Convenience And Luxury: Know the Difference

LET'S GET ONE THING STRAIGHT. LUXURY AND CONVENIENCE ARE TWO ENTIRELY DIFFERENT THINGS. Whatever do I mean? Look, there are so many people I know who confuse these two things, and it costs them an enormous amount of money.

You decide to go out and do some shopping for the day. You leave the house and somewhere in the process of shopping you decide you are thirsty. You stop at the local gas station and buy a bottle of Coke to satiate your thirst..

IS THIS LUXURY OR CONVENIENCE?

You might argue that you make enough money, and that you have enough money, and due to that fact alone, being able to buy that bottle of Coke while your out shopping is part of the luxury of having a supportive income.

But it is NOT a luxury. It is a convenience.

LET'S PUT THIS ANOTHER WAY. You go on a road trip and you know you are going to want to buy some bottled water somewhere along the way. You leave the house with 24 bottles of water in the refrigerator, but take none with you on the trip. You stop to fill up for gas and buy a bottle of water.

Is this luxury or convenience? IT IS CONVENIENCE.

Why is it convenience? In part because you decided to leave behind perfectly good and already bought and paid for water to avoid having to take it along. It is convenient that in the event you want that water despite that, someone will have it readily available.

In a way you could equate the logic to going on a vacation out of town. Do you opt to pack clothes you already have for the trip? Or do you opt to just buy those clothes as you need them while on the trip?

Let's put this yet ANOTHER way.

You get home from work and you simply do not feel like cooking dinner. You decide either to order out or go out to a restaurant. It's not that you do not have food available to cook in the cupboard or freezer. And it's not like you don't have the time or the ability to cook dinner. You just don't feel like it. This is a convenience.

So when is it a luxury if you decide to eat out or order in? When you decide to treat yourself to something special.

The long and short of it all is that when you start to break things down, the more you opt for convenience, the less you will be able to afford for luxury. Convenience costs the most even if luxuries are expensive since luxuries are partaken of, theoretically, less often than conveniences.

Drink cheap coffee Monday through Friday, and you may find you will have no problem treating yourself to something special on Saturday and Sunday. And because you have played your money right doing so, affording the luxury of doing so will not cost you as much.

I scrimp on the less important things so I can better afford the more important things.

What makes things worse for a good many people is they opt for both convenience and luxury. And at the end of the day when they look at their bank account what they find is...

THEY DON'T HAVE ANY REAL MONEY...

And more often than not, they have debt which they have created as a result, and a lack of savings to speak of. It's really a conundrum. But one that, when  you know what the difference is, is entirely avoidable...

And who wants to splurge on an easy bottle of Coke when you can do so much more if you didn't?

Aldi vs. Walmart

Perhaps I am not stating anything new, or I am rehashing old "sentiments," since I have written about my liking of the way Aldi Stores does things, and areas where I think Walmart seriously misses the mark many times before in the past. The fact is that when it comes to anything shopping related, and saving money in general, I am pretty good at what I do, and in no way I am trying to be vain about that.

The more I compare the two stores, Aldi and Walmart, the more convinced I become that there are more advantages to Aldi than there are to Walmart. These days I actually have to say that the best value a shopper can take advantage of comes from Aldi. Not so long ago you would have heard me continue to cite that Walmart mostly beats out the competition on price.

That is no more.

There are myriad items I find are much cheaper at Aldi than at Walmart, and let's be clear I am talking about unit cost here. Not overall price. Size matters when it comes to shopping for the best deal, as does knowing your prices when you shop. But moreover, knowing what you pay per pound, per square inch, and per ounce. That really is the art of comparing apples to apples, folks.

For example, let's take canned vegetables (even though I have recently shifted to frozen vegetables). The average price for the Aldi preferred brand is around 40 cents while Walmart's cheapest alternative is around 65 cents. Canned mushrooms are cheaper. So are Dakota's Best baked beans at Aldi, which by the way stack up rather nicely to even Bush's Best or the Great Value brand at Walmart. Tomato paste and tomato sauce are also significantly cheaper than anything offered at Walmart. And when it comes to some of those items, these are household staples.

Other items people like to buy that are cheaper at Aldi stores?

• Prepared noodles, be they the Reganno boxed variety or Aldi's mac and cheese
• Jarred spaghetti sauce
• Potato chips
• Snack crackers
• Take 'N Bake pizza

For the past three or so months I have also been buying my russet potatoes from Aldi. Why? Because a 10 pound bag of these at Aldi averages about $1.98 while Walmart's best price is about $3 more. A potato is a potato, right? Apples to apples.

But there is something else about Aldi that definitely wins very high marks. That is that despite a high volume of customer activity, and often times a higher volume of goods per cartload, Aldi gets you through their checkout line fast. The only complaint I have sometimes is that they do not take as much care with my canned goods, tossing them too roughly into the cart, causing denting which I detest. But even that is not an oft experienced thing.

Today I went to Walmart for a few essentials such as eggs, sliced cheese, beer (yes, beer is considered an essential in my household), jarred minced garlic, flavored waters, and so on and so forth. I of course got the best price since I bought these items there for that very reason. But the checkout time? Abysmal. I was in a line 3 deep and it took me fifteen minutes with relatively lowly filled carts just to advance to my own checkout. Even when I got there I swore the cashier was dead since she was barely moving. When you count in your head between beeps, you should never be able to get to "five, one thousand." But I was able to.

Walmart still holds the line on many items for me, and certainly when we are comparing stores ultimately, Walmart of course offers many more items and varieties of items. That all aside, my end result in my comparisons between the two stores is this; lower per item cost at Aldi, better overall experience at Aldi, more value for the money at Aldi, and certainly better customer service at Aldi.

If there is any store out there giving Walmart a real run for their money and taking up quite a lot of valuable market share, it has to be Aldi. I will certainly continue to shop there so long as their prices are good, and so long as the quality of their products are good (which both are). There are so many reasons why shopping at Aldi is simply overall a better experience. If Aldi offered the same level of goods as Walmart did I am certain the value would be there, and I would have no reason to shop Walmart at all.

Both Aldi and Walmart would be wise to pay attention to that.

Imagine for a moment the opening of the first Aldi Super Store. I bet it would go over like gangbusters. And if anyone could figure out the best and most efficient way to manage an operation  like that, it might just be a company like Aldi. Sadly it is a German company. But in the world of business what matters most is service, value, and quality, and if Aldi can find a way to do better than American owned Walmart...

That is exactly where my money will go.

A Rebuttal to Comments Regarding Ways To Save A Ton of Money On Groceries And Household Items

After writing my commentary, "Ways To Save A Ton of Money On Groceries And Household Items," while I did not get many comments directly on my post, there were some "circles" of friends and family who wanted to provide a verbal rebuttal to my entire concept that time is money, and not taking the time to shop multiple stores, maintain an inventory, and forget convenience was simply wrong.

But you and your wife do not have kids. We do not have time to go to different stores. We cannot always shop price. We just need to get it done.

I can sympathize with that argument, and I can also appreciate it. But what does it really boil down to for me? And let's be clear that I am not trying to be argumentative or mean when I state this.

You are making this claim with very little true knowledge of the value of your money, and the value of your time.

I stated in my commentary that if the average person wasted an average of $1,000 every single year just to save time, and just for the sake of convenience, that if they made $15 an hour they would need to work an additional 67 hours each year to pay for the cost of just getting it done and saving time.

To that end I decided to break things down a bit more, simply because I was curious what the true cost of saving time happens to be. My numbers are slightly rough, but they also hold a lot of truth. My calculation here is as follows:

• What if I wasted just a mere $1,000 each and every year for the next 30 years? If I would have instead put my waste into the markets, for example, and earned compounded interest at 5% year (a conservative figure based on historical results), how much more money might I have had? Or conversely, how much money did I actually potentially lose just to save time?

In 30 years you have of course wasted, at the bare minimum, $30,000. A small number. And let's keep in mind that the total waste not adhering to some of the ideas I presented in my "Ways To Save A Ton of Money On Groceries And Household Items" is actually significantly more than that for a very large number of people. The real number is probably somewhere around $3,000 - $7,000 a year of wasteful spending depending on your income, and the size of your household. Even those figures may be substantially conservative based on your own lifestyle, the types of products you buy, and of course whether or not you are buying brand name items or no-name items.

If you would have followed the principles, and instead of wasting the money at the cash register, put the money into the stock market, or a simple mutual fund that earned a very conservative 5% annually, at the end of 30 years that money would have accumulated to a whopping $66,643.82. Not only would one have wasted $30,000 in 30 years, their wasted money would have lost the opportunity to gain $36,643.82 of accumulated interest.

Again, more people waste more than $1,000 annually, so this number actually doubles and triples and quadruples. If we were take into account the real numbers we'd be looking at figures more around $266,575.28. If at the same time you were still sticking to your retirement goals it is easy to see how after a mere 30 years of working, following sound money management principles, being disciplined about your spending habits, and following a few simple extra steps to ensure that your money is spent wisely, justly, and with a well mapped out plan for at least the everyday spending, you could be looking at assets that top $1 million or more. Perhaps not quite enough to retire after 30 years of gainful employment. But surely much closer to the prize than if you simply decided you'd rather save time in the short term than save a TON of time in the long term.

Why do people fall into these traps? Why do people easily accept these "justifications?" Because they think in terms of the here and now. Because they do not run the numbers. Because they do not understand the basic idea of the intrinisic value of money. It is the fault of no one. They don't teach this stuff in school and most people don't take the time to learn it on their own.

There are other ways to consider how this $1,000 a year could be "reinvested" as well. One could pay down debts. One could pay down mortgages. Both of these things are also very good uses of the "found" money, and would significantly reduce the actual number of years you are required to work, and save you a massive amount of time overall.

The bottom line? The time you are saving today to make your life easier is costing you tens of thousands of dollars of more time working to make up for it in the end. If you are okay with that, then maintaining the status quo is fine. But the finish line comes up much sooner if you understand how money works, how waste affects you, and how convenience actually costs you more in the end.

It is said than an apple a day keeps the doctor away. That is disputable. But an hour extra a week could actually put retirement in your grasp YEARS earlier. I think the numbers I have presented here speak for themselves. There is much more to be gained by saving money than by saving time. I think that speaks for itself and the numbers make that all too clear. In my life saving time is worthless if in the end it costs me money...

And increases my working life.

Playing Broke To Save Money

There are a ton of tips and tricks on how to stretch your dollars and of course, save money. And believe me, I employ a number of them. I am as miserly as they come, and quite frugal as well to boot. Of course some have another name for me.

Cheap.

Go ahead and have your fun, I say. I am laughing all the way to the bank, and when I really want to have a little extra money for something, I can have it.

So what's one little trick to saving money and having money? It's time to return to the days of make believe like when you were a kid. Only for this play, instead of pretending like you are Warren Buffet or Bill Gates, or perhaps the man who trumps all of their massive wad of cash, you play broke. That is, you severely limit what you have on hand for money, and make it damn difficult to get money in a pinch.

When I was in the Navy one of the things I did, and I'll admit that back then I was still not as good with my money as I am now, but I did still think about. It was a work in progress, shall we say? I made my money hard to get. I left very little funds right up front and accessible, and made sure that the rest was socked away into a savings account at a bank that was 30 miles from where I lived, and that I had no ATM access whatsoever to.

This meant that in order to get access to any of that money I had to physically get into the car during bank hours, and drive 30 miles to make a withdrawal.

That took a little bit of thought. It required a little bit of planning. And that meant that 90% of the time the money stayed at the bank just because it was too much of a pain in the ass to get at. I found other ways to get what I wanted. Or I simply went without.

These days I don't resort to bank accounts miles away. In lieu of that I keep most of my money in my brokerage accounts, and most of that is tied to a stock. It's still accessible. But again, far less accessible than if I could just walk up to an ATM machine and draw it out.

I have to think about a tax implication of selling shares of stock, or have to wait a couple of business days for funds to be transferred to my checking account from my cash account. Especially if I sell shares I have to wait a couple of days for the transaction settlement, and then have to wait a couple more days to transfer the funds. Often times I don't even resort to doing that.

Again, just like before, I find other ways to get what I want. Or I simply go without.

The one thing I have learned over the years is that if you make money too easily accessible it gives you far too much freedom to simply give in, and take it. And 90% of the time it is simply something squandered on, on an impulse. Like New Year's resolutions are rarely followed through on, saying in the moment "I will deal with it later" is a sure way to ensure that it never gets dealt with. And time and time again you will simply find yourself going through more and more cash.

Playing broke is sometimes painful and frustrating, I will admit. But at the end of the day it just seems to make sense to me. When I really want the money for something I know it is there. I can enjoy skipping a fish fry today, for example, to better be able to afford a fishing trip I'd rather do tomorrow.

At the end of the day it is about having security and freedom. But not the freedom to frivolously spend. Rather, the freedom to spend wisely.

Besides, the best part is that when you get tired of playing broke and need a break back to the wondrous reality that you actually have money, it's right there, and you can go wild if you want and still not break the bank.

Joyous really. And perhaps, in some ways, quite brilliant, however conceited that may sound.

A 9-9-9 Plan At Home

In 2011 Herman Cain made the term "9-9-9" famous. It was a simple plan, even if in reality, the actual probability that he could have ever made it the reality was not very likely. I tend to think that even if he would have somehow found himself in the White House, the "9-9-9" plan probably would not have amounted to much aside from an interesting idea that would have needed quite a lot of scrutiny and ultimately, a morphing.

We'd have gotten something. But it wouldn't have been the "9-9-9" plan that Herman Cain campaigned on.

Still, I think as Americans we can use at least the simplicity of the concept of the "9-9-9" plan to right our own paths individually, and to make a strong effort toward getting our own financial houses in order. As we jump into 2012, I think we have a greater opportunity than we've had in a long time to set a new course for ourselves, and to pave a path that is far less rocky than it's been since at least 2008.

So what does a "9-9-9" plan at home mean? It means looking for simple ways to increase our earnings by 9%, decrease our spending by 9%, and reducing our debts by 9%. Granted, this is not something that's entirely easy. For example, how in the world do you increase your earnings by 9% when the average worker is probably lucky to get even a 2% increase in their wages?

Well, let's take a step back momentarily. I didn't necessarily suggest our plan would be 9%. What I said was we can use at least the simplicity of the concept of the "9-9-9" plan to right our paths individually, and to make a strong effort toward getting our own financial houses in order.

At the end of the day that number is probably not going to be 9%. But what if that number is just 1%? Can this still work out to be an effective plan? I think it can. Let's say you earned $40,000 in 2011. A 1% increase is a mere $400.

The point I'm making is that irrespective of whatever percentage number you choose, having a plan and being committed to that plan is what's important. And by the way, keep in mind as well that all of these numbers combined work together to acheive the goal. If you can increase your earnings, for example, by whatever percentage you decide is workable for you, why couldn't you also redirect that increase in earnings directly to savings? And what about debt reduction? What is the actual cost benefit to reducing debt? Paying less in interest payments of course. If you added it all up at the end of the day, I tend to think that engaging a plan like this would all benefit the entirety of the plan. Each part would complement the other, and compound the overall effect of the plan. The effective percentages would be higher than the base percentages overall.

Going into 2012 I think it's vital that we head ourselves onto a better path. We need to be more self-reliant. We need to be more capable of weathering a storm. We need to have more flexibility and therefore, more opportunity to get things accomplished, and make the path we're on less dangerous and risky as we've done in the past. Going into 2012 is a time to lay out all of our cards on the table and determine the best way to play them. It's a time to reflect on how we've played our cards in the past, and avoid the mistakes we made that helped us into this fine mess that we're only now starting to see ever so sligtly tidying itself up.

For you maybe it's the "2-2-2" plan. The numbers you pick aren't what's important. But if you want to see the most benefit in 2012, certainly picking the do-nothing "0-0-0" plan, or worse, picking the negative percentages plan from pre-2008 we were on will only get us right back where to we started in this whole fine mess.

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