Cost Versus Value In Your Life

Mug warmer: $7
Laptop computer: $1600
T-Mobile Dash: $150
LASIK surgery: $4700
Cable DVR: $5 a month
GPS: $600 (two years ago)
Online banking: Free
Send Out Cards service: $9.95 a month
Mountain house: A lot

I've heard the saying, "The best day of your life is the day you buy that boat, and the second best day of your life is the day you sell it."

Today's entry, in honor of the 9/15 deadline for Q3 estimated income tax filing, is about your money, specifically, cost versus value. Sometimes we buy cheap things because we think they're a "bargain" or "a good value". Other times, we resist spending significant money on things that might just be worth every penny. When you spend money, you spend it one of four ways...

and it's a lot like the Covey Quadrant. You may have heard of this model, where you evaluate your tasks in terms of their importance versus their urgency. Tasks get separated and it's a good way to stay focused on what is truly important to you, and not just spend your life fighting fires. Today, we're laying the Covey Quadrant model over your spending.

Everything in your life costs you something -- time, energy, health, happiness, money, peace, freedom, to name a few. But today we're focusing on your money, because people, if your money is in chaos, I'm here to tell you, so is your life. So let's make a money quadrant like the Covey Quadrant and see what good thoughts you can drum up about your money and your life!

At the beginning of this post, I listed some things in my life that fall under the first two quadrants: Inexpensive and Valuable, and Expensive and Valuable. As you view the list you can see that some of the most valuable, happiness-producing, life-simplifying goods and services in my life cost very little. And there are others that, though undoubtedly expensive, are worth every penny. So la dee da, where am I going with all this? Walk with me friends, down the road of "whatever money you spend, for Pete's sake, make it count!"

What goods or services in your life have you spent money on -- whether a lot or a little -- that fall into quadrants one and two? Those are the best quadrants to spend into! And vice-versa, what things have you bought that either currently give you, or have given you buyer's remorse in the past? Quadrants three and four are the bummer quadrants to spend into, because financial regret is haunting. Not only because of the initial money spent (the principal, if you will) but if you used a credit card, on top of the principal, you're paying INTEREST and boy howdy, that can keep you up at night. How long and how much more than its initial cost are you ultimately paying for that new [insert potentially frivolous item here]??

Financial regret comes from buying goods and services -- regardless whether they're CHEAP OR EXPENSIVE -- that don't add value to your life.

And here's what can ultimately happen when you do that. Some time in the future, you'll spend good money (quadrant ONE money if I do say so myself) to hire me or one of my awesome team to sit with you for six, ten, twelve hours or more and help you get rid of all that stuff you bought that didn't add value to your life. So you bought it, you may have paid interest on it, and now you're going to pay to have someone help you get rid of it. Man, that thing sure was expensive. But more than likely, it isn't just one thing. It's a massive amount of little things that add up. A few dollars here, a couple more there. They all add up, one tiny bit at a time, until one day you're drowning in bags, boxes, drawers, closets, basements, garages and secret stashes (oh don't pretend you don't have those!) of things, things, and more things.

The moral of this fairy tale is please buy consciously.

Think past the moment of acquisition. Consider whether it's a want vs a need. Where will you store it? How much maintenance will it require (ummm boat anyone?) and are you willing to commit to that? Is it a fad item you can live without? Do you have plenty of these (shoes, purses, hats, suits) already and you're just feeling bored? How much can you get for it when you sell it at your next garage sale? (oh, OUCH!)

Hey, we all make buying mistakes, myself included. And of course, over time your personal style and life situation changes. But when you have a lot of financial regret, chances are it's because you're buying unconsciously and most of your buying decisions reside in the third and fourth quadrant. You're living in that fancy subdivision called Buyer's Remorse Estates and even though it looks nice from the outside, it's not such a good neighborhood once you live there. Change your buying habits, move out of Buyer's Remorse Estates, and not only will you never have to pay someone to come help you get rid of your stuff, you'll sleep better at night in the meantime. 

Other posts related to your money:

What Does Your Stuff Cost?
Save Money With Frugal Travel Tips!
Wall Street Journal Quotes Me On Products

Comments

[Sara at On Simplicity]

I can sympathize with this concept... deeply. I used to congratulate myself when I'd be frugal and get my shopping fix taken care of at the dollar store. Fun! Cheap! No problems, right?

Now, after shuffling this junk around for a few years, there's definitely a problem. The cheap shopping high cost me hours probably in wasted time and additional organizing. I would've been better off splurging on one nice thing that made me smile to this day. Lesson learned!

[Alex Fayle]

Woo hoo! Great moral here Monica. Too often we buy for the sake of buying - I find friends do this when they go away - they come back with gifts for us even though we don't need anything. Consumables are good, but why add to clutter with things that people buy because they feel they should?

[Monica Ricci]

Sara and Alex, thank you both for your insightful comments. As my relationship with money continues to change (for the better) I realize more and more that some things are just flat out WORTH paying for. Even a lot of money.

Money is like time... if you allocate it according to what you really value and the payoff you receive, you will rarely go wrong.

~Monica

[Terry Lessig]

I love the Quadrant, but must say I learned it from Lyman Jackson in my junior year Gov't and Economics class, which predated Covey's books by some 20 years. I also learned about Adam Smith, the Constitution, the importance of voting, and how to skim from the concession stand at the basketball games.

Best Quadrant 1 purchase I made this year: cookies.

[Monica Ricci]

Terry, my mistake. However, in my defense, I'm SUCH a spring chicken that I couldn't possibly know that Mr. Jackson said it first, as it happened somewhere around Civil War times... ;)

I bet that skimming from the concession stand skill came in handy over the years huh?
~Monica