perspective (and try to use any new information on future decisions).
I think there’s real value in looking at where you spend your money and trying to make sure you’re spending wisely on the things you value most. However, cheap for cheap’s sake can often be an expensive way to live your life.