On “Free Stuff,” Part 2

In the last post I talked about how one can do far better by working and earning things than one can do by waiting for them to be handed to them. Today I’ll discuss the spending side of things.

Have you every gone to a restaurant for a new “9.99” deal they were running, only to be disappointed that the portion sizes were small (particularly the desserts, that tend to be absurdly small), the menu choices were lacking, or there were other restrictions that made the meal less enjoyable?  You might get a cheap meal, but the experience you had is not what it could have been.  As the old adage says, you get what you pay for.

You should remember that anything that you get for “free” has a cost.  Businesses that stay in business do not give out more than they take in.  Credit card makers know that you will forget to send a payment, the mail will be delayed, or you’ll mis-write a check eventually and they’ll be ready to hit you with penalties and interest payments as soon as you do.  Have this happen once, and the advantage you gained from cash back rewards will be quickly eliminated.  Also, studies have shown that people spend more money when they use credit than when they use cash.  Think about it, if you walk into a fast food restaurant with cash, you think about how much you are spending and what that add-on will cost.  Walk in with a credit card, and suddenly you feel like you have no limit and the charges start to matter less.  (There is a reason that fast food places are now accepting credit cards.)

Getting “free stuff” also affects how we do things.  Airlines may offer discounted fares, but they generally require you fly on a certain day or to a certain location.  Perhaps you would have done things differently if given the choice, but instead you are paying for something that is not really what you wanted.  In some cases, you may buy something because it is a deal that you would not have purchased otherwise.  Do this enough and you’ll never have money for savings and investing.

Before getting something for “free,” consider the cost.  Sometimes it is better to pay full price, or not get the thing at all.

Please contact me via vtsioriginal@yahoo.com or leave a comment.

Follow me on Twitter to get news about new articles and find out what I’m investing in.  @SmallIvy_SI

Disclaimer: This blog is not meant to give financial planning or tax advice.  It gives general information on investment strategy, picking stocks, and generally managing money to build wealth. It is not a solicitation to buy or sell stocks or any security. Financial planning advice should be sought from a certified financial planner, which the author is not. Tax advice should be sought from a CPA.  All investments involve risk and the reader as urged to consider risks carefully and seek the advice of experts if needed before investing.

One comment

  1. I read an article recently about menu design and it said they suggest leaving the dollar sign off the menu and rounding up prices as it make people feel like they are not spending real money, they just see 7,8,9 next to the menu item.

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