Frugality

I rarely drink wine myself but since many PF bloggers do I thought I would share the results of a couple of studies I recently read about.

In the first study wine tasters were served the same wine in a fancy bottle and an ordinary bottle.  The wine in the fancier bottle was rated much higher.   He also conducted a test where experts asked their impressions of a red and a white wine.  The red wine was actually the same as the white wine but tinted with food coloring.  None of the experts noticed it was a white wine.

In the other wine study volunteers were asked to rate their enjoyment of five wines.  Two sets of wine were identical but labeled differently.  The $5 and $45 wines were both the $5 actual price wine.  The $10 and $90 wines were both the $90 actual price wine. The fifth wine was identified by its actual $35 price.  The $90 wine was the favorite and the $5 was the least favorite.

Two weeks later they were asked to rate the wines without the price information.  They rated the $5 wine better than the $90 wine.  This shows how price can affect how people perceive wine and other things.

I guess the lesson from the studies is put your cheap wine in a fancy bottle and put an expensive price tag on it and you will enjoy it more.

Someone on a Yahoo group I belong to recently asked if it was possible to live on $1000 a month.  Since millions of people in the U.S. do live on this amount or less it is definitely possible.  Below is a sample budget of how I would live on $1000 a month.  I won’t be working during the months of February, March or April and plan to keep my expenses at $1000 a month or less for that time period.

The rent, health insurance, car insurance, and phone are all actual, fixed monthly totals.  The utilities amount is less than what I’m paying right now but it is well above what I’ll be paying in the summer.  My food expense isn’t fixed but it is usually right around $100.  The savings for irregular expenses covers car registration, maintenance, and any other predictable but irregular expenses. I purchase my health insurance through eHealthInsurance(Update: I now get my health insurance through Healthcare.gov) which has lots of relatively low cost plans available. My entertainment budget of $100 could easily be cut but I’ve been spending more than that lately.  The amount budgeted for gasoline is also probably too high since it should come down significantly now that I’m not working.  I threw in $30 for miscellaneous to cover any little expenses not covered by the previous categories.  This is a realistic budget for me and should be achievable for most people that live in an area with similar housing expenses.  You can look at my expenses for last April to compare how my actual expenses match up with this budget.

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When I make money mistakes like I did last week I try to make up for them.  What I mean by this is I try to earn extra money or save extra money in the amount of the mistakes I made.  This serves two purposes.  One is I’m able to feel less guilty about wasting the money because I made it back.  The other is any sacrifice I have to make to make up the money will make me less likely to repeat the mistake.

Making up the money mistakes of last week won’t be easy because they are rather large in relation to my income and my budget.  If I had made a small money mistake I could easily make it up by just cutting my food budget or working an extra shift at work.  Making up this money mistake will take a little longer.  Does anyone else try to make up for money mistakes?

I wasted $250 yesterday. Add that to the $100 I previously wasted and it comes to $350 for the month. This money could have been much better spent. I can afford to spend $350 on frivolous things if I want but I didn’t get anywhere near $350 enjoyment out of spending this money. I think this is completely out of my system now and I just have to forget about it and do the best I can with my money from now on.

I decided to play some poker Monday night and lost $100. When I went to play I rationalized that I’ve been doing well with my money and deserve to have a little fun. That is true but playing poker isn’t a good entertainment option for me. After playing for a couple of hours I was up very slightly but I didn’t leave. I have somewhat of a gambling addiction and whenever I gamble I’ll most likely stay until I’ve lost all the money I’ve brought.  This is what makes gambling a poor entertainment option for me.

Losing the $100 isn’t going to create a hardship for me but it would have been nice to have that to pay off my student loan or fund my Roth IRA quicker.  I’m going to try to make up the lost $100 over the next month.  I’m going to delay getting home internet for a month to make up some of the difference.  The rest will come from picking up extra hours at work or cutting my budget elsewhere.  This will cause me to feel some consequences from losing the money and make me less likely to repeat the mistake.

I do think I can loosen up on my spending some though.  I just need to find some other entertainment options that I enjoy and feel give me value for the money.