Tuesday, January 08, 2008

Avoid (Unnecessary) Spending - A Quick Checklist

It's all the result of people spending money they don't have on things they don't need to impress people they don't like. - Denise in Business Week Reader Feedback on December 10, 2007 on "The Consumer Crunch" edition

When I read this comment in Business Week, I thought it was very insightful and would be a good test of whether I should buy something or not. For future reference, I created a three question checklist to use. If the answer to either of the first two questions is "no," then I won't buy it. If I get to the third question and answer "yes," I will buy, but be more cost conscious.

  1. Do I have the money?
    YES ---> Go to question 2.
    NO ---> Stop and don't buy it. This one is simple. If I don't have the cash, then I shouldn't be thinking about buying it. My exceptions are a home or a first car.

  2. Do I need it?
    YES --->Go to question 3.
    NO ---> Stop and don't buy it. If I don't need it or plan to use it frequently, I won't buy it.

  3. Is a reason to "impress"?
    YES ----> Stop and consider something more "cost effective."
    NO ---> OK to buy.

While each people may make different choices, here are some example "decisions" for me:

Item Under ConsiderationQuestion#1Question#2 Question#3Decision
Nintendo WiiYesNo-Not Buy
Cell PhoneYesNo-Not Buy
Luxury CarYesYes in 2013Maybe:-)Look for economy model that meets need
HDTVYesYes in 2009NoBuy in 2009

For reference, in 2013 our cars will 10 years old. After February 17, 2009, all TV broadcasts will be in digital HD format and we only own TVs with an analog tuner.

For more on Ideas You Can Use, check back every Tuesday for a new segment.

This is not financial advice. Please consult a professional advisor.

Copyright © 2008 Achievement Catalyst, LLC


Anonymous said...

Great exercise - my house is full of junk that would have stayed on the shelves had I performed a similar analysis years ago.

Anonymous said...

Here is a work around to delaying the HDTV purchase.


Additionally, I wanted to let you know that I do enjoy reading your blog. You are a very level headed person very much like myself.

Please keep up the good work.

Super Saver said...

@ Frugal Dad,

Thanks for your comment. I agree, the exercise helps prevent (over) accumulation:-)

@ Anonymous,

Thanks for the kind words and the excellent tip on using current analog TVs to receive digital signals. I'll be checking if local retailers are accepting the $40 coupons yet. If yes, I'll be ordering my coupons later this week.

Anonymous said...

Nice. And I like Frugal Dad's suggestion that we apply it to stuff we already have. :)