How to Have an Above-Average Life for Below-Average Prices

by Philip Brewer on 30 May 2014 0 comments

The average person is stuck paying the average price for everything. But you're not an average person. You're a unique person. Your choices can boost you above average.

A while back, I happened across a chart of "average apartment prices" for different cities, and I was surprised to find that I was living in an apartment that cost quite a bit less than average (and it was a great apartment). (See also: Studio Living: A 5-Point Survival Guide)

It wasn't a matter of great bargaining either — I have no particular skill at bargaining at all. My wife and I found our great apartment by investing some time and effort. The main things we did were:

  1. Think about what we wanted in an apartment.
     
  2. Research how those features — and the features we didn't care about — affected the price of an apartment. Because everything affects the price of an apartment — size, floor plan, whether it allows cats, is on a bus line, has washer/dryer hookups, covered parking, a balcony, and so on.

Once we had some data, we were able to pick an apartment that lacked some features that we didn't care about, but that other people are willing to pay more for. Since our apartment didn't have those features, it was a "below average" apartment that rented for a below average price — even though it had all the features we really cared about.

This strategy doesn't work for everything. It only works for things that are unique. Things that are all the same — a gallon of fuel, a pound of sugar, a month of basic cable — are going to cost whatever they cost. Things that are unique — a house on the beach, a used car, a painting by a local artist — are going to have wildly different prices.

You can take advantage of this fact to get a much better standard of living than the average, because while the average person has to pay the average cost for an average item, all that matters to you is the price of the cheapest one you really like.

Here are two strategies to focus on.

Emphasize Unique Items

The more of your budget that goes for ordinary mass-market items just like everybody else, the more of your budget you're going to be spending on average (and averaged-priced) goods.

Where the mass-market item is cheap, this is okay — you're not getting an above-average standard of living, but at least you're getting low costs.

But the more of your budget where you can satisfy your needs with unique choices that are better than the mass-market choices, the more opportunity you have to live at an above-average standard of living for a below-average cost.

Emphasize Long-Lived and Expensive Items

The extra time and effort involved in finding the above-average choices really pays off when you find something that you can use for a long time.

Anything that you can buy once and keep for years is a great candidate for the extra effort of finding one that's above average.

Our apartment, that I used as an example above, was a great deal the very first year. But the real win for us has been that it continued to be an above-average apartment at a below-average cost year after year. The effort we put into finding it really paid off.

Other things don't justify the effort. Of course, sometimes you'll find an above-average item at a below-average price without a lot of extra effort. We once found some locally grown organic stone-ground whole wheat flour for about half of what ordinary flour cost. We bought all we could carry, and we really enjoyed the bread we baked with it — but it only raised our standard of living for a few weeks.

Of course, making your things last is great even if you didn't get an above-average deal on them.

So, get strategic. Look at the things you buy and identify the ones that are unique. From within that list, start with the items that you're going to keep for a long time, and the high-dollar items. That's where the extra investment is going to have the most impact on both your standard of living and your cost of living.

How have you made strategic purchases to boost your standard of living without boosting your costs? Please share in comments!

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