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Old 01-09-2009, 01:01 PM
 
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What is the first thing you hear when someone tells you a price? "It costs XX dollars." At first glance, a number might SEEM enticing, but I think we should learn something from our bartering ancestors: use the value of our LABOR in place of just thinking of the price of an item in dollar amounts. No, I'm not saying get rid of currency, as any economist will tell you that it's extremely difficult to have an economy based on bartering.

What I am saying, however, is to use the amount of labor we perform over an amount of time and ask ourselves if something is worth it. I've been doing this for a while now, and I have definitely changed my consuming habits. For example:

Let's say you make $8/hr (like me... broke student, lol). You go to the mall with friends and you want to buy lunch. You see that it costs $5 dollars for Chinese food. At first, that may seem like a reasonable price. However, think to yourself this: that $5/$8/hr is equal to 37.5 minutes of work. Remembering how grueling that amount of time from your life was, is it STILL worth it? Sure, it may taste good, but will you be remember it in the future or is it just average? Is it an all time favorite? Etc. etc. It definitely won't last forever, so why trade in 37.5 minutes of your valuable TIME (which has more value/scarcity than money since you can't produce more of it) for it? Now, you go to the movies. It costs $10 where I'm at. That is 75 minutes of my life and labor to pay for an intangible movie. Will I enjoy the company I'm with? Is it a good movie? Why not wait for it to come out on DVD where I can own it, watch it many more times, or at least rent it cheaper? Last but not least, what about those jeans that are 50% off? Marked down from $30 to $15. That is 112.5 minutes of my life, almost 2 hours. However, I'll be able to use these jeans for a good 2 years if I don't wear them out. I like them. Are they worth 2 hours of my labor?

I think if we started thinking in terms of how much labor/time we put in to get our money instead of just the price tag itself, we wouldn't make such frivolous purchases or be so hasty to use credit (because we can use the pay rate to see how many hours we work to pay off accrued debt). Does anyone agree with me or am I just looney toons?
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Old 01-09-2009, 01:52 PM
 
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No, you are not "loony toons." That is a very smart way to evaluate purchases.
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Old 01-09-2009, 02:20 PM
 
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I agree that its a smart way to look at your spending, but you can even go a step further:

Lets say that you make $1000/month, but after rent, basic food, and utilities, you only have $300 left. After putting a roof over your head and feeding yourself, you only make $10/day. At that rate, a DVD can cost you 2 days, and a cool flat-screen TV can cost you 3-6 months. An unlimited calling plan on your cell phone takes away 1/3 of your life.

Looking at your costs like that really puts things into perspective....
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Old 01-09-2009, 03:17 PM
 
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I seem to recall one of the investment companies running ads (probably in magazines...) about "cost of new watch : retire 4 years later" -- implication was that if you invested the money instead of buying the watch you could afford to retire sooner. Kind of similar "rethinking of spending".

Of course it does really work all that well, as the folks with super high end tastes rarely plan for the future. Data from the "The Millionaire Next Door" shows that those with a orientation to savings rarely buy "luxury goods" and conspicuous consumers rarely become wealthy. Almost polar opposites...
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Old 01-09-2009, 03:26 PM
 
Location: Cushing OK
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I'm on disability, and I pay all bills and order whatever has to be ordered by the end of week one. There is a food budget which is intentionally a little high. The rest is gravy... but I have a goal. I'm planning a trip later and every other purchase is weighed against that. Most of the time the item loses. The trip will be fun and memorable and ten years from now it will still make me smile. Will a dvd of a movie I have no idea if I'll like do that.

I've also learned to research what I buy. Online is a wonderful place for that. I needed a small space heater and spent three hours checking. Was it overkill? Would it work for what I wanted? Could I even use it in that room? I settled on the cheapest one, had it delivered and am very happy about it. No impuse buys, no taking assurences from clerks who really know nothing about the product... just your own research.

I also have a priority list of stuff I will need. Things get shuffled as needed. If I find something at a really really good price and I'll need it in a few months I might buy it if there is the money free. Or I might wait if there are other more pressing things to get.

I love the idea of using labor as a measure, and in my own version I ask what else could I get for that ten dollars? Kind of a barter between choices. I don't rush myself even if I go around the whole store an extra time while making up my mind.

I don't have a lot of luxuries but since I take good care to do everything necessary, and define necessary very carefully, I do better than I did when I did have more money but felt no need to take care of it.
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Old 01-09-2009, 03:36 PM
 
Location: Mid-Atlantic east coast
5,523 posts, read 10,216,644 times
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I think you're smart to look at the cost of stuff this way..I tend to do it, too, especially after reading Your Money or Your Life. Makes the saying "Time is money" very true, doesn't it? Guess the reverse is also true: "Money is time."

Something I do is buy good quality name-brand clothes at a couple of favorite thrift/used stores and get quality plus super low prices. I avoid malls at all costs...because it all costs too much... lol.
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Old 01-09-2009, 03:40 PM
Rei
 
Location: Los Angeles
494 posts, read 1,648,603 times
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You're forgetting taxes. For every $1 spent I usually add 30% more to the amount of money I have to earn.
What I mean is say I make $50 an hour and a dsl bill is $50. This means I would have to work 1.4 hours because the 0.4 hour goes to taxes...
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Old 01-10-2009, 02:02 AM
 
1,566 posts, read 2,840,109 times
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good way to look at it
when i was **** broke i wouldnt spend 4 dollars on a beer when all my friends went out
now i make good money so i dont care if i **** away a hundred bucks on a bar tab or spend 2 grand on a tv
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Old 01-10-2009, 12:17 PM
 
3,269 posts, read 9,070,922 times
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Quote:
Originally Posted by bxlefty23 View Post
good way to look at it
when i was **** broke i wouldnt spend 4 dollars on a beer when all my friends went out
now i make good money so i dont care if i **** away a hundred bucks on a bar tab or spend 2 grand on a tv
Interesting. I am the exact opposite. When I was young and foolhardy I had all the latest gadgets and wouldn't think twice about spending my last few bucks on a beer and a slice. Now I could easily afford to buy almost anything my heart desires and yet it's hard to pry that cash out of me.
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Old 01-10-2009, 06:56 PM
 
1,020 posts, read 2,297,943 times
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Quote:
yet it's hard to pry that cash out of me.
That's probably a big reason why you can afford anything your heart desires :-P
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