Personal finance boils down to recognizing good deals in context

When I registered MightyBargainHunter.com back in 2003, I had in mind a website that would offer up ways to buy things for less.  All well and good, but then I got to talking about broader topics like personal finance, debt reduction, frugal living, real estate, and even the economy after I transferred the site over to the WordPress platform in 2005. (Spending an hour formatting the HTML in each of my articles was getting really old.)

But then I didn’t recognize the expanding scope of this blog until I had several hundred, and now about 1,700, articles on the site.  As well as a whole bunch of links from other great sites pointing to MightyBargainHunter.com.  If I were to change now, I probably could do so, but nothing will fix all of those links.  In any case, people aren’t going to re-record radio interviews or re-print books just because I updated my website name.  That, and I’ve been referring to Mighty Bargain Hunter for so long, even I’d forget to say my new name consistently!

Good deals are everywhere

I’ve changed the tag line for this blog a number of times.  Given that it’s probably too painful to change the name of the blog itself, I can change the tag line.  I’m pretty happy with where it’s landed now:

Recognize life’s good deals, and avoid life’s raw deals, one bargain at a time.

Good deals come in all shapes, sizes, and contexts.  Pretty much any financial transaction when placed in context is either a good deal, or a bad deal.  Being successful in personal finance means making more good deals than bad deals with money and time.  Here are a couple of examples:

  • Debt reduction.  Aside from not getting into consumer debt in the first place, getting rid of consumer debt is generally a good deal because the interest cost is less.  But should you get rid of consumer debt right now, as quickly as possible?  That depends.  If you’re exposing yourself to a low-cash situation by paying off your debt, then it may end up being a bad deal if you have unexpected expenses.  It may be a good deal to keep an emergency fund even if it means carrying the debt longer.  The context matters.
  • Frugal living.  This often boils down to a tradeoff between time and money.  Do you buy prepackaged cut cheese, or do you cut the cheese yourself?  Do you go for convenience, or do you do little money-saving things?  For most people, doing these things is a good deal, but if your time is worth a huge amount of money, it may actually be a better deal to go with the convenience.  The context matters.
  • “Free” anything.  With few exceptions, things that are free rarely are.  What is the cost of free?  Does that cost stop free from being a good deal?  Or is free a good deal even when counting the cost?  When is parting with something for free a good deal, even when it’s a financial loss?  The context matters.

Context always matters.  Some of the biggest mistakes I’ve made were the result of missing the context of the transaction, or failing to take into account some context that affecting my judgment.  Some examples of this:

  • Tiredness.  Being tired clouds judgment, makes things fuzzy, lowers resistance to sales tactics.  It’s better to make deals well-rested.
  • Hunger.  Being hungry causes a grocery shopping cart to fill up faster.  It’s better to go grocery shopping on a full stomach.
  • Emotional buy-in.  Being put in a situation where you feel that you owe the seller something is a recipe for getting taken.  It’s better to control the transaction circumstances.  Go over to where the piano is, rather than have them bring it over to you in a flatbed truck.
  • Ignorance.  Being ignorant allows someone to snow you over.  It’s better to know what you’re dealing with.  Part of this is asking questions until you know, as well as asking the right people.  Don’t ask a barber if you need a haircut.

I haven’t always been successful at sorting out context well enough to make all of my deals good ones.  But each time I make a bad deal, I try to learn from it.  And that’s all that any of us can do.

John Wedding

Husband. Father. Web publisher. Musician. John has blogged at Mighty Bargain Hunter since 2005, helping people to recognize life's good deals.

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Comments

  1. says

    Admittedly, a lot of the frugal tips that I’ve seen and promoted are usually way too time consuming to be of use. YES, I do have a yard to sun-dry my clothes and I get how they’re wonderfully crispy… but I’m still taking a long while to sun dry my clothes. I’m with you on the contextual focus.

  2. says

    One of the way, I avoid the contextual issues is to never buy on the spur of the moment. I always carry a list, checked out the deal first or replace a broken or worn out item.

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