Why You Need To Know Math

This week I overheard a conversation that made me ashamed of my generation.  I felt like I aged 20 years and was looking at two young people (roughly my age) in disbelief.

I was in a retail store with my wife, and I had a cashier call other stores to check stock on an item.  As I was waiting for my answer, a woman (around 25) walked up to the register with an item.  It rang up as $8.50.

She turned to the cashier, “This was marked as 50% off.”

“Oh,” replied the cashier who was in his early 20s, “ok, I’ll just make an adjustment,”  He the proceeded to ring up the item again.

“That’s not right” said the woman.  “50% of $8.50…$4.50.”

At this point I would have been alright, people make mistakes, but I was still biting my tongue.

The cashier thinks about it, and then REACHES FOR A CALCULATOR!  At this point I couldn’t take it any more, and proceeded to make an ass out of myself.

“Uhhh…$4.25,” I interjected.

Both parties, thought about it for what seemed like at least a minute, and I got a combined “Oh yeah.”

I should have stopped at that, but for some reason, unknown to me, I had to continue with the smartass comment of “yep, gotta love that elementary math!”  

I immediately felt like a huge ass, I apologized, and left the store.

Now, I know I was an asshole and I probably should have kept my mouth shut, but really?  Needing a calculator for something like that?  Are we really a generation that can’t do remedial math in their heads?  Are we that reliant on technology that we can’t think for ourselves?

How can you expect to budget while you shop if you can’t do things like that?  I love sale racks (who doesn’t?) but I always have an understanding of what I will be charged before I pay.  That way I know if the cashier makes a mistake in ringing me up, it’s a basic way to save money, and a skill that everyone should have, if you don’t watch out for your own wallet no one will!  Yes, this issue was over a quarter, but imagine if it was a higher ticket item?

Does The Size Of Your Image Equal The Size Of Your Debt?

Our society has a perception complex. We are raised to judge and compare ourselves against others and our perceptions of other people become our own reality. We are trained from an early age in this regard. In school it didn’t matter if I got a “C” on a project as long as it was in line with the other students in class. Even on a set scale where everyone knows that an “A” is the best, we judge ourselves against our peers, not the scale. It only mattered that I was considered as smart or smarter than the other kids in the class.

By no means do I consider myself to be smart, but the fact that I am a clean cut, in shape, nerdy looking guy, who can carry a conversation on just about any topic, has really helped me out in life. My image allows other people to come up with their own realities of who I am, and I have found that for the most part, people consider me to be a mature young guy with a good head on his shoulders, though if you read young and frugal you already knew that (I kid). And for the most part I work at my image because I want people to walk away feeling that way about me.

Whether we like it or not, image is important in our society, and our society sees the things we appear to possess as extensions of who we are. Our friend who drives the BMW must be rich, and the guy down the street who drives a ’95 Civic with 225k miles on it must be poor (eww!).

Notice how I used the phrase “appear to possess,” I say this because if I’m leasing or I have financed a 3 series is it really mine? If it’s paid off like the ’95 Civic then of course it is, otherwise…? I don’t know, can you claim half a BMW?

All of this perception is human nature. As kids, we know that rich people drive nice cars, live in nice houses, and watch huge HDTV’s. As we grow up, and learn about money and responsibility we learn that just because we appear to possess these items doesn’t mean we are rich.

Mary and I listened to NPR on the way home from work today and we heard an interview with Moby. Moby grew up very poor, and he and his mother were on welfare and food stamps until he was 18. He knows and understands the merits of frugality, and that perception isn’t everything. He said on the radio today that earning a great deal of money hasn’t changed him and that he still shops at the same grocery store and does his laundry at the same laundromat. He says he still even has a little 13 inch TV.

When talking about his spending habits and his TV, Moby said “will watching Family Guy on a 42 or 50 inch TV make it funnier?” This practically stopped me dead in my tracks. For months I’ve been salivating over flat panel TV’s that I can’t really rationalize purchasing, but I always end up salivating and coming back around to wanting one. Mary and I even went shopping with her mother for one yesterday. I have had my dream home theater in my head for months (with a mac mini at the helm), and this one prompt by Moby made me question my motivations. Yes, Family Guy is hilarious, but A TV won’t make it funnier because it’s bigger, nor would Davidson have beaten Kansas had I watched in HD.

Why do I feel compelled to make such a big purchase? I could definitely put $1500 to better use somewhere else like an IRA/401(k) or paying down our car loan even faster.

I really can’t come up with a good reason as to why I want a new TV. We have two 20″ TV’s and they both work perfectly. Plus, I don’t really watch TV anymore! Yet, for some reason I want one that is newer/better.

Maybe I feel that our new and incredibly nice house is an extension of us and the TV is an an extension of the house that makes it that much nicer. Maybe I want people to perceive that we have made it, when we drive in our nice and practical new car to our nice new house and watch Nightly Business Report our big new LCD. But at the end of the day image is only as deep as the debt you (can) get yourself into.

Here is the anomaly on all of this, I don’t want my friends looking at our house and our car and being jealous. Sure it makes everyone feel good when other people are jealous of them, but Mary and I are in a unique situation where we are starting out in our lives and careers together. We are a dual income family with no kids (ok we practically treat our dogs like kids…but I digress). It is easier for us to afford this lifestyle. I don’t want any of my friends jumping into our lifestyle too quickly and getting in over their heads, I want them to understand that yes, we have nice things, nicer than we deserve, but we also have car payments, mortgage payments, insurance payments, property tax payments, Homeowners Association Dues, and various other things factored in.

Hey, at least we have no credit card debt! 

How Scouting Taught Me To Be A Smart Shopper

While I was at my parent’s house over Easter, I was looking through some of my old stuff when I found a stack of Merit Badge books from Scouts.  Sitting perfectly on the top of the stack was the book for Personal Management, a merit badge designed to teach teens about managing time and money.

The book is filled with very good information on everything from budgeting, to living on your own and debt management, but I’d like to focus in on the section titled: Being a Smart Shopper.  (Keep in mind that as I go through and quote this that it was written in 1996 for teenage boys, but the lessons transcend age and date.)

 Suppose you have your eye on a really special skateboard.  How much does it cost? (Don’t forget to include the cost of protective gear if you don’t already own such items.)  You count your money and discover that you don’t have enough.  What do you do?  You Might:  

• Shop around.  Maybe another store or a catalog has the identical skateboard at a cheaper price.  A telephone can make comparison shopping easy.  Call at least three stores.
• Earn or save more money until you have enough to buy the skateboard.
• Wait for a sale.  A store clerk might tell you if the skateboard will go on sale soon.
• Look for discount coupons.  These can be found in newspapers, coupon books, or the mail.

What if you still don’t have enough money to buy the skateboard, or you decide you don’t want to spend that much money, even if it is on sale?  You have other choices.  Shoppers can’t always buy exactly what they want.  Sometimes they must compromise.  Thats part of being a good money manager – knowing when to say no to yourself. 

 Wow.  I’d say those last few sentences are something everyone needs to remember!  Mary and I are in this situation with our house right now.  We really want hardwood floors in our living room, but we know that we just don’t have the money for it.  We are forcing ourselves to say no, and it’s hard because we need want them.  It is very hard to say no to yourself, and it takes a great deal of self control, especially when (once you get older) it’s so easy to put a purchase on the credit card.  Luckily for Mary and I, we are able to hold each other accountable and it really helps.  

The Scouts are essentially saying, if you can’t afford something you have a few options: shop around, save more, wait for a sale, and look for coupons.  Very smart advice for anyone.  It also reminds us all to consider all of the costs we will encounter for this item, like having extra money for protective gear for the skateboard.

The passage goes on to recommend that you buy a less expensive skateboard with a different paint job, buy a used skateboard, check classified ads, and it even brings up building your own skateboard (which sounds fun and easy to me!)

The book then offers a checklist for smart shopping some of which are (my commentary in parentheses):

• Be wary of advertising…(Always!)
• Before buying a product, talk to…others who may already use [it]…  (Also seek reviews from consumer reports or on the internet)
• Try before you buy/demo
• Consider quality.  Price isn’t everything… Why buy something, even at a low price, if it falls apart quickly or doesn’t work properly.  (I am obsessed with quality products, if there is a difference in quality and price, I will buy the one that has better quality)
• Consider Service. (I’m usually willing to pay more for something if I know that the service behind it will be worth it.  For instance, I’ll pay a bit more for something at Costco in order to get their service and extended warranty)
• Don’t Impulse buy.
• If there’s a problem, take a product back right away (be sure to keep your receipt).  Don’t toss the item aside and feel sorry for yourself….Most stores…[will]…probably fix the item or give you a new one.  (I am terrible at actually returning items to stores.  It always seems like too much of a hassle.  But I’m going to make a point to return a broken glass bowl we got as a wedding present (in June) this week.  We have the receipt.  I hope they take it back!)

It’s not always easy to be a smart shopper.  Most people, myself included, aren’t good at the waiting part.  We impulse buy, it’s what advertisers and marketers try to train us to do, but we need to always remember to stop and ask ourselves if we need the item, or if we just want it.  We also need to ask more important questions… Can I afford this?  How long with this take me to pay off?  How long will it take me to save for this?  Those are the types of questions that should be going through everyone’s head when they see something they want to impulse buy.

Writing this has been very beneficial for me today, because Mary and I did our Tax return yesterday and when I saw the amount we will be getting back I got very excited.  I even caught myself drooling over Mac mini’s online today.  But I slowly moved my mouse up to the corner of the screen and closed the window, because even though a Mac mini is on my list of things I want and need (yes I do need a new computer), I want to achieve other Goals first.  Most of our Tax return will hopefully be going directly into savings to help us achieve higher goals.