My daughter Katie finally saved up the money to purchase her very first cell phone. She will be paying for the service out of her own pocket since she now has a part-time job.
When she told me how much the phone cost, I was struck by how much of her life she had to spend working in order to earn the money to pay for it. She worked an equivalent of two weeks to buy the phone and pay for the first month of service. It will cost her ½ of a week’s pay every month to pay for the service.
I asked her if the phone was worth losing two weeks’ of her life working in order to pay for it. Katie gave me a blank look before regaling me with how wonderful her new gadget was.
That made me realize that most people have no concept of the amount of time they sacrifice from their lives in order to pay for things.
For instance, say you decide to purchase a new computer. You want a nice one so you select a model that costs $1,000. If you are on minimum wage ($7.25 in this area), that means you have to work full-time for a month to buy the device.
If you decide to buy a new car for $20,000 (I’m just picking a random price here), you would have to work 20 months just to pay off the base price, not including taxes and interest if you finance it!
Calculate Before You Buy
Before you purchase an item, calculate just how much of your life you have to sacrifice to a job in order to pay for it then ask yourself: Is this item worth so much of my life?
If it is, you’re good to go. Buy that whatsit and have fun.
But if it’s not, save your money. Remember, the less stuff you buy, the less you have to earn to pay for it. Also, remember that there might be a less expensive way for you to get what you need/want. For instance, if you want to own your own car, instead of purchasing a newer one that you have to finance, take the down payment and buy an older vehicle outright. You will have transportation at a fraction of the cost—without having to worry about a monthly payment.
If you want to own a home, consider purchasing a smaller, older, simpler home instead of that fancy one the realtor shows you. I have personally purchased older mobile homes on a rented lot for less than $2,000—one time I even purchased one for $100 and some furniture taken in trade! Some mobile homes and older houses in the country can be purchased for $10,000 or less if you look and are patient. You could purchase one of these, live in it, and save the difference that you would normally pay in rent to buy something better. Once you buy a better place, you could sell the first place (saving the money if you want to upgrade again) or rent it out for extra income.
If you practice this method of thinking before you buy, you will end up saving a LOT of money over time. You can either put that money away or decide to regain some of your life by working less.
I discuss this and other ways of saving money in the book The Shoestring Girl: How I Live on Practically Nothing and You Can Too, available in print and ebook at many fine retailers.
4 thoughts on “The True Cost of Stuff”
So, so true. I am glad you wrote and I read this post. I am working to reduce my expenses to less than $500 a month and the cell phone bill I currently have is over $300 a month. Currently I have 5 lines on my account, myself, my three adult children and my mother. One of the kids pays his share (well, almost) and I am going to move my mom to Freedom pop or something free or cheap. The other two are in college and paying for their cell service is something I do to help out their expenses. Trying to come up with a plan for myself. I ALMOST switched to another service that was going to cost me $60 a month for just my phone but changed my mind when I read this article. Just might have to go with Freedompop or something else. Actually, I would rather have no phone but need some way for kids to contact me in an emergency. Carrier pigeon?? Thanks, Annie, your posts always help me stay focused on my goal.
Ouch, Cam! That is a sizable chunk of change! I hope you can manage to cut it down. To b honest, if I traveled outside of the house more I would need a cell phone but right now I can avoid the expense so I happily do. I grew up without a phone for a good portion of my life so the absence doesn’t really bother me. As long as I can make or receive the occasional call I’m good.
Have you managed to reduce your expenses very much so far? I really hope you keep me posted. Your goal is admirable!
I also think that no only do I have to work x hours to buy y, but I also have to pay tax on the earnings from x hours. If I make/upcycle/grow or do without that item I don’t have to find the money OR pay tax on it!
Exactly! I left that out for the sake of simplicity but those taxes can add up fast!
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