purchases

This Simple Calculation Will Tell You If You're Getting Your Money's Worth

Sarah Winfrey — Thu, 29 Sep 2016 10:00:11 +0000

Do you ever wonder if you're really getting your money's worth out of the purchases you make? I know I do. There are times when I buy something and then wonder, "Will I really use this enough?"

Luckily, personal finance blogger Mixed Up Money and her brilliant Twitter followers have come up with a way to calculate this.

Use Value

For everyday purchases, like clothing, they suggest giving items a "use value" of $1. If you spend $200 on boots, then, you would have to wear them 200 times to make your use value that low.

While this is a bit arbitrary and most people don't actually count the number of times that they wear or use every single items in their homes, it can be a helpful way to think about new purchases. If you don't plan on using something at least to the point where the use value is $1, then maybe you don't need to buy it.

Use Value for Large Purchases

Use value is more straightforward for everyday purchases, but it can still be applied to larger ones. If, for instance, you own a home, you can calculate a daily use value. Let's say you make a mortgage payment of $1,500 every month. Divide that by the number of days in the month — say 30 — and you have a daily use value of $50.

Again, this is somewhat arbitrary, but it will help you determine whether a purchase is something you want (i.e., do you want to spend $50 a day on the particular home that you have or are considering?). It can also help you determine whether you can afford it. Do you actually have $50 per day to spend on a house, or do you need to get your spending under control before you make the purchase?

Other Ways of Calculating Use Value

For certain purchases, you will want to calculate your use value differently. If you know that the one-time cost of doing something equals a certain amount, then you can decide how often you want to do it, multiply that number by the one-time cost, and see if it makes more sense to buy.

I did this over the summer with a paddle board. I love paddleboarding, and I knew that it was something I'd want to do over the years to come. I also know how much it costs to rent a board per hour. When I realized that over the next few years I would spend quite a bit more renting boards than I would spend if I just bought one, I went ahead and made the purchase. In this case, what mattered more was that the cost per use was less to buy than it was to rent.

Use Value and Other Kinds of Value

In general, I think that use value is a great way to think about most of the things we want to buy. It gives us a perspective that we might not otherwise have on the things we purchase, and helps us think through purchases in a different light.

It's important to remember, though, that some things will have value to us outside of their use value. Let's go back to the paddle board I bought this summer. Buying it did make sense from a use value perspective, but I might have bought it even if it didn't.

Here's the thing: Owning a paddle board has allowed me to develop and deepen friendships that I might not otherwise have been able to. I have met some people boarding that I wouldn't have met if I didn't have my own board. And, when you're out on the water, it's easy to sit on the boards and talk for hours. So I have gotten to know people in different ways (and probably better!) than I might have gotten to know them without the board.

This kind of value isn't really something you can calculate. My friendships can't be assigned a numerical value. And yet, they are extremely valuable to me. Even if something unexpected happens and my paddle board is destroyed tomorrow (meaning that I won't use it enough to make the purchase make sense financially), I will feel like I got my money's worth out of it.

Some things have worth beyond use value, and it's important to think about this, too, when you're thinking about a purchase.

Use Value and Budgeting

If you keep a detailed budget, use value can help you plan for the future. Clothing is one area where keeping a use value in mind can help you set a thoughtful, realistic budgeting number.

For instance, fall is finally here. For many of us, that means that we will need some new clothes. It's time to take stock of the closet, discard what won't work from last year, and buy some items to fill those spots.

Thinking about use value can help this project. When you look at your closet, consider what you paid for items you're thinking of discarding, and approximately how often you wore them. Items that have hit their use value are likely to be in worse shape, and may be things to consider throwing out. On the other hand, you may realize that certain brands and styles get worn more often, and therefore are items where you're more likely to hit that use value of $1.

Using what you learn as you go through your closet, you can set a more realistic number when it comes to the cost of updating your wardrobe for fall, and it can help you make wiser choices about what to buy when you're out shopping.

Use value is a helpful concept for deciding whether to make a purchase or whether a particular purchase was actually worthwhile. It's not a perfect concept, but it can help you make wiser, more informed choices about what to buy and when.

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This article is from Sarah Winfrey of Wise Bread, an award-winning personal finance and credit card comparison website. Read more great articles from Wise Bread:

25 Purchases You'll Never Regret

Marla Walters — Fri, 11 Mar 2016 11:30:06 +0000

Over the years, I have made many a purchase. Some were big-ticket; some were under $15. Of course, there were occasions when buyer's remorse soon followed my shopping trips, but there were several purchases that I still stand by.

Here are 25 purchases that I think you would never regret.

1. Houses

Home ownership is still a sound financial idea. You can build up equity, claim mortgage tax deductions, and build a good credit history. I was a renter before I was a homeowner, and would never go back, but that's me. I like being able to put holes in walls where I want them, own pets, or dig up part of the yard for a garden. When you own a home, you are able to create the living environment you want — not your landlord's.

2. Four-Wheel Drive Pickup Truck

Not too long after my husband and I became homeowners, we bought a truck. It is now 18 years old and still runs well. Need green waste hauled? Buying large stuff? Going somewhere adventurous, where you need four-wheel drive? A truck enables you to do a lot of things that are especially handy if you are a homeowner. Ours isn't going to break any land-speed records, but we don't care. It's as handy as heck.

3. A Safe

There are paper records, and then there are really important records like birth certificates, marriage certificates, title to cars, valuables, etc. If it is important, it needs to be put somewhere secure. Sure, you could get a safe-deposit box, but it's handier to have things around — where you can get them when needed — and not subject to a bank's hours.

4. Fruit Trees

There is no instant gratification in planting fruit trees, but they are well worth the effort. Every time we pick avocados, oranges, bananas, or lemons, we are grateful we took the time to plant those trees. We cannot begin to eat all of what they produce, but part of the fun is to share the bounty.

5. Leather Furniture

When we began buying furniture, I thought leather would be bad to have, with kids and pets, but I was so wrong. It is extremely durable, and with leather cleaner and a little elbow grease, it cleans right up. Ours has survived beautifully, and we'll never go back to upholstered furniture. It is also easy to re-decorate with different throws or pillows.

6. Gas Stove

If you are interested in energy efficiency, gas is the way to go. It takes nearly three times as much energy to deliver electricity to your stove, according to the California Energy Commission. Savings aside, if you like to cook, it is so much easier to regulate stove temperatures with gas instead of electric. Plus, if the power goes out, you can still cook.

7. Outdoor Fire Pit

An outdoor fire pit was a bit of an impulse buy, but we have gotten so much use out of it. If you like to entertain, break out the marshmallows. Even if it is just my husband and I, it makes for an extremely relaxing evening — sitting in the yard with a glass of wine in hand.

8. Vacations

Have you ever regretted spending money on a vacation? Even when things don't turn out the way you expect, there were fun memories and good stories. Plus, they're good for you. People need breaks from work and time for fun and relaxation. And vacations do not have to break the bank — try camping, a road trip, or renting an RV.

9. Plug-In Artificial Christmas Tree

We bought the plug-in artificial tree during a year when I just couldn't, for sad reasons, handle Christmas. For 16 years since, we have plugged it in, and it's bright, cheery, and works perfectly. We live in a climate where fresh trees are ridiculously expensive, so this tree paid for itself long ago. Amusingly, it has become a collector's item on eBay and is worth much more than we paid for it years ago. Now, I wouldn't trade it for a 10-foot Silvertip.

10. Generator

After a particularly bad storm, we lost power for a week and a half. We also couldn't get enough ice, and eventually lost the contents of our freezer and refrigerator. That was motivation to purchase a generator. They are noisy and give off exhaust when being used, but having weathered even more storms, we're glad we bought it.

11. Knife Sharpener

If you have a scout merit badge in the fine art of knife sharpening, and the proper whetstones, you don't need one of these. If, on the other hand, you have a drawer or cutting block full of mostly dull knives, like we did, get a good knife sharpener. It will make life so much better. Scout's honor.

12. Label Maker

People who know that we own a label maker actually ask us to make labels for them. Talk about a handy little contraption! You can go a little nuts with them. If you are into organizing, they are a must-have.

13. Meat Smoker

If you like tender meat, poultry, and fish with a smoky flavor, look into buying a smoker. We have a traditional charcoal-burning one (quite inexpensive) as well as a new electric one. We will never eat Thanksgiving turkey another way, and we're about to try salmon and bacon. I worried that cleanup would be a pain, but it's really quite easy.

14. LED Flashlights

Not only are LED flashlights longer-lasting than regular flashlights, but they are more energy-efficient, and they cast a very bright light. We have a more traditional, battery flashlight that is very heavy, and the tiny LED outshines it every time. It is now our favorite.

15. Good-Quality Multi-Tool

Do some research and invest in a quality multi-tool that will last. Mine contains 10 tools: Needle nose spring-loaded pliers, a wire cutter, a fine edge blade, a package opener, scissors, two screwdrivers, a bottle opener, tweezers, and a file. Although I would like to carry mine in my purse, I am afraid I will lose it to the TSA when I fly, so it lives in my car. And I have another in my desk at work.

16. French Press

We paid under $20 for our French Press coffee pot about five years ago. Not only is the coffee from a French Press really delicious, but if there is a power outage, you can still make coffee! That's basically the same as having superpowers. This is a very important thing, when you really need coffee. It even goes camping with us.

17. Ice Chests

I just went outside and counted, and we have three, in varying sizes. Since we live a distance from Costco, we take the big one along when we do bulk shopping. Another has wheels, making it perfect to drag to picnics. The smallest one is perfect for beverages. During power outages, they have also been used to store food.

18. Alternative Education

Not all kids fit into the same mold, and sometimes they do better in a setting that suits their interests and pace of learning better. My mother, a longtime public school teacher, recommended we try the Montessori method for our daughter. She was right, and that was a great fit. Eventually there were others, including charter and public. In retrospect, I think it was good to mix it up.

19. Camping Equipment

If you like the great outdoors, odds are, you enjoy camping. It's an inexpensive vacation, if you own your own equipment (or can borrow some). A site with no frills should be around $10; state parks with water and bathrooms can be around $15. Even if you go to a private campground, you should be able to get a site for less than $50 a night. Most of our equipment was purchased at yard sales. Our big splurge was to buy new, good-quality sleeping bags — which are worth every penny on cold nights.

20. Ceiling Fans

We are not fans of air conditioning, but needing to move air around, we invested in ceiling fans. They don't actually lower the temperature of a room, but air movement makes a room feel cooler. In the winter, you can run the fan in a clockwise direction, and bring that warm air down.

21. KitchenAid Mixer

The KitchenAid mixer is a beast. Mine will not only mix, but also knead bread dough, and whip cream. It is about 15 years old and works perfectly. One of these days, I'll invest in some of the attachments and make ravioli, pressed juice, or core apples.

22. Revere Ware

My mother-in-law, who burned, um, everything in the kitchen, taught me the value of buying Revere Ware. I have owned many sets of "celebrity chef" pans, and I'll tell you — nothing, absolutely nothing, has held up as well as this brand. I still have one of her stock-pots, and it's a treasured item.

If you burn something in one of these pans, no problem. Let it soak overnight, scrape it, and out it comes. If it's really major, there is a cleaning product called Bar Keepers Friend that will remove any residual gunk. If I were getting married and had a registry, I'd choose Revere Ware.

23. Wine Refrigerator

It's a shame when a good bottle of wine is ruined due to being overheated. The wine fridge also ensures that you drink wine at the proper suggested temperature. I had initial concerns about energy usage, but that has not been an issue on our bill.

24. Sewing Machine

If you want to save money, and think you might enjoy getting in touch with your creative side, a sewing machine is a great thing to have around. You can make repairs, cover pillows, make curtains or blankets, or even sew some of your own clothes. To be honest, I'm not very good at sewing, but I really like it. My daughter recently bought herself a machine on Craigslist and taught herself to sew. We get a kick out of copying trendy catalog stuff and making it ourselves.

25. Good Books

Despite having the ability to download books and use e-readers, I have never really enjoyed that kind of reading experience as much as a paper page-turner. I also like to re-read favorites as well as classics. Reading can be an inexpensive pleasure, and you will never regret the books you buy.

What purchases are you still proud of? Share with us in the comments!

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This article is from Marla Walters of Wise Bread, an award-winning personal finance and credit card comparison website. Read more great articles from Wise Bread:

Best Money Tips: Daily Purchases That Hurt Your Budget

Amy Lu — Tue, 18 Aug 2015 19:00:27 +0000

Welcome to Wise Bread's Best Money Tips Roundup! Today we found some great articles on daily purchases that hurt your budget, affordable cities for settling down, and bad news for Spotify users.

4 Questions You Need to Ask Yourself Before Every Major Purchase

Brittany Lyte — Wed, 24 Sep 2014 13:00:05 +0000

A car. The wedding of your dreams. Your first house. These could be three of the most wonderful purchases of your life — or three of the worst. After all, the words "regret car purchase" generate 7.5 million Google search results, your wedding day will very likely be the most expensive day of your life, and 1 in 4 homeowners have buyer's remorse. Better do it right. (See also: The 7 Dumbest Purchases People Make)

But how does one keep far from catastrophe when making purchasing decisions about items that cost five figures or more? Purchases of this magnitude aren't run-of-the-mill for most of us. Well, lucky for you we've compiled a tidy list of questions to ask yourself before pulling the trigger on any major purchase.

1. Will I View This as a Good Purchase a Year From Now? Five Years From Now?

Buyer's remorse is a sneaky thing. At first, you're over-the-moon for your new Jeep. But will you still be pleased with your purchase once the newness wears off? Even our most prized possessions have a way of becoming just another thing in the pile of stuff that occupies so much of the space in our lives. We begin to compare it to other things like it that we don't yet have. Like a petite, red sports car. Or a Harley Davidson. And just like that our Jeep loses its luster.

Besides, research shows it's the experience of wanting a luxury item and shopping around for it — not the purchase itself — that makes us happy. So, go ahead and research the heck out of that new Jeep. You can even take it for a test drive. Just don't buy the thing unless it passes our four-question vetting process.

2. How Secure Are My Finances?

How plausible is it that your income could drop off dramatically two years from now? Would you be left to drown in payments you can no longer afford? Imagine your worst-case financial scenario, and draft a plan for how you'd escape things like bankruptcy and foreclosure. Are you completely dependent on your income to cover your expenses and financial obligation, or do you have a sizable savings?

If you don't seriously consider your financial forecast, even things widely considered as great investments can become regrettable. Exhibit A: A third of millennials say they would have been better off working than going to college. The reason? They're drowning in debt. More than half the 1,414 college grads surveyed by Wells Fargo said they afforded their education by taking out hefty student loans that has become the crux of their financial distress.

3. Am I Suffering From Stress, Duress, or Lack of Sleep?

Studies show that we're more likely to make big, splurgy purchases we'll later regret when we're mourning a death, dealing with a divorce, feeling depressed, experiencing stress at work, or otherwise emotional. That's because sadness often tricks us into thinking we can better ourselves and therefore our emotional state by making extravagant purchases. So steer clear of making any drastic financial decisions when experiencing any period of personal turmoil.

4. Am I Buying Because It's a Good Deal?

Make sure it's a good deal for you — your personal wants, needs, values, and financial standing — and not just "a good deal," period. The boat may very well be "the deal of a lifetime," but make sure it's your lifetime that you're considering. In fact, it doesn't really matter how good the deal is anyway. If you weren't planning on buying a boat until the good deal came along, then you're running the risk of throwing your money away on a luxury item you simply don't need. Now that's a recipe sure to do nothing more than worsen your financial position.

What do you ask yourself before making a big purchase? Please share in comments!

This article is from Brittany Lyte of Wise Bread, an award-winning personal finance and credit card comparison website. Read more great articles from Wise Bread:

Best Money Tips: Best and Worst Buys of August 2013

Ashley Jacobs — Mon, 05 Aug 2013 10:00:30 +0000

Welcome to Wise Bread's Best Money Tips Roundup! Today we found some great articles on the best and worst buys of August 2013, jobs to satisfy your wanderlust, and rules for buying a home.

Best Money Tips: Save Money When Buying Things You Need

Ashley Jacobs — Thu, 04 Aug 2011 10:00:21 +0000

Welcome to Wise Bread's Best Money Tips Roundup! Today we found some awesome articles on how to save money when buying things you need, decorating a small apartment on a dime, and when to teach kids about money.

Top 6 Reasons Why Using Cash-Only Rocks

Tisha Tolar — Mon, 16 Mar 2009 14:10:41 +0000

While I am a cash-only person by circumstance (paid off the credit cards and never reopened accounts), I am so grateful that I live in a cash world. Of course, having only cash is not always convenient and does occasionally make it difficult to rent a car — but overall I am so happy to no longer be a slave to the credit card industry and the high interest rates that are overwhelming so many people around the nation.There are also so very good reasons why using only cash is completely logical. Here are my top 6 reasons why using cash-only rocks.

I have had to learn to manage my money.

Back when I had credit cards, I didn't think too much about what I was buying on credit. Of course I was young and not financially intelligent back in those days. Now that I only use cash, I have had to learn how to manage my money down to the penny because I have nothing else to fall back on in the way of credit. If an emergency arises, I need to know I have the cash on hand to deal with it.

I have a true understanding of my needs and my wants.

It has taken some time but I can now walk into a store of any kind and differentiate between the things I really need and those things that I just want. Before I would throw whatever in the cart and figure the credit fairy was there to cover me. Now I take time to pause in the aisle and really think about the necessity of my purchases. I have also encouraged the same kind of thinking in my whole family.

I understand the need to wait on big purchases.

Because I can no longer run out and get anything I want with a swipe of the plastic, I have to wait and save up the cash. This waiting period, highly recommended by many credit experts has really worked for me. In most cases, the stuff I really wanted because a case of out-of-sight/out-of-mind for me after a waiting period.

I have used my creativity for the good.

I have always been crafty but not necessarily frugal. Now, I love creating fun alternatives for usually expensive things, such as family trips, birthday parties and gifts, and other events that I used to pay top dollar for in the past.

I finally do not fear the financial future.

When I was overwhelmed with debt, I hated even thinking about money. Now I am excited that we will soon be debt free after a few more car payments. There are no more credit card bills hanging over my head and I have no desire to qualify for any new accounts.

I am able to follow my dream.

Since I no longer had big debts to fear, I felt confident to follow my dream and become a writer full time. Working for myself has been the fulfillment of one of my biggest dreams and along with financial freedom, I am thrilled to earn a living doing what I want to do each day.

It will not be easy for many to convert from a credit card life to a cash-only existence but it will certainly be beneficial for you in the long run. If you are interested in changing over to a cash-only life, take baby steps away from your credit cards. Start by leaving the plastic at home when you go to the store. Slowly but surely, you too can learn to manage your life on a cash-only basis.

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This article is from Tisha Tolar of Wise Bread, an award-winning personal finance and credit card comparison website. Read more great articles from Wise Bread:

purchases

This Simple Calculation Will Tell You If You're Getting Your Money's Worth

Use Value

Use Value for Large Purchases

Other Ways of Calculating Use Value

Use Value and Other Kinds of Value

Use Value and Budgeting

Like this article? Pin it!

25 Purchases You'll Never Regret

1. Houses

2. Four-Wheel Drive Pickup Truck

3. A Safe

4. Fruit Trees

5. Leather Furniture

6. Gas Stove

7. Outdoor Fire Pit

8. Vacations

9. Plug-In Artificial Christmas Tree

10. Generator

11. Knife Sharpener

12. Label Maker

13. Meat Smoker

14. LED Flashlights

15. Good-Quality Multi-Tool

16. French Press

17. Ice Chests

18. Alternative Education

19. Camping Equipment

20. Ceiling Fans

21. KitchenAid Mixer

22. Revere Ware

23. Wine Refrigerator

24. Sewing Machine

25. Good Books

Like this article? Pin it!

Best Money Tips: Daily Purchases That Hurt Your Budget

Top 5 Articles

Other Essential Reading

4 Questions You Need to Ask Yourself Before Every Major Purchase

1. Will I View This as a Good Purchase a Year From Now? Five Years From Now?

2. How Secure Are My Finances?

3. Am I Suffering From Stress, Duress, or Lack of Sleep?

4. Am I Buying Because It's a Good Deal?

Best Money Tips: Best and Worst Buys of August 2013

Top 5 Articles

Other Essential Reading

Best Money Tips: Save Money When Buying Things You Need

Top 5 Articles

Other Essential Reading

Top 6 Reasons Why Using Cash-Only Rocks

I have had to learn to manage my money.

I have a true understanding of my needs and my wants.

I understand the need to wait on big purchases.

I have used my creativity for the good.

I finally do not fear the financial future.

I am able to follow my dream.

Like this article? Pin it!