Monday, September 28, 2009

Money Monday: September 28, 2009

You know…we’re all investors. Whether we realize it or not, we are.

Every day, we make decisions about how we’re going to invest our resources. Some of us are extremely conservative and only go with the sure bet kind of things. We’ll invest our time and talents in a steady job in exchange for a steady paycheck. We’ll invest five bucks in a McMeal, expecting that we will get a full stomach for it immediately.

Others of us are a little more daring. We’ll take more risk.

We’ll go to the supermarket and buy raw ingredients, risking all sorts of disasters. From leaving the pot on too long and burning things beyond recognition to not getting around to cooking it before it rots, investing $200 at the supermarket can be riskier than you might suppose on the surface of it.

But of course, risks like those are routine. So routine, in fact, that we don’t even consider them to be risks at all. Paying $50 for a pair of boots isn’t an “investment.” It’s just boots, for heaven’s sake! And going to the supermarket an investment?

This woman is whacked, yo.

But part of having a frugal mindset is constantly being aware not only of what things cost, but what their opportunity cost is as well.

For example. I’m out in the big bad world and I see a really cool pair of boots for fifty bucks. (Let’s just say.) And as it just so happens, I have a couple hundred bucks in my petty cash account…so if I wanted to buy the boots, I can pay for them in cash right here, right now.

But. Do I need them? Welllllllllllllll, this is open to interpretation of course, but unless I’m currently barefoot the answer is probably not really.

And for me personally, “cute” boots really are a waste of money. I won’t wear them. I may think I’ll wear them. I’ll envision myself being the kind of woman who stomps around in fashionable boots and the image will please me mighty well and all, but let’s face it: I’m not a fashionable kind of woman. My lifestyle is not fashionable. In point of fact, my lifestyle is the kind of lifestyle that takes fashionable things, wads them up into tiny balls, passes them through a mulcher, spits mud on them, irons them out in a vain attempt to make everything right again and then goes, “Uh, ta-da?”

I live a lifestyle of blue jeans and work boots. If I want boots, I’d better give the “cute” section a miss and head on over to the “can repel fire ants, rattlesnakes, mud, flood waters and five year olds with a shoelace fetish” aisle.

They’d be a bad investment for me, one where the money I spent would end up sitting on the shelf for a few years before I quietly snuck them out to the donation bag in the dead of night…weeping softly to myself because I had such high hopes that this time, miraculously, I would be that fashionable boot-wearing kind of gal.

But let’s say that’s not so. Let’s say I’m still working in the financial district and such things as kicky boots are definitely a part of my daily wardrobe. So the boots could be considered a decent investment for me. I’ll wear them regularly, and get good use out of them.

That’s still not the whole equation – there’s still the question of what I’m giving up, what other things I could be doing with that money.

I could buy ten whole chickens on sale. Or 150 pounds of flour, with enough left over for ten gallons of milk. A quarter hog. Enough beans to solve world hunger (if I could just figure out the distribution problems).

I could buy up to fifty articles of clothing at the thrift store. Shoot, with luck, I might even be able to buy ten pairs of boots there, instead of just this one! (You’d be amazed how many nearly-new boots end up on the thrift store shelves around here. Apparently, I’m not the only woman out there who only thinks she’s a sexy-boot kind of gal.)

Fifty dollars is twenty-five packages of seed at the hardware store, each of which will plant between twenty and forty feet of something. That’s more than enough to feed my own family and our neighbors and make the folks at the local family shelter very, very happy indeed.

Fifty dollars could buy twenty-five yards of brand new cloth from the discount bin at WalMart, or, the entire stock of fabric remnants at the thrift store.

Fifty dollars is more than enough to take a class at the parks and recreation center – maybe a sewing class, so I’d know what to do with all that fabric.

Maybe a quilting class, and then I could make quilts to add to the things in my Etsy shop. (Yes, I know, it’s almost empty right now – new stuff is coming. Boy, is it ever coming…I’m’a’gonna lose what’s left of my mind trying to keep all this stuff organized…)

I could simply hold onto it and wait for something better. Add it to the side-of-beef fund, or even just wait for the boots to go on sale at the end of the season – in a nice, interest-bearing account where more pennies get added to it every month.

Or. I could take that money and buy some raw materials. Maybe I could buy enough raw materials to make 100 hand-dyed handkerchiefs that sell for $2 each – shazam! My $50 is now $200, like magic! (OK, magic, plus about a hundred hours of work…I think there should be a rule that we don’t discuss hourly wages when we talk about artistic endeavors, it’s about always depressing...)

It’s at this point that people sit up and go, “Oh, that’s investing! That other stuff isn’t investing, it’s just buying!”

But I humbly submit to you that, like it or not, you are investing your life.

What you do with your time is an investment, whether you spend it sitting behind a desk in exchange for a sure-fire paycheck at the end of the week, or writing stories you only hope will be published someday by someone, or planting seeds and hoping they’ll grow and feed your family and let you have fresh organic produce without having to sell your internal organs on eBay for the privilege.

What you do with your money is also an investment, whether you’re putting it all into only immediate needs and desires, doing your best to spend it in ways that give you the most benefit, saving it for future use, or deciding to put some into a business of your own in the hopes of growing that monetary seed.

It all has some degree of risk, from “almost none” to “are you crazy?!”

It all has some form of reward, from “negligible” to “gratifying.”

If you can find the spot where, for you, that risk and reward come into perfect balance, where your returns are gratifying and the risk manageable for you (and that’s different for every person – some people would be on anxiety medication trying to deal with the risks I take, while others would be buying rollercoaster tickets trying to get a little more adrenaline into their lives), you’ll find that you’re really living – conscious of what you’re doing, aware that you are not just drifting along doing what you “have” to do.

It’s a nice way to live, even if it does mean you give those trendy boots a miss this time around…it doesn’t feel like a loss, when you’ve thought through why you want them and why you don’t, and made an “investment decision” rather than deciding to “stick to the (ugh!)budget.”

Trust me on that one.


Science PhD Mom said...

I had one of those "investment decisions" with stylish boots recently. It's something about the fall air that has a woman thinking of cute boots, apple cider, and a good new book on a rainy day. Anyhoo, I tried on a pair of just-below-the-knee suede boots in an uber-department store. I could have bought was my birthday, I could have had them as a birthday present. But I thought, "I would have to wear these with a skirt, or a flirty little dress. Yeah, I could be that fashionable woman, with an equally sassy handbag on my arm...yeah, I'm feeling the LUV!" And then my rational brain said, "You never wear skirts, and you don't have any flirty little dresses. You wear jeans or trousers all. the. time. Grow up and get real." *sigh* And, of course, they didn't zip up to the top with my large calves, because you know those boots are not designed to fit women who wear anything more than a size 6 (those heifers!). Yeah, so they went back and I kept my money. That's me...unfashionable since, well, birth!

Steph B said...

You sure know how to give us something to chew on at night when we can't sleep. Sigh...and as usual, you are completely and logically correct. I've been learning to say no to a lot of things that I used to think were "reasonable" investments, both money- and time-wise. It isn't easy, but it's good. As for the boots - well, I found a mighty cute pair to wear with my jeans this winter at the thrift store, for a whopping $3. Leather, barely worn, the right size, and they go with everything I have. How's that for an investment? :-)