The thoughts, stories and advice of Bill Riddell.

Money Matters Part 1 – The Art of Buying the Right Things at the Right Price

July 14th, 2009 Posted in advice

This is part 1 of 2, where I’m going to share with you some of my theories, thoughts and personal rules regarding all things money.

Take or leave my advice, it’s up to you. I’m not rich – I don’t even have an above average income. I am however a great saver (though I do have incredibly low overheads – mostly by design) with some quite healthy lifetime financial habits.

“It is a kind of spiritual snobbery that makes people think they can be happy without money.” – Albert Camus

Essentially I don’t just look at the cost of an item, I look at the value of it. Basically it’s about weighing up the cost of an item with the quality and taking into consideration how you will use it to determine the value.

If you are use something rarely and don’t have much interest in it, buy the cheapest item that will be able to do the job.

Buying the cheapest is not always the best option. The most expensive is often the same. The best value typically comes in the middle price range, but not always. At the middle price range you often get better quality and therefore a longer lifespan till the item breaks down or otherwise need replacing, at a reasonable cost.

Here are a few examples of things I have bought:

Bed Vs. Car – Now the contrast between bed and car is huge. I doubt there a many people on earth with a bed that cost more money than their car, I do not know any. I’m one of them. My car cost less than $1,000 while my bed cost almost double that.

Most people drive fancy cars yet sleep on rather average beds. I have a rather average car yet sleep on a world class bed. Why?

Quite simply because I spend far more time in my bed than I do in my car. That is at least 6 hours sleeping compared to an average 20 minutes a day behind the wheel). Sure I have a passion for cars and would love to drive something very expensive and nice on the road but I would rather enjoy the benefits from my bed. Great sleep and good health. To me sleep is more valuable than transport.

Having said that my car is very reliable, now just over 10 years old and quite well maintained by my father and I. In the event that something comes up and will cost money I have plenty of savings to pay cash for another car immediately to replace it.

I did not set out to spend almost $2,000 on my bed. Since it was a major purchase I spent a few hours over a few days trying different beds priced from $40 to over $4,000 until I found the perfect one for my body. I would gladly have paid $20,000 for the bed I have, it is the best investment I have made in my health.

Batteries – AA batteries are not cheap, they can be quite expensive. While the initial cost of a set of rechargeable batteries dwarfs the cost of even lithium batteries, if you are a heavy user they will pay for themselves. I try to use rechargeable batteries in most major devices. Camera is the big one but even things like my beard trimmer and torches have rechargeable batteries in them. Things like remote controls have such a long battery life so it would not be cost effective to use rechargeable in there. I don’t buy brand name disposable batteries – generic brands are less than half of the cost with at least 2/3 of the performance in devices that use little power.

Do You Really Need It-If So, Pay As Little As Possible!

The golden rule is don’t spend more than you have to and more importantly don’t buy it if you don’t need it.

Obviously if you must have something, or really want it, then you should definitely buy it. Make sure you don’t pay too much. I have a number of strategies for keeping the maximum amount of cash in my wallet while getting what I need.

Look for the best price to start with. Don’t drive from store to store, the saving you may find will most often be eliminated by the cost of driving. Try looking on the net first, otherwise make a few phone calls to the stores most likely to have the best price.

From there haggle by asking “is that as low as you can go on the price” or “I really wasn’t planning on spending that much, can you do a better price for me”.

Offer to pay cash and be prepared to walk away (or at least give that impression) if you cannot get a reduction. If that’s of no use ask too, speak to a manager or try again later. If you’re calm and friendly the worst that can happen is the sales person will say “no I’m sorry that is as low as we can go”.

Another way to get big savings is to bundle your purchases. When you buy that new big screen TV, let them know that your also going to buy a Blu-Ray player, surround sound system and a new digital camera. I’ve done similar and effectively gotten the camera for free. Note however this is only a saving if you needed to buy all items.

Don’t Sweat The Small Stuff

Haggling is often going to net quite significant savings on bigger items, however complaining about the cost of a banana with the supermarket cashier is not haggling, its being a pedantic and annoying. If you cannot afford the banana, don’t buy it or find somewhere you can get it at wholesale prices.

I will cover a bit more about fussing over daily costs in part 2. It will also deal with saving your money, investing it and how to use credit and loans correctly.

Resources

One of the best article I have ever read on this topic is Tynan’s blog post The Secrets of Buying. It confirmed a lot of lessons I’d learnt from my parents who are quite savy buyers.

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  2. Jul 23, 2009: Money Matters Part 2 - Investing Saves You Credit or Something Like That | Bill Riddell
  3. Oct 22, 2009: Dead Tired - How to Sleep & Stop Killing Yourself | Bill Riddell

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