Comments on: Smart Savings, Dumb Savings

By: Sustain_ability

Sustain_ability — Sun, 20 Jan 2008 12:42:06 +0000

Had a huge discussion with engineer types about housewives using SUVs daily but never on the highway – in/security factor, why pay two way car insurance, affordable housing for couples having children but hours away from office, etc. The resource wars are upon us, it seems, with violence becoming a permanent “feature” of modernity, but as with pollution, being “exported” to someone else’s backyard. Promoting green lifestyles takes on a much bigger meaning if you consider these things.

By: FourPillars

FourPillars — Fri, 04 Jan 2008 15:21:50 +0000

James, you are right but it’s the rental schedule that is relevant since I think the rental amounts have gone down a bit. I think it’s gone from $20 to $15/month which will extend the payback period. Regardless, it’s still worthwhile for me since I won’t be going HD for a while.

Mike

By: James

James — Fri, 04 Jan 2008 14:28:12 +0000

Four Pillar, when buying the PVR you have to keep in mind that the price of the PVR will drop over time, so your payback schedule is a little bit understated. Give it a year and they will be dirt cheap because everybody will want a HD PVR.

By: This and That

This and That — Fri, 04 Jan 2008 02:10:22 +0000

[...] you spend money to save money? Mr. Cheap posted an useful thumb rule from a real-estate book he is [...]

By: Mr. Cheap

Mr. Cheap — Sat, 29 Dec 2007 22:31:24 +0000

Mrs. Micah: If it’d been a close case, I might have been willing to go with it for the increased building value and as a neat little talking point about the building, but it was just *SO* expensive for such a little return that it didn’t seem worth trying to justify the purchase…

By: Mrs. Micah

Mrs. Micah — Sat, 29 Dec 2007 21:52:24 +0000

Interesting. Obviously one has to draw a line somewhere about when savings need to be in effect. 3 years seems like a decent rule of thumb.

Another question–will the building gain value if it has solar power? If you’re renting space, might it be more valuable? Also, if you’re doing LEEDS green building initiative, that would be a huge step. I don’t know if it gets you tax breaks, but it at least allows you to classify your “greenness.”

By: Four Pillars

Four Pillars — Sat, 29 Dec 2007 03:34:27 +0000

Nancy – you should tie the mug to your wrist!

Mike

By: nancy (aka money coach)

nancy (aka money coach) — Sat, 29 Dec 2007 02:43:30 +0000

this post brought a wry grin to my face. I don’t know how many times I’ve justified my own literal latte-factor: buying a mug which = 10� off each drink and figuring it would pay for itself. I didn’t factor in how easy it is to lose mugs that travel with me! So I’ve yet to ever come close to “paying off” the mug purchase. Having said that, I’d still rather pay more for a mug (or a couple) that I reuse, and save the paper.

By: Mr. Cheap

Mr. Cheap — Fri, 28 Dec 2007 19:31:37 +0000

Potato: I’m not sure if there’s any math to back it up… You could probably fiddle around with the math behind a the time value of money calculation and get something that would justify 3 years (or any other time frame you wanted, just play with your assumptions until you get the answer you want).

I suspect the 3 years is just an arbitrary point that experience has led him to…

By: Potato

Potato — Thu, 27 Dec 2007 21:58:54 +0000

What’s the math behind the 3-year payback rule of thumb? My naive thinking would be 5+-years: the pool of money you start with should double every ~10 years at ~7%, so after 5 years you earn back your original in savings, and another 5 years you earn that again to get your doubling — and if whatever you invest in still has life left in it, you have assets to boot.

Don’t forget to factor in the future potential savings when making decisions like this: will electricity be as cheap in 10 years as it is today? Would that influence things? For this specific example, probably not, since you can always buy solar panels later when they make more immediate financial sense. For other things where you might need to decide sooner (a bulb burned out and you need to decide whether to buy another incandescent or CFL, or your car dies and you’re deciding between a civic or civic hybrid, etc) then guessing what the future holds becomes more important