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How we did our California Vacation on a Budget (across the country)

Flight

In June of this year planning commenced on a 6 day fall vacation.  We had initially planned to fly from Louisville, KY to Orlando, FL, but Southwest had a special sale for flights into San Diego for the same price.  Since we had never been to California we decided that a California Vacation would be the best choice for us.  I purchased the plane tickets using points earned from signing up for Southwest Airlines.  I booked a flight for daughter and me, which cost about 36,000 points total.  At the time of booking I had only earned 105,000 Southwest points and had not yet earned my “Companion Pass“.  Once I earned the additional 5,000 points to reach 110,000 I earned my companion pass and simply clicked on my flight to “Add a Companion”.  At this point my wife was added to the itinerary.  Total out of pocket for our cross country flight was $15 round trip.

Car Rental

I knew we would need a car to get around California.  I wanted to rent a vehicle that would be big enough to accommodate our car seats and luggage.  With these options in mind we decided to get an SUV, although my wife was really pushing for a convertible.  I searched online coupon codes and used CarRentalSavers.com .  I found this website to be the best because it included the best coupon codes.  I looked at many different sites and found this one to be at least $30 cheaper for the week. Other sites may have been comparable or even cheaper if we had a normal rental, but ours was one way.  This meant we picked up the car in San Diego and dropped off our car in Santa Ana as we flew out of John Wayne Airport.  The car included unlimited miles and was a very nice car.  We had no trouble at Alamo and even used the kiosk when picking up the car, which allowed us to forgo getting hassled about all of the extra insurance and other upsells.

Lodging

IMG_6042First Hotel 

Obviously we needed to find a place to stay each night of the trip.  Since we were staying 3 days in San Diego, 1 day in Anaheim, 1 day in LA and 1 night near our departing airport a condo or house were out of the question.  Finding an area in San Diego for our home base was not a problem at all.  We stayed near La Jolla and Torrey Pines as it provided better prices, access to La Jolla and was only a 20 minuted drive back to San DIego Zoo.  We knew we needed a hotel close to Disneyland in Anaheim so that was not much of a problem either.  Our day in LA proved to be a bit more difficult because the city is so big and traffic is not great to drive through.  I ended up booking a place that was vouched for by my cousin.  It was near Burbank, supposedly close to Universal Studios, but actually ended up closer to North Hollywood.  The last night we stayed in Huntington Beach which was a quick 15 minute drive back to the airport.

IMG_6696View from Country Inn Room

We stayed at a Country Inn and Suites in San Diego which I highly recommend.  It was in a beautiful location with a nice view of the mountains out our window every morning.  They also had an excellent breakfast which really worked well to save us money on food as one meal was included in the price of our stay.  Most travel blogs emphasize staying in really expensive hotels.  One of my problems with sites such as Priceline is that their rating system puts no value on free breakfast.  I strongly disagree with this valuation because if we were to go out for breakfast and get eggs, waffles, sausage, juice, yogurt and milk it would end up costing us at least $20.  Sure we could go to a fast food place and the 4 of us could eat for less, but it would be far less substantial.  We ate breakfast in our hotel 5 out of 6 days.  The last day we had to be at the airport before breakfast was served.  We ended up buying breakfast at Carl’s Jr. and it cost $9 and that was just for my wife and daughter.  My daughter was complaining that she was hungry 2 hours later.

In Anaheim, our hotel was literally across the street from Disneyland.  Probably 5 blocks if we walked, but since our Disneyland tickets included parking we just drove to the lot.  This ended up being a great idea since by 11:00 PM Pacific Time both kids were passed out.  Which would have made the extra 5 blocks perilous.  I booked our room through getaroom.com which advertised a rate $20 less than booking through the hotel itself.  Unfortunately they add taxes and unnamed fees which put the total at only $2 less than booking directly with the hotel.  I did book through TopCashBack.com which earned me 10% cashback on the stay, which was pretty nice.  The hotel was the Best Western Plus Stovall Inn, which had very nice updated rooms, but they also charged $10 for parking.  The breakfast there was acceptable, but there were so many people that the staff couldn’t really keep up even with the large dining area.

Best Western Stovall's INN Pool Area

Our 5th night was spent in a Comfort Inn near Universal Studios.  The area was in North Hollywood, which is a bit grittier than we would like.  My daughter looked out the window of our room and asked, “Why would they build a hotel here with this terrible view?”  The view out the window was a local mechanic shop, so we did have an excellent view of oil changes.  This room was also recently updated and seemed clean.  It’s not exactly a hotel I would rave about, but for the price and a place to sleep it was okay.  The breakfast area was very nice and clean.  They had cheese omelets, juice, sausage and typical hotel breakfast items.

Our 6th night took us back south to another Comfort Inn in Huntington Beach about 10 miles from the airport.  It was updated, nice and looked (and smelled) very clean on arrival.  The area is also very nice just a few miles from the ocean.

Activities

Many of the activities that we did on the trip were very low cost or even free.  Walking along La Jolla in San Diego was not only free, but it was among our favorite parts of the trip.  The seals on the beach were amazing to see and the views were breathtaking.

IMG_6124

The San Diego Zoo is how Disney would do a zoo.  I know, you are thinking, Disney basically did a zoo, it’s called Animal Kingdom.  Having been to both the San Diego Zoo and Animal Kingdom I believe San Diego Zoo is superior.  That being said, I’m sure that Animal Kingdom will be pretty great in their 97th year as well.  There was something to see every step of the zoo.  Whether it was an animal exhibit or just the assortment of botanicals.  If you enjoy zoos it is definitely worth seeing.

We also visited Torrey Pines State Reserve which offers a beach and beautiful overlooks.  We paid $15 for parking and that was it.  The only problem is for some reason the restrooms and water were all turned off.  This is problematic when you play in the ashy sands of the Pacific and need to get back into your car.

 

We decided to go to Disneyland on Tuesday for “Mickey’s Halloween Party”, it’s a special event that is ticketed separately from the rest of the park.  Disneyland closed on Tuesday at 6PM and Mickey’s Halloween Party took place from 6-11, but you could enter at 3.  We arrived at the park at 3 and enjoyed it immensely.  Instead of the normal price of admission Mickey’s Halloween Party only costs $59 per person.  They only sell a certain amount of tickets, you can trick or treat throughout the park and most attractions are still open.  There were characters out in full force even when we were leaving.  More things for guests to do means that any one line will be shorter.

IMG_7052

In LA we went to the Getty Center, which is fantastic.  It’s a billion dollar art museum that opened in 1997.  The museum was free which I did not know going into it.  Parking is $15, but that is definitely a bargain price even if you were going by yourself.  It’s not exactly the most entertaining for small children as it is not a hands on science museum.  If my wife and I had gone alone we could have spent nearly the entire day touring the massive collections, but with our kids a few hours was ample.  Just seeing the building itself was worth it to me.

We went to Hollywood to check out the sights and typical tourist type things.  We paid $7 to park at the Hollywood and Highlands Center.  It is a very ornate shopping center built around its view of “The Hollywood Sign”.  My daughter wanted to see Hollywood, hoping she would be discovered.  She looked at the sign for about 30 seconds and said, “cooool” then was ready to see the next thing.  We followed the Hollywood walk of fame.  Saw that TCL Chinese Theater and had fun comparing our hands to the stars.  My daughter was a bit disappointed because she wanted to have her footprints and handprints immortalized in the cement, but alas that will have to wait.  I guess seeing Hollywood is worth the $7 parking charge, but otherwise the experience was ruined by the vendors, celebrity impersonators and people in cheap costumes hoping to hustle tourists out of money.

Huntington Beach was a nice way to end our trip watching the sunset over the Pacific Ocean.  They charged $15 for parking, but only $13.50 if you used a credit card.  Since I was going to use a card anyway this worked out perfectly.  The beach was huge over 100 yard from the parking lot to the ocean.  We were also basically alone on the beach which was nice for pictures.

Food

One way we save money on a trip is to minimize our food costs. When we arrived in California we were expected to be absolutely blown away by the prices for food.  I fully expected that if I went into a Subway asking for a $5 footlong they would oblige me with, “Okay sir, that’s one $5 footlong, that will be $28.75.”  This was not even close to reality.  The first night we went to a nice Mexican restaurant that was having huge frozen Margaritas, 5 flavors to choose from for $3 each.  We ordered a margarita, beef nachos, pepsi, and 10 tacos and paid $19 plus a $6 tip.  $25 is cheaper than we eat at the Mexican restaurants in Kentucky.

We try to eat breakfast in our hotel which saves an immense amount of money.  If we had stayed in a condo or rented a house we would have tried to prepare meals at home which would provide huge savings.  Ultimately though, my wife and I value food in much the same way.  I fell like food only gets so good.  Meaning that a $100 meal is not 4 times better than a $25 meal.  We have gone out to very expensive restaurants, but usually feel that they could not live up to expectations.  We might splurge for a meal or two on vacation, but for the most part we try to keep our spending in line with what we spend on food normally.

Total Spent

Flight (3 paid tickets and 1 lap child)                               $30

SUV Rental                                                                      $287

Gas                                                                                  $86.37

Travel Total                                                                  $403.37                                 AVG. $67.23 per day

Food Total                                                                    $166.40                                 AVG. $27.73 per day

San Diego Zoo (2 adults, drink, child free October)     $116.30

Disneyland (3 tickets)                                                   $177

Getty Center                                                                  $15

Torrey Pines                                                                  $15

Hollywood                                                                       $7

Huntington Beach                                                          $13.50

Total Activities                                                             $343.80             AVG.  $57.30 per day

Country Inn & Suites (3 nights)                                      $236.40          The best hotel we stayed in, great staff, great pool, great breakfast.  (78.80 per night using discount, normally $105 +tax)

Best Western Stovall’s Inn (1 night)                              $133.43           Paid for the area near Disney.  Nice Rooms, Awesome pool and topiary area, Adequate Breakfast.  ($10 parking, worst value)

Comfort Inn Universal Area                                            $110.88           Nice room, good breakfast, terrible parking lot, not a very nice area

Comfort Inn Huntington Beach                                       $61.94            Great room, very clean, did not eat breakfast (left too early).  Best value.

Total Lodging                                                                $542.65              AVG.  $90.44 per day

Total Miscellaneous                                                     $66                     AVG.  $11 per day

Trip Total                                                                        $1,522.22          AVG.  $253.70 per day

We could have done the trip for cheaper, but we would have sacrificed some things.  We could have gotten a smaller car and saved a hundred dollars or so.  Driving less miles or having a fuel efficient vehicle could have saved gas.  We could have saved more money by only buying tickets at the zoo ($88), but I am not going to avoid spending at the cost of fun.  We had also budgeted to go to Sea World, but we were enjoying San Diego too much to sacrifice a day doing that.  All around there’s not too much I would change.  Although the Best Western and Comfort Inn were both pricier than I would like and neither was as good as the Country Inn and Suites or the Comfort Inn in Huntington Beach, both about half the price of the Best Western.

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Philosophy on value? Pay the Least Anyone has Paid.

I recently overheard a salesman tell a potential customer that for their budget they needed to lower their expectations.  This kind of mentality drives me absolutely crazy.  Obviously there are situations where people have champagne tastes on a beer budget.  In these cases it’s absolutely reasonable to lower expectations to be more aligned with your budget.  For instance, if I go to a car dealership and expect to get a brand new BMW for the same price as a used KIA, then I probably need to adjust my expectations with reality.  Usually though, if you do your research, you will realize that there is always a better deal to be found.

The couple that I observed were looking for the biggest television that they could get for their money.  From what I gathered they had about $1,000 to spend and did not want an off brand television, they also wanted an LED.  The salesman basically told them that the biggest they could get was a 50 inch.  They seemed to listen to him, but were disappointed.  He presented, as fact, that they either needed to lower expectations or raise their budget.  I knew from personal experience that this was just a blatant lie.  I just purchased a 60 inch LED television for $847 after taxes and everything.  I have seen cheaper televisions this size, but my goal was to maximize value.  On that particular day the salesman was not lying to the couple as there were no great deals going on, but the point is that the better deal will come to those who wait.

It’s easy to just assume that you could sacrifice quality at the expense of value, but this is a false choice to make.  If I go to the grocery store today and bananas are $1.90 a pound unless I cannot wait another moment to buy bananas I will forgo them because I know the price will fall.  The grocer will not come over and say, have you thought about dry beans instead?  I know what I want and I know what price I want to pay.  I will buy bananas at 38 or 48 cents a pound, but even at 58 cents per pound they are not out of the question.  I think the same holds true to many purchases.  If I am looking for a vehicle and want to spend $8,000 and find a used Honda Pilot that books for $14,000 on sale for $9,000 I will still consider this car even though it is 25% over my budget because that extra $1,000 will get me an extra $5,000 in value.  In this example I am making the assumption that the car is really worth 14k, but the seller is motivated.  My point in this exercise though is that even with a budget number in mind it’s good to stay flexible.

When I research prices for an item, my goal is to find a good price and then buy the item for a great price.  If I am looking at a TV I do not want to compromise, but I want the item I want cheaper.  Basically, I want to buy any item at the cheapest price anyone else might have paid.  It’s not that I think I am special, but I do think that if a company can sell a product to one customer at a certain price, and make a profit, then why shouldn’t I get it at the same price?

This is true of products where I use the MSRP and average price as a guide, but will research to find a better price.  Then I try to adjust my expectations accordingly and take advantage of sales.  This is especially true of hotel rooms and car rentals.  My wife and I stayed in a hotwire low priced hotel one night for 40 bucks.  We were not completely satisfied, but for the minimal price it was hard to complain too much.  The next morning at breakfast I overheard another couple saying that they had paid $90 per night and to extend another day would be $105.  This made me a bit angry.  I was certainly glad I scored the hotel room for such a low rate, but if I had been the person paying $90 and a guy next to me paid $50 I would be livid.  I actually let the guy know that if he booked on hotwire he could get the same hotel for $40 and he did just that.  The point I am trying to make is that a better price may be available and it may not even be too difficult to find.  It’s not that I am cheap, but I absolutely want to maximize value in every dollar I spend.

I look at it as a value ratio that would be measured by a simple formula of quality / dollar.  I want to get the most quality, taste, or value per dollar that I spend.  When I buy a car I want to get the best car that I can buy for the money.  When I buy a house I want to get the best $ per square foot, without skimping too much on fixtures.  If I can get a plane ticket for $150 roundtrip why would I pay $300 for the same trip?  These are all adjustable expectations and some are clearer than others, but the point remains that I want to stretch every dollar that I spend. I’ll spend a little more for a little more quality and sacrifice a little quality if it can save me a lot of money.  Overall, these are decisions that every individual makes, but if you are mindful of value maximization you are better off in the long run.

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Picking the Perfect Hotel

If I ask you to imagine the perfect hotel your mind probably conjures up images of grand chandeliers, baby grand pianos and beauties feeding you grapes on the plush mattress of a hand carved canopy bed.  Out the window a beautiful sunset begins to crest over the horizon of an unobstructed ocean view.  The salty air touching your skin only briefly before being dabbed away from the damp, cool, mango scented towel.  This sort of fantasy, multiple room palace probably exists for a price.

If I were to ask you to imagine the cheapest hotel what do you see?  Flicking on the light switch, causes the roach herds to scurry toward cover in the putrid motel room.  You pull back the sheets, which audibly crunch from whatever has hardened to their surface.  Through the fitted sheet you can see the stains on the mattress, although their origin is unknown, the evidence manifested clearly lead you to believe these are bodily fluids of some kind.  This kind of hotel certainly exists and the psycho running it would gladly accept your money.

When searching for a hotel I try to find some definite middle ground in these establishments.  I do not need to check into a pretentious establishment where I am expected to tip every person substantially for doing unnecessary tasks.  I am certain that if I lugged the bags of my entire family through the airport I’ll be fine taking them the next 50 yards or so.  I do not need people looking down at me for staying in their hotel.  At the same time I do have certain expectations in a hotel.  I want a nice, clean place where I can lay my head every night.  I will likely not spend much time in the hotel anyway.  Basically for my family a hotel is a place to store our things, take our showers and sleep until the next day.  So as long as the place is clean, quiet and comfortable I am fine.  All other things beyond that are luxuries.  Although having been updated in this millennium is a nice plus.  If your hotel is still rocking a big tube TV I am going to be a bit put off.

Keeping this criteria in mind I try to find the most affordable option, but I try to keep away from the lowest price option.  The last time I went with the lowest price option in an area was a few months ago.  I booked a room in a Howard Johnson, that was supposed to be a 3 star (out of 5).  It was a Hotwire hidden deal and cost about $40, which was very affordable for a 3 star hotel.  I arrived at the hotel and there was a very sketchy looking couple at the counter.  There was an old white Gateway Desktop in the lobby with a line 6 people deep waiting to use the computer.  The “couple” at the counter turned out to be two guys and a girl (sans teeth) who were fine with just one King bed.  I felt like I needed to shield my daughter’s eyes.  Walking through the hall I really felt like I was surrounded by shady characters.  This is not to say that money equals class by any stretch.  However, when you book the cheapest hotel in the area, it’s also the cheapest hotel for everyone else in the area.  So the guys scoring a three way with a tweaker are also booking that cheap room next door to your family.

I try to pick a moderate priced hotel with great reviews.  If possible I try to get a 4 star hotel at a lower price using a site like Priceline or Hotwire.  The problem with this method is that I have personally found that Priceline inflates the rating on some of their hotels.  So you may book a 4 star hotel for $50 and be pumped, but then when the hotel is revealed it is an old Howard Johnson that might generously be awarded 2 stars.  So you think you’re getting a room in a Hyatt or W and you are getting an overrated Ho Jo.  There are websites that exist to help make better decisions on hotels and reveal which hotels are available in an area at the particular star rating that you seek.

Over the next week I will be sharing more information about the hotels I decide to book for our upcoming trip and I will likely give a review of whatever hotel is lucky enough to be chosen by me.

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Lower Grocery Budget without Extreme Couponing

 

junk-foodphoto

Food expenditures are probably the easiest places to make budget cuts for younger Americans, but the grocery budget is also the easiest to justify keeping.  After all, statistics show that most Americans eat food on a regular basis (citation needed).  In fact, many scientists would probably agree that food is nearly a necessity for human survival.  With all of these facts buried in your brain, spending money on food is viewed as a necessity and unconsciously we reason that “our bodies need the nourishment and our bodies are worth the expense”.  There is nothing wrong with this assertion on the surface we do need to feed our bodies quality foods in order to keep them working in optimal condition.  Unfortunately, drawing a line between expense, nutrition and necessity is based on flawed logic.

Let me be clear, I am not advocating only consuming a dense diet void of any taste, but I would reason that spending more on your groceries does not make you healthier or love yourself any more than the rest of us.  I have drilled down into my spending data for the past few years and have noticed some amazing trends.  The statistics show (in my household), that those times when our food bill is lower correlate with better eating habits.  So, I can back into the reasoning that spending less on food makes my family healthier (not even considering less stress that accompanies bettering your financial situation).

I know that there are those among you that will argue, “it’s cheaper to eat unhealthy foods than it is to eat healthy.”  In many ways this assertion is correct, but there are moves we can make that swing the scale in our favor.  We must learn to value our food differently.  Rather than looking at food’s value on a calorie per dollar basis, we need to evaluate foods on a nutrients per dollar basis.  It’s much easier to get full on high quality foods.  Try this experiment, eat as much chicken and broccoli as possible, then eat a similar meal from McDonald’s.  You will consume more nutrition, get full on far fewer calories and spend less.

Eat at Home

Without question eating at home saves money.  If you are spending more by eating at home, you’re doing it wrong.

 

Go to the Grocery for Big Trips After Dinner

The times when we eat most unhealthy and spend the most money happen to coincide with those times when we have less food available at home.  Too often my wife and I will look in the refrigerator or pantry and say, “You want to go get some dinner?”.  This plays out poorly and expensively in two ways.  First, if we go out to dinner we will spend between $10 and $30 for that meal.  Option 2 is that we go to the grocery with our hungry eyes.  We purchase those items that would not be part of a normal shopping list.  From a psychological perspective it’s much easier to handle these smaller expenditures.  You don’t feel like you’re spending much money if you just spend $25 on most of your grocery trips.  It’s easy to splurge when your total is relatively low, plus you’re hungry and you’re worth it.

Going to the grocery for one big trip each week is easier to handle because you are less likely to make off the wall purchases.  Going to the grocery on a full stomach keeps your brain in control of food purchases.

Make a List

Knowing the items that your family consumes is important for shopping successfully.  Some items that we always try to keep in our house are Bread, Chicken Breasts, Ground Turkey, Ground Beef, Frozen Vegetables, Cottage Cheese, Peanut Butter and the list goes on.  The point is that we have taken a mental inventory of those items we eat on a regular basis and we buy them when they are on sale.  These tips also can be applied to other non-food items as well.  We are not super rigid with our lists, but we know that keeping these key items on hand around our house give us many of the ingredients needed for dishes we eat regularly.

Shop the Sales or go to a Salvage Grocery Store

This likely goes without saying, but making purchases when items are on sale is pivotal to saving money.  Knowing the list of ingredients your family enjoys is key, but so is purchasing these items when they are at their lowest prices.  At our local grocery store the regular price on a loaf of “Nature’s Own” bread is about $3 per loaf, but at the local Salvage Grocery Store they sell the same exact bread for $1 per loaf.  It’s the same delivery guy and everything.  Very often, going to a salvage grocery store is a better deal than even regular couponing and sale shopping.  Most recently, I found a 10 pound  “Black Forest Ham” that is normally found behind the deli counter.  At the local deli they charge more than $5 per pound on this item, but I bought this for $2 a pound.  Always keep stocked up, it might cost more up front, but you spend much less over time.

Buy a Freezer

Frigidaire Freezer

Around the holiday season 2012 my wife and I really started to embrace the stocking up on sales mentality.  We found turkeys were deeply discounted for Thanksgiving.  We ended up buying 6 of them in total and each one was a great deal.  I think the two cheapest were less than 20 cents per pound.  We also found glazed hams for at GFS for $1.30 per pound and ground turkey for $1.45 per pound.  We bought 100 pounds of the ground turkey and 5 hams.  We spent a ton of money, but we used my parent’s spare freezer to store these items, but it was running out of room.  It was then that my wife and I decided that we needed our own freezer.  We ended up purchasing a stainless steel upright freezer that was on sale at Lowe’s.  We ended up spending about $600 for the freezer, but by having the freezer we were able to capitalize on sale prices.  One of our first purchases after buying the freezer was buying boneless skinless chicken breasts by the case at Sam’s Club.  Normal price for chicken breasts seem to hover around $4 per pound or more.  We ended up buying 100 pounds for $1.77 per pound.  Our freezer has already saved us more than it cost in the ability to always eat sale priced food.

Credit Card Cashback

Of course anyone who has read the blog knows that I advocate getting money back by using credit cards for purchases you are making anyway.  So while you’re buying food on sale you might as well get a bonus discount after all your sale prices, coupons and smart shopping are considered.  With the exception of Sam’s Club, I can get cashback for grocery purchases.  One card give 5% at grocery stores, another gives 6% cashback at grocery stores which can really save quite a bit of money over the course of a year.  If I spend $6,000 a year at grocery stores then I will get $360 cashback on my American Express card which is pretty great for expenses I would incur under any scenario.

Start a Garden

Vegetables can be quite expensive when purchased at the grocery store.  My dear wifey bought bell peppers last week at Kroger for 50 cents each because she needed them for a recipe she had been eying.  We have grown accustomed to having a garden, but with the move and home renovation we did not get one planted soon enough.  Today we went to the local farmer’s market and actually purchased pepper plants for 50 cents each.  Even if each plant only produces one pepper we will be ahead.  We planted a late summer garden today and all of the seeds were a bit over $10.  Hopefully this small investment and minimal sweat equity will end up paying for itself many times over as we enjoy our fresh organic vegetables this fall for minimal cost.

 

 

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Value Maximization and Quality

“A penny saved is a penny earned”, is a quote famously uttered by someone.  I like to think that the geyser who wrote this was a coupon fanatic or a general deal hunter of some sort.  I know that I have spent a great many hours at my laptop or cell phone pondering over the best way to make a purchase.  My brother actually called me out on this recently and said that from an economic perspective my time might be better spent elsewhere.  I still stand behind the fact that I enjoy maximizing my value.  However, I feel that I must stress there is quite a difference between buying cheap things and maximizing value.

I believe that anything you buy has an individual worth that is unrelated to the price that a company places on the item.  For instance, if I get a hotel at the Howard Johnson for $75, but their normal cost is $100 is this a deal?  I guess it depends on perspective.  An argument could be made that you “saved 25%”, but I tend to think paying $75 a night for a low quality hotel is overpaying by at least $25.  I would rather spend

My goal is to always maximize fiscal value without sacrificing quality.  This is a tactic that is lost on far too many people.  For example, car salesmen love to ask, “How much do you have budgeted for a payment?”.  I imagine the reason this is a common question is because it is effective.  From a psychological perspective it diminishes the true amount paid on a car, it also makes you feel good about staying within a budget.  Many people just want to know the price they pay per month and that’s it.  The most important thing to me is the total price I will pay as a function of the car’s value.   When I bought my current car 18 months ago we had not been actively looking.  We ended up getting our car for $4,000 even though Edmund’s and all the other car buying websites put its worth at about $6,500.  Even though I have driven it for over a year I am confident that I could still sell the car for 125% of the price we paid!  To me it’s not the price paid, but the value.  The last car guy that I talked to seemed utterly confused that I just wouldn’t give him the number I was trying to hit.  Once you do this you have lost all negotiation power with any salesman.  Now he knows your budget and can keep bringing out crappy cars until you take one.  Sticking too strictly to a budget keeps one from making good value investments.

 

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