Wednesday, January 19, 2011

When More Expensive is the Better Deal

I like a bargain. I like spending as little money as possible. I'm always looking for the best prices. But sometimes, in order to save money, you need to spend more money than you were originally considering.
And no, in this case, I'm not talking about buying food in bulk and laying out more money up front, because you're spending less per unit of food, even if its a large chunk of money being spent at once. Sometimes its worthwhile to spend more money per unit, when it means you're spending less money altogether.
The point of frugality isn't just to spend the same amount of money, but getting more things with that same amount of money. That is great, don't get me wrong, but a big part of frugality is just spending less money altogether. Here are some instances when spending more money will be a better deal (in my experience, anyhow).

When More Expensive is the Better Deal

Pre-Paid Cell Phone Minutes
My husband's cell phone plan costs 11 cents a minute for each phone call (or less; I'm not 100% sure). My pre-paid cell phone costs 17 cents per minute when I call. Obviously, I'm paying more for my cell phone than he is. Right? Wrong.
I pay 16 dollars to fill up my cell phone with 60 minutes of talk time every month or two. Approximately 11 dollars per month for my cell phone.
My husband, on the other hand, pays between 50 and 70 dollars per month for his cell phone, even with its lower cost per minute. Why?
Two reasons. He also has to pay a service charge. No matter how many minutes he uses, he always has to pay a minimum of 35 dollars each month (at least until his contract is over).
My mother often would say "Work expands to fit the time allotted to it". I'd stretch that to say "Conversations expand to fit the minutes allotted to it." However many minutes you have available, thats how long you'll talk. If you have 60 minutes to talk before you need to fill up your phone with minutes again, you'll stretch those 60 minutes a lot farther than if you have an unlimited amount of minutes, and pay them at the end of each month. By my spending more for each minute of talk time on my phone, I actually am spending less money than my husband does using his "cheaper" phone plan.

House Phone Plan

Similar to our cell phone plan, by spending more per minute on our land line plan, we actually save more money than if we'd pay less per minute.
How's that?
Where I live, there are three base payments for your land line. You can have the regular plan for 21 dollars a month, the cheap plan for 15 dollars a month, or the el-cheapo plan for 7 dollars per month.
Why would anyone chose the 21 dollar per month plan? Because calls there are 2.5 cents per minute, and free between 7 pm and 7 am. The 15 dollar per month plan costs 2.8 cents per minute for any call you make, and the 7 dollar per month plan costs 7 cents per minute for all calls.
Based on our usage (I looked at how many minutes of phone service we'd used over the course of a couple of months), we decided that paying 7 cents per minute per call in addition to the 7 dollars per month would work out cheapest for us. A good 20 dollars cheaper per month, nearly.
For others, based on their usage, they may decide to go with the more expensive monthly plan but pay less each call. There's no one correct cheaper plan. You have to see which one will save you money. (If you live locally, it pays to look at your past phone bills, and then call up the telephone company and switch your service to the one most worthwhile for you.)

The Price of Transportation
In between my shopping trips, I ran out of sugar. Because I had no plans on going shopping at all in the next 3 weeks, I couldn't just pick it up on my next trip- it meant going without sugar at all. And while that is a lofty goal, it isn't doable just yet here.
I had the choice to go to my corner grocery store and picking up a package for $1.50 or I could have gone to my usual store and paid 1 dollar. Which does the frugalista choose to do?
I paid $1.50 for that package of sugar. Why? Because going to the grocery where I usually shop would have cost me 5 dollars round trip in bus fare. While its worth it for me to pay that once a month when I shop, because I save much more than 5 dollars via shopping there, when it comes to buying sugar... It would be silly to pay 5 dollars in busing to save 50 cents.
When figuring out what is cheapest, its also important to factor in how much transportation costs to go to buy the cheaper things to see if it really ends up saving you money.

New Appliances vs Old
I'll gladly furnish my home with second hand and free things from the dumpster. However, from experience, I've learned that its not worth my while to buy second hand appliances. Appliances are prone to breaking; you rely on them and when they stop working, it makes life very difficult. Fixing appliances can cost you quite a lot of money. You need an appliance that works.
When we first got married, we bought a second hand washing machine, second hand dryer, second hand oven, and second hand fridge. I regret the purchase of all of them. After paying too many times for their repair, we now have none of them in the house. They all eventually broke beyond repair and the money went down the drain. They claimed to be second hand, but the stuff was so old and in bad condition that they must have either owned those appliances for many, many years, or they were third or fourth hand or more.
When replacing the appliances, we chose to go the non used route (aside for our refrigerator that we got as a gift in amazing condition, second hand, and with free transportation to our house), as we felt that spending money on old, non good quality and non guaranteed (and likely non energy efficient) second hand appliances with a shorter expected lifespan was a waste of money.
We bought a new oven, the cheapest one we could find, but it was beyond our non existent budget, so we ended up paying for it in payments with a hefty interest (finishing up those payments this may). Even though we paid much more for the oven than we would have paid for a second hand oven, the fact that it has worked well for the past nearly 2 years allowed me to be able to make things from scratch, and I haven't had the headache of a non working oven nor have I had to pay for repairs or replacement parts.
Our washing machine was bought refurbished, which was twice the price of a second hand machine, but a third the price of a new one. It came with a one year guarantee and I'm thrilled with it.
Second hand appliances- in my opinion, a huge money waster. More expensive new appliances, or at the very least refurbished, are a much better deal than "cheap" second (or third or fourth) hand appliances.

Smaller Packaging For More Money
If you're making a recipe that calls for craisins, and you can buy a small, 4 ounce package for 50 cents, or a 2 pound package for $1.50, the larger package is obviously cheaper per unit of craisins. However, if you only need 4 ounces, anything extra is just money spent necessarily. So even if you got a better price for the craisins you bought, the better deal for you is the small package. Of course, if you need larger amounts, then the larger package is a better price. But it doesn't make financial sense to buy too much of something that you don't need, just because it was a "good deal".

Health is Worth It!
If you can buy ultra-processed chemical laden foods that are devoid of nutrition for barely any money, that doesn't make it be a better deal than low priced but more expensive nutritious foods. You're not getting a good deal if you're getting lots of garbage for little money; you're only getting a good deal if you're getting healthy food for little money. If you don't take care of your body now by spending money on it, you'll have to spend a lot more money long term because of the adverse effects of malnutrition and eating unhealthy pseudo-foods.
Unrelated to foods, I also plan on having a home birth next time, even though I'd need to pay for it with cash and hospital births here are covered by insurance, because hospital births have a lot of risks with them, more risks than a home birth for a low risk person like myself. Spending money on a homebirth would mean putting my health above everything else, which is definitely worth it, in my books.

How about you? When do you think more expensive is actually the better deal? Do you agree with the aforementioned situations? Are they a better deal, even though they cost more money? Or do you disagree?

1 comment:

  1. I have a clothes washer bought on craigslist for $75 3 years ago. Still works! Look at the brand and check out the condition of the product prior to purchase!

    I buy at Costco if I will use the items before they expire. Mind you, I stick to my weekly budget even while doing so.


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