Nowadays people know the price of everything and the value of nothing. –Oscar Wilde

This morning I heard a radio commercial for a second-hand clothing store. The tag line at the end was “Value means paying less than you expected to pay.” I started yelling at the radio. No, it’s not. Paying less than you expected to pay is a bargain. Value is much more subjective. Value is paying what something is worth to you. What is a value to you is not necessarily a value to someone else. Don’t confuse price with value.

Tonight Baskin-Robbins® is having a 31 cent scoop night. On Wednesday, April 30th 2008, from 5pm to 10pm, stores will sell small scoops for 31 cents (plus tax). Here’s the reason why (from their website):

A donation of $100,000 will be made by Baskin-Robbins® to the
National Fallen Firefighters Foundation. At select local stores
throughout the country, you may also have a chance to donate to
your local fire station. We encourage you to learn more about the foundation by visiting www.firehero.org.

What’s this got to do with value? Isn’t paying 31 cents for an ice cream cone a good value? Maybe. It’s definitely a good price. But it’s only a value if it’s worth it to you to pay 31 cents for a scoop. Maybe you’re on an eating plan that doesn’t include ice cream. Maybe you’d have to drive several miles to get to a store. Maybe you don’t like ice cream. (I think sorbet is included in the deal). Maybe you’re indecisive and would spend an hour trying to make up your mind what flavor to choose. Just because you know it’s a good price doesn’t automatically make it a good value.

For me, it’s a good value. There’s a store about a mile away. Jamoca Almond Fudge, here I come.

When you’re browsing at a bookstore, don’t you tend to look at the stuff that agrees with you? You already have your mind made up. You know where you stand on an issue. You know that you need to do your part on global warming, so you gravitate toward books such as Good Green Homes and You Can Prevent Global Warming (and Save Money): 51 Easy Ways. If you see a book titled Climate Confusion: How Global Warming Hysteria Leads to Bad Science, you bypass it.

You know that buying a home is a smart idea. So if you see the book Who Says You Can’t Buy a Home!: How to Put Credit Problems, Down Payment Challenges, and Income Issues Behind You, you grab it. You’re not going to read a book that tells you to save up for a down payment first, or wait until your income is higher. Why? Because that’s not what you want to hear.

Psychologists call this tendency to seek information that agrees with us confirmatory bias. When we ask for advice we are biased toward sources that “confirm” what we “know.” Is this the best way to make decisions? Probably not. We should seek out people who have the opposite view, and evaluate their thinking. If you can’t find fault with their position, perhaps you don’t “know” as much as you think.

One of the hardest things to do is to change our minds about what we “know.” Part of this is our reluctance to admit being wrong, and part is the difficulty of breaking habits. I would even say the more certain you are of a position, the more “everyone” agrees with you, the more you need to seek opposing views. If you can understand and refute the opposing view, you can have confidence in your decision.

I enjoy reading about investing in mutual funds, about not using credit cards, and about following a budget. These are all issues I “know.” Next time I’m reading blogs, I’ll pick some that discuss investing in things other than mutual funds, or sites that favor credit cards. (I’ll need to hunt for them, they sure aren’t in my Favorites.) Or maybe I’ll read some books by authors I’m not familiar with. After all, how many times can I read those Ben Stein books. I think I can learn more about myself by listening to people who disagree with me.

Anyone disagree with this? I’m ready to listen.

Money won’t buy happiness, but it will pay the salaries of a large research staff to study the problem. –Bill Vaughan

Maybe Money Does Buy Happiness After All was the article that caught my eye in the New York Times Business section. It compared what’s known as the Easterlin paradox with a new study. The Easterlin paradox says that more money doesn’t make you happier. Two researchers from the Univ. of Pennsylvania disagree. They published a study that says more money does bring happiness, but it’s not guaranteed.

So, who do we believe?

The Times article skirts the question by concluding that “affluence is a pretty good deal.” Money can allow you to visit relatives in far away places, travel, work less, spend more time with friends or on hobbies that you enjoy. Duh!

I’ve said before that everyone needs enough money for life’s necessities. And a little more for a few fun things. But happiness, that overall feeling of positive emotions and leading a purposeful, meaningful life, won’t come from more money. It comes from those experiences that money can’t buy.

But being a poor money manager can lead to stress, anxiety, jealousy, and other decidedly non-happy emotions. For myself (and most Americans), if I am content with what money I have, manage it as well as I can, and spend it on the most meaningful things to me, I’ll be happy.

I am planning to buy some plants today, do some yardwork, and watch a movie. Here’s how I’m going to save $11.00 doing it, and maybe you can too.

If you have a Visa card, you can use it at Lowe’s with a coupon and get $10 off a $25 purchase. Here’s the link to print out the coupon. That’s a pretty good savings.

http://www.lifetakesvisa.com/?id=lawn_editorial2 The coupon is good until 07/30/08. I’m using my Visa branded Debit Card.

Try renting a DVD from one of those RedBox kiosks at McDonalds, here’s a link for a free one-day rental. Just give them your email, and they’ll send a promo code. I find them a bit difficult to use, so you might want to take a kid along with you. http://www.redbox.com/Help/Signup.aspx

Some Valero stations and WalMarts have RedBox rentals. You can check online for the locations. You can’t miss the kiosks because they are the color Red and are shaped like a Box. Get it? Red Box– it’s hard to beat the price, $1.00 for a one-day rental.

Even at Megastores, Hagglers Find No Price Is Set in Stone

This article in the New York Times business section caught my eye. I’ve always been uncomfortable bargaining for purchases, even at flea markets or antique fairs where it’s expected. It took years for me to muster up the courage to ask “Is that your best price?” Somehow, it seemed disingenuous on my part. If I could afford it, I paid the asking price, and if I couldn’t, I didn’t buy it. I would never think of going into Best Buy or Home Depot and negotiating a deal. Evidently, I’m not a very smart shopper. The slowdown in the economy has led to buyers having the upper hand.

Priya Raghubir, a marketing professor at the Haas School of Business at the University of California, Berkeley, said “In the past, when you tried to get yourself a deal and it was an embarrassing thing — the kind of thing you did if you couldn’t afford to pay,” she said. “Now it’s about being a smart shopper.”

A former Best Buy salesman said about one-fourth of the customers in his store tried to bargain. Often, he gave them a better price. He suggested checking the Internet and coming armed with information. If you can show another store with a lower price, the salesman probably has the leeway to match it.

Some shoppers admitted to lying to the salesman. I’m not in favor of being dishonest. Although there is gamesmanship involved, I draw the line at lying. It’s one thing to walk away from a purchase or say the price is more than you want to pay. It’s another to claim the item looks damaged or worn, when you know perfectly well it doesn’t. I want to be a smart shopper and an honest shopper. What about you? Leave a comment below if you have a story to share about bargaining at a Big Box Store.

This is the last post about elephants. Probably. I’ve been writing about Dave Ramsey’s tips for saving money on big purchases. You get to decide what’s “big.” In my mind, big is anything over $100.00. For you it might be more or less than that. In case you’ve forgotten, here they are:

1. Wait before making a purchase.
2. Consider your motive for buying.
3. Never buy anything you do not understand.
4. Consider the opportunity cost of your money.
5. Seek counsel before buying.

Today we finish up the list with number 5: seek counsel. If you’re married, this is very, very, very important. Ask your wife/hubby for an opinion. This list isn’t in a particular order. Asking your spouse might be the first or second thing you do. If you’re not married, and respect your parents’ opinion, you might seek their counsel. Maybe they never told you they had an elephant once, and it turned out to be a disaster. Or, if you’re older, and you did a good job raising level-headed children who are now grown, ask for their opinion. But be ready for the mid-life crisis lecture. “What! At your age! Why in the world do you want an elephant? Don’t you know how dangerous they are.”

Your wife/husband’s is the opinion that really matters, because they have to live with your purchase, too. “Honey, we just put in all that landscaping. And did you forget the kids are allergic to peanuts?” If your spouse wants to put on the brakes– slow down. If you ask for their opinion, be willing to listen and hear them out. Hopefully, what you’ll hear is, “That’s a great idea, I’ve always wanted an elephant. How about we get two?”

No doubt about it, except for your home and car, an elephant is the largest purchase you can make. We’re talking big money here. Anytime you contemplate making a major purchase you should consider the opportunity cost of your money. The opportunity cost is the loss of some other thing you could have had with that money.

We make decisions everyday involving opportunity cost. It doesn’t apply only to elephants. Anytime we sacrifice one activity in favor of another, we lose the benefit of one. On Saturday morning you can work out in the gym, or go visit a friend. Both are good choices, but you can only choose one. You lose the opportunity to do the other.

Same with our money. If you chose to buy something, you won’t have that money available any more. Before you make a major purchase, you should consider what else you could do with that money. Would something else be more beneficial to you? You’ve really wanted an elephant, but would that money be better used in your retirement fund? Or, you could put in a hot tub and go on a nice vacation. It’s a trade-off. We have a limited amount of money and must chose how we spend it.

An overall financial plan helps you evaluate opportunity costs. Let’s say you’ve paid off your credit cards, have an emergency fund, and are saving 15% for retirement. The next item on your plan, your next goal, is to save for your kids college. How important is an elephant vs. a college fund?

It’s a trade-off, but it’s your choice. There’s no right or wrong answer, but don’t fool yourself; consider what you’re giving up by buying that elephant.

“Television came along and took away our

imagination” –Robert Altman

This week is National TV Turn-Off Week. It’s actually Screen-Time Turn-Off Week. For most folks, turning off the TV isn’t that big a deal, you can watch YouTube and play video games. Hence, the idea to turn off all screens. The average American spends 4 hours 35 minutes a day watching televison.

What can you do instead? Read (something other than this), exercise, walk the dog, talk to kids, cook something healthy. Work on your finances (and don’t use Quicken). You get the idea.

It’s Monday.

Make some time today to read the business section in the newspaper. You’ll learn something about personal finance that will help you manage your money. And I promise it won’t be boring. You’ll start your week off right, thinking about what to tell your money.

When you’re making conversation today, instead of talking about the weather or the Spurs game, ask your friend, “Did you read what Scott Burns wrote in the paper?”

Every Monday is your day in the newspaper.