Building wealth – Don’t sweat the small stuff unless you should

Back when I was a resident, I lived in a high cost of living area. About one and a half of my paychecks went towards my monthly rent.  I know this sounds crazy as a resident earning about $50,000 a year, but that was my situation.  I probably paid more than what most of my readers pay for their mortgages on an entire house! This wasn’t a nice pad either with a Sub-Zero fridge or Toto toilet either—I lived in a roach-infested studio where the amount of heat I got in the winter was controlled by the building’s superintendent.  But, the trade-off for such an expensive unit was that I felt safe living there…most of the time.

With a skewed budget like that, I did pay close attention to my budget even though I wasn’t attuned to the finer aspects of finance. Cheap cellphone providers weren’t in style yet, so I shopped around frequently if my phone company decided to jack up their rates.  Likewise, I spent a few hours every year on the phone with my Internet provider, threatening to leave their company if they wouldn’t keep my bill the same.

I sweat the small stuff.

Most doctors have some sort of compulsive behavior in their blood.  All financial bloggers DEFINITELY have compulsivity in their fabric too (Yes, if you like spending your weekends plotting out your dividends from your stock market funds, you have compulsive behavior!).  As a busy resident, the time I spent sweating the small stuff could have been probably better allocated to sleeping, studying, or even socializing.  But, I was very aware that my budget had a narrow range before I needed to break out the awesome balance transfer checks that tempted me.

So lowering my Internet bill from $80 a month to $29.99 a month was worth negotiating for an hour or two each year with the frustrating service representatives.  So was fighting through extra crowds of customers at the cheaper ethnic supermarket.

Total savings of getting your feet stepped on at the supermarket: probably $15 a week.

The savings do add up. And for most families, the $50,000 a year resident stipend could easily feed a family of four.  Saving a few thousand dollars of post-tax dollars a year could help fuel your Roth IRA, 529, or emergency fund. That is a practical use of time and money for that budget.

Once your life gets busier and you begin to command a higher price for your services, the small stuff might actually become too small for your time.  You might not want to drive an extra two miles and wait in line for gas at Costco to save ten cents a gallon.  Do you risk your child’s well-being by using the babysitter who is $1 an hour cheaper? What about $5 cheaper? Or $10?

Pinch hard enough and it might go into your veins!

The decisions become more complicated as more variables come into play.  If you are justifying a minuscule cost savings in exchange for time already in your limited schedule, then it’s probably not worth it.  For instance, if you have to round for 4 hours on Saturday and Sunday morning, then you probably would not want to raise your blood pressure on the phone with a Comcast agent trying to lower your Internet/TV bill.

On the other hand, if you typically spend your weekends building furniture or at the local park with your kids, you could probably spare an hour a year to save $1000 on your Internet bill.  It wouldn’t really matter if you otherwise had a salary of $50,000 or $500,000. I would venture a guess that even some people I know with a $5,000,000 net worth would still be willing to argue with a phone rep to save a grand.

Some people will sweat the small stuff no matter what situation they are in.

Another consideration on savings depends on how much your job allows you to earn more for working more.  If you are an ER doctor, you could probably fill in a few extra shifts and earn a few extra thousand bucks.  You might end up deciding that it’s easier for you to just go to work to earn more rather than going out of your way to save on gas or groceries.  If you really like money and are willing to sacrifice time your time, you could do BOTH.

Whatever your threshold for pinching pennies, make sure you actually have a threshold.  At some point, you have to decide what makes you happy.  Sure, that high sugar, high calorie Starbucks latte might cost $6, but you could swing it a few times a year if it can help you get you through your clinic.

You might also like: Money Does Buy Happiness

What is your threshold for saving a buck?

(Photo courtesy of Flickr)

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  • After more than a decade living on my own from 18 to 30 without much of what I would consider “disposable income,” I found it next to impossible to turn off the frugality switch.

    I still sweat the small stuff at times, even though I know it logically makes no significant difference in the long run. But if it makes me happy (and it DOES make me happy) to save a few bucks here and a few bucks there, why change?

    Cheers!
    -PoF

    • Smart Money MD

      True. I actually see plenty of elderly folks follow a similar path simply because that was what they had dealt with in their younger days. We all have our frugality vices. Mine? Buying discount donuts from the grocery store when I know I won’t be able to finish them before they go super stale.

      Hope you guys had a fun trip to Europe!

  • #LifeofaMedStudent

    This is a particularly timely post for myself, now just a 3 months from the “big bucks” of attending life. I’ve waxed and waned in frugality, but definitely lean more that way when the sport of a good negotiation can come into play. So I will likely continue to fight with ATT every 6-9months as I do now. But I plan on stopping some hassles I’ve put up with for years, now that I’ve got more income. Example – today I’m buying a brand new state of the art wheelbarrow – as the yard sale $10 find that is rusted out and the tire is flat I curse every spring is finally going in the trash! HA!

    • Smart Money MD

      Just put your energy into whatever you can handle without going overboard!

      High quality wheelbarrows don’t come cheap! The one I have came with my house (came with obligatory rust too and a tire that doesn’t retain air), and I still struggle through it every time I use it.

      Will you be moving for your new job or staying in the same town?

      • #LifeofaMedStudent

        I ended up with a Kobalt, that was 20% off at Lowes! “She’s a beaut, Clark!”

        I’m moving about 1.5 hours away, back to more of my wifes “hometown” and where I went to undergrad.