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Every day seemingly brings new examples of penny wise, pound foolish behavior. I think the steady stream of bad economic news is making us all a little nuts.
When gas was $4.00 a gallon how many of you drove miles out of your way to find the lowest price for gas? There are websites that allow you to find the cheapest gas but how many of us actually do the complicated math of calculating the cost-benefit analysis to determine if driving x miles in a car that gets y mileage for gas that costs z per gallon will result in savings or cost us more in the long run? Virtually nobody I would bet spends the time to do this. And then you've got to factor in what your time is worth and don't buy it on a credit card because then there are interest charges - my head hurts. Rather we all just go for the serotonin and ego boosting thrill of finding a great deal. When gas prices rise uncontrollably we can feel good about ourselves by taking back a little bit of control and pride.
In her New York Times article, "Failing Home Economics," Penelope Green chronicles the three store hunt of EconoWhiner blogger Jill Andresky Fraser's quest for cheap cauliflower and artichoke hearts. Despite Fraser's professional finance background, the results?
“So on the one hand I had saved all this money on cauliflower,” Ms. Fraser said, “but probably my family was never going to eat that much cauliflower, and there was the problem of the $7 artichokes. In the end, I had spent more money than I had ever planned. This was a cosmic moment.”
ABC's Nightline recently featured three shopping experts who each shopped for the same items, online and off and tallied up the savings to see which expert came out ahead. The findings? You can find bargains shopping either online or in discount stores. And my editorial note is if you spend hours and hours both online and stores trying to find the lowest price to the penny on everything you buy you will go insane. Pick one and spend some time with the people you love including yourself.
On the other end of the freaking out about the economy psychology spectrum are those of us who spend like crazy to get deals of a lifetime! I've read that flat panel television sales were higher this year than last on Black Friday. This may well have been driven by all the stories in the media that prices were being cut lower than ever. Save 70% the circulars screamed. But that means you're still spending 30%. When half a million people are losing their job every month and no industry is safe, spending money on a thing that nobody needs makes little sense. Yet, lemming like, many more of us will watch the Super Bowl in Hi-Def next year.
Consider this example from New York Times writer, Melissa Clark:
I’M a sucker for a sale, the kind of shopper who tallies the amount “saved” rather than spent. My arithmetic goes like this: It makes more sense to buy the $125 cashmere sweater marked down to $95 than to pay full price for the $80 one.
Following this logic, when I heard on the radio that lobster prices were the cheapest they had been in 25 years, I decided that the sensible thing to do was to run over to the fish store and buy a couple for dinner.
Although debates about Rational Choice and Behavioral Economics rage among Ph.D.'s, simply put, nobody has perfect information for making decisions. But given the historically bad economy many of us are putting pressure on ourselves to make the exact right financial choice all the time.
One woman chooses skincare over childcare:
Mrs. Sirof's daughters took the separation badly. They inquired incessantly about "Vita," as they called her. Normally a lively child, daughter Addie became sad and withdrawn. A doctor Mrs. Sirof consulted suggested renewed contact with Ms. Monterrosa.
"I try to have Alba come once a week," says Mrs. Sirof. She says she feels "horrible" about laying off Ms. Monterrosa. But there are some perks she isn't willing to give up. "Nothing deters me from my Botox treatments."
Another woman beats herself up over the
