Beating Broke

Personal Finance from the Broke Perspective

Dissave: Financial Term of the Week

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Are you a Dissaver?  If you don’t even think that’s a word, don’t worry.  I didn’t think it was either until I looked it up.  And believe it or not, it is a word.  Here’s the definition or Dissave on dictionary.com.

As you can probably guess, someone who dissaves is someone who lives beyond their means.  Someone who doesn’t save.  I’m quite sure that none of the readers of this site are dissavers.  You aren’t, right?

I have a small confession to make.  I really just wanted to use the word in an article.  Mission accomplished.  Also, despite what the article’s title might suggest, there aren’t currently any plans to have a financial term of the week.  Now, back to your saving.

Is Saving Money a Waste of Money

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Save! Be Frugal! A penny saved is a penny earned. There’s a plethora of maxims meant to encourage us all to save our money for a rainy day. To hoard our excess funds so that we can spend them at a later date and enjoy their usage. But, is saving our money a waste of our money?

The most obvious way that saving money could be a waste of money is in lost opportunity cost.  If your money is tied up in some CD or savings account that you don’t have ready access to, what opportunity are you going to miss out on that could make you even more money.  If you can’t take advantage of an opportunity to make money, your savings is wasting those potential profits.

But, that isn’t the real issue.  Potential profits don’t necessarily mean lost profits.  Maybe that opportunity doesn’t perform as expected and you earn less than you would have in the CD or savings accounts?  No, I don’t think that theory holds up.  Sure, you might miss out on a potential profit boon, but I wouldn’t encourage not saving for that purpose.  In fact, having a readily accessible savings could make it easier to take advantage of an opportunity like that.

But, let’s think for a moment about what we do to save money.  The easiest way to do that is to just have it taken directly from your paycheck and into a 401(k) or to set up an automatic transfer from your paycheck to a savings account.  Easy.  A little bit of set up involved, but very little effort thereafter.  That’s hardly a waste of money!  But, let’s look at the opposite side of the spectrum.  You’re pinching your pennies, saving as much as you possibly can and then some.  You don’t want to miss out on an opportunity, or you want to pay your debt off super fast!  You go so far as to start collecting pop cans.  (assuming you live in a state that has a deposit.)  You walk down the street and throw the cans you find into a bag.  Maybe you even hit the parks and poke through the trash cans there.  Every week, you spend several hours looking for cans.

How much is your time worth?  If you’re spending several hours a week for a few bucks worth of cans, are you making a good use of your time?  Isn’t your effort to save a few bucks a waste of potential money doing something else?  Heck, you could deliver pizzas for a few hours a week and make much more than that.  Not to mention the other ways to make extra money.  You can make money selling ebooks, or working some overtime, or consulting, or just about any second job, or make money on twitter, or even *ahem* blogging.  Sure, the cans are an extreme example.  But, one used to put a spotlight on my point.  What saving practices are you employing that are a waste of money?  Which of them are worth your time, effort, and resources?  And which aren’t?

If we are going to attempt to create a super financial situation, we have to make our saving machine as efficient as possible. It doesn’t hurt to question your tactics.  Find the ones that are causing you to waste your money and find a better use of your time.  Not only will it make your money saving efforts more efficient, but I think it will free up some time to do things that you want to do.  Like spend time with your kids, or walk through the park and not look for cans!

The Expensive Produce Myth

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When many people discuss buying more produce (fruits and veggies) the most common complaint is how expensive it is.  How can they afford to pay that much for fresh produce and still feed their family?!?  Well, I think it’s a myth.

Based on my recent visit to the grocery store, the price of produce is actually pretty good.  Let’s compare for a minute.  A quick trip down the meat aisle will tell us that a chunk of meat of whatever shape or size will likely cost us about $3 a pound.  And that’s the cheap stuff.  No t-bones here.  How about the other aisles.  Hamburger helper?  About $3.  Plus a pound of hamburger, a cup or so of milk, and some margarine or butter.  Chips?  Doritos were on sale for about $2 a bag.  I think that’s about a 10 ounce bag.  Frozen Pizza?  I saw some that were 5 for $10.  Smaller ones, sure, but pizzas.

Apples

Now, lets take a look at produce.  Apples were $1.49 a pound.  Oranges were $1.89 a pound.  Potatoes were about $1 a pound.  Onions were $1.38 a pound.  Broccoli was about $2 a bunch.  The list goes on.

Sure, none of those, by themselves, is a meal.  Very little of the first list is either.  But, if you eat an apple before dinner or as an appetizer, it makes you fuller.  Which means you’ll eat less of the other, more expensive stuff.  Maybe you replace 4 ounces of steak with a 9 ounce apple.  Even at a 2:1 ratio, you break even.  If you manage to cut the meat even further back and replace it with other veggies, you’ll save even more!

And I won’t even go into the savings on medical costs that could be gotten from eating more fruits and veggies.

The bottom line is that expensive produce is a myth.  It’s only when you don’t stop to consider that it’s replacing something else in a meal that you realize that.  If you replace something, you can buy less of it at the store.  And you will spend less.  Sure, costs might stay the same, or even go up, if you don’t reduce what you buy based on your new eating habits.  But, that food will last longer.  Give it a try and then compare your budget sheets from before and after.  I think you might be surprised by the outcome.