Lesson 8: Spending More to Buy Nicer Things

Being married means that I spend more on nicer things than I would have otherwise. Case in point: The two pictures show the relative differene in my perception of a "dream house" at this point in our lives. The first one is offered for a grand total of $7000, the second, for something like 2.1 mil. While I somewhat jest at the extent of our differences (who wouldn't want house #2?), the fact of the matter remains that as a single individual, I would probably have no problem living in a $7000 hovel. (In some ways, the contrarian glamor of it is rather appealing). Nevertheless, I wouldn't ever want my wife to have to live in a roach infested shack. (See Lesson 9: Living a happier, healthier life). Before I got married, I slept on a $50 futon, which was great for me, but I deemed unacceptable for married folk. We went out and got curtains and rods for the windows (which were perfectly fine bare).

But the real difference is the attitude of buying - not for an immediate need - but for something that is going to last. As opposed to buying furniture made of particle board that will disintigrate at the first sign of moisture, I've bought furniture that hopefully will last for years. Instead of buying tools for a project based on "what's the least expensive", I've bought tools that will last a lifetime (or at least have a guarantee for that long).

Many people buy for "now". They want the DVD/VCR combo, so they buy the Cheap-mart version for $50, as opposed to spending $90 for a version that will last more than twice as long (prices quoted are fictitious with no knowledge of actual prices). Such tradeoffs on price and quality are often difficult to quantify, but can be key to saving big bucks in the future. The way I was raised, if something is worth getting, its worth spending the extra time and asking the extra questions to make sure you're getting the best value. This really is the key, whether you are buying an air mattress, or a house. Having the right information allows you to make a good decision on the tradeoffs between price and quality - sometimes there isn't any difference, sometimes 5-10 dollars can make a big deal. So sure, I do spend more on things now that I'm married. But I'm confident that the extra money I spend has bought me quality, functionality, and value that more than makes up for the dollars of extra price.

10 Lessons Learned from a Year of Marriage

1) Marriage should be built on a lot more than financial expectations (hence the phrase in marriage vows "for better, for worse, for richer, for poorer...")
2) Marriage will not solve money problems - keys to successful money management work whether you are married or not
3) But some of the best memories are from doing activities that require little to no money
4) Its important to talk about financial goals and expectations
5) But FAFSA rules are against getting married
6) Taxes are a lot less
7) But you also spend less in total on housing, food, utilities, etc.
8) You also spend more than you would have to buy nicer things
9) As a male, you take a lot better care of yourself than when you were single
10) You spend a lot less on gas to go visit your fiancee six hours away

Over the next couple of days, I hope to talk about each one of these lessons - so be sure to tune back in!

Do It Yourself!

You know the old saying - "If you want something done right, do it yourself." Not only is this the way to make sure the work you do is quality work - but it can often be a lot cheaper too. Just in the past three weeks, I have done a number of projects around, some for me, some for others, but all which could have been done by someone who would have a)Charged for labor, and/or b)would have charged some sort of markup on materials. I was amazed once I tallied up the numbers how much I would have had to spend to get it fixed by "outside" help. Some of the figures below are somewhat approximate, but I feel that they wouldn't have been too far off - perhaps some of the figures for what I would have paid would have been even more! All of them, however, involved some sort of investment of time. For example, you'll notice that changing the oil on the car saved me about $20. While 20 bucks is 20 bucks, by the time you buy a filter and oil, and have to fight jacking up and getting under the car.... I probably wouldn't protest too much with a person that said it wasn't worth the savings - especially if you don't have a place (or tools) to work on it. However, most of the items on the list represent real savings - the cost it would have taken to have a repair man to look at the air conditioner - at least $55. The cost to have a repair person to put on the new fender (as well as the cost of getting it new) - big bucks. Luckily, there are a lot of places (many free) out there that help even the most idiotic of us work on most of the projects that we'll come across. MSN has "Be Jane" (hey some of those tips aren't bad for guys either). Lowes has their project center. For $20, Haynes manuals have a step by step troubleshooting and teardown (and put back together too!) guide. On the other hand, if you're the type person that tends to break more by trying to fix something.... maybe this isn't such a great idea. But for most of us, having a little gumption can keep a lot of cash right where it should be - in your wallet!

Money Saving Tips: Eliminate Baggage from your life

Over at NCN, a popular post has been the compilation of money saving tips from all over the blogosphere. To keep up with the Smith's and the Jones', I thought I would go ahead and post as well.

On Sunday, I talked about the "Ancient" Portfolio theory and how important it was to look at the choices you are making and determine to life simply and not strive for luxury you can't afford. This is my biggest money saving tip (perhaps its a philosophy really): Eliminate baggage from your life.

Here at Smiths Trading Post, my goal is to help people figure out the habits that they need to pick up, and the items in their life that need jettisoned. Let me explain. By eliminating or significantly reducing vices in our life, whether that be alcohol, cigarrettes, or an addiction to Starbucks lattes. MSN had an article on vices awhile back that itemized the costs of some of these, and revealed that they can reach in the thousands of dollars. A $2.50 latte every workday may not seem like a lot, winds up being over $500 in a year. Maybe you'll decide that you don't really need cable television - perhaps you can save $300 a year. Perhaps you'll eat home one more time at home in a week - for a couple of two at $20 a meal, that would save you almost $1000.

Essentially, taking stock in this way forces us to evaluate our conceptions of what give us meaning - do I have to have cable in order to be happy? Will I really feel deprived if I buy a used car rather than a brand new one?

Just as the pioneers had to forge a new path for themselves, we are blazing the trail for our financial future. An just as they had to leave much of their former life behind, we have to leave much of our (hidden) passion for luxury on the side of the road. I'm not necessarily advocating a strict Spartan existence, but I do think most of us (me included) could take a rather critical view our lives and can find items that are holding us back from achieving the the goals we have set for ourselves.

"Ancient" Portfolio Theory

Most people have heard of the "Modern Portfolio Theory". Generally, it posits that diversifying one's portfolio, properly diversifying for a given level of risk will maximize returns. It's interesting that throughout history, however, that for any given level of skills or situations, the path to financial freedom has been reletively unchanged. Sure we've become more "sophisticated" with our credit cards, stock markets and loan structures, but the "big things", the large levers that drive financial success, haven't really changed. Proverbs 21:17 says: "He that loveth pleasure shall be a poor man: he that loveth wine and oil shall not be rich." Living simply and frugally (i.e. living within your means), carefully managing and avoiding debt, and working hard, are the keys to diversifying your personal character portfolio. It's often easy to blame others for our financial situation, but in the end we are responsible for the results of our own financial choices. Its always good to take some time to evaluate your life, and determine if the choices you are making, even perhaps the "passive/default choices" are helping or hindering the realization of your goals.