One Million and Beyond

How I Shop Around

June 10th, 2008

Last week I posed about the pros and cons of shopping around. Today I wanted to post about how I shop around. The reality is that over the years I’ve come up with a bit of a process for shopping around and it follows a fairly basic series of steps:

1. Do I need to shop around?
2. Check online
3. Call ahead
4. Batch when physically shopping around
5. Ask for specials

Do I need to shop around?

The reality is most of the time the answer to this question is no. I’ve decided that my time is valuable to me, so for me to spend hours of my time and effort to get the best price on an item it really needs to be significant. For example I was more than happy to drive around and make an effort when I was looking for a new car. On the flip side there have been times when I have simply ignored the fact that I’m paying a premium on a purchase because it wasn’t worth it to shop around. I’ve needed to replace the ink in my printer a few times and I simply went to the nearest store to buy it because the $5 I’m going to save isn’t worth the time to get it. For me the item needs to be expensive before I start shopping around and the potential savings significant. I know that this might not be the most frugal but I don’t get a thrill from spending 2 hours to save $2.

Check Online

Once I’ve determined that I need to make a purchase that’s significant enough for me to shop around then I’ll start by looking online. Most retail outlets now have their prices online. This really cuts down on the amount of time I spend on shopping around. At the very least this is a great place to find resources for what I’m looking for. Car insurance for example might be hard to shop around for online since prices are quoted (though some places do offer online quotes) but you can get a listing online which makes the next step quicker.

Call Ahead

If you’re looking for a specific item, say a washer and dryer, you want to know that the stores you’re going to actually have the item in stock. It’s great to find yourself an amazing deal but when that deal vanishes because they don’t have any items left it becomes really frustrating (and can be costly).Picking up the phone and making a call can save you a lot of time and effort.

Batching

This item in the process doesn’t always apply but if I’m looking for an item I’ll try to make sure I’m not going too far out of my way for just a single item. The goal here is to make the most of my time. This item also really applies when there’s no rush in making the purchase. When I we were considering a new TV I only went into stores that had TVs when they were in close proximity to where I was. The purchase wasn’t urgent, we had a working TV and even if we didn’t, TV really isn’t that important.

Ask for Specials

The TV is a perfect example when it comes to this part of the process because we found a decent deal on a TV but it became a better deal when we bought a model that came from an opened box. Someone had returned the TV but there was nothing wrong with it. The best part was that it came with the same warranty as a sealed box. A simply question saved me 10% on the purchase and at $500 for the TV the 10 second investment saved me $50. It never hurts to ask if there are any specials on the item you’re buying. If you happen to be calling and shopping around asking this question might be make your decision for you. Some stores don’t advertise that they offer perks and bonuses with purchases (The tire place that gives you a free alignment is a perfect example I’ve found).

Overall personally I’m not big on shopping around though I know there is a very distinct benefit to it. For myself I’ve found the balance of time and effort in return to require a significant benefit. I know that I can save myself some money if I were to shop around more but the reality is I’ve significantly cut back on my purchases and most of the time I spend money on items that are day to day items.

Posted in Saving Ideas, Commentary | 3 Comments

The Pros and Cons of Shopping Around

June 6th, 2008

We all like to save money when we make purchases. It doesn’t matter if you’re buying something for $10 or something for $10,000, if you can save yourself some money then it’s a good thing. To that end it often makes a lot of sense to shop around for the best price. Unfortunately there are pros and cons when it comes to shopping around.

Pros

• Getting a better price
• Perks of the Sale
• Better Quality

Better Price

This point is particularly obvious since stores rarely have the same prices. You can see price differences between two different grocery stores. By taking a bit of time out of your day you can save yourself a great deal of money. The bigger the purchase the more likely that you can save yourself a lot of money by shopping around. For example buying tires for your car at store A vs. store B can save you $20+ per tire (and often a lot more). There is definitely a possibility of saving money if you’re willing to put the time and effort into it.

Perks of the Sale

When you’re buying a big ticket item there are often perks and giveaways that you can get at no charge. When I was shopping around for tires a couple years back one tire shop offered to balance my tires and do an alignment as part of my purchase. If you factor this into the sale you can really save yourself a great deal of money (surprisingly that tire shop also had the best prices).

Better Quality

When you’re not shopping around for a specific brand or model you might be able to find yourself a better quality item by shopping around. If you have a set budget for your purchase you might be able to find a better quality brand within your price range by shopping around.

Cons

• Waste your time and money
• Benefits negligible
• Impact to the environment

Waste your time and Money

By going out of your way to get the best price on something you can spend so much time and money doing so that although you end up getting the best price in the city you spend more effort than its worth. This is particularly true when you’re dealing with items at the lower price point. If you’re spending hours and hours buying a new car you can really save money but the same isn’t true when you’re buying a pair of jeans.

Benefits are Negligible

The perfect example of this is driving 20 miles out of your way to get the best price on gas in the city. The reality is that the $2 you just saved on your gas purchase was spent in getting there. Not to mention that you might have just spent 40 minutes sitting in traffic getting that savings. The benefits that you get as a result of shopping around for the best prices might wash out to pennies and not be worth it.

Impact to the Environment

This point is relatively mute when if you shop around for the best price by driving around the city once every few years. But if you’re driving around all the time just because you know that you can save a few dollars on groceries every week there’s a difference. Also this point is more valid when you start multiplying it by masses of people. If everyone shopped around for every item they purchased then you’d have traffic everywhere and the impact to the environment would start becoming noticeable.

In conclusion shopping around definitely has its place in our society but there is a definite point where it stops being beneficial and actually starts costing us money. Personally I only actively shop around when I’m buying more expensive items. When I need to buy tires for my car I’ll make the effort to shop around because tires for my car are expensive. But getting the best price on $20 headphones I can’t be bothered to do. More often than naught my time is worth more than the money I save by shopping around. Essentially it comes down to how much time and effort are you willing to put into saving a few dollars. Next week I’ll post on how I shop around.

Posted in Saving Ideas | 3 Comments

How to Save on your Gas Costs

May 9th, 2008

Since the price of crude oil and gasoline have been going up drastically the topic of saving on your gas costs has been common on many blogs. We love our cars and the bigger they come the better regardless of how much gas they guzzle. I wanted to jump into this general conversation with my tip to save on gas.

If the price of gas has gone up just don’t buy as much of it. Simply use less of it! I know the tip is very simplistic but I think it would be ideally exemplified with an analogy. We all wear clothes that get dirty which we wash with washing machines (well most of us do) and this activity requires a type of fuel of sorts (detergent). I think it’s is a perfect analogy for my saving tip.

We have grown accustomed to using our washing machines just like our cars and we’ve gotten to essentially need them. We need to have clean clothes. Just like with the car there are other alternatives to get our clothes clean that are far less expensive than owning a washer and dryer that we don’t use for the sake of convenience.

Now assume that all of the detergent makers decided to raise the price of detergent by 3 or 4 times what we pay now. So rather than paying say $7.50 for a pack of detergent the price was suddenly $30. We would instantly notice but we might still pay. For the sake of argument let’s say this went up 40 times (my logic is we drive and use our cars at least 10 times more than our washing machines). The price of that same pack of detergent would now be $300. How many of us would still continue to buy the premium brands? And just to make this analogy completely outrageous let’s just say that the washing machine was costing you $350 per month in financing costs and you were required to have insurance on your dryer of another $150 per month. Doing laundry would all of a sudden cost us $800 per month.

At this point how many of us out there would consider the alternatives? Probably all of us. We have alternatives when it comes to cars as well. We can drive less and not buy fuel or gas guzzling cars. We are in a situation where we are reliant on an incredibly expensive means of transportation when alternatives exist. I know this is a bit more of a challenge for some people and in some circumstances but walking, biking, transit and car pooling would probably be accessible to most people in some way.

The way to save on gas is to not buy it; we need to either improve the mode of transportation or find an alternative means. Cars have been around for about a 100 years and in that time we’ve come to rely on them so much that people are convinced they cannot live without them. I like most bloggers have a car that I drive to work for convenience, thankfully it’s pretty close and I’m saving time by driving which is my logic for continuing this. But if the price of gas were to go up another say 2 times I would start taking transit. I know there are alternatives and I would use them.

The question I’ll leave you with is at what point would you stop buying gas? What would the price need to hit before you couldn’t justify the cost?

Posted in Saving Ideas, Commentary | 1 Comment

The Art of Bulk Buying

April 8th, 2008

If you look at anything and practice it enough it almost becomes an art form. This is very true when it comes to playing the piano or painting but I believe it’s true for most things. A perfect example in the personal finance world is buying in bulk. If you buy a product in bulk you can significantly reduce your cost per item which can save you a lot of money in the long run. Unfortunately if you’re not careful in buying in bulk you can end up loosing more money than you’re saving.

Your lifestyle or at the very least your knowledge of your lifestyle and habits can really make or break your bulk buying. Personally every time I try to take advantage of buying in bulk I end up in the same spot I started or I’ve lost money. The question that comes to mind is what am I doing wrong? The simple answer is nothing. My lifestyle isn’t geared towards bulk buying. I don’t have a regimented diet nor do I use any singular product in mass quantities on a regular basis.

The Art Form

Buying bulk means you need to buy a lot of a product or products at once and take advantage of the price reduction. The concept is very simple and it’s the basis of how retail stores make money by buying at wholesale prices. The goal here is to know that you’ll need a lot of a single product. People who have a large family can very easily take advantage of this since they’ll go through food and the necessities at a much faster pace. For me the only items that I can safely buy in bulk are toilet paper, soap and batteries because none of these items go bad.

I believe that to master buying bulk you need to plan ahead carefully to take advantage of the savings. You have to know what you’re likely to use and adjust your habits to ensure nothing perishable goes bad. When it comes to some foods they can be frozen but I’m not disciplined enough in my eating habits to effectively take advantage of this. Another great way to take advantage of buying bulk is to do so as a group of people. This goes back to my point about planning.

People who are able to save hundreds of dollars a month at stores like Costco amaze me since they have in my opinion great planning abilities (or very regimented lives). Unfortunately if you’re not careful and don’t actually use the products you can end up loosing a lot of money buying bulk and throwing out a lot of stuff. Stores like Costco love customers like me, I clearly understand the value of the purchase but by not using it the per item costs goes up drastically. Part of the art of buying bulk in my opinion is knowing when not to do it.

Buying in bulk can save you lots of money if and only if you can take advantage of the volumes.

Posted in Budgeting and Planning, Saving Ideas | No Comments

Car Maintenance: Spending to Save

March 27th, 2008

Spending money to save money sounds like an oxymoron but when it comes to car maintenance it really can save you money. There are a few very obvious ways that it can save you money such as reduced gas and maintenances costs as well as increasing the life of your car. These alone can make it worthwhile even if it seems like more of a hassle initially.

Gas Costs

If you keep your car well maintained you get much better gas mileage out of it; especially if you do this over the life of the car. Say get 10% better gas mileage and have to fill up 9 times where you would normally have filled up 10 times. This savings seem very small but over the life of the car they’ll add up and will save you more than the cost of the maintenance.

One thing I’ve noticed with car maintenance on the cars I’ve owned, typically late model used cars, is that the improved gas mileage is far better than the 10 I mentioned. Cars that are beat up and not taken care of simply done run all that well and they have a tendency to break down which leads us to the next means of saving

Maintenance Costs

When your car breaks and needs repairs it costs a lot of money probably more than you were expecting or want to pay. Very often these repairs can be avoided by proper maintenance of the car. If you can avoid a single major repair to your car you’ve probably made up the cost of the maintenance if not a lot more. I’ve had a few cars need some major repairs, which could have been avoided with proper maintenance (the main one that comes to mind was courtesy of a previous owner). The worst part about car repairs is that we rarely expect the costs and have to dip into emergency funds or credit cards. If it’s the latter than the interest on those cards can really make some maintenance that much more worthwhile.

Extending the Life of your Car

Unless you happen to have bad luck with cars proper maintenance can extend the life of your car considerably. Even if the only thing you accomplish is extending its life by one year you can save a mountain of money. Lets assume you pay $400 a month for your car loan, by extending the life of your car for an extra year you won’t need to pay that amount for a new car as quickly. Over 12 months that $400 per month savings adds up to $4800. If you spend $1500 in maintenance costs over 5 years (and the car lasts you a 6th as a result) that savings is quite significant.

I know I’m using some hypothetical numbers but I think they illustrate the point rather well. Cars are very expensive to have especially if you’re paying lease or a loan on them. By removing the need to buy one for a year or two due to some diligent maintenance think of how much money you could save.

Also if you have an older car there’s a chance that your insurance premiums will go down. New cars tend to cost more from this point of view so that hypothetical $400 a month could easily be $500 with those premiums.

Some Extra Benefits

The obvious point that comes to mind is that maintaining your car in good shape can prevent you from having an accident. Accidents cause you hassles, cost you money, and worst of all they can cost lives. I know that this is a bit of a stretch but accidents do happen because of worn tires and bad breaks and those are preventable.

Car maintenance is something I know a lot of people avoid because it costs money and half the time it’s inconvenient. But the hypothetical numbers I used add up very quickly to significant amounts. Personally I would rather use that extra money to reduce or completely remove the next car payments. Keeping your car in good condition simply makes sense from a financial point of view, not to mention the benefits to the environment.

Posted in Saving Ideas | 1 Comment

The Cost of Holiday Travel

March 24th, 2008

With Easter just past I’m sure many of us took the trek to see family and friends to have some fun. Even if the drive is across the city there is some travel that as done to get there and unfortunately all of that travel has a cost. When we’re not really prepared for this that cost can make us dread the holidays even more than seeing those relatives we would much rather avoid.

Some holidays are more expensive than others (Christmas takes the cake on that) but that doesn’t mean all the others are that much cheaper. There are many hidden costs that creep up especially when it comes to the travel. With relatives living out of town you end up packing the kids into the car and driving to see your parents or grandma. The cost of the extra gas alone can make some people cringe.

Planning for all of these hidden and unexpected expenses can really help you out. Here are a few things that we did this time around to cut down the costs:

• Pack snacks rather than stop at fast food joints
• Keep splurge spending in check
• Take some leftovers (it can cut down your food bill the next week)
• Set aside money for the spending
• If you have kids plan to keep them occupied

Holidays can be a great time to catch up with friends and family you haven’t seen in a long time but it can also be stressful. Remember to pause and enjoy the time. Take stock of things, see how others live their lives and create yourself some memories. Plan for the trip so the hidden costs don’t surprise you.

Posted in Budgeting and Planning, Saving Ideas | 2 Comments

Frugality Sucks

March 4th, 2008

Lets be honest, not too many of us are naturally frugal people. I know that might seem a little strange at first but if you take a moment to think about it how many people do you know that are truly frugal? My guess would be very few. I was thinking about this myself and I could only come up with a couple examples out of the people that I know that are truly frugal. Being frugal isn’t fun and personally I think it sucks. But that doesn’t mean it isn’t necessary.

There are times in our lives when being frugal isn’t a choice but something that we simply have to do. When you have children and don’t make a lot of money you have no choice and you have to be frugal or meals won’t make it to the dinner table. When these times arise you simply do what needs to be done. I think this is one of those adaptabilities that humans posses. We do what we need to survive and what we need to do to protect our loved ones and offspring.

This leaves us with a great big gray area in my opinion. Most of us in debt look at our budgets and we cut back on the things we really don’t need to spend money on. We’ll cut our cost of entertainment or maybe trim down our food bills so that we’re living below our means. But we are being frugal by choice and often times this isn’t fun. This is the part of frugality that sucks. I’m in that boat right now. I’ve decided to cut back on my spending to make sure that I can make ends meet and really make them meet rather than fool myself into a false sense of belief.

Those of us out there that are naturally frugal simply won’t spend the extra money and as a result they would never need to cut back; at least not to the same extent as your average person who is in debt. In my efforts to get my finances under control I’ve stopped spending money on the things I thought I needed and really just wanted. I took a very hard look at what I was buying and why. But cutting those items down and in many cases out of my expenses I’ve been able to cut away the fat that didn’t need to be there. The net result for me has been a more simplistic approach to life in general.

Do I still want the big screen TV? Kind of but I know that it’s a want and not a need. I get enjoyment from watching movies with my wife but I know it’s not essential to my survival and that TV will do nothing but cost me money. If I had spare money I might purchase one but until that time arrives I can walk past them in the store and not think twice about buying one.

I am by no means perfect since I still want some things that I don’t need and worse still spend money on some things that are kind of pointless. For me this has been a process rather than a quick fix. I took a long time getting into debt and I want to make sure that when I’m out of debt that I don’t fall right back in. Finding a good balance between spending for want and for need will, I hope, help me live within my means. This is important to me because I do not enjoy being frugal and I don’t think many of us do. It’s simply something that needs to be done sometimes.

Posted in Saving Ideas, Debt | 3 Comments

Thoughts on Valentines Day

February 14th, 2008

Happy Valentines Day everyone! I couldn’t resist throwing out a post about this holiday since it’s a hallmark holiday that it screams to be avoided. Unfortunately its not quiet that easy, a lot of people attribute a lot to this day which is very sweet and cute but that doesn’t help the pocket book when chocolates, gifts and expensive dinners are involved. To prove the point a little further Yahoo! has an article up saying Americans will spend $17 Billion on this Valentines Day.

This holiday is one that shouldn’t exist, wait hear me out; if we didn’t wait for one day of the year to let our significant others know what we think and feel about them we wouldn’t need to take out a second mortgage just to make it an extra special affair. Now with all of that said it is nice to do something special to show your loved ones you care even if you need a special day on the calendar to remind you. It doesn’t have to be about the gifts and the money. Remember you’re trying to show them you care and you love them not that you can put yourself into debt extra fast on Valentines Day.

So for all of you out there with wives, husbands, girlfriends or boyfriends go out and show your special someone what they mean to you but make it from the heart not the pocket book it will mean that much more.

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The Job Search Series will continue tomorrow with Step 1 – Analyze your previous experience

Posted in Saving Ideas, Commentary | 2 Comments

The Cost of Entertainment

February 10th, 2008

Pretty much every activity that would entertain you comes with a price tag. It doesn’t matter if it’s watching TV or going out to a fancy dinner there is often a cost associated with our leisure activities. Depending on where you live and your lifestyle this could be very little or it could be a great deal. Entertainment much like shopping is something that our society revels in. Take for example the movie industry, each year there are hundreds of movies created, marketed and watched but the sheer volume of movies in north America compared to the rest of the world is significant.

I don’t want to sound like I’m against entertaining ourselves because I enjoy my downtime as much as the next person but there is a significant cost associated with it. A night out going to a dinner and a movie for two people can very quickly turn into a $100 evening, which is substantial.

The fact that we will spend money entertaining ourselves doesn’t have to be excessively expensive. There are alternatives to the more costly approaches.

Rather than going out to a costly dinner, cook at home. This can be just as much fun at a fraction of the cost. That doesn’t mean that you should never go out for dinner what I’m suggesting is take the time to cook with your significant other, step outside the box and try something you’ve never done before.

Renting a movie rather than going to see one in the theatre. This is another perfect example of how you can save a little money. Personally I enjoy watching a good movie but most movies don’t need to be seen on the big screen to be enjoyed.

A nice walk in the park rather than an excursion to the mall; granted the activities are different a lot of the basic motions are the same. You can explore your neighborhood and see what’s around you rather than fight crowds in a mall.

Take a trip to the local library. For people who enjoy a good book almost as much as a movie the cost of buying new books can very quickly add up. Books used to cost a couple dollars not that long ago, now they’re $10 if you’re lucky and heaven forbid buying a hardcover. Libraries offer the same books but without any cost (not to mention there’s a lot more of them in a library than any bookstore).

Entertaining yourself does not have to be an expensive activity if you put a little thought into the matter. Otherwise be prepared to spend a lot of money that you could have used to paying down some debt or saving for a trip.

Posted in Saving Ideas | 3 Comments

Saving on Grocery Spending

January 22nd, 2008

As I was reading through my RSS feeds this morning I ran across a post on Blogging Away Debt where Tricia was describing how she is trying to save the family some money on the grocery bill. This got me thinking about my spending habits in this area and even though my wife and I split the cost of food over the course of a month it inevitably adds up very quickly.

The ideal way to save money on groceries is to know what you are going to eat over the course of a month, pick recipes that have the same ingredients and then buy in bulk. Although this is probably the best way to save money on food costs its not necessarily the most fun.

In my particular case I have a different approach to grocery shopping than Tricia does. We decide what we’re going to have during the course of the day or at a maximum a couple days in advance and then we buy the groceries on the way home. Now this might not be the most efficient way to buy food it but because we decide our dinner menu with very little lead time it prevents us from buying food that we don’t end up eating.

The net result from our approach maybe that we spend more money on food by going every day but I believe that we end up spending less in the long run by not throwing out food. Wasted food is no different than if you threw your money away. With all of this said we still keep some staples stocked it was just a matter of reducing the amount of wasted food and money while keeping the menu/eating habits the same. If it came down to a necessity we could always revert to a planned menu and buy in bulk (hopefully not throwing anything out).

Posted in Saving Ideas, Sites/Articles | 2 Comments

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