Value vs. Price - wise shopping

We live in a price conscious world. Advertising is filled with claims to low price, sale, save money and other catch phrases aimed at getting our attention. In every shopping situation, whether you are purchasing fast food or a new home, there needs to be a balance between price and value. Sometimes the lowest price give no value. Part of being prepared for hard financial times is recognizing the difference between the price of object and its value.

On the first level, price is based on the marketplace. Price is what you will pay or what someone else will charge for a specific product or service. Price comparisons have become ubiquitous in our Internet society. You can search for an item in Google and almost instantly have a price comparison from up to hundreds of vendors. However, the key here is that you have to be aware that this price comparison system exists. If you haven't even done so, trying putting a product into Google Product Search (or any of many other similar online services). The range in price can be surprising. For example a Canon Digital EOS 40D Camera has a $600 spread in prices. Finding the best price is no longer an issue in our computer driven world.

Price can be a trap however. Many times variations in price reflect actual variations in the quality of the product, it availability, or accessories. Also, price comparisons only work with mass produced products. It is very hard to compare the price of two unique hand woven rugs, for example.

In all your searching for the best price, do not forget value. Considering value, the first question to ask yourself is this, what value has this product to me or my family? Can I really use the product? Do I need the product? Can I purchase something else that will work just as well and cost less? What would happen to me or my family if I did not buy the product at all? How long will the product last and will I have to purchase a replacement? Is this something I want to store or fix? None of these, or many other questions are answered by focusing on price.

I often reflect on these questions when I remember gifts given and received for holidays and birthdays. Truly, I can think of few things that had any lasting value, particularly with toys some of which were discarded or broken before the day was finished. One good reality check is to go out and look in your garage or storage room. Is there anything there that you don't need or are tired of storing? Have you ever made a purchase only to discover that you already owned what you purchased? If not, you are very fortunate indeed.

Shopping can be an addiction. We can drown in our own refuse. Let's look the value of purchasing new items and less at the price. Real security, that can overcome fear, comes with a balance between our needs and our wants.

Wheat prices fall -- perhaps time to buy

One of the staples for any serious food storage plan is wheat. During the past few years, wheat prices have climbed, due primarily to increased fuel costs and increased plantings of corn for biofuel. With the downturn in the economy, and the lowering of gasoline prices, one small benefit is lower wheat prices. I saw an ad recently for wheat in 50 lb bags for less than $20 a bag.

One thing I have found about the availability of wheat and not flour, is that it not particularly available on the Internet. It is best to look for local suppliers. The prices on the Web are as high as $46 or more for 50 lbs and $69 for 45 lbs plus shipping. Sometimes the grain is referred to as "wheat berries" especially in the context of seed wheat. To find bulk wheat for sale, you may wish to start asking local farmers and feed stores about the availability in your area.

We used to buy directly from the farmers, although the wheat needed to be cleaned since it was often full of weed seeds and other extraneous substances but at that time we were paying only about $6 for 100 lbs. We usually bought in bulk by organizing a number of people to buy at the same time. Cleaning the wheat was not too difficult in smaller batches.

Interest never sleeps

There is a much quoted saying which has long since passed into our collective folklore but it was first given by President J. Reuben Clark in a Conference talk for The Church of Jesus Christ of Latter-day Saints in April of 1938. The saying is more relevant today than it was in 1938. The complete quote is as follows:

It is a rule of our financial and economic life in all the world that interest is to be paid on borrowed money. May I say something about interest? Interest never sleeps nor sickens nor dies; it never goes to the hospital; it works on Sundays and holidays; it never takes a vacation; it never visits or travels; it takes no pleasure; it is never laid off work nor discharged from employment; it never works on reduced hours; it never has short crops nor droughts; it never pays taxes; it buys no food; it wears no clothes; it is unhoused and without home and so has no repairs, no replacements, no shingling, plumbing, painting, or white-washing; it has neither wife, children, father, mother, nor kinfolk to watch over and care for; it has no expense of living; it has neither weddings nor births nor deaths; it has no love, no sympathy; it is as hard and soulless as a granite cliff. Once in debt, interest is your companion every minute of the day and night; you cannot shun it or slip away from it; you cannot dismiss it; it yields neither to entreaties, demands, or orders, and whenever you get in its way or cross its course or fail to meet its demands, it crushes you. (J. Reuben Clark Jr., in Conference Report, Apr. 1938, 103).

In a previous year, President Clark stated: "Let us avoid debt as we would avoid a plague; where we are now in debt let us get out of debt; if not today, then tomorrow" (J. Reuben Clark Jr., in Conference Report, Apr. 1937, 26).

In today's world credit has become a god, worshiped as a solution to all of life's problems. I have had people come to me as an attorney, about to lose their home, who are more worried about their credit rating than they are where they will live. But credit comes with a price and that price is the payment of interest. It is not unusual for credit cards to carry interest at 18% or higher and rates as high as 28% are not uncommon. Payday loan companies, in some states, can legally charge interest as high as 300% or even up to 700% per year. Presently, there is an attempt to limit the rates to 36% per year.

If we live within our means and learn to save for the things we need and want, we can avoid paying a penalty for a lack of self denial. As President Gordon B. Hinckley said, “Reasonable debt for the purchase of an affordable home and perhaps for a few other necessary things is acceptable. But from where I sit, I see in a very vivid way the terrible tragedies of many who have unwisely borrowed for things they really do not need.” “I Believe,” Ensign, Aug. 1992, 6.

Of course, more later.

Recognize hidden charges to avoid debt

Being prepared is a way of life, not like a New Year's resolution to lose weight. One way to be more prepared economically is to be aware of the multitude of hidden charges built into our high speed electronic way of doing business. This problem was brought forcefully to mind with a recent letter to the editor of a national magazine.

Right now, it is popular to write articles on weathering the financial storm. In the recent letter, the writer noted that he went to his local bank ATM weekly to get pocket money. He observed that the bank fees had jumped to "$3 a transaction." In this one area alone he calculated he was spending $156 per year on ATM charges. He went on to say that he had started using the ATM at Wal-Mart stores and found that their fees were only $1.40 per transaction, thus saving $119.60 per-year.

What is wrong with this picture? First of all, this person was using the ATM to get "pocket money." How much was he spending each week on pocket money purchases? Did he even know? Cash has a way of being spent and not necessarily for necessities. If you are worried about $120 in ATM fees, perhaps a better place to start is looking at what you spend on unnecessary items each week from pocket money.

As to the ATM fees, there are a multitude of ways to avoid them altogether. First, use a debit card rather than cash. Second, get cash back from purchases rather than withdrawing money from an ATM. He was already in Wal-Mart, I assume he was also making purchases, he could get the same "pocket money" by asking for cash back on his debit card, rather than paying to have the machine spit out a twenty dollar bill of his own money.

Economic security begins and ends with awareness of each expenditure and the cost of using our society's convenience services. Look at your bank statements carefully. You might just see charges that can be easily avoided.

We need to return to the old adages, waste not, want not and if we don't need it, don't buy it. Financial security can come from paying attention to details.

Spending our way into insecurity

In my last post, I expressed incredulity that purchasing a $6000 was a necessity. I believe the post needs some clarification. The real question is the need or motivation for purchases. When I was a just starting out as an attorney, I drove a 1967 AMC Javelin. I suppose someone might now think that this was a "cool" car and it could be a collectible. But at the time, it had seen too many miles. The windows did not work, they were stuck either up or down. Since it does not rain much in Phoenix, having open windows was not a problem. However, there obviously was no air conditioning. The car had a three speed manual transmission. It was nearly ready for the junk pile.

One of my lawyer friends at the time, took me aside one day and told me that if I wanted to get ahead in the legal world, I needed to purchase a Cadillac. He said people didn't like to go to attorneys that didn't look rich.

I didn't buy a Cadillac, but eventually, I did buy a used Suburban. I have often thought about that advice. (I did drive a Cadillac for a while once and did not like it at all). Now, would I buy a $6000 bedroom set to impress my neighbors and friends? As a comment on the side, I doubt that any of my present clients even know what kind of car I drive. If we make purchases based on our perception of what others think of us, then this is the saddest and most destructive reason for spending money.

Some would justify purchases for the reason that they want "quality." That is a good thing but needs to be tempered with a realization that some things don't need quality. A brown paper bag, as cheaply purchased as possible, is more than adequate to carry your lunch to work. On the other hand a cheap tool may not perform its function. For example, a cheap screwdriver will seldom last long or work properly. The difference in price between a quality screwdriver and a cheap one is insignificant, but the quality difference is immense.

Part of being prepared for life's contingencies, is learning to distinguish needs from wants. It is also learning to purchase real quality rather than accumulating more and more junk. It is learning to set priorities and spend our time and resources on things, as Christ says "But lay up for yourselves treasures in heaven, where neither moth nor rust doth corrupt, and where thieves do not break through nor steal, but lay up for yourselves treasures in heaven, where neither moth nor rust does corrupt, and where thieves do not break through nor steal."

The choices we make each day on how we spend our resources, money, time and effort will determine whether we are rich or poor, fearful or secure. Maybe one family can purchase a $6000 bedroom set without creating a problem, maybe, in some circumstances, it would be better to do without. In a recent news story, it was noted that because of the economy that Macy's Inc. offered $800 sapphire or ruby and diamond rings for $249. Maybe, this isn't a bargain, maybe the $250 would be better spent on helping poor around us who are struggling this Christmas season? Maybe a $2,100 Marc Jacobs dress at Sak's Inc. marked down to $629.95 is not a bargain, but a rope leading us down into into insecurity and away from the things that will help us to lay for ourselves treasures in heaven and give us real security.

Furniture is not a necessity

I was reading a recent copy of the AARP Magazine (showing my advanced age) and read a column supposedly giving advice on money matters. The question came from Utah and asked about a problem with renting furniture. That wasn't what caught my attention. The person with the problem mentioned that they had rented furniture in Texas, a bedroom set, and "we had paid $4,976 and had only five payments of $254 to go until it was paid off." Maybe I don't have a real good grip on reality, but simple arithmetic, using a calculator, shows this person paid $6,246 for bedroom furniture. What is interesting is that the furniture was rented, so they were paying interest on the furniture. Now if this amount doesn't faze you, then you probably don't worry about a budget.

One thing I have learned in my life is that used furniture has almost no resale value. I am not talking antiques or collectibles, just ordinary house furnishings. A quick check online shows 6 piece bedroom sets from Costco Furniture for about $5,500 without a mattress or box springs. Apparently, some people place a great deal of importance on furniture. However, $6,000 is close to what I have spent on furniture in my entire life. A further check online showed Queen Bedroom sets starting at under $500 from other vendors.

I would guess that many people, however, are caught having purchased or rented expensive furniture and are now feeling the pinch. My point is that furniture is not a necessity. We can get along quite nicely with a very minimal amount, perhaps a chair or two, enough for each one in the family, and a table. Beds are nice, but not absolutely necessary. If you are thinking about your financial priorities, particularly in these chaotic financial times, perhaps you need to reassess your attitude about what is a luxury and what is a necessity. Maybe $6,000 is a lot of money to you, I know it is to me, especially for furniture. For me, being prepared for hard times probably doesn't mean going out an spending money on furniture.

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