Attitude towards planning purchases an indicator of wealth

[PsyopRanger]

Posting this message from a friend for input from the FIRE crowd:

I've noticed that typically there's an easy way to tell whether or not somebody has the attitude to be wealthy -- how do they plan for purchases?

For example, my ex used to make enough money that she could save when she wanted to, but never felt "above water." Not quite paycheck to paycheck. Anyway, I noticed she never bought in bulk. It was always what she needed then, and rarely ever more.

Meanwhile, I've noticed that when I go to the store if there's a good sale on something I use regularly (say peanut butter, which lasts forever), I'll stock up and buy several at half-price.

It seems that people with wealthier intentions tend to buy more like that last example -- long term even if they don't need it immediately. It's the same principle behind buying winter clothes at the beginning of summer and vice-versa.

Agree / disagree?

What kind of purchase planning do you do?

 

[audreyh1]

Well, stocking up never helped me. I would almost always end up with stuff that I didn't use later or forgot about or just plain get tired of. When I finally sold the house, I had to get rid of a bunch of stuff that I had "gotten a good deal on" or "seemed like a good idea" and figured I would use someday but never did.

Things may be on sale, but extra stuff takes extra space to store, and that is a cost too.

I have since moved firmly into the only buy what I know I will use NOW camp, because I learned that my ability to predict what I will want or use in the future is actually rather poor. This has nothing to do with what I can afford, but rather a conversion to the "declutter" mindset which has really improved my quality of life, and so totally cut down on impulse purchases.

OK - buying 2 jars of PB on sale instead of one is not that extreme if it's a household staple used every day. But this can be easily taken too far and I think many people do.

I remember a 20/20 bit on the "myth" of cost savings when buying in bulk where they interviewed people leaving Sam's with huge baskets full of stuff and discussed with the customers whether they could really use all that stuff before the items expired.

Audrey

BTW PB does NOT last forever, and if you are buying the stuff with partially hydrogenated oils (trans fats) that extend it's shelf life, you are risking your health.

 

[Nords]

Agree / disagree?
What kind of purchase planning do you do?

Funny how those LBYMers learn all the tricks for making off-price buys and end up joining the ranks of the wealthy.

And as for saving, no one ever feels that they're flush enough to give up a hedonistic purchase in exchange for a bigger portfolio. Saving has to come first and it has to be a little painful now for that future security. During our accumulation years we never had enough to "start saving", but if we took 10-15% off the top and tried to live off the rest then somehow we always made it to the next paycheck.

We used to not buy anything that we couldn't pack out during the next military move. Now we've made big changes in our buying habits because we think we'll never move again. Storage can still be an issue but if the grocery store is selling a pallet of pasta or 20 pounds of dishwasher detergent then we're buying.

From my submarine experiences with it, I'd put peanut butter's shelf life at about two years. I can vouch that it's not 2.5!

 

[FinanceDude]

Lance:

Where have you been?

My wife is a "clearance rack" shopper extraordinaire.

However, I have put an end to the clothes WITH TAGS hanging in her closet.......

 

[grumpy]

Well, I HATE shopping so I don't plan ahead at all. If I need something (and I mean really need it) I go and get it at whatever price I find. I spend as little time and energy in the process as possible. The exception is major purchases such as cars, electronics, or vacations. On those I do lots of online reseach first.

My DW enjoys shopping. She doesn't mind at all spending the whole day shopping even if she doesn't buy anything. Its a perfect match.

Grumpy

 

[Outtahere]

Dh and I buy things in bulk, non perishables like TP, paper towels, soap and food that won't go bad for an extended period of time. Saving on those items helps me get past the emergency purchases that have to be made no matter what they cost.

 

[MooreBonds]

I would argue that it's more of a personality trait rather than a decision to FIRE/RE.

As the various posts below have mentioned, there are FIREd (or FIRE-planners) who are on both sides of the fence. And you can easily be on either side of the fence and still have FIRE as a goal.

For instance, you could always buy just what you need, and just buy generic/clearance items, and still spend less than buying in bulk with name brands. However, there are people who buy only what they need in generics who will never reach FIRE because their overall personality mindset isn't wired that way. Likewise, there will be people who buy name-brand bulk who will never be FIREd for the same reason. And, the converse is true (as exhibited by the posts below). (I was engaged before, and my ex-fiance always wanted to pay the lowest price - however, she spent every dime that came within a 10' radius of her, and even borrowed on top of it, and had stockpiles of junk that literally overflowed her house)

While I'm not trying to go anywhere near the slippery slope of 'blaming' everything on how our inner personalities are and leave us no free will, there is a definite strong bias as to how your personality is (IMO) the main determining factor in how you decide to buy. For instance, I combine all of the above ways: my main goal is buying at the lowest unit price, given that the quality is the same. If the quality isn't the same, I have to assign a value to the difference in quality and determine if it's worth it. If something will expire before I expect to use it, I don't buy it - but I won't hesitate on stocking up on something that I legitimately expect to use up. However, I can cite some examples where I buy on sale, only to have the expiration date come and go before I even open the bottle (doesn't happen often, but it does).

Bottom line - it can be a HUGE augmentation to your FIRE goals/budget by how you decide to buy, but it is just one example of the 'bigger picture' of how your specific personality type is, and not necessarily indicative of your ability to be an OAW/PAW (see "The Millionaire Next Door").

--Peter

 

[PsyopRanger]

Lance:

Where have you been?

They chained me to my desk for a few weeks of complex MDMP.

In non-military speak; MDMP is the process the military uses to evaluate every minute detail of a campaign plan (Something they forgot about with Iraq?)

Lance

 

[crazy connie]

On the grocery store detail... Well I excell there! Dry foods which are shelf stable are bought monthly and basically at the best price. A 2 to 4 month supply of TP, dish detergent, pasta and canned items are just fine with me. Having a very well stocked pantry eliminates grocery store runs which always seems to generate some impulse buys. I need to buy a new freezer which is easily filled with bread from the day old store and meat sale items. I shop at Fry's which is a division of Kroger and always shop on a specific day which has an extra % off. Also, they tend to rotate the buys on a rolling cycle. When canned tomatoes are on sale... I do buy 30 cans and have enough to make spaghetti sauce, chili etc. I am from the cooking school of cook big & freeze. That way I save 2 or 3 cooking cleanups and perhaps it takes less energy to cook a big pot vs. 3 or 4 smaller ones. Being a scratch cook (my hobby) also saves at the grocery store.

I also haunt the clearance racks when I do hit the deparment stores. Thanks Mom & Dad for instilling that if you take care of the pennies... The dollars take care of themselves!

 

[Nords]

I need to buy a new freezer which is easily filled with bread from the day old store and meat sale items.

I'm a fan of bulk buying and once-a-month cooking, but now you're talking about storage costs.

I'd hate to have to evaluate a purchase by how much it'll affect my electric bill. Chilling technology seems to be chasing Moore's Law but a second fridge/freezer can still be as much as 25% of a house's energy use. A 25-pound turkey on sale-- no problem. Storing a butchered steer-- ruh-roh...

 

[FinanceDude]

They chained me to my desk for a few weeks of complex MDMP.

In non-military speak; MDMP is the process the military uses to evaluate every minute detail of a campaign plan (Something they forgot about with Iraq?)
Lance

Guess W and Condy didn't attend those meetings.............or maybe Condy "can't recall"............

 

[MasterBlaster]

Andrew Tobias in his classic book - "The Only Investment Guide You'll Ever Need" talks about this very topic.

His example is, if you drink a bottle of a particular wine every week at say $10 a bottle. If you bought a case a and saved 10 percent then the case would cost $108 (for 12 bottles - that's 120 less the 10% discount). Thats a savings of $52 a year but you've tied up an extra $98 dollars by buying the case ($108 less the single bottle at $10).

So your "return" on your investment over the year is 53 % ($52/$98). And that's a tax-free return. Add in your federal, state, sales and other taxes to see that this return is absolutely outstanding.

 

[LOL!]

This idea that the wealthy plan purchases in great detail and buy in bulk is a load of crap.
You ain't wealthy if you are pinching pennies. If you are wealthy you know your time and health are more valuable than getting peanut butter on sale or having a closet full of toilet paper.

The millionaire next door may shop at Sam's or Costco, but the wealthy are sending their personal shoppers to WholeFoods and TraderJoe's.

 

[Mr._johngalt]

Lance:

Where have you been?

My wife is a "clearance rack" shopper extraordinaire.

However, I have put an end to the clothes WITH TAGS hanging in her closet.......

While I was in Dallas last week I decided I needed a shirt. With
DW no longer here to lead me to the resale/thrift stores, I wandered
into a Dillards department store. Man, did they have shirts!
Problem is they were all priced about $85.00, which is about 20 X
what I have been paying the last few years. All of their merch. was
priced like this and the store was packed with customers.

JG

 

[FinanceDude]

This idea that the wealthy plan purchases in great detail and buy in bulk is a load of crap.
You ain't wealthy if you are pinching pennies. If you are wealthy you know your time and health are more valuable than getting peanut butter on sale or having a closet full of toilet paper.

The millionaire next door may shop at Sam's or Costco, but the wealthy are sending their personal shoppers to WholeFoods and TraderJoe's.

I always found it interesting that the car lot full of Jaguars, Merceds, BMWs and Lexuses were outside a mall that had 3 stores in a row: TJ Maxx, Kohl's, and Burlington Coat Factory...............

 

[kcowan]

Andrew Tobias in his classic book - "The Only Investment Guide You'll Ever Need" talks about this very topic.

His example is, if you drink a bottle of a particular wine every week at say $10 a bottle. If you bought a case a and saved 10 percent then the case would cost $108 (for 12 bottles - that's 120 less the 10% discount). Thats a savings of $52 a year but you've tied up an extra $98 dollars by buying the case ($108 less the single bottle at $10).

So your "return" on your investment over the year is 53 % ($52/$98). And that's a tax-free return. Add in your federal, state, sales and other taxes to see that this return is absolutely outstanding.

Yabbut when we have a case, it somehow gets used more quickly than when I have to walk to the store for the next bottle. I guess breakeven would be OK on this transaction.

We go to Costco once a month for staples (we buy for neighbors too). We do JIT shopping for regular consumables. We can walk to three grocery stores from our condo.

 

[PsyopRanger]

Andrew Tobias in his classic book - "The Only Investment Guide You'll Ever Need" talks about this very topic.

His example is, if you drink a bottle of a particular wine every week at say $10 a bottle. If you bought a case a and saved 10 percent then the case would cost $108 (for 12 bottles - that's 120 less the 10% discount). Thats a savings of $52 a year but you've tied up an extra $98 dollars by buying the case ($108 less the single bottle at $10).

So your "return" on your investment over the year is 53 % ($52/$98). And that's a tax-free return. Add in your federal, state, sales and other taxes to see that this return is absolutely outstanding.

So all these great Super-Tuscans I am drinking here in Italy is actually an investment!!!! More Antinori 1997 Solaia!!!!!!

Lance

 

[MasterBlaster]

So all these great Super-Tuscans I am drinking here in Italy is actually an investment!!!! More Antinori 1997 Solaia!!!!!!

Lance

And those investments are great cause they are easy and fun to liguidate them

 

[ladelfina]

I agree with PsyOp's friend.. some of the posters have overlooked the phrase "the ATTITUDE to be wealthy". Once you've achieved wealth or FIRE you can relax the penny-pinching standards a bit while not losing sight of the original premise: that saving now means having more to spend later when you want/need to.

For people on an average salary it would be impossible to become wealthy if they didn't plan purchases and pinch pennies.

I only have the anecdotal evidence of the rolls of ancient Handi-Wrap (bought on sale) that I tossed from my mom's shed. Sure, in the end that Handi-Wrap was wasted, but the attitude led to wealth accumulation. I remember in the inflationary 1970s there were also big spikes in coffee and sugar prices.. guess what was in our basement? Coffee and sugar bought on sale. The growth of those pennies saved are, in part, some of the dollars earned that helped me to become FIRE.

There are always stories of lottery winners and sports stars who run through all their dough. If "the wealthy" are sending their personal shoppers to food boutiques, well, guess who may not be wealthy much longer if they don't keep an eye on their spending or hire someone trustworthy to oversee the pursestrings.. Isn't Michael Jackson broke, or near-broke?

 

[Spanky]

We always buy stuffs that we always need in bulk, e.g., paper towel, toliet paper, detergent, tissue, tooth paste, shampoo, hand lotion, rice.

 

[Cb]

When we joined Costco we made a few trips buying >$300 worth of stuff, then I cleared space in the cupboards and laundryroom to store it all. Most of it was store-brand paper products, cleaning supplies, etc, and food items with long shelf lives. So far so good.

For the next few months nearly every time the kids or other relatives came over I'd watch my wife load them up with our surplus supplies! WTF?!?!?

Afterward we'd make Costco runs and she'd grab a second mega-pack of Kirkland paper towels or laundry detergent, explaining that one of the kids had asked her to pick it up on our next run, with the understanding that they'd pay for the items. Uh-huh.

It took a little while (and not a few arguments) to break her of that. Three years later I'm still not quite sure we're in the black on our Costco membership.

Cb

 

[FinanceDude]

That would explain the many glass jars of garbanzo beans I found in my 96 year old grandmother's house................

 

[youbet]

For the next few months nearly every time the kids or other relatives came over I'd watch my wife load them up with our surplus supplies! WTF?!?!?

Been there, done that!!!

I've changed our strategy away from bulk buying to one of just watching the sales for most items. Living in an urban area, it's easy to visit several stores and only put 3 - 4 miles on the car for the entire trip. So, I save the store fliers when they arrive in the mail and shop weekly planning most meals based on what is in season and what is on sale. With only two of us at home now, even small extra quantities purchased on sale usually stretch out over a long time.

Now that we're FIRE'd, it's hard to stop watching the pennies! Sometimes we laugh at the contrasts in decisions. Example: We decide to get the best seats available to see Jimmy Buffet when he was in town, dine at one of our favorite, but pricey, restaurants afterwards and then stop at a bistro for a nightcap and more live music. Cost = almost $200. We could have gotten less expensive tickets and dinned/drank at home and saved close to $100. The very next day, I'm looking at sale fliers and making home meal plans that save $5 or $10 for the week! Being "thrifty" gets in your blood like a hobby and you just can't stop.

I do agree that saving money on small, regularly consumed items reflects an attitude about spending and consumption that could likely be a predictor of getting to FIRE or not.

 

[yelnad]

I tend to stock ahead on nonperishables when I have coupons. I have so much free toilet paper and toothpaste that I had to go on haitus and stop buying free stuff for a couple of months.

 

[rmark]

I invest first, so we can spend the rest, occasionally tracking spending throughout the month.

I decided a long time ago that buying in bulk probably saved us very little, and with limited storage space just wasn't practical. I just let Walmart store it all for me.