value

Is Picking Up Pennies Still Worth My Time?

March 12, 2019 By Shannon Christman 18 Comments

“If Bill Gates saw $100 lying on the ground, it wouldn’t be worth his time to pick it up,” a friend told me once. She reasoned that he would make more during that time by doing something else. At an estimated salary of $1.38 million per hour, Gates would likely make more than $100 in the two seconds it would take to pick up that $100 bill.

Is It Worth It If You’re Off the Clock?

“But what if he’s off the clock when he sees the $100?” I asked my friend. “Then it would be worth his time.” I realize that people like Bill Gates are never really off the clock, and in fact, that $1.38 million per hour includes even the minutes he’s sleeping, but my point was that he could just as easily spot the cash when he’s on the beach as when he’s doing business. Then he’s making money in his leisure time, not when he’s earning his salary.

Even if the $100 flew in his office window while he was working, I added, he could easily continue certain types of work – thinking of new ideas or talking to an assistant, for example – while he bends down to pick up the cash. Then, during those two seconds, he would have made $233 instead of $133. Even minimum-wage workers are allowed a few seconds to stretch, so no one is cheating his or her employer by picking up a penny on the clock.

The Value of Picking Up Pennies

Odds are, you’re not Bill Gates, you don’t make $1.38 million per hour, and you never see $100 bills lying on the ground. You probably see quite a few pennies, though. Is it worth your time to pick them up? If you could make a living picking up pennies, one after the other, 40 hours a week, you would make $37,440 a year, assuming two seconds to pick up each penny. Some people, like my friend, would say that picking up a penny is not worth your time if you make more than $37,400 annually. I say that, even if I made $500,000, picking up that penny would be worthwhile because I would then have made $500,000.01.

The amount of money you make is irrelevant to whether it is worth your time to pick up a penny. However, other factors may lead you to choose to let the penny remain there. By picking up a penny on a busy sidewalk, you risk being trampled and having to pay much higher medical bills. If you pick up a penny whose previous owner you can identify, you may be stealing (at least ethically, if not legally). Picking up a penny on a first date might give your date the idea you’re cheap, and you could miss out on a second date. (Though, if he’s a keeper, he will be thrifty himself and may beat you to the penny.)

For Most, It’s Worth It

You may be too tired to pick up the penny; your back may hurt; a child may appreciate finding it more than you would. Any of these circumstances could provide a legitimate reason to let a penny remain on the ground. “I make too much” is not a good excuse. If you had picked up the penny, no matter who you are, you likely would have made more.

Do you think it’s worth picking up pennies? Share your thoughts in the comments below!

6 Reasons Why Buying Cheap Often Ends up Costing More

July 22, 2015 By Will Lipovsky 2 Comments

Have you ever gone to buy a new appliance or piece of furniture and immediately picked out the cheapest option? While sometimes buying the cheapest option can work out, many times it ends up costing more money.

For instance, buying the cheapest option may mean you end up paying more in the future. This could be something as simple as buying a pair of winter boots that you’ll have to replace within a year. Or buying a cheap car that only lasts a year.

A lot of cheaper items won’t last as long mostly because they’re poorly made and not designed for long term use. Buying cheap $1 sandals aren’t going to last you as long as spending a bit more money on quality sandals. For instance, let’s say $1 sandals last one month. $20 would only have to last 20 months before they become the cheaper option. Not too mention throwaway sandals are a pain to keep buying and that amount of waste is bad for the planet.

The following are six reasons why buying cheap often ends up costing more:

1. Hefty Repair Bills

Additionally, sometimes the cheapest options are also the most expensive to repair. Often cheap appliances mean hard to find parts. Repair people may also not like working on them. Worst of all, the item may not be quality enough to deserve all the money it needs in repairs. Hello, scrap yard.

Poor quality items are generally the type of items you have to replace or repair constantly. While sometimes buying generic can pay off or doesn’t make a huge difference, sometimes buying those $3 t-shirts means you have to replace them every few weeks because they literally fall apart. You can’t really repair a t-shirt.

2. Inevitable Replacement Costs

On the other hand, opting to replace an item instead of repair it also costs money. For example, you could pay $100 for a pair of shoes that last three years or pay $20 for shoes you have to replace every three months. In most cases, the amount you pay to replace a cheap item vastly outweighs the amount you would have paid if you had initially bought a quality item.

If you don’t plan to use an item all that often, buying a cheaper product might work out in your favor. After all, why pay a lot of money for something you’ll never use? But if you do plan to use it all the time, you should consider spending more money to buy something built to last. You don’t want to buy a dishwasher you expect to use every other day only to have it stop working after a year because you bought the cheaper model. Sometimes you need to think about the long-term.

3. Additional Costs Down the Road

There are also additional side costs that sometimes come with cheaper items. For instance, sometimes generic or off-brand items use their own special screws or extensions, meaning you have to buy their accessories instead. Paying additional costs for a cheaper item might mean spending the same amount you would have paid for a higher quality item without the strange side costs.

4. Choosing Quantity Over Quality

In some cases, it’s definitely better to buy quantity over quality. But for many cases, it’s much better to choose quality over quantity. Buying a couple pairs of pants for work at $20 a pair might seem like a great steal but you won’t be thinking that when they start to fray or wear thin after only a few wears. Sometimes it’s better to buy those $60 work pants that you can wear over and over again.

Suggested reading: 8 Ways to Make Your Shoes Last Longer

5. Buying Items You Don’t Need Just Because They’re Cheap

A lot of people are easily swayed by sale signs or seemingly great prices. They often end up buying items they don’t need. Don’t let the cheap price of an item fool you. If you don’t need it or know you won’t use it, don’t waste the money.

6. Lack of Warranty

Cheaper items often don’t come with warranties. If they do, the warranties aren’t usually that great. Quality products often come with warranties that last for at least a year, if not longer. So if that cheap appliance you bought breaks after two months, you might be stuck throwing it out. But if you had bought an appliance that was a bit better, you might be able to redeem a warranty even if a couple years have passed.

The Tesla Model S Is Now the Fastest-Accelerating Sedan in the World

July 17, 2015 By Will Lipovsky 6 Comments

Remember when people used to laugh at electric cars? They used to be seen as an underpowered joke of a car. Not. Any. More.

Just hours ago, Tesla Motors revealed how owners can make their Model S’s go from 0-60 faster than any other car.

Yes, this all-electric 4 door sedan built in California is now capable of going from zero to highway speeds faster than any other production car known to humankind.

Tesla can be called the only car on the planet that gets better with age. This is thanks to special over-the-air (OTA) updates the car receives (should the owner accept them). As technology advances, the car is given more capabilities.

In March of this year, Tesla introduced ‘Insane’ mode. Insane mode took the car from a standstill to 60MPH in 3.2 seconds. Back then, we thought that was impressive. A lot has changed in the past 4 months… apparently.

Tesla’s can now do it in 2.8 seconds. This is absolutely… Ludicrous. Yes, the new available feature for the Tesla Model S is called Ludicrous mode.

How to Get Ludicrous Mode on a Tesla Model S

Unfortunately, it is not an OTA update. It’s also not free. Expensive hardware needs added. The cost to do everything is a cool $5,000 for existing owners and $10,000 as an option for new cars. Another drawback is it is only an update or option on the P85D models. However, that is to be expected since the P85D owners are the ones who buy a Tesla for the speed. And the Ludicrous mode needs the AWD which is only offered on P85D’s.

The feature will also be available for the Model X when it’s released. However, the less-aerodynamic SUV’s Ludicrous speed will be a less impressive 3.3 seconds. Although Elon Musk (the brain behind Tesla Motors) says that is only an estimate. They have yet to test Ludicrous speed on the X.

The Cost of Ludicrous Speed

Obviously, a Tesla is not a cheap car. Prices start at $52,500 (after incentives and gas savings). But one equipped with Ludicrous speed will cost about $110,000.

While the Model S or Model X are certainly not cars for people looking to save tons of money, they are more practical than most people think. The seats can be folded down to store ton of belongings. After all, the Tesla doesn’t have a big gasoline motor. It’s electric motors are the size of water melons. That means there’s room for luggage all over in the car. You can even put rear-facing seats in the hatchback and turn it into a 7-passenger car.

The car also comes with AWD for those who either want the instant speed or for those who deal with slippery roads on a regular basis. The car also only has one fluid to monitor – windshield washer fluid. Maintenance is cheap on this car. Tesla even has an infinite mile warranty.

Bottom line – Tesla’s offer massive excitement for a great value. There comes a point in every successful person’s life where they stop trying to save every penny and start trying to get the best value for their dollar. If you’re at that point in life, a Tesla may be right for you. For me, I’m not there yet. But someday I may have a Tesla of my own. By then, the car will probably do its own driving.

Home, James.

Determining Value

December 14, 2012 By Jennifer Derrick 3 Comments

Recently I was invited to a lunch at a very pricey, exclusive restaurant in town. I accepted because it was a professional thing and I felt like the contacts I would make would justify the price tag. I was right, to an extent. I did meet a lot of people that will probably be helpful to me at some point. When I got home and thought about it, though, I realized that the restaurant itself had no value for me. In other words, I’ll likely never darken their door again unless I’m invited to a similar function.

The food was good, but not great. Certainly not great enough to justify the price tag. There was no discernible difference between their food and beverages (which set me back about $75) and the food I can get for $15 at one of the local chain restaurants. The service was attentive and the atmosphere was, we’ll call it swanky. The service and atmosphere were the main draws but, while it was nice to be fawned over for an afternoon and dine in a quiet, child-free environment, it’s not something that holds enough value for me to justify spending that kind of money on a regular basis. I left thinking that, aside from the professional aspect, the afternoon had been a waste of money.

Other people in the group loved it and mentioned that they eat at this place all the time because they love to be treated so well. For them there is value in such treatment and in the plush environment. Paying that kind of money does not bother them because they perceive that they are getting their money’s worth. They have determined that this place holds value for them.

Everyone’s choices are their own and I certainly don’t think less of them for liking that restaurant. They would probably laugh at some of the things that I find valuable and for which I will happily fork over money. The point is that you have to spend your money on things that give you value. If that’s being treated like a celebrity for an afternoon, great. It’s equally great if you find value in roughing it for a weekend. Neither activity is better or worse. People are different and they appreciate different things.

There was a time when I would accept any invitation, do anything, and go anywhere. I had no filter. I couldn’t or wouldn’t determine which activities were “worth it” to me. As a result, I spent a lot of money on bad food, vacations to places I didn’t really want to go, and activities that I found boring or painful. Now that I’m older, I’m clearer on the activities that are valuable to me. While I’m still willing to try new things, there are some things that I just know won’t suit me. I knew that about this restaurant and had it been just a gathering of friends, I would have said no. Since it was a professional thing, I said yes. And I was right about the lack of value.

This doesn’t mean that you have to say no to everything that you might think won’t be valuable to you. It’s a good thing to try new things occasionally. But for your everyday spending, it’s helpful to know which activities bring you value (whether that be in terms of emotional satisfaction, great food or drinks, time with friends, or an activity that just brings you joy) and which you find worthless. The more you can define what value means to you, the less likely you are to spend on things you later regret.

(Photo courtesy of obvio171)

Money Lessons From Aesop’s Fables

January 24, 2012 By Jennifer Derrick 3 Comments

As a kid you probably grew up hearing Aesop’s Fables. These little stories all have a moral designed to teach kids (and adults) to live better lives and to be better people. Many of these stories deal indirectly with financial topics. As an adult it’s fun to go back and re-read some of these tales. Knowing what I know now, I see how spot on many of the author’s observations were. If you ever want some snippets of inspiration or instruction about personal finance, go back and re-visit some of these tales:

The Milkmaid and Her Pail

Patty the Milkmaid was going to market carrying her milk in a Pail on her head. As she went along she began calculating what she would do with the money she would get for the milk. “I’ll buy some fowls from Farmer Brown,” said she, “and they will lay eggs each morning, which I will sell to the parson’s wife. With the money that I get from the sale of these eggs I’ll buy myself a new dimity frock and a chip hat; and when I go to market, won’t all the young men come up and speak to me! Polly Shaw will be that jealous; but I don’t care. I shall just look at her and toss my head like this. As she spoke she tossed her head back, the Pail fell off it, and all the milk was spilt. So she had to go home and tell her mother what had occurred. “Ah, my child,” said the mother, “Do not count your chickens before they are hatched.”

The Lesson: It’s fine to dream about what you will do with money you don’t yet have, but don’t get too excited and don’t count on it. Whether the money is coming from a tax refund, an inheritance, a bonus or raise, or some other source, you don’t have it yet. Until the money is actually in your hands, don’t spend it or make any promises about what you’ll do with it. Only when you have the money can you feel free to turn your dreams into reality.

The Ant and the Grasshopper

In a field one summer’s day a Grasshopper was hopping about, chirping and singing to its heart’s content. An Ant passed by, bearing along with great toil an ear of corn he was taking to the nest. “Why not come and chat with me,” said the Grasshopper “instead of toiling and moiling in that way?” “I am helping to lay up food for the winter,” said the Ant, “and recommend you to do the same.” “Why bother about winter?” said the Grasshopper; we have got plenty of food at present.” But the Ant went on its way and continued its toil. When the winter came the Grasshopper had no food and found itself dying of hunger, while it saw the ants distributing every day corn and grain from the stores they had collected in the summer. Then the Grasshopper knew: It is best to prepare for the days of necessity.

The Lesson: An oldie, but a goodie. It’s fine to have fun today, but you have to prepare for the future. You can have some fun today and buy frivolous things, but you also must prepare for emergencies, layoffs, and illnesses, as well as your long term future when you stop earning an income. If you do nothing but play, you’ll regret it when you really need money one day.

The Cock and the Pearl

A cock was once strutting up and down the farmyard among the hens when suddenly he espied something shinning amid the straw. “Ho! ho!” quoth he, “that’s for me,” and soon rooted it out from beneath the straw. What did it turn out to be but a Pearl that by some chance had been lost in the yard? “You may be a treasure,” quoth Master Cock, “to men that prize you, but for me I would rather have a single barley-corn than a peck of pearls.”

The Lesson: Value is subjective. What one person finds valuable is useless to another. You may love new cars, another may find those to be a waste of money and instead value vacations. Value and desirability are different for everyone and you should know what it is you truly value. Otherwise, you’ll find value in everything and end up spending too much money to chase it all. Know what you want and can use and go after those. (And if something like a pearl comes along to you and you don’t want it, sell it and buy something that you do value.)

The Dog and The Shadow

It happened that a Dog had got a piece of meat and was carrying it home in his mouth to eat it in peace. Now on his way home he had to cross a plank lying across a running brook. As he crossed, he looked down and saw his own shadow reflected in the water beneath. Thinking it was another dog with another piece of meat, he made up his mind to have that also. So he made a snap at the shadow in the water, but as he opened his mouth the piece of meat fell out, dropped into the water and was never seen more.

The Lesson: Greed only brings trouble. When you to try to grab for too much, you often end up losing what you already had. Be content with what you have and what is reasonable and don’t be greedy.

The Hares and the Frogs

The Hares were so persecuted by the other beasts, they did not know where to go. As soon as they saw a single animal approach them, off they used to run. One day they saw a troop of wild Horses stampeding about, and in quite a panic all the Hares scuttled off to a lake hard by, determined to drown themselves rather than live in such a continual state of fear. But just as they got near the bank of the lake, a troop of Frogs, frightened in their turn by the approach of the Hares scuttled off, and jumped into the water. “Truly,” said one of the Hares, “things are not so bad as they seem.”

The Lesson: There is always someone worse off than yourself. While you don’t want to take joy in the misfortunes of others, it can be comforting in times of financial crisis to remind yourself that there are others out there who have it worse than you. Knowing this can give you the courage and strength to go on and fix your problems. Often just putting things in perspective makes them easier to deal with.

The Crow and the Pitcher

A Crow, half-dead with thirst, came upon a Pitcher which had once been full of water; but when the Crow put its beak into the mouth of the Pitcher he found that only very little water was left in it, and that he could not reach far enough down to get at it. He tried, and he tried, but at last had to give up in despair. Then a thought came to him, and he took a pebble and dropped it into the Pitcher. Then he took another pebble and dropped it into the Pitcher. Then he took another pebble and dropped that into the Pitcher. Then he took another pebble and dropped that into the Pitcher. Then he took another pebble and dropped that into the Pitcher. Then he took another pebble and dropped that into the Pitcher. At last, at last, he saw the water mount up near him, and after casting in a few more pebbles he was able to quench his thirst and save his life.

The Lesson: Whether it’s one pebble or one dollar at a time, big goals are often accomplished little by little. It may take a while, but you will accomplish your goal eventually, particularly if you are motivated by necessity.

The Goose With the Golden Eggs

One day a countryman going to the nest of his Goose found there an egg all yellow and glittering. When he took it up it was as heavy as lead and he was going to throw it away, because he thought a trick had been played upon him. But he took it home on second thoughts, and soon found to his delight that it was an egg of pure gold. Every morning the same thing occurred, and he soon became rich by selling his eggs. As he grew rich he grew greedy; and thinking to get at once all the gold the Goose could give, he killed it and opened it only to find nothing.

The Lesson: When you get greedy, you can ruin a good thing. Like the farmer who killed his goose, a person who reaches for too much often finds that they lose everything. It’s better to accept your good fortune as it comes and to enjoy it rather than constantly reaching for more.

The Miser and His Gold

Once upon a time there was a Miser who used to hide his gold at the foot of a tree in his garden; but every week he used to go and dig it up and gloat over his gains. A robber, who had noticed this, went and dug up the gold and decamped with it. When the Miser next came to gloat over his treasures, he found nothing but the empty hole. He tore his hair, and raised such an outcry that all the neighbors came around him, and he told them how he used to come and visit his gold. “Did you ever take any of it out?” asked one of them. “Nay,” said he, “I only came to look at it.” “Then come again and look at the hole,” said a neighbor; “it will do you just as much good.”

The Lesson: If you never intend to use your money, what good is it? While you want to save money for the future, you don’t want to become such a miser that you never spend or give away any of your money. If you never use the money, what’s the point of working to hard to get it? There is a fine line to walk between saving, spending, giving, and hoarding money. Try not to end up on the hoarding side.

The Fox Without a Tail

It happened that a Fox caught its tail in a trap, and in struggling to release himself lost all of it but the stump. At first he was ashamed to show himself among his fellow foxes. But at last he determined to put a bolder face upon his misfortune, and summoned all the foxes to a general meeting to consider a proposal which he had to place before them. When they had assembled together the Fox proposed that they should all do away with their tails. He pointed out how inconvenient a tail was when they were pursued by their enemies, the dogs; how much it was in the way when they desired to sit down and hold a friendly conversation with one another. He failed to see any advantage in carrying about such a useless encumbrance. “That is all very well,” said one of the older foxes; “but I do not think you would have recommended us to dispense with our chief ornament if you had not happened to lose it yourself.”

The Lesson: Do not trust advice given by someone who has a stake in the outcome. Whenever you’re evaluating financial advice, consider whether or not your advisor has a stake in the outcome. If the person will benefit from the plan, ask yourself whether this is a plan you want to go along with, or whether the person, like the fox, is trying to get you to do something that will benefit him more than you.

These are just a few of Aesop’s fables. There are many more and all of them can be found on the Internet. If you want a version for your e-reader that you can keep with you and refer to often or read to your own kids, you can find it for free through Project Gutenberg.

(Photo courtesy of libertygrace0)

Waste of Money or Valuable Possession?

June 3, 2010 By Jennifer Derrick 11 Comments

The other day a friend of mine came over to have dinner. While she was here, she commented on my DVD collection. “What a waste of money,” she said. “You can rent from Netflix for much less. Besides, DVD’s will be obsolete one day and then where will you be?” She didn’t say anything I hadn’t heard before. However, I don’t consider my collection a waste of money. We watch everything we have. We don’t have cable, so the DVD’s are our entertainment. Plus, we’re both huge movie buffs so we really do enjoy the bonus features on the DVD’s. Are there other things we could do with our money? Absolutely. But is it a waste? Not to us. We get full value out of our collection and enjoy it.

While my friend was commenting on my DVD’s, I resisted the urge to call her purses a waste of money. This is a woman who has a new designer purse every season. At $300+ per bag, I consider that a waste of money (talk about obsolescence). I can carry the same bag from Target for years and be perfectly happy. To me, spending big money on a purse four times a year is a waste. But to my friend, those purses are a joy. She loves shopping for them and carrying them around. She would never consider them a waste of money.

So what constitutes a waste of money? We’re tempted to call anything we don’t understand or agree with a waste of money. But those items provide value to someone. When I go into a store I wonder who spends money on half the stuff in there, but someone must, otherwise it wouldn’t be there. Just because I would feel like I was wasting my money if I bought that stuff doesn’t mean that someone else doesn’t find value in it. If they can afford it and will enjoy it, then it’s not a waste of money. Just because it’s not something I want doesn’t automatically make it a waste.

A waste of money can be defined in three ways. First, something becomes a waste of money when it is bought and never used. If you buy something, no matter how much you may want it at the time, and then never use it you’ve wasted your money. If my friend bought all those purses and then never used any of them, she would be wasting her money (unless she was into collecting purses). Similarly, if I never watched any of my DVD’s, that would be money down the drain. To get value out of something you need to use it.

Something is also a waste of money if you can’t afford it. If I was going into debt for my movies (or buying movies when I already had a lot of debt) I would be wasting money. That money would be better used to pay down debt, buy necessities, or save. No matter how much you enjoy something, if you can’t afford it, you are wasting money because you need to put that money toward necessities or debt payments.

Finally, something is a waste of money when you buy it just because everyone else is but you don’t really love it. Take the purses my friend buys. If she didn’t really like them but was buying them just to fit in with her friends, she would be wasting money. Her money would be better spent buying something she loves, not something she is “supposed” to love.

What is a waste of money to one person may provide a lot of value to another. We cannot judge something as a waste of money just because we don’t care for it. Only the person who owns the item can judge whether or not they wasted money on it. So when you’re out amongst friends and you see something that you consider a waste of money, bite your tongue and don’t criticize. They may be thinking the same thing about your most treasured possessions.