Financial Diet: Spending Until 80% Full

Fitness has been one of my goals for this year (as it probably is for many people, in a lot of years), but this time I’ve put forth more effort into it. Aside from the most important part – taking action – I’ve done a little more reading on ways to improve health.

Of course, as I say here periodically, health and money are interrelated. Improve one, and you can help the other.  Now in this case, I thought I’d actually do something a bit different. Here,  I thought of applying a health-related principle to money. That concept: Hara Hachi Bu.

From what I’ve learned, Hara Hachi Bu is an Okinawan approach to regulating eating. The idea is that one should eat until reaching the point of being 80% full. The result? People eat less, don’t gain unnecessary weight, and have better health. It’s been said that Okinawa has an exceptionally high percentage of centenarians compared to the rest of the world. Eating fewer calories, when paired with an active lifestyle, might really help longevity and the ability to live a healthy life to 100.

It got me thinking – why not apply the 80% concept to our spending?

If calorie restriction and eating until 80% full might play a role in longevity, maybe spending 80% of what we think we need can play a role in longevity of our savings as well. If we spend less, we can increase our income minus expense gap. This increased savings, with time, proper investing, and the power of compounding, can result in a substantially increased net worth and financial security. This extended life of our savings can help us live a higher quality of life for a longer period of time.

Now, I don’t think this is just a matter of taking a high level of spending and bringing it down by 20%. Rather, I’m talking about taking what would be a reasonable budget made by financially responsible people, and living on 80% of it.

This could entail spending (and living on) less as follows:

• Housing – moving to a less expensive area or living in a smaller home
• Cars – driving an older used car, or for a family getting rid of a second car
• Food – cutting out dining outside, and going the extra mile to make frugal dining choices

It’s almost like thinking about what you need to live comfortably, and then spending at 80% of that level. Maybe we can get used to that, just like the body gets used to living on less calories when stopping at 80% full.

Update: Just so everyone knows what I mean by 80%, I’m referring to 80% of current expenses. I’m not referring to spending 80% of income and saving 20%. Rather, I mean take whatever your expense level is and multiply it by 0.8. For example, if a family earns $100,000 and spends $80,000, they’re saving $20,000. By applying this Hara Hachi Bu concept, the family would take the $80,000 expenses, multiply by 80%, and spend the resulting amount instead: $64,000. In this case, savings as a percentage of incomes goes up from 20% to 36%!

My Questions for You

What do you think of the idea of living on 80% of an otherwise reasonable expense level?

Do you think that doing this could extend the life of your savings and substantially grow your net worth?

Much like the Hara Hachi Bu rule, do you think that this approach is one that would require a higher level of discipline than many of us are accustomed to?

Can you cut expenses with these?

It’s nice to find ways to cut out expenses, and operate a bit leaner financially. That is, as long as the changes don’t impact your day-to-day life too much:) Then, it’s a matter of viewing them as trade-offs.

A recent article in on Yahoo! Finance discussed 12 things that people can choose to stop spending on in the new year. Now, I often think that it’s worthwhile to consider how much time one spends on trying to save money, as it’s necessary to make money first before we can save it.  That being said, if we’re going to spend some time focusing on saving on consumer purchases, we might as well do it with some type of framework.

Recall that I recently posted on the topic of trying to spend wisely, where I suggested that we ask ourselves the following questions before purchasing:

1. Do we truly need the item?
2. Can we easily find a lower cost alternative?

Keeping that in mind, I’m going to go through the list of what to cut from our budgets (from the aforementioned article), and will answer those two questions for each one. Then, I’ll describe what I’ll actually do in practice.

1. Coffee Shop Visits
• I don’t truly need to do this, though I enjoy it
• A lower cost alternative is available, such as home brewing
• What will I do?: I will keep visiting. I suppose it might seem like I’m going against the system I devised, but I look at the visits as more than coffee. Which, by the way, is simply black coffee and not one of the more expensive drinks. I view it as renting space where I can get some work or writing done while enjoying a drink. The combination works for me in terms of productivity, so I’m going to keep doing it occasionally.
2. Incandescent Light Bulbs
• I don’t really need to buy these exact type
• Not sure a lower cost alternative is available, unless you operate on sunlight:) Well, longer-term the energy-efficient ones are supposed to be cheaper anyway.
• What will I do?: Buy the energy-efficient ones, and save money in the long run. Besides, the others are effectively being phased out.
3. Disposable Water Bottles
• I don’t need to buy these bottles
• Lower cost alternatives are available, such as carrying a reusable bottle or using a water fountain. Remember when that was the norm? If not, maybe it’s just people that aren’t super young anymore:)
• What will I do?: Use reusable bottles. I’ve bought a few, and will use them regularly. The disposable bottles I have bought were purchased in bulk for maybe 10 to 15 cents each – as opposed to the $1 or more rip off for single bottles many places. But still, once you get past the initial investment in a reusable container, it eventually represents the cheaper choice.
4. Baggage Fees
• Usually, for shorter trips, I don’t need to check a bag
• A lower cost alternative is available: packing lightly, and carrying on
• What will I do? Going forward, on personal travel I will be sure to pack lightly and avoid such fees. Of course, I had previously discovered an alternative way to avoid checked bag fees that I won’t try on purpose, but thought I’d share anyway:)
5. Subscriptions You Don’t Use
• We don’t need to spend on things we don’t use!
• A lower cost alternative might be available if you choose to read - going online is one way
• What will I do? Continue to go subscription-free. One can go online for much information, or go to the local library and read hard-copy periodicals in many cases
6. Baby Food
• I’m a parent, but past the baby days. But if you have a baby, store bought baby food technically isn’t a need
• A lower cost alternative could be making it at home, so yes – one is likely available
• What would I do? In that case, being in the position of being a parent of a baby, I would still buy some pre-made baby food. Now, I do think that it seems like a good idea to mix in some homemade food. However, with the demands of daily life for many working parents, time is valuable. Speaking from experience, I think buying at least some baby food is worth it for working parents.
7. Credit Score Fees
• I think checking one’s credit score is very important, probably a need
• Apparently, free options are available
• What will I do? I like the option of getting something for free.
8. Cable
• I don’t truly need cable
• Yes, there are plenty of lower cost alternatives for watching shows and movies.  Hulu and Netflix were a few mentioned.
• What will I do? Good question. Cable right now offers some things kids really enjoy, which has tipped the scales in its favor. But wow, it’s not cheap. I’m contemplating ending it, with other options filling in the gaps.  It’s not a need.
9. Landline Phone
• I don’t need a landline phone
• There are lower cost options, and alternatives that are arguably more necessary
• What will I do? I don’t have a landline phone, and haven’t had one for a while.
10. Cleaning Supplies
• I think they’re needed
• There might be lower cost options, in terms of homemade concoctions
• What will I do? I think there’s room for swapping out chemicals for more natural options for certain things, but I don’t have the time to devote to making my own cleaning supplies at this time. I’m sticking to primarily store bought items.
11. ATM Fees
• ATMs are useful, but their fees are not necessary
• There are lower cost options, such as finding an institution that doesn’t charge you fees along those lines
• What will I do? What I currently do, which is limit ATM usage to my own bank, where I don’t pay any such fees
12. Home Repairs
• It’s necessary to do home repairs, but only sometimes necessary to pay someone to do them
• There is a lower cost option: DIY
• What will I do? My past history has been to do repairs for the basics, but then call a professional for something that’s bigger and time consuming. I’m fine with paying when needed for such things, where it makes sense of course. No reason to stubbornly avoid paying other people or having a false sense of bravado when it comes to fixing things.

My Questions for You

Are there any of these expenses that you are fine taking on, as I am? If so, which ones?

Or, do you actively try to avoid expenses even if it means extra time and effort?

Can you think any other similar items that can be included on a list of expenses to stop paying?

Four days have passed, and no money has been spent.

As I write this, the day before publication, I have started the new year by spending no money in the first 4 days of the year. Zero, zilch, nada. Absolutely nothing. Hooray! Of course I’ll inevitably spend on different things soon, but my resolution to spend less money on discretionary items has started out the way I wanted it to. It’s always nice to get some early momentum on working toward a goal, no matter what it happens to be!

Really, what I’m trying to do is lower expenses in order to help efforts to grow net worth. Now, I generally think that most of us should spend more of our time and energy on the income growth side of things, and maybe even investing a bit of time in risk management. So, let’s not get carried away or become stingy. Dwelling on saving money can only get us so far. After all, as I say periodically here, we do need to make money before we can save money, right?

With that in mind, rather than going too far by getting obsessed with expense-lowering strategies, I’m trying to make it a habit to very quickly assess whether or not to I need to make a particular purchase at any point in time.  This expense assessment strategy basically involves asking the following questions when I’m making a purchase.

1. Do I need this? Yep, the old wants versus needs question comes back again! However, just because something is a want, it doesn’t mean it can’t be purchased. Life would be too boring if we only did what we need to do and ignored what we would really want to do.  However, needs are just that – needs – while wants can be addressed sometimes when the time is right.  So aside from exceptions, if it’s not needed, question whether or not it will be purchased.
2. Is there a lower cost option easily available?  OK, so we’ve very quickly decided “Yes” to question #1. We need to make the purchase, whether it’s food, clothing, gas, or whatever. But can we spend less? For example: if you’re at work, you’ll typically take some time in the middle of the day to eat lunch. Maybe that means going to the company cafeteria, or running out to pick up a sandwich or salad. Sure, you could do that, but what about bringing something from home? You could save some money that way if it doesn’t take much extra time to prepare and pack a lunch. Even a few dollars a day can add up to a lot annually.

It’s a very simple, yet very effective concept. Do you need it, and if so – could you get it for less elsewhere, without spending much extra time. Keeping it simple allows us to avoid overanalyze saving money, and think about other things too:)

My Questions for You

Do you ever stop yourself when making purchases, to decide whether or not you need to spend?

What approaches do you use to make sure you’re spending your money wisely?

If you’re driving, you need auto insurance. If you’re like most people, lowering auto insurance costs sounds like a great idea. After all, who wants to spend more money than necessary?

Personally, I’m trying to take a closer look at reducing regular expenses, and the costs of driving a car can really add up. Along those lines, the insurance part of it is an area that I’m revisiting.  Since we have to get car insurance, and those costs aren’t insignificant, we might as well look for ways to reduce those expenses.

Here are 10 ways to to lower auto insurance costs:

1. Actively shop for the best rates.  The quotes that you might get for auto insurance can actually vary depending on who you talk to, and where you’re looking. Take the time to do your homework, and show a little persistence in looking for the best possible rates. A little bit of money saved with each payment can add up to a pretty decent amount over the course of time.
2. Raise your deductibles. A deductible is the amount of money that you will be responsible to pay, out of your own pocket, before the insurer responsibility kicks in. If you raise the deductible threshold amount, your payments will decrease as well.  If you end up driving without accidents, this will save you money. Just be careful, as with an accident you would have to pay more out of pocket with a higher deductible.
3. Drive a low-premium vehicle. Some cars can better than others for premiums. You might pay more if you drive a sports car, a luxury car, a large SUV, a very small car, or others. It really depends on how your car can handle damage, how expensive it might be to repair, and how much damage it could inflict on other cars.
4. Utilize multi-car discounts.  Do you have multiple cars in your household? You might be able to save money with a multi-car discount, covering those cars with the same insurer.
5. Drive safely. This was already noted in #2 above with respect to raising deductibles, but accidents can also raise your rates. Drive safely, and you can keep your rates low.
6. Shorten your commute.  The distance you drive back and forth to work each day can matter in determining your rates.  You might be able to get lower rates if you have a short commute to work. I know someone who’s had a 2 mile commute to work for some years now (must be nice!), who’s talked this up. Hard to choose a job based on lowering insurance costs, of course, but it’s still something to keep in mind in terms of your mileage.
7. Take advantage of multi-line discounts.  Bundling auto insurance with home or renter’s insurance is another potential way to save money.
8. Take a defensive or safe driving course. Such a driver improvement type of class might lower your insurance premiums. It’s worth inquiring about such potential savings before making the investment in a class.
9. Consider dropping collision coverage on older cars. If you believe in car longevity, and drive a car until it has a sky high mileage number, you may be in a position to consider dropping collision coverage.  It’s good to take a step back and determine exactly what coverage you’ll really need.
10. Invest in an approved anti-theft device.  Sometimes, depending on the device, you might be able to obtain extra savings by installing an alarm system/anti-theft device. Protect your car and potentially save money in the process!

My Questions for You

Do you take advantage of any of these measures?

Do you have any additional tips to share?

What do you think is the best advice to give someone trying to successfully reduce car insurance costs?

Different times of the year provide different reasons to spend money, be it holidays or weather-related.  With respect to the latter, the winter months provide a unique set of conditions that can affect our expenses in different ways.

With that in mind – and the reality that we’re in for a prolonged few months of cold weather where I’m at – I thought I’d put together a list of winter savings tips, including 10 ways to save money during the winter months. Here goes, in no particular order and top of mind:

1. Open curtains on sunny days. The sunlight coming in can actually make some rooms bit warmer than they would be with windows partially covered. Let the light in, and feel the warmth. More importantly, let the sun do the work – instead of turning up the temperature in your home. South-facing windows can really help.
2. Check windows and doors for drafts. This is often of particular importance in homes that are older, but can apply to most homes in general. Sometimes, we can have our expensive heating efforts somewhat negated by small leaks that bring in cold air. Weatherstripping and caulking can help take care of these efforts. Just spend a few bucks at a home improvement store, and a little bit of time, and you can solve such problems quickly.
3. Lower the heat when you’re not home. When not home during the day, why not lower the thermostat by a few degrees? An empty house doesn’t care whether it’s 70 degrees or 65 degrees! Little amounts that are saved each day can add up to something measurable over longer periods of time, which can be reflected in your monthly bill.  This concept of lowering the heat can also be applied overnight, as temperatures can be lower while everyone sleeps.
4. Lock Santa out of the Fireplace. OK, I like good ole Santa just as much as anybody else. However, on those other time aside from Christmas Night, keep the fireplace damper shut. This is a source of heat loss for many homes. Of course you want to be careful when doing this (as in, not when a fire is going), and not everyone has a fireplace anyway. But if you do, just keep in mind that the damper can be closed, since the jolly man in the red suit won’t be appearing every day. Talk to a professional for details.
5. Consider an insulation jacket for your water heater.  These don’t cost much, maybe $20 or so, but can save you a small percentage of your heating costs by preventing heat loss. Like many other things, these costs can add up over the year.
6. Wear layers. A great example: wearing a sweatshirt! Instead of cranking up the heat even a few degrees, throw on something warmer – maybe a sweatshirt or a heavier pair of socks. Don’t ever go to the point of being uncomfortable though. Personally, I think it’s entirely silly to suffer just to save a few bucks. But for a couple of degrees, which seems more than manageable, layering can work well.
7. Be prepared for snow.  Depending on where you live, you might be dealing with snow in the winter. In some places – such as where I live (Midwest) - the snow can be significant.  Make sure your snow blower is working, snow shovel is handy, and that you can be ready to go if needed. Otherwise, you could waste time and money trying to get someone to do it for you. Not that outsourcing is a bad option – it can be great for many people – but do it if you want to, not if you’re forced into it due to being unprepared.
8. Pay attention to insurance.  Winter brings on it’s own challenges in terms of weather, and some of this is related to snow. Though we can remove it, as discussed above, we might not be able to remove all risks associated with it. Snow insurance might be a good thing to consider, depending on where you live.
9. Prepare your car for winter weather. This includes checking things such as antifreeze, tire tread, wiper blades, etc. Also, keep an emergency kit in your car. More than money costs, we’re thinking of safety in this case!
10. Dress for the elements. I’ve seen enough people wear light jackets or no outerwear at all in temperatures as low as the 40′s. That’s a great way to get sick, one would think! Protect yourself against the weather, and stay healthy. Besides the obvious positives of good health, you might save yourself health care costs, and also be able to get to work and be productive!

My Questions for You

Since this was list of ten, I’m sure there are other tips that could be added. Do you have any to share?

What are your favorite ways to save money during the winter months?

Holiday gifts are nice, no matter what you might be celebrating. For those of us who celebrate Christmas, it’s a lot of fun to look under the tree and see a nicely wrapped gift with a bow, along with your name on it.  Of course it’s much more exciting for kids in most cases, but it can be a lot of fun for grownups as well.

So yes, receiving gifts can be fun. Personally, I don’t really need anything in particular, and prefer to give gifts to those closest to me.  Giving is more enjoyable to me during the season.

Gifts given to me sometimes make me feel a bit guilty that the person spent hard-earned money on me.  If it’s my money being spent, then I might feel less guilty. If it’s brand new car that’s bought for me, I’d feel something other than guilty: outraged!

I bring this up because it’s this frugal mindset I have when I see television commercials that involve a person receiving a brand new car as a holiday gift. You know, the ones where a car is outside in the driveway, with a big red bow on top. The ones where the person getting the gift (usually the wife, from the husband – but I’ve seen it reversed) has that “Oh my GOSH!!” look on her face when she sees the car. There’s usually some kind of subtle hint to the recipient initially, then she looks outside and the jaw drops and eyes light up with wonder and excitement. The message seems to be that she’s thinking “Wow, a brand new car, for ME!! This proves that he (or she) loves me so much!!”

Oh, please.

If you’re wealthy, perhaps it won’t matter. But for the rest of us – the so-called 99%, let’s say – a car purchase is a big deal. This isn’t like buying a nice cashmere sweater you got on sale, tickets to a live musical, or even a TV. This is a vehicle. One that probably cost $20,000 or more – sometimes much, much more.

So, let’s see here. If your spouse loves me, she (or he) is then supposed to buy me a brand new car, out of the blue, burning $20,000 in savings? Or, for most people, take out a big loan which might take a few years to pay off?

It’s almost like saying, “Happy Holidays, Honey! I love you so much, and wanted you to be happy, that I signed you up for 4 years of debt payments that we’ll have to work extra hard for. You’re the best, you deserve it!”

Right.

You can see what I think of those car commercials. The ones that I’ve seen lately have been these types of commercials, though there might be others this year for all I know.  Most commercials in general don’t bother me, and some are quite funny and/or clever in some way. However, these commercials kind of bother me, but mostly amuse me because I think it’s mind-boggling how stupid the premise of a brand new car as a gift is for most people.

Like I said,  I don’t need any gifts, though whatever I do get will be appreciated. Just save some zeroes, and stay around $20 instead of $20,000

My Questions for You

What do you think of these car ads on TV around the holidays? Do you see it the way I do?

Are there any other ads around the holiday season that have made you roll your eyes, or amuse you in some way?

Do you ever think about money being spent on you (as I do), or do you avoid thinking of money in these terms when it comes to the holidays and gifts?

Black Friday is an annual source of entertainment and amusement to me. Every year, it seems like a number of alleged adults at different locations around the U.S. end up acting like 3 year olds when fighting over discounted merchandise upon the day after Thanksgiving.  Yelling, pushing each other out of the way, and pulling things out of each other’s hands are all things that happen somewhere on Black Friday. Everybody is so anxious to spend their money that they just can’t contain themselves!

Why are people so anxious to spend so much money? Well, I think that there are quite a few people that use Black Friday as an excuse to go out and overspend. You know, kind of like a built-in excuse to go overboard, as in “hey, it’s the biggest sale of the year, what was I supposed to do?”

Personally, I do get the idea that life is to enjoy, and there’s nothing wrong in buying some things that make us happy. But doing it as some sort of “retail therapy”, so to speak, may not be the smartest thing. We all have a certain level of income, certain fixed expenses, and eventual needs such as retirement, health care, maybe even kids’ college costs. Those things come first, right?

Well anyway, there are still a number of people out there who are actually smart with money who still like to shop on Black Friday. The thinking is that you can truly get deals on that day, so one might as well buy things that you’ll need to get. Things like actual needs for yourself and family, which might include gifts for the upcoming holidays. With that line of thinking, if you’re truly not spending more than you might not otherwise spend, I can certainly see how it could be worth it.

Now for me, being someone who doesn’t view shopping as a contact sport, I have a different approach. In my view, it’s the easiest and most effective way to save money on Black Friday.

What is that?

Don’t go out for any shopping, don’t surf the web to buy online. Simply put: don’t buy anything at all.

Boring? Perhaps. While many others enjoying their shiny new purchases, marveling over the goodies in their overflowing shopping bags, I’ll be settling for using the same old stuff that I had the day before. Nothing new to enjoy. Same old, same old. But remember, the difference is that I’ll have spent nothing, and can take pride in being resourceful and not wasting. If you don’t spend, and if you cut expenses – that’s one day closer to financial freedom. We all have our own version of excitement

Truth be told, I’m absolutely not all about the money and do spend quite a bit on the things that I value and like. Family and those closest to me mean the world to me, so all told I’m a spender with those people. I also like spending on life experiences, traveling to see things, etc.

However, in terms of running out and buying some big TV, household goods, clothes, etc – it’s just not a priority. Maybe it is for a lot of folks, and that’s fine. But I’m totally fine with doing absolutely no shopping that day, and having a family day doing other things. I did that last year, it worked out well.

I have a friend who told me a few years ago how his wife had “made” him go out to the stores in the middle of the night (like 3:00 AM) to stand in line for sales. As in, stand in line outside, in the cold.  Hey, suit yourself, buddy. I’ll be sound asleep, bank balance maintained!

My Questions for You:

Do you see things differently, with regard to Black Friday? What’s your take on this particular day, and how it fits in the American experience these days?

What are your plans for Black Friday? Alternatively, if you’re reading this after the day has passed, what did you buy?

Back in the old days, before most of us (including me) remember, people had to go out to see a movie.  It was an experience, and a common form of entertainment.  Do that today, and it could end up being a costly experience.

At the local theatres, it’s about $10 a ticket for going out to the movies at night. Let’s say there are two of you going out – that makes it $20 just on tickets. While you’re there, you might get tempted to get a bag of popcorn, candy, or a soft drink. Each of those will likely set you back another $2 to $5, based on what you’re buying.  All told, it’s easy to spend $25 for two people to go out to the movies, at many theatres.

Admittedly, I do like to go out to the movies. It’s fun to go out and get a real theatre experience, with the requisite big screen and high quality sound. I don’t go very often these days, maybe a few times a year.  It’s enjoyable to go, but there are other options for watching movies, and I’ve taken to a few of them.

Here are some lower cost alternatives to paying full price at the movies:

Matinee Performances

That same $10 full-price movie might be, oh, say $7.50 for a matinee showing. Sure, you’ll have to go earlier in the day, thus taking away from the traditional “night out at the movies” experience. But hey, for two of you that’s $5 saved.  The way my mind works, is taking that $5, multiplying it by an annual rate of return of 8%, and you will have an extra $34 after 25 years. So see, it can be worth it to see a matinee!

Discount Theatres

Sometimes, you can go see movies for less money by going to a low budget place. Some of these are actually pretty decent. I recently went to a place that offered new releases, for much lower price. I believe we paid $6 per ticket for a prime time show. Now, the theatre is much older, without many of the niceties of more modern venues.  However, it’s a good option for going out to see a newer movie while paying less. 

I know there’s a place within a 30 minute drive from where I live that offers $2 movies. Haven’t been there, but someone who has told me that it was totally worth it. For many of us, these options do exist. We just have to seek them out – and many times, be pleasantly surprised!

Drive-in Movies

If you really want to go old school, you could do this.  Aside from theatres, this was another venue of several generations ago. Not far from where I live, there’s a drive-in that offers showings for less than what you’d pay at a traditional indoor venue. I believe they’re in the $5 to $8 range. Anyway, it’s a way to save a few bucks and more importantly get a different experience.

Netflix

Speaking to the streaming plan, for $8 you can watch unlimited movies. Clearly, despite recent controversy, this option is very popular. Netflix accounts for a staggering percentage of internet bandwith, recently noted at 32% of U.S. downstream traffic at peak times.  I’ve enjoyed the unlimited option with Netflix to some extent, as it’s convenient and super low cost. However, you likely won’t be getting the newest, most popular current movies with this plan from what I’ve experienced. Something to consider.

Cable

With my provider, newer movies cost about $5 to watch. It’s convenient, as you just push a few buttons and you get to watch a movie. That seems too high to me, and I’d say that there are better alternatives. However, it’s clearly cheaper than going out to the movies.

Redbox

Around here, these kiosks are seemingly everywhere. At $1 per day for a regular DVD rental – or $1.50 per day for BluRay – this is a good, low cost option for people who are on the go. I’ve enjoyed Redbox, and it’s a good way to get a movie for a very low cost. As long as you know you can return it the next day, and don’t have to go out of the way to visit the kiosk, it seems like a good alternative.

Library

This is my current favorite alternative. For the cost of – well, nothing – you can check out a movie for up to a week at the local library here. The selection is actually pretty good.  Of course the free concept is hard to beat, but I also like that you generally have some time to watch the movie. One downside is that the movies get viewed quite a bit, so the DVDs might not always operate perfectly. Or, at least one recent one I rented skipped a couple times. But most of the time, they’re totally fine – and all of the time, they’re free! As long as they’re not overdue, anyway!

There are plenty of other options: Amazon, Apple iTunes, Vudu, and Blockbuster. With the latter, they’re still around with some varied options, though I think it’s interesting how Blockbuster might have been the first option if an article like this would have been written a decade ago. Now, it’s almost a footnote here.

My Questions for You

What’s your current favorite way to watch movies?

How often do you go out to a theatre to see movies? 

Loopholes can be great, particularly if you’re the one taking advantage of them. What’s even better is when the loopholes are pointed out to you!

Recently, I visited a local Starbucks in order to catch up on some things. There are random times when it’s just easier to get work done in that type of environment, without the distractions of home. This was one of those times, and I was looking to have something to drink while staying there for a few hours working.  As I shared in a story about a previous effort to do this, you do get what you pay for, so I made sure to go to a place that I knew would be conducive to getting things done.  Thankfully, no freaky customers at this place, versus that other place:)

My Order

This probably won’t surprise anyone who regularly reads Squirrelers, but I was looking for something that was:

1. Reasonably healthy
2. Inexpensive

So, I surveyed the choices and decided on hot, herbal tea as my selection.  In my renewed enthusiasm for making healthy choices, I decided against anything loaded with extra calories, or even super high in caffeine. With respect to the former – as a sidebar – it’s astounding how fattening some of those drinks can be, compared to what many people might think! So tea it was for me, healthy and cheap.

As I was ordering, the lady behind the counter asked me which size I wanted: Tall (small), Grande (medium), or Venti (large). I recall that Tall was $1.95 and Venti was $2.45, and don’t remember the price of Grande. Anyway, I thought “what the heck” and ordered a Venti. Thus, I spent $2.45 for the tea.

As they were preparing the tea, I chatted a bit with the lady behind the counter, and asked if I later I could get a refill of hot water. My idea was that I could get as much out of that bag as possible, of course! She said yes, that wouldn’t be a problem it get more water later. Cool! Extra glasses of tea for no additional cost, I like that!

The Loophole

Then she voluntarily told me about how there are customers that come in and try to game the system in other ways. What she shared is that there are some people who take advantage of the following loophole:

1. Order a Tall (small) tea, and pay $1.95 – instead of the $2.45 I paid for the Venti (large).
2. Ask for the Tall sized tea to be served in a Venti cup – which meant it was maybe 2/3 or thereabouts full.
3. Immediately as for extra hot water
4. Walk away with a large drink for the price of a small, saving $0.50!

Clever!

Now, I recall hearing about other tricks people try when it comes to getting extra value at such establishments. But I’ve never really thought about it, perhaps surprisingly. This time, it actually took the lady behind the counter to tell me about it on her own

After hearing her tell me all about this loophole, I laughed and told her that if I come back there, I’m going to do the exact same thing. What was interesting is how she and another employee there who overheard the conversation were both telling me that I might was well. If others try this, why don’t you? They didn’t have a problem with it. Plus, it’s yet another example of how it doesn’t hurt to ask for a discount, or at least think out of the box to try to get a better deal.

My Squirreling

The thought definitely crossed my mind later that I should have asked them if they could change my order to a Tall, which was a mistake I made. I was busy talking with them about the whole idea, and trying that next time, that I didn’t think of asking for the discount right away. The order was complete anyway and they rang me up, and next time would be fine anyway!  However, I did manage to get something small out of the deal.

I realized that they use 2 tea bags to make your tea. Right away, I saw a small opportunity. I asked her if I could only use one tea bag for this order. However, I wanted to keep the other tea bag and possibly have it later.

She smirked, and said that it would be fine. No problem. I asked if other people do this, and she mentioned that very few people ask, but some have.  So, I took that extra bag of “Passion” tea and brought it home.  Hey, every little bit counts, right? I’ve picked up coins at a drive through before, so I’m not above saving a few nickels this way either

My Questions for You:

Has it ever crossed your mind to think of a loophole when buying something at a retail establishment? If so, please feel free to share.

Have you heard of other people pulling off other “arbitrage” opportunities like this, whether at a coffee shop or anywhere else?

Would you like to have more money and work less? I”m sure most people would, even despite a few displaying bravado of how much they are driven to work for work’s sake.  The reality, I think, is that much of this work is based on the need to work.

Here’s a simple way to work less: spend less

I think it’s one of those common sense principles that gets lost in the noise of personal finance blogs, books, shows, etc.  If you don’t want to work forever, spend less money. Additionally, keeping your baseline, “steady state” expense level low can really make a big difference over time.

A while ago, I wrote a post on how time is money, where we discussed the topic of how long we actually work in order to buy things. In looking at it, I think that this concept can be revisited and used to consider how much less we would have to work if we don’t buy something.

Let’s take an example of somebody earning a salary of, say, $60,000 a year. If you divide this salary by a standard full-time calendar of 2000 working hours, you’re at $30 per hour. Taking this effective hourly salary calculation, what if this person had the opportunity to take a deluxe vacation that would cost $3,000. Or, he had an alternative of taking a more modest, no frills vacation for $600.  Both would be relaxing, but the expensive one would entail high end hotels, fancy meals, etc. The difference in costs would be $2,400 dollars – or 80 hours of work. 

Thus, the high end vacation would cost an extra 2 weeks of work.  Makes me consider the notion of a vacation – which is supposed to recharge us – actually creating more work!

The concept is not just about vacations, obviously. The idea is that incremental expenses cost incremental work. Want to go out to eat for dinner and drinks? If the person in the example above dropped $35 on that, as opposed to a simple $5 meal at home, it would cost an extra hour of work.  Want to buy a $100 pair of jeans, as opposed to a $40 pair of jeans? That’s an extra 2 hours of work. Clearly, these choices can add up.

With bigger expenses, the impact is greater. Want to buy a house that’s $90,000 more than an alternative, good enough home? Well, you’re going to work away an extra 1.5 years of life at the income levels noted above.

When taken together, our spending decisions contribute to our need to work longer. If we ask ourselves the question of “How much work would I save by choosing the less expensive alternative”, it might help us with our quest to make smart purchasing decisions. It’s a question that’s an easy way to help us save money and work less.

My Questions for You

What do you think of the concept of figuring out how much work could be saved by making cost-conscious purchasing decisions?

Do you ever think about not wanting to need to work forever (as opposed to working because you choose to)?