The value of a dollar

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Sam’s post about our dad explained his disregard for money. Sam also gave some of his thoughts on spending and I felt I can expand a bit on the topic. My dad’s reasoning, incorrectly I might add, is that he has bigger numbers going on in his life that 10 dollars here or there isn’t going to make a difference. To a degree this is true but I also think Sam is on point by saying his mentality is one where he wants to show other people his loose understanding of the value of a dollar. It becomes a status and a lifestyle. I’m going to leave it at that rather than delve in any further with details.

Everyone values a dollar differently. To someone who is in thousands of dollars of debt and has 100 dollars to their name, they are worrying about 10 dollars. Now I know people who are thousands of dollars in debt and still don’t worry about 10 dollars because they figure “what’s the difference.” People’s life circumstances, experiences, and earning power decide how they value a dollar. I can give you my opinion and mine only. I don’t claim it’s right or wrong because how you spend your money is up to you.

I had more money in 2006 than I do today. I made a lot of money coming right out of college. More money than I make now. Coming out of school I had 0 expenses. No car, no rent, no insurance, no nothing. I saved a ton of money. In 2006 at the height of the market I invested a good chunk of change, lost 40% and foolishly sold near the bottom out of fear. On top of that I squandered money left and right at the casino and betting on sports. Fast forward to today and I live a much different life. I have bills that require a monthly sum and my ability to save is much different now that I make less and spend more. I’m by no means poor but I watch my money closer now. I try not to just throw money around haphazardly like I’ve done in the past. But I also don’t penny pinch either because no one has any use for money when their dead and you also sell yourself short a lot of times. Value becomes the word.

I view something as valuable if it’s worth more to me than I paid for it. Here are few examples of finding value.

My pitching wedge snapped in half (at mid shaft) last golf round and the head fell off my 3 iron from last year. It’s time for a new set of clubs. This past set lasted me 10 years. Assuming the same life expectancy and considering new golf clubs will cost between 300-1000 dollars, what do I buy? Penny pinchers go in saying they will buy the cheapest clubs because buying cheap means value. This is incorrect because cheap clubs are lower quality and won’t last as long. My dad will buy the 1,000 dollar set thinking it’s the best (status) but most likely is overpaying. I will go in, tryout sets within the price range, check out reviews, find which I hit the best, do research online to make sure I am paying the best price for them, and spend whatever that perfect set costs that matched my criteria. The price doesn’t really matter at that point because they are going to be my clubs for 10 years. I want whatever is best for me no matter the price and that will offer me the most value for my money.

Clothes shopping is one of the easiest places to overpay. Some people will pay hundreds of dollars for jeans and no one can tell the difference between them and a 50 dollar pair of jeans. However, if you are going to wear jeans everyday, and these are comfortable and make you feel good, maybe they are worth 300 bucks to you. If you have the money and it makes you feel good, so be it. I would never spend that much money because it isn’t that important to me. Just to point out though, some people think spending the least amount on clothes is a smart idea. I have found time and time again that this is false. Buying cheap means you buy things that wear out and are uncomfortable. I tend to buy somewhere in the middle and don’t mind replacing anything I buy within a few years. People notice the same stale wardrobe and it’s relatively inexpensive to update it.

A final example. 3 dollar Gatorade’s on a golf course that has no water fountains. I don’t want to pay this much but I do. As much as I know I’m getting ripped off, I don’t care about the 3 dollars. I want that liquid to make my golf round more enjoyable. This doesn’t constitute a waste of money for me. In my mind the 3 dollars becomes pennies because my want outweigh the cost.