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?

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.