Sunday, February 26, 2012

Understanding the True Value of Items

I was reading an article on a blog about 8 Financial Lessons from Ben Franklin taken from his autobiography.  The first value, understanding the true value of items, is one of my tenets on this site.

I promote a lot of deals on this web site and on twitter. This allows readers to find extreme savings on things and sometimes helps them create a better value for their hard earned cash.  Though, a deal does not make an item valuable. Value is found when an item enriches one's life over a quick fix.

I like to ask a few questions before I buy items that helps me determine if they have value and if I should buy them.  These questions are:

Why am I buying this?  This question fleshes out the purpose of the item.  It determines if the item is a want or a need.  If my answer is because it is on a sale or I think the kids would like that; that is a good indication that the item might not have a lot of value.  These are the items that end up in bins in the garage and later donated to Good Will.  If the answer is because I have been looking for this to fill this need for a while, or that would make this job easier, then it will probably add value to my life.

How long will it last?  Anyone who buys tools will understand this.  If a person pays up for a quality drill then it will last a long time and be a hard worker.  A cheap drill's motor will burn out if used too heavy or barely drive screws into a wall.  Therefore, that $40 drill on sale for $30 is probably not as good of deal as a $150 drill on sale for $130.  Over the life of the more expensive drill, one would have bought 4 or 5 of the cheaper drills and been frustrated with their use.

Is there a subsitute that is better?  This can be the opposite to the how long will it last question.  This question is asking if I need to pay up for quality.  If I only screwed in the occasional wall shelf, then spending $130 on a drill might not make sense.  This also means checking other brands or buying a used one.  For instance, I don't really care about what paper towel I use, so what is below a certain price point I buy.

What else could I spend the money on?  To me this is one of the most important questions of all.  If a dollar is spent on an item it cannot be spent on something else.  I bring this up to my wife all the time about mochas and how we could spend that money on an espresso maker and make our own mochas.  Then we would save on gas too. The same thing could be said for eating out versus eating at home.  The savings can go towards buying a new car, paying down a mortgage or paying off student loans.  This in turn saves money on interest and multiplies the savings effect.

What other items would fill this items role?  When looking for a bed for my cat, I didn't buy the cat bed and decided to just throw some old blankets into a box.  When our mastiff destroyed his bed we just threw some cedar shavings into his dog house to lay on.

Where else can I get it for less?  Just because a store threw an item on sale it doesn't mean it is the best deal.  We saw that this weekend with the Lord of the Rings box set.  Amazon had it for $49 but Walmart had it for $35.  Feelings aside about Walmart, it pays to check other stores and sites.  The Internet and cell phone apps like RedLaser make this is easier than ever.  Normally, the person doesn't have to leave the current store because they price match.

Do I need it now, or can I wait to see if it goes on sale?  Waiting for sales or deals is the key to stretching that dollar.  There are very few times that things are needed right away.  Most items go on sale a couple of times a year.  I had a canner in my wish list on Amazon for 5 months before I pulled the trigger on buying.  The reason I bought it was because I saw the price had dropped to $177 from $199.  Because I had watched it for 5 months, I knew this was a deal and saved $20.  This also works with food and household items.  When there is a sale, buy a few months supply's worth.  Then wait for the next sale while using what was bought from the last one.

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