Black Belt Shopper
(featured column)

Spend or Splurge?

by Larry Wiener

"Okay Mr. Black Belt Shopper," he said to me.  "Tell me what you think of this."  I always wonder what’s coming when I get greetings like that.

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"I know that you say that buying a late-model used car is the way to go, but I bought the car I have new because I do a lot of biking and I like to throw the bike in the car and bike racks just don’t do it for me.  I researched thoroughly and couldn’t find a used car in my price range that would do it and I went new.  What do you think?"

I knew this man had a good-paying job.  As far as I knew, he had no consumer debt and was building a financial base.  He follows the general rule of black belt shopping in looking for deals on everyday purchases (lowest gas stations, getting good value in groceries, etc).

"Perfectly fine, I said.  You really showed me that you’re a black belt shopper."

Given those habits, he was doing exactly what black belt shoppers do—saving regularly on everyday purchases, researching major purchases, and using the money saved intentionally to improve the quality of his life.  This man was able to afford the new car because he was savvy enough to not always pay the highest price for everyday items like paper towels and rewriteable CD’s.  He had decided that this particular car would be right for him and he had thought through and researched the purchase carefully.

He also said that when it is time to buy his next car, he will see if he can find a gently used car that meets his needs and, if there is, he’ll buy it.

My response would have been different if this man had an unstable job, if he was drowning in consumer debt, or if he wasn’t building a financial base.  Then I would have suggested that a brand new car was a splurge he couldn’t afford.

I’m glad this conversation took place because it reminded me that black belt shopper does not necessarily mean living as an ascetic when you can afford more (that is unless that is part of your personal ethic).  It means a fruitful financial life brought on by good decision-making and planning.

So, if you are a black belt shopper, when do you save?  When do you splurge?  It’s different for everyone, but here are a few guidelines that I use.

Have a system for saving on everyday purchases.  The best way to have money for purchases that bring extra value to your life is to have a system to save on everyday items such as groceries, car expenses, utilities and the like.  Look for these deals if you want to have money for extras.  Here in California, for example, long distance is available for a penny a minute (through a card) at the 99 Cent Store.  Using that services allows me to use long distance at will and have more available for other extras.

Thoroughly research major purchases.  You’ve saved on tomato sauce and motor oil.  You’ve kept that thermostat low so you can afford a set of gourmet pots and pans.  You go to the store and buy them only to discover several weeks later that they really aren’t what you want because the non-stick is of poor quality.  You commiserate with your friend only to find that had you bought another brand at more or less the same price, you would have been a happy cooker.   Even if your major purchase is a splurge, do your research to make sure it does what you want it to do.

Make sure your spouse or significant other is in agreement  You may think that you are “entitled” to a new mountain bike because, after all, you’re the one who’s in charge of the money and you’ve really done a good job this year.  Your other half may not be as thrilled to see you come home with that new mountain bike if you make a unilateral decision.  One couple I know has agreed that neither partner would spend more than $50 on non-necessities without consulting the other.

Avoid expensive extras if you are mired in debt  Debt is the enemy of financial freedom.  Getting out of debt has to be your first priority with the money you save by black belt shopping if you want to attain any financial freedom.  Buying expensive toys while you are paying down credit cards will only delay your freedom.  Sure, you may like to have a high-end PDA, but your enjoyment will be compromised if you keep getting those high-interest credit card bills.  Maybe a small splurge, such as the cross country skiing machine I got at a garage sale for $10 would be more the order of the day.

If you are not into debt, be slow to take on debt for your extras  Financial freedom is an enviable state to attain.  For most of us, it makes little sense to go into debt for, say, a Bowflex exercise system.  Better to save for another few months and buy it with cash.

Build a financial base  Even if you are not in debt, using every extra penny on consumer goods is not the way to go.  It’s worth doing without a few toys to establish such disciplines as saving for a home if you don’t have one, funding your retirement, and helping your children with their education.

Be sure to maintain a reserve  You’re thrilled because you can buy new drapes for the entire house.  You’re not in debt, so you empty the savings account to make that purchase.  Imagine your chagrin when you find that the refrigerator and hot water heater blow within a week of each other and you have to take on credit card debt to replace them.   Better to buy your extras at a slower pace (i.e. drapes for one or two rooms at a time) and maintain your solvency.

No matter what shape you are in financially, you’ll do well by adopting the principles of black belt shopping.  Saving on everyday purchases, researching major purchases, and being intentional about how you use the money you save will always serve you well.

If you are in debt, you’ll want to use most of the money you save to get out of debt.  If you don’t have a strong financial base (savings, home ownership, savings toward retirement, etc.), you’ll want to use some of the money you save to start or strengthen that base.

But if you’re already financially strong, then you can truly reap the rewards of black belt shopping by actually enjoying some extras and considering them the fruits of your hard work.

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Copyright © 2004 by Larry Wiener

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