Sunday, March 28, 2010

Thoughts on Spending

A few posts ago, my new (used) cell phone sparked some discussion that sparked some thoughts about my spending habits. In a conversation that week, Kent asked me if I feel bad spending money on expensive items. (I should note here that Kent considers expensive to mean something that costs more than it should. I've always understood it as something at or above a certain dollar amount. That dollar amount has changed through the years and I won't say what it is now, but it's basically more than I would normally drop on an item I like at the store.) His question, and my answer, which is that yes, I generally am adverse to spending for nice things, has been working in my mind.

Don't get me wrong. I like owning nice things; but only if I can get a really good deal on them or if someone gives them to me. It's not just a matter of being frugal. I deep down feel...what's the best word?..kind of undeserving of being able to spend money. I think there are a few factors that contribute to this part of my personality.

There is some part that humility plays here. (Don't you love it when someone tells you how humble they are?! That's really not what I'm trying to do. I'm talking about the humble circumstances that people can live in.) I don't begrudge how anyone else spends their money. I love this part of the American Dream, and I think people should work hard to fulfill their wants. I do not like when people rack up consumer debt to buy things that will force them into financial hardship later, but that's not what I'm talking about. Part of it is seeing the living conditions of so many people in developing countries, and even in our own U.S. history. Those people have lived happy, productive lives in small homes while wearing non-name brand clothing. I think a humble life is a good life and I simply don't want many showy things.

When I have wanted things that tend to be pricey, I've found ways to get them cheap or free. When we bought our house, we kept a lot of the previous owner's furniture with it. For landscaping boulders, I asked the developer's permission to pick big rocks out of the field next to us. For quality clothing, I usually shop at DI. And our family has been blessed with hand-me-downs since almost the beginning of our marriage. I love hand-me-downs. I think not having to pay for furniture or clothing has inhibited my ability to do so when I can't get it cheap or free. Instead, I just wait and eventually a neighbor will give something away that fits my need perfectly.

In reading The Tipping Point, I really identified with those people that the author calls "mavens". Mavens shop prices and quality so they know what a truly good deal is on a specific item, and then they only buy that item if it's a good deal. They research consumer reports and compare brands. And they pass their information on to others. That's me in many ways. For big-ticket items, I shop at least three brands against each other, and then I shop at least three stores or internet sites for the best deal on a given brand. The bigger the purchase, the more I compare. In buying our minivan, I narrowed the field to eight models that ranked high with consumers, and then I narrowed it to two models after sitting in and test driving six of the eight, and then I shopped prices with several dealers. We were so happy with our purchase and the experience with Utah Auto Sales that I have recommended them to many friends.

I find that when I am going to spend on something, I also have to take a lot of time. It's almost like the more time I spend shopping for it, the better I can justify later owning it. I would not feel right about buying something spendy on the spur of the moment. One of the reasons I haven't blogged recently is that I spent seven days placing an order in a seed catalog. It drives me crazy that I devote so much time to getting whatever I decide is the best price for something. What a waste of time!

I apologize for my meandering thoughts. I guess what bothers me is that I am bothered by the idea of paying a chunk of money for anything. Maybe the issue is that I don't have that option right now. I like to think that if we had a big income, I wouldn't feel guilty buying something nice that we could afford, but I really think I would have guilt attached to it. And I can't explain where that guilt comes from or if it's even valid.

What are your thoughts on spending?


Paul said...

I think at least part of what you are explaining was in the way you were raised. Unless one has unlimited wealth, whatever you can save on one purchase can then be applied toward other purchases (or gifts or donations) which would not otherwise be possible. Sorry if this has caused you any grief!

Carolyn said...

I tend to analyze my purchase decisions based on opportunity cost (one of my favorite economic principles). If I make this purchase, what is the next best thing that I'll be giving up? Also, I almost never pay full price for something, because I know I won't enjoy it as much if I pay full price and then find it cheaper somewhere else. Somehow clothes are cuter, appliances are more useful, etc, if I get a good deal on them. And the cheaper I get them, the better they are!

Min said...

I'm poor and I hate it. The End.
PS - I like your new profile picture. Cute!

mindy said...

I think about this a lot. I know that my mom was always a deal seeker, and is so good at finding things on sale that she doesn't often pay full price for anything. I also have an idea of how much things are "worth" and I hate spending more than that on them. I'm pretty sure I'll always be this way, even if we end up wealthy someday. Hopefully these habits will help us get there! Also, like Carolyn, I look at the opportunity cost of money. Do I want to spend XX on this? If I do, I can only spend X on this other thing.

Charlotte said...

I've dealt with this for a couple years. I lived at or below the poverty line until Peter finished residency and our income jumped (significantly). For a long time I still felt guilty about having money to buy things. But for us it has often become a matter of convenience. Peter gets paid enough per hour that spending hours trying to find the best deal and save $50 is not worth it anymore.

That being said, I still shop at the cheapest grocery store and check the consignment store first for kids' clothes. I always check the store brands before I buy name (but am now more likely to buy the brand if the quality is better). I still usually comparison shop big ticket items, too. I just enjoy being frugal.

And I am getting better at not being ashamed at my husband's income.

Mary said...

As I continue to mull this topic over in my brain, it really comes down to this: I like being frugal, even if it sometimes means I spend too much time comparison shopping only to discover that my first gut instinct was the one that proves to be the best deal. If we have more spending money in the future, I hope I'll be able to cut down the comparisons and just trust my gut and be happy that I'm saving time and almost always also saving money.

I think most of my spending habits are due to the financial struggles of my adult life. (So you're off the hook, Dad.) Some of it may also be human nature. Kent remembers reading in "Predictably Irrational" by Dan Ariely that marketers use something called price anchoring to manipulate what consumers consider to be a good deal. For example, few people order the most expensive item on a menu; that high-priced item is put there to make us feel okay about spending on other items. Sounds like a good read that would explain a lot of my thoughts on money.

Carolyn and Mindy, I studied opportunity costs in college, but I've never really applied it beyond how quickly we can pay off our mortgage. I think that once we own our house free and clear, I will be emotionally more free to spend on wants.

Charlotte, I appreciate your last line. Peter has worked hard and you both have sacrificed a lot to have the income he does--and I'm sure the sacrifice continues in respect to time and stress. I think that if Kent one day makes it big in business, I will still enjoy the game of being frugal and I hope I can be guided by the Spirit in how to bless others' lives financially.

spadaclan said...

You know Mary, I think we would be the perfect money manager if we were smashed into the same body. I don't know how many times a week I think, "Oh man I wish I were more like Mary!" and it sounds like, maybe just a little, that you are saying something like, "Gosh I wish I were more like Jenny." You are aren't you? Maybe... just a little.

Nate said...

I think the key is to only buy things that are high quality and will last (whether it is the name brand, the store brand, on consignment, at a yard sale or at a high priced specialty store).

It doesn't do you any good to get a great deal on a low cost/low quality item.

Christy and I learned very early on in our marriage that it's worth it to buy higher quality so we don't end up replacing things nearly as often (even if it meant saving up longer in order to be able to buy that higher quality item).

I've certainly overspent on certain purchases (Remember Christy's sewing/embroidery machine?) and underspent on others (Cardboard entertainment center anyone?) Overall though, the purchases I've been most pleased with are the ones that continue to be "nice" years after they were bought.

It reminds me of this saying:

Buy cheap -- be happy once... be sad many times
Buy high end -- be sad once... be happy many times

Mary - I'm surprised that you didn't see yourself doing opportunity cost analysis for your purchasing decisions. I've always considered this principle when shopping (and you are a much more frugal shopper than I am).

I agree with you on the house thing - but I would say it is much easier to conduct effective opportunity cost analysis on big-ticket items than it is for the every-day stuff we buy.

It was easy for me to understand that buying a boat meant that I couldn't do X, Y, or Z and it was part of the decision-making process we went through.

It's a lot harder to actually ask yourself what the next best thing you are giving up when you're comparison shopping brands of cheese.

Mary said...

Jenny--I do wish I were more like you--mostly in your extroverted ways--but also I sometimes would like to not be such a tightwad and just spontaneously enjoy a fun activity with my kids even if it meant spending some money. As it is, I have to schedule and plan out those activities to convince myself that the financial cost is worth doing something different and enjoying my children's fun. So at least they happen, even if they aren't spontaneous.

Nate--I agree about the high-quality purchases. When you pay extra for those, you are also paying for something that will last and/or require less maintenance, so the price is worth it.

As far as considering opportunity cost goes, I've concluded that my thinking has evolved over the course of my marriage. I do remember weighing opportunity cost as a college student. And I used to budget like crazy. Then I found myself tracking purchases in my brain to the point that my actual spending matched up to my budgeted spending without having to double check where I was at for the month.

Several years ago, when Kent and I began going through difficult financial times, I reigned in my spending to the minimum and kept it there. More importantly, I learned that if we were faithful in paying tithing and a generous fast offering (to the point that the amount was a true sacrifice), the Lord took care of us in unexpected ways. He would even provide for our wants, not just needs. A lot of you have been answers to those prayers: we had groceries left on our step; my sister wrecked her car and gave it to us, which Kent fixed; when I mentioned in a prayer that I would like a window for the office, a cousin showed up with one left over from a house he had worked on. (I guess I should be praying for a window installer, because that window is still sitting in the garage.)

I have been very grateful for the generosity of others. I think it is this reliance on the Lord that has made me want to be very careful about how we spend because I don't want to take His gifts for granted. Yet at the same time, I kind of get a sense of what big purchases would be okay by the timing of what the Lord places in our paths. An example is my garden. I began feeling like I needed to get serious about growing food for my family. To set it up right would require about $1,000. The timing worked out that our tax return last year covered most of the materials, and I feel like the Lord provided a way for me to start the garden He inspired. This year, our tax return will go against our mortgage and fund several family reunions. I've felt, lately, that the Lord wants me to focus attention on my family and extended family, and He is providing a way for us to put our energy there.

Thank you, everyone, for your comments. I think I've rediscovered the Lord's hand in this part of my life, and I believe that with this perspective, I'll have peace about spending decisions regardless of how large or small our income will be in the years ahead.