Can we spend money to save money?

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I have been drawn into two conversations in as many days, asking for my opinion.  Be careful what you ask because I will give it to you the way I see it.  Both these conversations centered on saving money, something I feel deeply about.  Without watching my money I couldn’t live as I do.  I thought I would let you weigh in with your opinions on these two subjects as well.

Let’s buy a hybrid to save money

The first subject concerned the purchase of a new automobile.   This person has decided he wants to purchase a brand-new Toyota Prius.  Let me give you a little background.  This man is 78 years old as is his wife.  Both are in poor health, and have a wonderful car that gets them around in a dependable manner.

He wants a Prius because he wants to save on the cost of gasoline.  He does very little stop-n-go driving as he lives in a rural area.  Now I’m all for saving on gasoline.  But here is where the issue goes astray for me.  He is putting a little bit away each month trying to save $28,000 to purchase his new Prius with cash, in the meantime his current car gets 30 miles to the gallon on the highway and in rural driving, 28 in the city.  A new Prius (the sedan model) is reported to get 35 highway and 40 city. 

Since he doesn’t do much city driving he would only be getting 5 miles more per gallon in a hybrid.  Let’s say he drives 20,000 miles a year (I think this might be high, but based on his age and health I want to give the benefit of the doubt when it comes to his actual savings)  At 30 miles per gallon he would be purchasing 666 gallons of gas per year, using the current cost of gasoline here now of $3.65 he would spend $2457.54 per year in gasoline costs.  At 35 miles per gallon he would be purchasing 571 gallons per year.  Using the same figures this would cost him $2084.15.   Purchasing the new car he would save $373.39 per year in gasoline.  Or to break it down further he would save a total of $7.18 per week.

Let’s say that he keeps his car for 10 years and drives the same amount every year he would see a total savings of $3733.90.    If he pays $28,000 for the new car (even without financing which he doesn’t plan to use) he will be out $24,266.10 after 10 years.  To break it down further it will cost him $110.30 more per week over ten years than if he kept his current car.  That figure doesn’t take into account the increase in his insurance costs for a newer vehicle either.    So is the decision to purchase a new hybrid car a good one?

Some times we need to break it down to these simple figures to see where we will truly save money in the long run.  Now for this person the possibility that he will drive 10 more years is stretching it. As much as I love this man I fear he may not be capable of driving that long.

Television costs

So on to the second discussion I was drawn into the very next day.  This conversation was centered on the subject of cable television.   First, if you don’t know already, I don’t own a television so that probably tells you where I landed on the issue of the cable bill.  Here was the gist of the conversation. My good friend is having a hard time paying bills right now.  Medical bills are piling up, he dreams of being able to purchase his own home, someday, so he is storing everything he owns in two large storage lockers he pays for monthly. I should add he is 68 years old.

He loves television yet the bill keeps going up.  The last time I paid for cable tv my boys were in their teens and I paid $19.98 per month.  He informed me he pays $75. per month.   I know this is true. Our local cable company charges $45. per month for internet, $75 for cable, and $102 for combined internet and television.

My good friend informed me that he can’t live without his TV.  I get that, but then I countered that I can watch any TV programming I want online.  I feel that while I don’t have a large flat screen to watch a program on the $30 per month I save is a good trade off.   For him to get the internet he would first have to buy a computer, so that would have to be taken into account.  For me I didn’t buy my computer, my son built it from parts he collected from old computers people gave him. My neighbor bought his TV.  So I saved on the cost of the computer, and then I save $360 per year by only paying for the internet, instead of cable.

Even I spend money I don’t need to spend

Today, I made a choice that affected my finances, even if it was slight.  I stopped at the store to pick up eggs.  I happened to spot two shopping carts filled with pasta, spaghetti sauce, and even parmesan cheese along with a few other things.  Frozen vegetables were on sale for .99 a bag.  While I went into the store for one thing I had $10 on me so I purchased all this.

I ended up bringing home 2 jars of spaghetti sauce, 2 packages of pasta, 1 bag of frozen peas, my dozen eggs, and just because it was next to the peas I picked up a package of soy long grain rice.   My total spent came to $9.54 and will give me at least 10 servings plus the meals I will make with the eggs.   I came home and called my daughter-in-law to let her know so she could stock up as well.

It’s all about how we define our needs.

We all make our choices in what we feel we need to live in a way that makes us feel comfortable and not deprived.  The purchase of a new car when you already own a good reliable car for me would mean having to work more to afford it.  Television, well it’s not something I need or get pleasure out of, but I want my internet to feel connected to the outside world.  Do I need the internet? No, I know it’s a want so I save money in other places to afford it without giving up my freedom to work less.

This leads me to gratitude, and today’s quote:

Feeling gratitude and not expressing it is like wrapping a present and not giving it.  ~~ 

                                  William Arthur Ward

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28 thoughts on “Can we spend money to save money?

    1. Don’t get me wrong, they are wonderful cars. I’ve ridden in a Prius twice. I was on vacation and instead of renting a car when we needed we used a taxi. The entire fleet was made up of hybrids. The room inside amazed me and it was such a comfortable ride. I thought by posting this I would show others the thought processes I go through when I make a big decision. Can you see how anal I get sometimes? 🙂 Let me know how it goes with Mr. Sensible and what you both decide in the end.

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    1. Me too. You know it’s funny in the early 90s I bought a Toyota Corolla it was a regular gas engine and got 40 miles in the city, 45 on the highway. Then all of a sudden cars can’t get decent mileage. They know how to make a fuel efficient engine, they just don’t want to. The hybrids don’t even get as good mileage as my old Toyota did.

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  1. I think any 78 year old wishing to purchase a new car (any type) is mad as the amount of driving they are likely to do is almost certain to decrease and it is simply not worth the resources used to create a new vehicle.

    Re the cable TV – I am not sure about the USA but here in Australia we have perfectly good free-to-air programs so personally I would not waste the money on cable. We do have a television but I do not watch a great deal.

    Wants vs needs is what it is all about. I think your choices are sound.

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    1. Thank you. I too wondered about the purchase of the new car. There was so much more I wanted to add but it was getting to be a bit winded of a post. When considering purchasing a hybrid, it will end up costing him on repairs. See his son is a mechanic with a garage on the family property. So you can easily see the garage from his house. His son does not know how to work on the hybrid engines so he would have to find a new mechanic as well.

      As for TV, they have been reducing the output from the stations for years, when they switched to a digital signal anyone who had been living with just what they could get over the air could no longer get a signal, even with a converter box and now needs cable or satellite dish to get a signal. It’s all about money. I sure miss the days we had a little rabbit ear on top of the TV and received a good signal for free.

      It is about wants versus needs, but people are so easily convinced the want is a need by those “wonderful” advertisements.

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  2. When buying something, you first have to determine why you want the item. It may dovetail with your values, provide entertainment, or be a necessity. Cost figures into each of these in a different way. First of all, you shouldn’t buy something unless you can afford it. Secondly if savings is your goal, you should do a cost analysis as you did above to figure out the money you may be spending or saving. I am so tired of hearing advertising or sales people tell me how much money I will be saving/month without mentioning the payout for the purchase price may take years–maybe longer than the life of the item.

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    1. Yes! I so agree with you. I will say in the man’s defense, he is waiting to purchase the vehicle until he has the cash to pay for the car, but I personally think he would be better off holding on to that money than spending it on a new car at his age and with his and his wife’s failing health. Can you imagine how many years it would take to finally see a payoff from the purchase price of that hybrid? Based on just over $3,000 per 10 years in gas savings, you would need to add another zero to that meaning it would take nearly 100 years to finally recoup the initial investment and start saving money!

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  3. With the gentleman wanting the Prius, you have to wonder what his true desire is. Sometimes it’s easier to use “saving money” as our motive than what we’re really feeling. It could be that he wants to feel like he’s contributing to “green” causes. Or it could be that he just wants to see his weekly costs lowered, as some sort of security (although keeping that cash in the bank would likely be more security).Or it could be that he wants something new and shiny. Or it could be all of this, and then the sum of his desires is much greater than just saving money. As for the high cable bill, I think a lot of folks overestimate the value of something like cable in their lives. But maybe it’s a “luxury” that keeps some folks from feeling “poor”.

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    1. You know it’s funny. The man who wants the new Prius buys everything he can used. He lives with furniture that he bought many years ago and does all his own work on what he can around the house. Now he is from a generation who (from my experience) wanted to buy new cars because they were convinced that once a car was being sold it was because there was something wrong with it. They didn’t want to inherit someone elses headaches. But that generation usually holds on to something until it has lived it’s usefullness.

      I think the cable is the luxury that keeps my friend from being bored around the house.

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  4. I agree, cable is out of this world and one does not know what they can’t live without until they actually try. I barely watch TV and I don’t feel like I’m missing anything. A good alternative is a computer and a net flicks membership. Between the two all the programs I really enjoy are covered.

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    1. I’m like you, I never could find much on to watch. I have my computer and can get enough of what I want to satisfy me. I use Hulu for TV shows, but I just use the free service rather than paying for the subscription. Then there is free documentary websites and so on.

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  5. I completely agree with your food purchases – that is spending money to save money.

    The car… well… I think when you buy a new car you’ll always be out money versus driving the one you already own into the ground – and they depreciate too of course. I think though, that the average US MPG on the Prius is closer to double the value that you mentioned. Your logic on the outset cost is sound, but something else to think about is will the price of the gas be the same in 10 years time, for example.

    I was in the Mercedes Benz museum in Stuttgart a few months ago and I’m really interested to see what will happen with other kinds of fuel cells, particularly hydrogen and electric.

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    1. I too would like to see what they will do with the hydrogen cells in the future. As for the mileage of the Prius, I took the figures off the brochure from the company. No here in the US mileage isn’t much better than that on hybrids. I have noticed that on BBC channels automobile commercials never show the mileage. I’ve heard cars sold in European countries get better mileage on the same models sold here. I’d love to hear if that is true.

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  6. The Prius discussion had me shaking my head in dismay. Arithmetic! I once saw a home improvement TV show where people were ripping out perfectly functional tile to replace it with groovy new tile make from recycled glass because it would be “greener.” AAARRRRGGGHHH!!

    But speaking of TV, you might want to suggest to your friend that he consider getting a device called a ROKU player. They range in price from about $50-$100 and allow you to get free internet content through your television. Of course, you have to have high speed internet access, but you don’t need a computer. There’s a ton of free stuff, and If you combine it with Netflix or Hulu+ you can have practically unlimited content for under $10/month (plus the cost of internet of course.)

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    1. It amazed me when people do a home remodel to install green cabinets and such. First of all if you are trying to be green the best way is to keep what you have and not buy something new, but you and I already know that. The only time I would pull out things to remodel would be if what was there was beyond repair or made of something dangerous (like asbestos ceiling tiles).

      I’ve seen the ROKU player, my youngest son has it in his home because playing movies from netflix through his video game system caused a lot of stalling of the playback. I’m not sure if I could ever convince my friend to make the switch. He’s very set in his mind that he can only get the local news by having cable.

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  7. This post goes deeper than it first appears – I think your points are generally very valid, even if there are possibly hidden reasons for purchases we don’t know. Professionally I know the number one killer is lack of activity, so for me something like a TV is a definite no. Even a car itself is questionable if it stops you using a bicycle -assuming the person is able of course, . Not having a car sounds like a step too far for many, I know, but the bottom line is movement. This is very important.
    I used to love TV. Looking back it makes me sad to think I spent hours watching when I could have been doing – hiking, helping, working, playing.

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    1. I couldn’t say it better. I have muscular dystrophy so I have to keep active to stay independent. I am not able to ride a bike, and have to rely on a wheel chair to get around outside the home, but I do plenty of things to stay busy such as refinishing furniture, gardening and so on. I have to work out 2 times a day to keep my muscles going and stay limber.

      As for TV, I don’t think I ever enjoyed it. I never had a TV as an adult until one was given to me when I was expecting my first child. I was told I couldn’t raise a child without a TV, how wrong it was. When my oldest was 13 I began homeschooling him. At first he spent a lot of time watching daytime television when not doing his school work. It drove me nuts. It took about 2 weeks before he turned off the TV and informed me that he didn’t know how people could sit around all day watching it. He never went back to watching it like that.

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      1. Yes, I remember you said, about the muscular dystrophy. You are an inspiration in many ways. I think you are just so right to do gardening, very much. The workout must be annoying sometimes – hope not – nice if you can meditate on some good ideas at the same time, if meditate is the right word.
        The story about your 13 yr old was very interesting – and intriguing, including the homeschooling idea, Too much TV is a big worry, though I only have videos here for the girls.

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        1. I love gardening and I have had to exercise since I was little so it’s second nature. I do change it up or I’d get bored. I enjoy music during my workouts as it helps the time pass. I agree, videos are much better. I see a lot of families doing a similar thing whether they buy, rent or even use Netflix. they are all taking charge of what their children watch. Another plus, you probably already know, is by using videos families can prevent young children from seeing all the advertising directed to them. Maybe we will have a generation of children who when they do encounter advertising will not be so easily swayed by it. We can only hope.

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  8. The car is an interesting conundrum (btw, a Prius gets 50mpg). I once chewed through the numbers too, for expenses as well as carbon emissions, in a post October 2011. The conclusion: from a green perspective, trade in your gas guzzler now! from the _greenback_ perspective: keep your guzzler until it breathes its final polluting breath. This holds even in Europe where gas prices are 3 times higher than here in the US.

    But I’ll throw you a curve ball: You can buy a car that has fewer emissions _and_ is cheaper to buy: you simply choose a model with a smaller engine. Nearly all our cars in the US are way overpowered anyway – I did a simple calculation that says 76HP is enough to move a fully loaded Honda Accord on the nation’s interstate highways. As the new emissions requirements on cars come into effect, car makers will start to offer those here.

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    1. I agree with what you have said about just running them into the ground. On the toyota website currently it quotes 48-51mpg for the prius. http://www.toyota.com/prius-hybrid/trims-prices.html

      We certainly do pay more for fuel here in Europe (unleaded petrol being €1.60 per litre so that would make it around US $7 a gallon).

      Most of the price of petrol here is tax and the annual road tax is also based on emissions. Here in Germany they also include nitrious gases (so is harder on diesels). In Ireland it’s mostly calculated on carbon emissions, but that is going to change and is currently around 3x more expensive than in Germany.

      I have just read on wikipedia that the Volkswagen’s Bluemotion technologies are not for sale in the US??? wow, that is unbelievable!!!

      I guess it just shows that consumers preferences in the US are changing to be more green and economical and that the car industry was staying with the traditional larger sizes and engines and didn’t really consider how peoples’ preferences might change. I guess they have to come up with a rival technology fast to save the indigenous car manufacturing industry and are blocking the sale of foreign manufacturers’s ultra fuel efficient technologies until they have something to compete.

      Let me just also say, that I see a quite a number of american imports here in Hamburg, particularly Dodge.

      I suppose there is a grain of positivity in there, but at the same time while they get up to speed the environment suffers. I wonder if it would be legal to import one privately?

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      1. I’m glad you took time to comment. I would love to pick your brain. We hear here that our Fords and Dodges which are sold in Europe must get higher fuel efficiency to get permission to sell in your markets. What kind of efficiency do you see American imports getting? I’ve never heard of the Volkswagen’s Bluemotion. I’m going to look it up, but could you tell me a little about it that isn’t on Wikipedia?

        Our gas prices do include taxes which vary from state to state, ours are higher than even those of neighboring states. We are told it’s to repair the roads, but our roads are getting much worse over the last few years and I suspect the money is going to wherever the state governments need the money at that time.

        There is one industry that seems to have control of this country. It’s the oil companies. They lobby to keep the fuel efficiencies lower to help their sales. I worked for a company that made parts for oil drilling way back in the early 80s, it was amazing to me to see how much power they had to keep new technologies off the market to protect their business.

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        1. BlueMotion is Volkswagen’s fuel efficiency technology. “4Motion” is their 4 wheel drive variation. It’s been around since at least 2008 and currently holds the guinness book of records title for fuel efficiency for a Passat model that got around 74 US mpg and traveled a distance of 1,526.63 miles without refueling. Mercedes Benz also have something called BlueEfficiency.

          I don’t know about US cars having to have better efficiency for the EU but I did see on a TV programme here, that an owner of a high-powered american car that was importing it into Germany, in order for it to pass the TÜV (like the english MOT or “national car test”) had to be altered to reduce the decibel level. It was too loud for EU regulations!

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          1. I was just on the Wiki site and am amazed by the technology in Bluemotion. That’s really funny that the car imported was too loud for the EU regulations. Here people are trying to push for the hybird cars to have more noise because those that are blind can’t hear them coming.

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    2. That is an interesting conclusion. I agree with you. Here in the US bigger is always better it seems. I grew up in a time before smaller engines. A V-8 was standard. When smaller engines first came out I was taught that you wanted and needed the larger engine to have the power to get out of the way in a hurry if needed. Much to my surprise my little 4 cylinder moved just as fast if not faster. I am amazed by the discrepancies in mileage. I took my figures right from the brochure picked up at the dealership. At 50 the savings would be much better. I would ask you though, would you really trade in your current car for a brand new model at the age of 78?

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      1. As you said at the start, his car that he has serves him well – if I were in his shoes I’d go with the old saying “if it’s not broke, don’t fix it”. But that’s just me 🙂 It’s the same here with the public wanting louder hybrids, but I quite like the idea of a city with less car-noise.

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        1. I would love to have a quieter town. I have lived on main street for many years and hated the long string of motorcycles that caused you to have to stop your conversations because you couldn’t yell over them.

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