Economic Survival 101: Smart Shopping Taking a step back and reviewing what you buy can make a big difference in the years to come. BY AL JACOBS
Keep more money in your clip by being more critical of your purchasing habits.
When economic times are good, you and your spouse may be inclined to shop with little regard for price or value. But when conditions turn sour it’s another story. As your dollars must now be stretched longer and harder, you’d better spend each of them wisely.
From household items to personal items, it would be wise to take a moment to stop and think about your purchases. Foolish spending will cause tremendous turmoil at a time when couples need to come together. So consider some of your current spending habits and ask: are they truly serving my marriage?
What brand of watch do you wear? Whether a top-of-the-line Rolex or an economy Timex, recognize both keep excellent time. The current models all do a better job than the "precision" pocket watch your great-grand-uncle Elmo used as a railroad engineer. The only justification for a high-priced model is self-image and the illusion of prosperity. These are both overrated.
And while on the subject of small mechanical devices that serve a need, consider the hyperbole employed by one firm to convince us of the importance of a $600 ballpoint pen. The arguments include an appreciation of beauty and workmanship, the profound emotional experience you receive utilizing a fine writing instrument, and the implication you will be admired by clients and associates for your taste and culture. There are two fascinating aspects of this campaign: the first being that the hired pitchmen manages to keep a straight face while reading their lines, and the other is that anyone not certifiably demented actually believes a word of it.
What can be said about wristwatches and ballpoint pens is equally true as to other highly promoted products. These include magazine offerings, timeshare projects, $300 per ounce bottles of perfume, Las Vegas weekend getaways and the purchase of lottery tickets, to name just a few. As a rule of thumb, the more overpriced the merchandise, the more innovative its promotion.
Let me offer a few other examples of money badly spent, which added up over a lifetime represents a fair chunk of your earnings. Twenty-four rolls of a popular brand of toilet paper is available at a major box store for $10.19. Six rolls of the same product, selling at other stores costs $6.46, are easily dropped into a shopping cart. The 250% markup doesn’t seem to bother many housewives, but it it's a lesson to look at the per roll price.
And speaking of paper products, where might stationery be bought cheaply? Except for top-grade rag content or custom-engraved stock, avoid the stationery stores. Even the major discounters are not the places to go. A little comparison-shopping reveals paper supply houses offer the lowest prices, and most are open to the general public.
When you fill your car with gasoline, does the lesser-priced regular grade or the higher-priced premium grade end up in your tank? Don’t base your decision on assurances by the service station manager promoting the more expensive fuel, but on performance you can actually experience. The fundamental difference between the two grades is octane number?burning speed—when in earlier-year-model cars the slower burning helped prevent engine "knock." Because of the lower compression ratios of today's cars, most function satisfactorily on 87-octane fuel. Unless that causes your auto engine to “ping” when climbing a slight hill, use the cheaper fuel.
I hope this message is coming across to every couple clearly. Don’t make your buying decisions based on urging from shopkeepers or exhortation from advertising. Sharpen your buying habits with a healthy dose of skepticism. Look closely at the product, read the specifications, verify the quality and compare prices. You’ll often find what is claimed is not what is offered. In most of your purchases, you are less familiar with a product than are its vendors. You can overcome this disadvantage with a little effort and by educating yourself. The results are cumulative and your marriage will become stronger, even in the most difficult of times.
Al Jacobs has been a professional investor for nearly four decades, with articles that appear regularly in a variety of online and print publications. His financial column, "On the Money Trail," can be viewed at www.onthemoneytrail.com.