Thursday, January 17, 2013

CFE: Saving Money The DIRK® Way

The Backstory: Lifehacker had a silly item about saving money by imagining things cost 10 times as much. Many people in the comments remarked how dumb an idea this is in practice, so I chimed in with this:

As others have noted, this is stupid advice because it asks you to imagine spending something no one without a royal title would consider paying.

What I do is view money not as a number but in terms of what it buys and what not spending on one thing allows me to purchase somewhere else. For example, I was considering getting a Galaxy S3 on AT&T. Amazon did a sale last year where all non-iPhones were a penny, so I decided to wait a couple of months for the time they'd done the sale to save the $200, which is like 20 Blu-rays on sale.. While waiting, the Nexus 4 was released and I'm using it with Straight Talk. Over the term of what the AT&T contract would've been, I'm saving over $900 going this route which is a new laptop or most of an HDTV or rent and gasoline for a month.

The reason people don't realize how the little things add up. Going to the cafeteria for lunch costs $7 a day, that's not so bad, right? Sure, unless you realize that it's $35 per week or $1750 per year! What aren't you able to buy with that $1750? How about buying some lunch meats, cheese and bread for $10 per week, brown-bagging it, and having $1250 more in your pocket to spend on something else? Don't buy the new game the day it comes out for $60; wait 6 months or a year and get it for $10 - the entertainment value doesn't evaporate.

With a little patience and some deferred gratification, you can save tons of money. Instead of imagining something costing 10X as much, just multiply what something costs over time and then see how much other stuff you could buy (or SAVE!) instead. I'm able to live a lifestyle of someone making twice as much by just being smart about spending. While my friends are subsisting one paycheck to the next or are buried with credit card debt, I've got no debt, just pay my monthly bills/rent/car lease without interest, and have the ability to splurge on whatever I want on the rare occasions some deal comes along because I've saved.
Another tip is taking drinks with you when going to the bar. Since you have to go outside to smoke, it doesn't look weird to be going to the parking lot in between bands. Two tall boy cans of Labatt Max Ice are $3 (plus tax and deposit - $3.38 at the party store and have the liquid quantity of four beers and the alcohol content of eight beers. Depending on the bar, brand, and tipping, eight beers would cost you around $30! Save $26 bucks by getting your drink on in the car or buy one in the bar and still save a Jackson.

If you drink pop (soda, Coke, soft drinks, whatever your locality calls it) and aren't buying 2-liter bottles, you're throwing money away. People laugh at my giant bottles of pop at work, but I paid $1 for over 64 ounces - don't tell Nanny Doomberg! - while they paid at least $1.20 for the 20 oz. bottle they have. I've got three times the pop for less than a third the price. When there's a sale, I stock up. I drink about a liter a day, so $2.50 takes care of me for a week. Co-workers are paying at least that much per DAY for their consumption - five times as much. Chug!