Becoming Cheap

by Mr. Cheap

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As a reward for reading me all these long months (and following me when I upscaled and moved into Mike’s crib), I’m finally going to pull back the veil and provide 3 mind tricks to become cheap. I love little ideas that can give you a totally new way to evaluate the world (things like “Sunk Cost” blow my mind).

Keep in mind, knowledge can be dangerous if incorrectly applied. Luke Skywalker didn’t start trying to take over people’s minds until the *THIRD* movie (and even then, it got him thrown to the Rancor). If you apply these and your girlfriend / boyfriend / husband / wife dumps your ass (or if they turn into a Rancor) you’re not going to get any sympathy from me!

Mind Trick #1

Any time you’re going to make a sizable purchase (not a cup of coffee, we’re talking Canoe size purchase plus here), take 10-15 minutes (maybe in the store, maybe in your living room when searching on E*Bay) and imagine your life with that item. Imagine going out canoeing, or wearing the cardigan around campus (do kids where cardigans around campus these days? Did they ever? Does anyone know what a cardigan is?). Some times you’ll decide you can’t see yourself using the item much in the future, sometimes you’ll enjoy the idea of the item enough that you don’t need to actually purchase it.

Mind Trick #2

When you’re about to buy something (big or small), compare its purchase price to something you really enjoy. Say you like going to Mexico once a year to an all-inclusive for $2000. When you’re buying an extra-large double-double at Tim’s, ask yourself “Would I rather have the trip or 1300 cups of coffee? Say you like going to the movie on a weekly basis, ask yourself “Is dinner at a fancy restaurant really worth 4 movies to me?”

Mind Trick #3

Somewhat related to #2 (but different enough to justify being another point ;-) ), when you’re about to buy something, consider it in terms of your hourly salary (to take a trick from Ramit, if you’re paid an annual salary, your hourly rate is 1/2 it, so if you make $40K / year, your hourly rate is about $20). If you want to get really depressed, consider the price after sales tax AND AFTER INCOME TAX (e.g. reduce your salary by the tax rate you pay).

I saw a woman in a McDonald’s uniform coming out of Starbuck’s one day. She totally deserves a bit of a treat on her way to work (who doesn’t love a Mocha), and maybe its just the occassional indulgence (I doubt it though), but that drink would probably cost her the first hour of her shift. Who would ever trade an hour of labour for a bloody cup of coffee?!?!? Or even a cup without any blood in it???? ;-)

Does anyone have other “mind tricks” they like for saving money or just getting more out of life?

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{ 19 comments… read them below or add one }

1 MillionDollarJourney

My trick is if i’m in a store (electronics) and I want to buy something over $100, I wait a couple days. If my brain has still rationalized that I still “need” it, then i’ll buy it. :)

2 Mr. Cheap

MDJ: That’s a good one! I’ve often thought “I’ll leave it for a while and get it if I still want it down the road” and usually I forget all about it (or lose interest in owning it).

Electronics stores *are* always a temptation…

3 The Dividend Guy

#3 is the best way to bring you back to reality – it comes down to self-discipline and the ability to hold back. Not watching too much TV helps too.

4 guinness416

My trick is that two dollar coins and five dollar bills don’t exist. Therefore I can’t spend them; with a five dollah bill in my wallet I am broke. They get put in a jar and an envelope respectively, and are cashed in every time I go abroad, for spending money. I have entertained myself (and spouse) in Italy, Mexico and Ireland with this method, and though I’m not sure I’m saving as such, it prevents me dribbling away my cash on magazines, cups of tea, crappy sandwiches at lunch time, etc.

5 FourPillars

Funny post.

My version of #3 is to think of big expenditures in terms of “more years of working”. ie if I want to spend $30k on a new garage then that might translate into having to work two more years before retirement.

This method works better if you are a bit older :)

Mike

6 Wooly Woman

Good ideas!

I do the comparison trick too, often with Mr Wooly :) If we are out shopping and he says he would like something, I will equate it to the number of golf games he could play if he didn’t buy the item. Sometimes works, sometimes doesn’t.

For me, I am trying to walk away from an impulse purchase, and think if I really need/want it. If I decide I do, then I can get it next time I am shopping- same as MDJ above except it can be for any impulse shopping item.

7 the Wealthy Canadian

I use mind trick #3 a lot. Before I buy anything I consider how long I had to work for it. The real kicker is when I factor in tax. The only problem is when I stop buying anything,… once in a while you need to indulge a bit.

8 Mr. Cheap

WC: I run into that problem myself. You can push these ideas to the limit that you don’t buy anything (which kind of defeats the whole purpose of money and gets you into miser territory)

9 Vixen

It seems #3 is the trick most people use.

I use it all the time as well. Except, for me, I don’t think on an hourly basis since I waitress. Instead, I usually relate buying items in relation to how many tables I’d have to wait on to earn that much in tips.

And, I may not wear cardigans, but I do at least know what they are. :-D

10 Gates VP

Whenever it comes to buying non-essentials, I like to take #3 and drop it right down to actual disposable income.

That means money left after tax and rent and groceries and bills and savings. Cheap you’re making ~$32/hour, but you probably “dispose” about $15 of those. I know people making $45/hour who don’t “keep” that much.

Of course, when you start weighing your purchases that way you could actually justify the daily latte :)

End of the day, I think that the fundamental issue is “Mass”. Money is terribly nebulous, it’s just a fricken piece of paper or sometimes just numbers on a ledger, it doesn’t “weigh” anything it doesn’t mean anything.

In all three of your cases, you’re assigning some type of “mass” to that number. You’re comparing it to a dream or to “something else” or finally to a unit of your own time. The reason everyone likes #3 is that time has the most mass: “I worked for an hour and all I have to show is this stinkin’ latte!”

When you convert right down to disposable income and your hourly number plummets, most people suddenly realize how truly expensive their significant purchases become. The over-spenders can rationalize away the expenses by simply ignoring the reality or “mass” of their money situation. I know, I’ve done it!

This is same fundamental reason that the “cash-only” lifestyle works quite well for helping people out of debt. Of the current payment methods (Credit/Debit/Cheque), cash is the most physically significant one. I can guarantee you that most people (those who haven’t thought as we have) would change their spending habits almost instantly if they received their full paycheque in dollar bills and then had to make all of their payments from their stack (rent, taxes, car payments!). This would be especially true of taxes, it would likely be only a matter of months before the populace became irate at the government if they actually had to pay the tab “out of pocket”. (this of course is one of the reasons the government take their cut first :))

I know that we “frugal types” are often asked for help by the “less fortunate”. My first step would be to break out their budget using poker chips all of equal value. Watching stacks of poker chips go away (like living bar charts) will give the average person a huge sense of what’s going on; probably in a way they’ve never experienced.

In fact, I’m planning to do this with my fiancÚ this weekend as we plan our budget for the next year (she doesn’t know yet); so I can tell you how it goes :)

11 moneygardener

Wonderful post cheap!

Mind tricks are very important because they are a weapon against consumerism which is the great mind trick that is pressing on us every day.

12 Riscario Insider

Interesting tricks :)

Another one is to buy the item buy not open it for a few days (assuming it’s not 1300 cups of coffee). Either your anticipation will grow or you’ll realize you don’t need the item.

As you wait in the return line, you punish yourself for making the purchase in the first place.

With items like electronics, you rarely lose by waiting since you can get a lower price or better item. Patience pays.

13 telly

I like the idea of waiting a few days as well (though I rarely ever do it! ;)). I hate shopping so if I see something at the store, I generally just buy it. Online shopping is entirely different though…I need to take a time out.

When my sister and I were younger (early teens) we never got an allowance but my dad paid for our clothes, shoes, etc. So before heading out to the mall, we would ask my dad for some money to buy school clothes. He would tell us to go shopping, pick out some stuff and then report back on what we needed and how much it cost. Wow…that was a lot of work! By the time we’d get back home, we’d usually only remember a select few things that stood out (the ‘gotta have it’s’). I’m sure this method saved my dad buckets of money. :)

14 rocketc

Great post, can’t wait to try some of these. Instant gratification is a difficult thing to deny. . .

15 John D

This sounds like a great way to completely rip the fun out of your life and obsess about pennies until the day you die. What a way to spend the small number of precious years we get in this world.

16 FourPillars

Thanks for the inspirational words John.

Good luck with your spending!

Mike

17 telly

Very diplomatic response Mike. :)

18 Mr. Cheap

John D has made me see the light! Why am I saving like a fool, when I could SPEND, SPEND, SPEND!!!

See you guys later, I’ve got a date with my credit cards… Do you think I should buy 3 or 4 plasmas TVs?

19 FourPillars

Mr. C – lol!

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