I’ve mentioned before that I regularly read Lifehacker and pay special attention to the personal finance posts. I don’t always agree with everything posted, but by-and-large the advice and opinions are sound. Sometimes some real gems come shining through as well.
Recently a pair of those gems came to my attention. One was in my RSS feed reader while another was a year-old post linked to because it’s a closely related concept. I really like both of these ideas, so I thought I’d share them here.
$1 Per Use Rule
A writer from Refinery29 writes about a concept they learned from their mother. Essentially, the idea is that you assess the potential value of something you’re considering purchasing by asking yourself a very key question.
“Will I wear/use this enough to only cost me $1 per wear/use?”
Asking this question doesn’t negate other financial concepts that I believe are crucial—such as budgeting for big purchases and paying cash rather than accumulating debt. Once you’re beyond those core concept and into purchasing territory, break down the cost of the item under consideration into a real per-use value.
You may discover that you have cash available to buy something specific—such as a formal outfit—but will end up wearing the item only a handful of times during your years of ownership. In this way, you may find that you’d end up wasting money and will search for more cost-effective alternative such as shopping at consignment shops, etc. In contrast, spending money on an item for your wardrobe that will see dozens of uses is far more cost-effective.
Don’t forget to consider quality when determining an item’s value. You may think you’re saving money buying a lower-cost or used product, and you may well be. But consider that you may be subjecting yourself to the potential costs of earlier replacement or repairs, meaning you’ll be spending more money in the long run than if you had saved a little extra money for a higher-quality item.
Spend Money Where You Spend Time
Another great concept that’s tied the above idea is to spend money where you spend time. What does this mean?
Take a step back and consider where you spend the bulk of your time throughout the day. Many of us spend time at a desk in front of a computer. Is that chair comfortable? Does it offer you the support your back needs? Does it encourage proper posture?
Consider that you would be well-served by spending a significant amount of money on a chair that is comfortable and meets your needs. Why would you sit and suffer in the name of “saving a buck?”
Case in point: Several years ago I began to experience some pretty significant back pain. From the symptoms and circumstances involved, it was fairly easy to determine that my problems were caused by our mattress. We did a little research and determined that it was worth the cost to purchase a Sleep Number bed.
How did we come to that determination? Simply put, we calculated that the cost of a new, fancy bed would be insignificant in comparison to the cost of ongoing doctor visits and medical treatments.
We were right. My back problems soon disappeared, and on top of all that—since a Sleep Number bed is adjustable—I can alter my sleeping circumstances when my back begins to feel bad again.
When you do the math, you’ll find that such a purchase was well worth the money. A Sleep Number bed has a 25 year warranty, so let’s break that down into a per-use cost:
Let’s say that this purchase was roughly $1,000, and let’s also say that the average user is getting about eight hours sleep per night. So, over the course of 25 years that’s 9,125 nights (not accounting for Leap Years) which comes out to 73,000 hours of sleep time. Multiplied by two people, that’s 146,000 hours of sleep time, which equals $0.0068 per hour in cost.
Less than one penny per hour!
Even if you and your spouse only average six hours of sleep per night, the cost is still less than a penny per hour. If you’re single, it’s less than a pair of pennies.
Sure, there are other factors to consider, such as certain parts that are not covered under the 25 year warranty. We’ve had to replace the pump once already, but you get the idea. The purchase was well worth the expense in terms of total time spent and cost per use.