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Saturday, September 24, 2011

MONEY: Spending Your Money Wisely

       I think everybody gets ripped off at sometime in life.   When we do it to ourselves it is one of the ones that hurts the most.  Over the years it has happened to me more than a few times.  Sometimes it was when my reasoning and logic failed to take in all the factors.  A couple of examples come to mind, mainly cause they still irk me even after twenty to thirty years.
      After leaving the service my wife and I bought and old fixer upper that was within our budget and we could easily afford the payment on one of our incomes.  More about that later.  Anyhow as it was an old house a lot of the rooms, especially upstairs,  had very few plug ins. In fact many of the rooms did not even have light switches.  The house had turn of the century two strand wiring which we failed to notice.  It even had the old screw in glass fuses in the electric box.  We learnt a lot buying that house.  Like learning if the seller is friends with realtor and the banker.  They might be helping her get out from under a loan she could not afford.  It may well be at your expense. Get an inspector to check out the house.  It could save you a lot of work and tons of money.  Anyhow, to avoid stringing extension cords all through the house I bought  a fitting to screw into the light fixture.  It was one that had room for two plugs and a pull chain for the light.  When one of them went bad I went to Wal-Mart and decided to purchase it there.  After Wal-Mart I was going across town to a smaller chain store.   However using the infinite logic of a college level freshman it seemed safe for me to assume, which is a dangerous thing to do,  that the big national chain would be cheaper.   Upon arriving at the local chain store that illusion was quickly shattered.   The fixture cost half the price at the local store that it did at Wal-Mart.  The lesson learned was that big chains make their money by giving you a discount on the necessities of life and bend you over on the stuff you buy only once in a while.  Cheap as I was at the time I bought the fixture at the local store and took the more expensive one back to Wal-Mart and got a refund.  This has happened several times over the years and it burns me each time it happens that I am stupid enough to fall for it.
     It is not my intention to pick on Wal-Mart but they are a chain most people deal with, at least in the United States.  If you are economically well off enough that you do not go to Wal-Mart this article may still teach you something before it is through.  Another day in Wal-Mart I noticed that when it came to buying sugar there was a pricing problem.  Simple math told me that two five pound bags were almost fifty cents cheaper than one ten pound bag.  I pointed the matter out to about ten different people.  Only about three out of the ten put the ten pound bag back and got two five pound bags. Lesson learned was that bigger is not always cheaper.  What is fifty cents to an individual?  Not much really, but if you buy ten pounds a week you would be spending twenty six dollars a year that you could have saved.  When you add that up by the thousands of customers and thousands of stores it turns into big money for Wal-Mart.  The same pricing techniques are used in the meat department and in cereals.  Other departments use the same tactics I imagine.  These are things that people buy everyday or at least every week.  It is little things like this that help the big chain become the big chain.
     Later in my college career I took a mandatory class in Personal Financial Management.  Being thirty-two when I started college and having been married for eight years I was sure this class would be a waste of time for me.  It turned out to be one of the most valuable classes I took in my four years of going to college.  The class taught how to figure interest, how to read a stock report, and how to plan a budget.  The two excercises that taught me most though were about things that I was sure I already knew.   The first one was an excercise where we had to go to at least three different grocery stores and price fifty different items.  Then we had to figure out what the lowest price was for the items.  What the highest price was and finally what the price was if we bought all the items at one store.  It really shocked me.  Buying only the lowest priced items totaled about seventy-seven dollars.  If you bought only the highest priced items the bill would have been about one hundred and forty-five dollars.  However when you bought all the items at one store the price aveaged between one hundred fifteen and one hundred and twenty-four dollars.  It taught me that it paid to shop. It is easier than it sounds.  Most of the stores send out weekly adds with the local papers.  Some items may not be on the advertisements but a quick trip around the stores can save quite a bit of money.
      A couple of other minor bits of advice.  Always shop with a list and stick to it.  Only make exceptions for necessity items.  Also after you get all the prices go somewhere cheap and eat something.  While eating go over your list and plan what you get where.  Not being hungry helps stop impulse buying.
      Getting back on track.  Just based on my experience it would be possible to save as much as nineteen hundred and seventy-six dollars per year by paying attention to detail.  Sure it takes a little longer but how many hours do you work for those nineteen hundred and some dollars.  If your pay is fifteen dollars an hour that would work out to about one hundred and thirty-one hours.  That is three weeks worth of pay that you can spend on yourself.  Even if you spend an hour a week checking prices you still save a couple weeks worth of pay.  Use some coupons save even more.  You can put your savings in the bank and build a fund to protect yourself in case you are laid off.  The choices are yours to make.
      Another excercise we had to do was to price twenty five items we might need at some point.  The list included things like Appliances, TV's, Stereos, Furniture, Tools or other items we felt were important to the average person.  Computers were not even on the market, along with microwaves, cell phones and many of the other things we consider necessity items today.  It again showed me that careful shopping could save a lot of money.  Money not spent is money you have for other items.  This concept is even more important to someone living on minimum wage.  While it represented one hundred and thirty-one hours for the person making fifteen dollars and hour.  Which is just over three weeks pay.   The person on a minimum wage of around eight dollars an hour would pay two hundred and forty-seven hours of his or her pay.   Based on a forty hour work week that would be over six weeks worth of pay.  This is a perfect example of why having a budget is so important.
     This does not solve all of the financial problems for the average person, but it certainly can help make life a little easier and more enjoyable.  Another question we addressed in class was if both parties in a marriage should work outside the home.  If the one spouse stayed at home and the family gave up the second car.  The savings with a few other minor adjustments, like maybe having a garden in season, made it the more practical way to go.  The savings on day care if children were involved and the stay at home partner managing the shopping looking for the bargains.  It often worked out that a stay at home spouse made for a better family situation.  I did not say it had to be the wife at home.  Even back then sometimes it was obvious the wife would be the bread winner for the family.  Most men back then were to chauvanistic to accept that arrangement though.  During the course of my sixty five years I have seen some couples get by on one minimum wage salary.  In the same period of time I have seen families with two large incomes go belly up.  The well to do couples got buried by what I call stuffitis.  Trying to keep all the toys took them down.
      The point is that regardless if single or married managing your money is a wise thing to do.  How you handle your finances will determine if life is something to be enjoyed or a burden to bear.  Life is short so I recommend paying attention and enjoying it.  The best way to do that is share it with others.  That is why this nation used to be so blessed.  It is summed up in one verse from the Bible that says it all.
      Malachi 3:10  "Bring ye all the tithes and offerings into the storehouse, that there may be meat in mine house, and prove me(test me) now herewith, saith the Lord of hosts, if I will not open you the windows of heaven, and pour you out a blessing, that there shall not be room enough to recieve it."
     America had all those blessings but we are falling away from them fast.  If you want to see where America was and where it is going I challenge you to read one chapter out of the Bible.  It is about the Blessings and Cursings that come from God.  Then you decide where America is at.  It is the 28th Chapter of Deuteronomy.  I will leave it at that.  It has worked in my life. It works on the personal and on the national level.  I am not trying to preach I am just trying to give a standard to measure America against and beings America calls itself a Christian nation.  It seems the Bible would be a good source to measure it against.
                                                         

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