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Living on the Cheap
The Affects of Living Cheap
We are presently living in a world where living cheap is the topic of many household conversations. With unemployment rate at 10% (of course that's the governments conservative reports) many are having to do some major cutbacks.
There are always times where we need to "trim the fat" so to speak. But there are also perils of living cheap. Living cheap can easily become a lifestyle that will cause you not to enjoy the things that life can offer. It changes ones perspective! Live cheap long enough and you will be cheap, look at things cheaply, and act cheaply.
I remember talking with a person one time and they said that they would not buy a Coke at Disneyland because they knew the cost of it was pocket change and they were charging $3.00. Well, it's true that you are going to pay an arm and a leg for a soda, hamburger, or anything else at Disneyland, the movies, or any other place there is a captive audience. But when you can't do it you've arrived at cheap. Now you can't even enjoy the day at Disneyland because of your cheapness. I guess if you can't afford the $3.00 coke you definitely shouldn't have paid $90 to get in the park.
There is also another truism about living cheap. Just like the old saying goes, "You can't spend your way into prosperity" it is also true that you can't cheap your way into prosperity. Cheap people don't prosper because they look at things incorrectly.
Let's take real estate right now. A cheap person may be jumping up and down because here in California a house that was selling for $400,000 a few years ago may now be selling for $180,000.00. A cheap person would be excited by the bargain they are getting. Only cheap people buy based on price. Price really has nothing to do with anything. The real question in any transaction is value. While this person may be able to buy this house that someone else paid $400,000.00 for, it still may not be worth $180,000.
In order to get ahead in this life one must buy based on value. A person who buys on value will always get their money's worth even it it cost more. The cheap person may miss out on a great deal because they can't get past the price.
Then there are those who get great value out of haggling. Have you ever been to a garage sell? People haggle over twenty-five cents. Now that's cheap! A cheap person wants to try to negotiate because they feel they have gotten a better deal because they've talked a person down. A person who is looking for value will pay a specified price for something because it is worth it. If the seller doesn't like the price then they move on. If the seller really wants to sell then they will adjust the price either way a person of value is not stressed over the situation.
I remember once while we were traveling in Tennessee back in the early
90's. Trying to save money we got a "cheap" hotel. We couldn't wait
to get out of that place. It was worth every penny we paid for it.
What we didn't realize is the value was less than the cheap price. It
would have been far better to spend an extra $15.00 and had gotten a
place that was clean. Getting stuck on the price is a bad predicament to be in.
A Balancing Act
As with all truths in life there is a ditch of error on both sides. There are those who spend way more then they make. They obviously will have financial problems all their life. Then there are those who develop a cheap lifestyle always buying used, never enjoying what they are paying for, and trying to save an extra dime on everything.
In reality our life has two rivers. An inlet and an outlet which is called income and expenses. You have to keep these two flows in line, but instead of always being price conscious be value conscious. In the long run your money will take you further.
Three Reason's the Cheap Never Get Ahead
- Financial literacy cost time and money. A cheap person who focuses on price will never pay $500 to have someone teach them much less spend $15 and take the time to read a book about how money really works. They are so price focused that they don't see the value they will gain from the information. Those who prosper over the course of a lifetime are always learning.
- Price focused people are typically emotionally driven people. In the world of money emotions will hurt you far more than they will help you. When a person is going to make a financial decision they need to be able to see both sides of the equation. They must be able to weight out the pros and the cons so they know how their decision will affect them in the short term and in the long term. It is virtually impossible to do this while being emotionally driven.
- Price focused people get their information from the wrong sources. It is amazing to me how many people fight against the rich. There is one thing for certain and that is they know how money works far better then the poor or just getting by. A price focused person makes their decisions based on the salesman. Value focused people will gain insight from people who have expertise in the area they are buying.
In the end we are responsible for our own lives. We must be able to tell the good advise from the sales pitch and we must make decisions based on value and not price. Don't get caught in the cheap trap. It's a horrible life that will torment you every time a dime leaves your pocket.
While we must manage our outgo with our income in the end life is short. Enjoy the ride and don't become a slave to money.