Flat screen shopping with Thoreau

As a child I vividly remember the tupperware that my grandmother kept her Raisin Bran in.  What seared the cereal container into my memory was the piece of paper she had taped to the front.  On the paper was a list of dates going back to the Nixon administration where she had documented every time the contents had been refilled, along with the cost per ounce and which grocery store in town had the best price at each date.  And anyone that’s witnessed my father scouring his “gasbuddy” app for the cheapest fuel in the state would agree that if price shopping were an olympic sport, my grandma wouldn’t be the only gold medal winner in the family.

Through the magic of DNA, I too inherited a little bit of the bargain hunting gene (and unfortunately a little dose of Grandma’s OCD).  Whether I’m shopping for a flight, a pair of jeans, or a restaurant, you can rest assured that I’ve done my research on the cost and have a strong sense of where said purchase fits into the budget.  This has always served me fairly well, at least to the extent that I’ve never been caught up in credit card debt, nor have I had to visit any shady payday loan stores to make rent, but a few months ago it occurred to me that there was a much more effective way of looking at my spending decisions.

The revelation came to me as I was reading Walden, easily one of my favorite books of all time, when I came across the following wisdom packed tidbit:

“The cost of a thing is the amount of life which is required to be exchanged for it”

Not being the sharpest knife in the drawer, it’s not unusual for me to glaze over more than a concept or two in a book, but what is surprising is in all my prior times reading Walden is that I would miss such a powerful concept like this one.  And like with a lot of Thoreau’s writing, the more I started thinking about it, the more it resonated.

When you’re considering spending money, you almost always judge the potential cost in relative terms to the cost of other things.  In other words, if you’re thinking about dropping two grand on a new flat screen TV, you’ll likely make a quick, and sometimes subconscious, comparison of the pleasure you’ll get from those 172 inches of high definition against what else you could do with that cash.  You might also gage the price against how much you’ve spent on TVs in the past or how much your neighbor Fritz down the street spent on his.  If it ends up that you estimate that you’ll get more future pleasure and benefits from the TV than you would from a new set of snow tires for the car (or a ski pass, braces for little Johnny, or whatever it might be) and you think it’s a good price, you’ll likely buy it.

Before I start to sound too much like my freshman economics professor here, my point is that if Thoreau were at Costco looking for a flat-screen to hang on the wall of his one-room cabin, he would look at the price in terms of how many hours he’d have to exchange of doing what he enjoyed most, for the hours that would instead have to be spent working to pay for it.  I’d be willing to wager that our hermit friend would quickly come to the conclusion that the TV wasn’t worth it after some quick mental math.  He’d see that in order to pay for the $2,000 television at the $20 an hour he earns working in the field, it would mean giving up 100 hours of time that he could otherwise spend writing Civil Disobedience 2.

To give me a better idea about what is important to my clients, I often ask them what they like doing most in life and without fail the top answers are spending more time with loved ones and following a passion (usually something like travel, volunteer work or making art)…  Never once has anyone answered working more or watching a big screen.

All of this conjures up visions for me of a utopian alternate universe where in place of dollars, price tags are listed in time increments of what you actually value most.  A world where a search on Amazon would sort products by cost in hours and at checkout in place of selecting which credit card to use, you’d make the tough choice between deducting it from the time you could have otherwise spent relaxing on the beach or quality time with your future grandkids.  I like to imagine a world where the old cliche of “time is money” is reversed to a more accurate “money is time”.

Unlike Thoreau, if you decided you could could somehow make it through life without the pleasure of Monday Night Football on a monstrous television and forego the purchase, it’s unlikely that the decision would mean that you could instead take this Thursday off and head to the golf course.  What it does mean is that every dollar not spent on a big screen, ski pass, or pair of jeans can be used to actually quit working altogether or serve as a cushion that will enable you to take your dream job that pays a little less money.

And because we know that through the exponential power of compound interest, a dollar saved now is worth much more than a dollar saved down the road.  Had you resisted $10,000 worth of impulse purchases in the 90’s and invested it in a good index fund instead, it would have turned to around $100,000 today.  A $100,000 that would likely afford you the ability to retire a few years early… and those few years probably being a much longer period than would have been required to earn the $10,000 in the first place.

I’ve said it before and I’ll say it again; the biggest key to financial success is one’s ability to delay gratification.  Zig Ziglar summed it up nicely when he said “The chief cause of failure and unhappiness is trading what you want most for what you want right now”.

So the next time you’re considering the purchase of something you want right now, consult your inner Thoreau, ask yourself what you want to do most in life and then consider how much of it you’d be giving up in exchange.