I’ve long considered myself a fantastic buyer. Notice I don’t say shopper - that alludes to a hobby or form of entertainment. To me, buying is serious business.
Even before I had any serious degree of financial success, many people assumed I was rich because of my material posessions. I guess most people could pull that off by maxing credit cards, but I was actually socking money away for later.
How do I do it? Read on…
The most important thing to remember is value. Sounds obvious, but nearly everyone ignores value on a daily basis. Value means that you’re getting the most for your money - not that you’re saving the most money necessarily. A Rolex at $1000 might be an incredible value, but a Timex could be a rip off at $150.
Ok, ok… you’re not an idiot. I get it. Moving on… I find that in general the best values can be found at the end of the spectrums. A $20 bicycle is probably a good value even if it sucks because at the improvement over not having a bicycle is huge. For example, I needed to hang some speakers a few hours ago. I went to Wal Mart and bought speaker mounts for $9 each. That’s dirt cheap. They’re not fancy, and they’re kind of annoying to set up, but it’s WAY better than not having speaker mounts.
At the other end of the spectrum is the super high quality. In many cases the MOST expensive item isn’t the highest quality, but the next cheapest or third cheapest is. In this range, there is so much attention to detail that you are likely buying something that is genuinely valuable. It has higher quality materials, more features, and better worksmanship. There is always a demand for these items, so they retain their value.
In the middle, is a lot of garbage. Usually a few steps up from the cheapest you’ll find something 10% better for twice the price. The reason is that they have a large marketing budget and they have to pass that cost on to you. Higher than that are the items that are posing as top tier items - they have the flash, but not that quality. Resale on these is usually awful, leaving them with poor value.
So, rule #1 - Always buy the Best or the Cheapest. I follow this rule religiously. Basically everything I own is either bought at Wal Mart or has been researched and ordered online.
Next, it’s extremely important to determine what is the best. It’s very common for companies to try to trick consumers by outpricing the actual best in class, or spend more money marketing. If you have two products, equal in price and one is marketed much more aggressively, it’s usually worse. Why? That marketing money has to come from somewhere.
For example, take Bose speakers. To people in the know, it’s common knowledge that they are not very high quality. No true audiophile would be caught dead with them in his home theater. However, most people perceive Bose as being the best because of their aggressive marketing. Have you ever heard of Outlaw audio? Probably not, but they are incredibly high quality products priced much cheaper than Bose. They do almost no advertising.
Another good example is high end blenders. There are really only two companies that produce them - BlendTec (also known as K-Tec) and Vitamix. Many people have heard of Vitamix, but few people know about BlendTec. Both are priced at the same level. For the most part, they are the same - they’re both very powerful and have the same high quality type of assembly. The difference is that the BlendTec is 3 horespower versus the Vitamix’s 2 horsepower, and the BlendTec has more advanced programming (although I think Vitamix may have caught up on that by now). Which would you rather have?
The best way to find out the best product in a category is by searching on the internet - specifically in forums. People in forums are totally crazy, and in many cases spend their entire lives researching to find out what the best of something is. Let them do the work for you.
Sometimes you’ll be surprised - the one you think is the best may actually be the best. For example, Rolexes really are superior watches. Before I lost it, I had one and I would take it to black tie events (if I went to any), as well as scuba diving and sky diving. Cartier, Tag Heuer, and many other competitors are more expensive or equally expensive, and are far inferior. However, if you did your research you’d also find out that Omega watches are on par with Rolex and come in styles that may be appealing to you.
Thus, rule #2 is Know what the Best is. I’m always interested in knowing what the best is, even if I’m not interested in that particular item.
How do you decide whether to buy the cheapest or the best? The goal is always to end up with the best - if you care. If you don’t care, then just buy the cheapest and save your money for the best of some other item. For instance, I don’t really care about vacuum cleaners, so I bought the cheapest bagless one. I’d like a Dyson or Kirby, but it’s not important enough for me to spend the extra several hundred dollars.
Sometimes you can’t afford the best, in which case you buy the cheapest to tide you over until you can. That way when you can upgrade, you don’t mind getting rid of the cheap one. If you spend more money you might be tempted to not upgrade.
Of course you also want to make sure that you’re getting the best price possible. Except on the cheap items, this will almost always be online. The best sites to look for deals are Fatwallet Forums and Ben’s Bargains. I probably get 50% of my purchases from there.
Always check ebay for a reference price. Make sure you pay attention to what things are actually being sold for. A completed auction for $300 means a lot more than an auction at $400 with no bidders. If this price is cheaper than you can find on Fatwallet or Ben’s Bargains, just buy there. If not, you know that you can always resell on ebay later if you change your mind about the product. A lot of people have the misconception that ebay is sketchy or that you are getting used or damaged products. The truth is that ebay is now, more than anything, an easy way for small businesses to make sales. 90% of what you buy will be brand new, and if it’s not, it will be labeled as such.
I also check Craigslist as well as Froogle. Froogle is Google’s price search engine. It takes a little getting used to, but you can find some great deals. For example, last night I wanted to buy a food dehydrator (the best one, the Excalibur 2900). Ebay showed me a price of around $210+ shipping. Other stores sold it at $210. I dug through Froogle a bit and found it for $185.
Rule #3 - Always pay the best price. Groundbreaking, right?
Actually, I then used one of my advanced tips to get the dehydrator even cheaper… but (you guessed it) those will come next time. For now I have to take a nap early so that I can go to a tea party. Also, I’m straight. Honest.
-Tynan
Sunday, March 04, 2007
How to make it to top
1. Identify the leaders
2. a. Shake things up ( do something unrealistic)
b. Take power
3. Cement your role.
2. a. Shake things up ( do something unrealistic)
b. Take power
3. Cement your role.
Value, Price, and Cost
The concept of Value vs. Price is one that I am inexplicably fascinated by. Maybe it’s the fact that most people ignore it entirely, or maybe it’s because following its principles virtually guarantees success in any area.
Most people do not understand the difference between value and price or, at the very least, greatly underestimate it.
So, what is the difference between value and price? Value is the benefit derived from an action, and price is the benefit lost by performing an action. What makes this such a profound concept is that every action has a value and a cost associated with it, and it is usually fairly easy to measure. Our unconscious minds are constantly evaluating the price and value of every possible choice, which ends up governing many of our actions.
Example #1 - Wealth
Take the purchase of a computer as an example. If you buy a computer for $1000, the price is simply $1000. But what’s the value? Let’s assume that you’re a writer, and you are replacing an old computer which has suddenly broken. You have a book due the next day, and will be penalized by $10,000 if you do not turn it in on that day (yes, I know this isn’t a realistic penalty). In this case, the value is about $10,000.
For me to buy that computer, however, the value is far less. I have several computers. I don’t use the computer that much anymore. The value isn’t $0, because I could potentially sell the computer (probably for less than $1000), with an additional price of my time. So the value may be $700 to me.
In this example, the decision of whether or not to buy a computer is obvious for both me and the writer. The writer should buy it, and I should not. The cost of an item is the net effect it has on us, after considering the price and value. For the writer the cost of the computer is -$9000, meaning that he is essentially gaining $9000 by completing the transaction. To me the cost is $300, meaning I am losing $300 by buying the computer.
An interesting phenomenon to note is that sales often don’t REALLY affect the cost of an item. For example, if there was a $200 off coupon for that computer, it wouldn’t change my decision to buy the computer or not. It obviously wouldn’t affect the writer either. The only possible effect it would have is to make us more likely to purchase that product AT THAT STORE, rather than at all. I see many people (I used to be very guilty of this) buying things with low price, but significant cost. Doing this is a sure path to financial scarcity.
Of course, price isn’t simply the number on the pricetag. What if the computer was for sale at $800 100 miles away, and $1000 2 miles away? A round trip drive to get the cheaper computer would take me 4 hours rather than a couple minutes. If four hours of my time (plus wear and tear on the car and gas) is worth less than the $200 difference in price, the writer should drive and get that cheaper computer.
This seems like a simple concept, but I can’t tell you how many times I’ve seen people (myself included) spend hours searching for a lower price on something which only ends up saving $20 or so. Often times dealhunting isn’t worth the cost.
Example #2 - Relationships
More interesting is this concept applied to non financial matters, because most people don’t even begin to consider it. Let’s take, for example, the choice of going out to clubsor staying in.
If I go out to a club, the intention is to meet women. I don’t drink, I don’t dance, and I don’t particularly relish the club atmosphere. Sometimes I’ll go downtown to hang out with friends, but that’s a different decision.
In any given night I might talk to 9 different women. Three groups of three. For me to be significantly interested in a girl, it takes time for me to get to know her (mainly because I’m picky and have a list of things which will disqualify her). I would estimate that I am seriously interested in one out of three hundred girls that I meet downtown.
If I’m interested in a girl and have a good opportunity to get to know her, I believe that she will be attracted to me almost 100% of the time. However, I’d say that getting a good opportunity to get to know a girl only happens around 40% of the time. The club atmosphere makes it difficult to get a good opportunity, but it is possible to increase that percentage to 100% with skill. In LA it was probably more like 70-80% for me when I was well practiced.
So let’s boil these numbers down. If I’m only able to attract 40% of the 300 girls necessary to find one I’m interested in, that’s 750 girls I must meet before finding one who I will be compatible with and will develop a relationship of sorts with. If I am meeting 9 girls per night, that means that it will take 84 nights out to “meet someone”.
On an average night, including driving and getting ready, I probably spend 5 hours to meet those 9 girls. That means that the price of meeting a girl is 420 hours of my time. That’s significant.
Of course, I do have fun when I go out and meet all those people. Some might become friends. I’m also going out with my friends and we joke around and have a good time. However, I would probably be doing something fun if I wasn’t going out as well, so those two effects can cancel each other.
What’s the value of beginning a relationship with a girl? It’s tough to say. If I had no other means of meeting a girl, I would probably go out religiously. The cost of NEVER having a girl is monumental, so I would be willing to spend the 420 hours of my time to meet that girl.
The reality, however, is that I do meet girls in other situations. Whole foods, friends of friends, and even through my blog. This is why I rarely go out anymore - the price I pay is simply not worth the value I receive.
Example #3 - Health
One last example is eating healthy. Eating raw food is expensive. I went to the grocery store last night and spent $150 buying 4-5 days worth of food. That’s probably about $7000 more per year than regular food would cost me. It’s also a pain. I can’t eat anything more than a plain salad at most restaurants. Some of the foods aren’t as tasty as conventional foods. That represents a significant price to pay for eating raw food.
What is the value of eating raw? For one, longevity. I believe that I will not only live for 10-20 years longer than the average person, but will be active and healthy for at least 10-20 additional years. I also need less sleep (to be determined by my break from Polyphasic sleep), which gives me more usable time. Let’s say that I go from 8 hours to 5.5 hours, which I feel is conservative. That’s 912.5 hours per year, or around 50 extra days. I also feel a lot better on a daily basis and look better thanks to lower bodyfat percentages and better skin.
For the sake of convenience (and because we don’t have years to make every decision), let’s cancel a few things out. Let’s say that the value of feeling and looking better is roughly equal to the cost of not being able to eat out, and not being able to eat tasty things like egg rolls.
The average lifespan is 75 in America, so let’s assume I will live to 90. I believe that’s very conservative. Since I am about 25 now, that means that I will be alive for another 65 years. At 50 extra days per year thanks to decreased sleep, that gives me an extra 3250 days of life, or almost 9 years.
The additional $7000 price of eating raw multiplied by my remaining 65 calendar years adds up to $455,000. That’s not insignificant.
So, when it all boils down to it, I am paying $455,000 for an extra 24 years of life, or $19,000 per year. To me that’s obviously worth it. To others it’s not. How about you?
Living Your Life
Living your life by the concept of Value vs. Price is essential. By constantly increasing the value of your habits, relationships, and posessions, you are constantly moving forward, and increasing your pool from which you are able to pay the price of new value. For example, with all my extra time, I can SPEND more time to gain more value.
Being a lawyer, to me anyway, would be the opposite. The value I would receive would be high (a high salary, power, prestige, etc.), but the price would be far too dear. Giving up my waking life for the majority of my productive years is not worth $100k, $200k, or even $1mil per year.
-Tynan
Most people do not understand the difference between value and price or, at the very least, greatly underestimate it.
So, what is the difference between value and price? Value is the benefit derived from an action, and price is the benefit lost by performing an action. What makes this such a profound concept is that every action has a value and a cost associated with it, and it is usually fairly easy to measure. Our unconscious minds are constantly evaluating the price and value of every possible choice, which ends up governing many of our actions.
Example #1 - Wealth
Take the purchase of a computer as an example. If you buy a computer for $1000, the price is simply $1000. But what’s the value? Let’s assume that you’re a writer, and you are replacing an old computer which has suddenly broken. You have a book due the next day, and will be penalized by $10,000 if you do not turn it in on that day (yes, I know this isn’t a realistic penalty). In this case, the value is about $10,000.
For me to buy that computer, however, the value is far less. I have several computers. I don’t use the computer that much anymore. The value isn’t $0, because I could potentially sell the computer (probably for less than $1000), with an additional price of my time. So the value may be $700 to me.
In this example, the decision of whether or not to buy a computer is obvious for both me and the writer. The writer should buy it, and I should not. The cost of an item is the net effect it has on us, after considering the price and value. For the writer the cost of the computer is -$9000, meaning that he is essentially gaining $9000 by completing the transaction. To me the cost is $300, meaning I am losing $300 by buying the computer.
An interesting phenomenon to note is that sales often don’t REALLY affect the cost of an item. For example, if there was a $200 off coupon for that computer, it wouldn’t change my decision to buy the computer or not. It obviously wouldn’t affect the writer either. The only possible effect it would have is to make us more likely to purchase that product AT THAT STORE, rather than at all. I see many people (I used to be very guilty of this) buying things with low price, but significant cost. Doing this is a sure path to financial scarcity.
Of course, price isn’t simply the number on the pricetag. What if the computer was for sale at $800 100 miles away, and $1000 2 miles away? A round trip drive to get the cheaper computer would take me 4 hours rather than a couple minutes. If four hours of my time (plus wear and tear on the car and gas) is worth less than the $200 difference in price, the writer should drive and get that cheaper computer.
This seems like a simple concept, but I can’t tell you how many times I’ve seen people (myself included) spend hours searching for a lower price on something which only ends up saving $20 or so. Often times dealhunting isn’t worth the cost.
Example #2 - Relationships
More interesting is this concept applied to non financial matters, because most people don’t even begin to consider it. Let’s take, for example, the choice of going out to clubsor staying in.
If I go out to a club, the intention is to meet women. I don’t drink, I don’t dance, and I don’t particularly relish the club atmosphere. Sometimes I’ll go downtown to hang out with friends, but that’s a different decision.
In any given night I might talk to 9 different women. Three groups of three. For me to be significantly interested in a girl, it takes time for me to get to know her (mainly because I’m picky and have a list of things which will disqualify her). I would estimate that I am seriously interested in one out of three hundred girls that I meet downtown.
If I’m interested in a girl and have a good opportunity to get to know her, I believe that she will be attracted to me almost 100% of the time. However, I’d say that getting a good opportunity to get to know a girl only happens around 40% of the time. The club atmosphere makes it difficult to get a good opportunity, but it is possible to increase that percentage to 100% with skill. In LA it was probably more like 70-80% for me when I was well practiced.
So let’s boil these numbers down. If I’m only able to attract 40% of the 300 girls necessary to find one I’m interested in, that’s 750 girls I must meet before finding one who I will be compatible with and will develop a relationship of sorts with. If I am meeting 9 girls per night, that means that it will take 84 nights out to “meet someone”.
On an average night, including driving and getting ready, I probably spend 5 hours to meet those 9 girls. That means that the price of meeting a girl is 420 hours of my time. That’s significant.
Of course, I do have fun when I go out and meet all those people. Some might become friends. I’m also going out with my friends and we joke around and have a good time. However, I would probably be doing something fun if I wasn’t going out as well, so those two effects can cancel each other.
What’s the value of beginning a relationship with a girl? It’s tough to say. If I had no other means of meeting a girl, I would probably go out religiously. The cost of NEVER having a girl is monumental, so I would be willing to spend the 420 hours of my time to meet that girl.
The reality, however, is that I do meet girls in other situations. Whole foods, friends of friends, and even through my blog. This is why I rarely go out anymore - the price I pay is simply not worth the value I receive.
Example #3 - Health
One last example is eating healthy. Eating raw food is expensive. I went to the grocery store last night and spent $150 buying 4-5 days worth of food. That’s probably about $7000 more per year than regular food would cost me. It’s also a pain. I can’t eat anything more than a plain salad at most restaurants. Some of the foods aren’t as tasty as conventional foods. That represents a significant price to pay for eating raw food.
What is the value of eating raw? For one, longevity. I believe that I will not only live for 10-20 years longer than the average person, but will be active and healthy for at least 10-20 additional years. I also need less sleep (to be determined by my break from Polyphasic sleep), which gives me more usable time. Let’s say that I go from 8 hours to 5.5 hours, which I feel is conservative. That’s 912.5 hours per year, or around 50 extra days. I also feel a lot better on a daily basis and look better thanks to lower bodyfat percentages and better skin.
For the sake of convenience (and because we don’t have years to make every decision), let’s cancel a few things out. Let’s say that the value of feeling and looking better is roughly equal to the cost of not being able to eat out, and not being able to eat tasty things like egg rolls.
The average lifespan is 75 in America, so let’s assume I will live to 90. I believe that’s very conservative. Since I am about 25 now, that means that I will be alive for another 65 years. At 50 extra days per year thanks to decreased sleep, that gives me an extra 3250 days of life, or almost 9 years.
The additional $7000 price of eating raw multiplied by my remaining 65 calendar years adds up to $455,000. That’s not insignificant.
So, when it all boils down to it, I am paying $455,000 for an extra 24 years of life, or $19,000 per year. To me that’s obviously worth it. To others it’s not. How about you?
Living Your Life
Living your life by the concept of Value vs. Price is essential. By constantly increasing the value of your habits, relationships, and posessions, you are constantly moving forward, and increasing your pool from which you are able to pay the price of new value. For example, with all my extra time, I can SPEND more time to gain more value.
Being a lawyer, to me anyway, would be the opposite. The value I would receive would be high (a high salary, power, prestige, etc.), but the price would be far too dear. Giving up my waking life for the majority of my productive years is not worth $100k, $200k, or even $1mil per year.
-Tynan
Thoughts
No man is entitled to the blessings of freedom unless he be vigilant in its preservation
Do not wait for leaders; do it alone, person to person."
It is impossible to walk rapidly and be unhappy
If people knew how hard I worked to get my mastery, it wouldn't seem so wonderful at all
Capital isn't scarce; vision is
Success is a lousy teacher. It seduces smart people into thinking they can't lose
stay hungry
Freedom is nothing but a chance to be better."
An idea that is developed and put into action is more important than an idea that exists only as an idea
Do not wait for leaders; do it alone, person to person."
It is impossible to walk rapidly and be unhappy
If people knew how hard I worked to get my mastery, it wouldn't seem so wonderful at all
Capital isn't scarce; vision is
Success is a lousy teacher. It seduces smart people into thinking they can't lose
stay hungry
Freedom is nothing but a chance to be better."
An idea that is developed and put into action is more important than an idea that exists only as an idea
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