The Value Trap

Have you ever found yourself justifying a purchase because the value is too good to ignore?  You should know –

trap

I’ll give you an example of the value trap and how it negatively impacts your Whealth.  You’ve probably heard of a company that offers subs that are 12 inches long and sold for $5.  I remember a time where it finally hit me whilst in the midst of an argument with one of their sandwich “artisans”* that I was about to be caught in the value trap.

I was doing some consultant work at a plant just outside of Tulsa Oklahoma.  After a long day in the factory, I just wanted to head back to the hotel room and crash.  There was no way I was going to go out for dinner so I just hit up the local sub shop on my way home. I checked out the menu and thought to myself “Ok John, portion control is the key, just get a 6 inch tuna sub and you’ll be fine.”  When it was my turn to place my order, I had the following conversation:

John: “I’ll take a 6 inch Tuna on wheat with cheese, toasted.”

Artisan Sandwich maker:  “Oh, it’s a $5 foot long sub, so I’ll make it a 12 inch.”

John: “How much is the 6in. compared to the 12in?”

ASM:  “The 6in. sub is $4.50.”

I had to pause here for a moment and think about it… the trap had been set.

John: “No thanks, I’ll just take the 6in. sub.”

ASM:  Looking at me incredulously “but the 12in. sub is only $.50 more…”

John: “Yes I know, but I only want the 6in., I’m not going to eat the other 6 inches.”

ASM: “But you can eat it later…”

John: “I don’t want the extra calories and I don’t want to waste it.”

ASM: Continues to give me a funny stare “Ok..”

Now I know it was only 50 cents, but this sort of value grab happens all the time.  Certainly there are times where this makes plenty of sense to do, where you could take it home and have it the next day but staying in the hotel, it really didn’t make sense to me.  Despite my situation based on her reaction, it was clear that most people would grab the other 6 inches and let’s be honest here, they would probably just go ahead and eat the whole thing.  What would you do?

This is another double whammy negative impact on your Whealth.  You’ve got the cost of the larger sandwich, the 500+ calories that pretty much no one in the modern world needs to consume, and you’re setting yourself up for failure.  Just by having it front of you, you’re more likely to eat it all at once unless you’ve got some above average will power and will actually put it back in the fridge for another meal.

The same thing happens in with “buy one get one half off” and similar deals.  How often do you take advantage of one of these deals only to find that you never use the excess?  It’s like we’re hardwired to get that value and marketers clearly are aware of this.  It happens with

  • Fast food / soda sizes – just 50c more for another 16oz!! (of crap you don’t need in your body)
  • Any size coffee for 99c! (Do you really need the heart palpitations that come with a large, sugared up coffee?)
  • The grocery store and their 10 for $10 deals, which by the way, you only need to buy 1 to get the deal.
  • Insurance – for just $5 more a month, you can get another $50k of coverage! (that statistically you’ll never need or use)
  • Tools that come with “free” stuff (that your basement is now filled with and you’ve never actually used, am I right??)
  • Non cash-back rewards cards and store “bucks” that require you to spend more money to redeem.  Kohl’s bucks is a great example where you get $10 for every $100 you spend in future store credit for a week or two; they incentivize you to buy crap you don’t need.

It adds up.  And it’s super prevalent in the food industry so it adds up if you do consume things that you really don’t need to both in dollars spent and inches on the waist.  Avoid the value trap, it’s a one dimensional approach and it’s rarely worth it.  The old adage of you don’t own your things, your things own you is in my experience, true.  Your items cause you to feel and think about them and the fact that you never use them.  They drive negative feelings that aren’t worth the trouble of having them.

So keep an eye out for the value trap and  do your best to avoid it.  Remember that true value comes in the form of planned use.  If you find yourself justifying how you might use something, you probably don’t need it and you shouldn’t buy it.  In a month you’ll likely never have put a second thought into it and you’ll have kept your home, your belly, and your mind free of waste clutter.

*Seriously, there should be a law preventing someone from calling a $7/hr high school sandwich maker an artisan.  Who thought this was a good idea?!

Pay Yourself First.

We have all heard this before, right? I remember reading it first in Rich Dad Poor Dad, and I always thought to myself “wow, what a great concept!” Well as I get older (34 now) and have had time to get both my financial life in order as well as the rest of my life, I realize it’s a lot more powerful than the simplistic statement it sounds like. Having grown up as a procrastinator (I was the kid who did their homework in the class before the one it was due) this has been a long, slow change for me but also a very good one.

Personally, I’ve taken the FIRE approach that includes my health as well. What good is buying yourself time if it’s at your own expense? I’m sure many people have heard the phrase “at least you’ve got your health” at one time or another. That’s because at the end of the day, that’s what’s most important in life, your health! We talk about money here in /r/fi more than anything but it’s just our vehicle to enjoy more of our health, later in life. In fact, I think I’m going to start referring to it as my Whealth* (make sure to pronounce the H).

So get to the point – to me, paying yourself first extends far beyond putting $5500 into my IRA by April, or maxing out my 401k. Those are the more simple parts of the concept that don’t take any thought or action once you set them up. What I’m talking about with paying yourself first is a lifestyle that can be applied in many parts of our lives. Some personal examples:

  • I put my kids to bed at 8pm every night. While they brush their teeth, I brush mine. By brushing my teeth at 8pm, I get a couple of benefits. I am no longer interested in eating again for the rest of the night because then I’d have to brush my teeth & floss again, which I don’t really enjoy doing in the first place. Also, my bedtime routine is a lot more pleasant knowing I can walk upstairs and just fall into bed with no additional work, all because I paid myself first. I avoid the excess calories of an evening snack, the cost of them, the time wasted, and the negative impact on my bedtime routine (it wakes me up for some reason).
  • Making lunch the night before/after dinner. Getting up early sucks, and waiting until I’m about to walk out the door to make lunch for myself is a recipe for whealth disaster. When I inevitably go to work without lunch, I’m taking the double hit of unhealthy food that costs so much more than the leftovers or PB&J I was going to make. Not to mention the fact that I have to drive 7 miles each way to a place to buy non gas-station food wasting more time over lunch than if I had just made it for myself in the morning.
  • Getting gas on the way home from work. This one is more of a sanity cost where often I’ll pass up gas because “I can make it until tomorrow and I don’t feel like doing it now” that ends up with me getting gas in colder, often shitty weather conditions the next morning AND potentially making me late for work. This one also ties in with my “don’t be a victim” mentality.*
  • Working out at 5am. Man, this one sucks. I hate waking up early but I can say a couple of positives about doing this. There is no way for you to “run out of time” to workout when you take this approach. There is the super health benefit of getting that workout done, there is the mental boost of starting out your day having completed such a task, and you get some quality “me” time to focus on yourself. The alternative usually looks like “Today was a rough day… I’m pretty tired. I’ll just make sure I hit it tomorrow instead.” And then life happens and you miss 2x, 3x, etc. Pay yourself first. At the end of the day, what else are you doing with your time? For myself and I’m sure many others, it involves playing video games or watching tv mindlessly. By investing in myself early, the only things I miss out on are the things that I find myself not missing. I never regret not playing video games 3 weeks ago, but I have often regret not working out or eating healthier sooner. Set yourself up for success and pay yourself first.

I could go on and on, but the gist of it is: when you pay yourself first, you make your future self happy. A little pain now truly pays dividends and for me and has improved my general well-being as well as my approach to life. After reaching this point, the financial side of preparing for FIRE becomes a no-brainer. Build your whealth!

* I wrote this before making the blog… hence the blog name 🙂