Archive for the ‘Frugality’ Category

Service of Self Restraint

Thursday, November 30th, 2017

Photo: jbsa.mil

Many stretch their money to give a little or big something to family and friends at this time of year. If you don’t put self restraint to work, you literally pay the price. I had a great idea for a gift for 2 good friends but to implement it meant spending a ridiculous sum. It’s not every day you think of the perfect gift for people who have everything but common sense said “move on.” I did so far.

Photo: foodiesnyc.com

There’s a new bakery that also sells sandwiches and salads near my office. I’ve been in twice to reconnoiter and I’ve left empty handed. One small beautiful pastry, that may or may not be tasty, costs what a scrumptious, though not as glam, cake does at Trader Joe’s. The price of an éclair, gone in two bites–far smaller than standard size–is $4.95.

Photo: yelp.com

I love flowers but daily pass by the many delis that sell tempting sunflowers and roses in peach, yellow and magenta. It makes no sense to buy them for myself. In summer, our apartment gets too hot when we’re not home so they don’t last long and in winter, the shock of the overheated apartment, when they come in from the cold, kills them pronto. And anyway, I have a collection of orchids, many of which, as I write, show signs of blossoms to come. When they bloom in winter I’m enchanted. In spring I cut daffodils, lilacs, peonies and daisies.

Self restraint isn’t any easier if faced with dietary restrictions. It rarely fails: people are forced to give up things they most love to eat. Was anyone advised to avoid grouse or liver ? [the two foods I most dislike].

Are you good at self-restraint? What are your tricks for avoiding temptation?

Photo: cartoonmovement.com

Service of Smart Frugality

Thursday, February 25th, 2016

pinching pennies

I was drawn to Sendhil Mullainathan’s Wall Street Journal article “Pinching Pennies in the Right Places,” because according to this Harvard professor of economics, my thinking, while intuitive, is wrong. Not surprised: I almost failed economics in college. I ended up passing the course by figuring out the answer and writing the opposite. On the other hand, what he wrote makes sense. Maybe I’d have aced his class.

He shared two instances where you’re at a store and the salesperson tells you that another branch 30 minutes away has what you want for less. One item costs $50 and would be $40 for the same model. The other item costs $400 and you could get it for $385.

20 percent off“Research by Daniel Kahneman and Amos Tversky the psychologists whose work helped spawn behavioral economics, suggests that people are more likely to make the trip for the $40 headphones than for the $385 speakers,” wrote Mullainathan. That would be a mistake. “In each case it will take 30 minutes to save some money. But with the headphones, you save $10; with the speakers, you save $15.” He continued: “It’s as if you had two identical job offers, but one paid $20 an hour and the other $30. Yet you consistently chose the lower-paying job.”

He observed that people spend chunks of time finding the best deal on a pair of jeans and none on the fees charged by mutual funds for example. “Do Consumers Make Too Much Effort to Save on Cheap Items and Too Little to Save on Expensive Items?” is the title of the paper of Ben-Gurion University economist Ofer H. Azar. Mullainathan’s answer is “Yes.”

piggy bankThere is an exception according to Anuj K. Shah from the University of Chicago who conducted research with Mullainathan and Princeton psychology professor Eldar Shafir. “Poorer people tend to value a dollar more consistently, irrespective of the context. It is not simply that those with less money pinch more pennies; it is that they are compelled to value those pennies in absolute rather than relative terms…A dollar saved is a dollar to be spent elsewhere, not merely a piece of token accounting.”

Mullainathan advises: “When it comes to money, stop looking at relative values and start looking at absolutes. Dollars, not percentages, matter. In this case, the well-off can learn something about money management from the poor.”

How much would you have to save to travel for 30 minutes? Are you, like most, driven more by the percentage of a discount—which was 20 percent off the $50 headphones and 3.75 percent off the $400 speakers–than by the amount of money saved?

Driving in traffic

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