Beating Broke

Personal Finance from the Broke Perspective

Supply and Demand Goes Both Ways

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Supply and Demand.  We all learn about this tenet of the capitalist market at a rather early age.  It’s a pretty simple concept really.  When one increases the other decreases.  As supply grows, demand diminishes.  As does the price for that product.  As demand grows, supply diminishes.  And price goes up. It’s a function of our market.  And, I think parts of it are broken.

As a frugal blogger, I’m constantly wracking my brain trying to find new ways to be more frugal, and new ways to present that information to you. Part of that includes keeping an eye on the market.  And as such, I’ve come to the conclusion that the law of supply and demand has become more of a guideline than a law.

How so?

Take airfare for instance.  According to this CNN Money article, airfare prices have been raised twice as many times this year as they were all of last year.  And we’re only in March.  What allows them to do that and get away with it?  You keep paying for the tickets.  Gas goes up, and we still fill up our SUVs.  As long as you continue to pay the prices they are asking, the prices will continue to go up.  And, recently, they’ve gone up anyways.

We all know that some of the things that we are buying are too expensive.  I read several articles a day about how expensive somethings have gotten and ways to save money by making your own, or frugally using what you do buy.  And, to some extent, that does work.  For a select few.  But, there are others who are willingly paying that price and then complain about it afterwards.  Why?  They’ve been conditioned to do that.  When was the last time you heard of a boycott based on the price of a good, rather than something the company did to offend you?  Do you think that if even half of the consumers boycotted flying for a month, that prices wouldn’t drop?  They’d have to or they’d have to go out of business.

Why can I buy a ticket from Fargo, ND to Las Vegas, NV for less than $150, but it costs me 3x that much to fly to San Antonio?  It’s not 3x as far.  Why can I buy a bag of malt-o-meal cereal for $2 that tastes exactly the same as a name brand cereal but I can’t buy that name brand cereal for less than $3.50?  The examples of this are plentiful.

We aren’t just consumers.  We have brains and are capable (in most cases) of thinking with them.  It’s time we used them to demand fair prices for products.  We’ve forgotten that supply and demand goes both ways.  We do have some small modicum of control here, but we’ve grown complacent and forgotten that we have it at all.  Many of you are frugalers.  But, we always say that we’re doing it to save money.  And, that’s true, but maybe it’s time we also say that we’re doing it to protest the high prices that we’re being charged.  Oddly, saving money isn’t always a good enough excuse for some people.  Sometimes they need a moral soapbox to stand on.  And, maybe that’s the way to take back supply and demand, and turn it into a working machine again rather than a pleasant theory in economics textbooks.

What say you? (So Say we All.  If you’d watched BSG, you’d get that.)

Is Personal Finance Really Important?

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In case you haven’t noticed, this site is all about personal finance.  Well, mostly.  We certainly talk a lot about personal finance.  But, is personal finance really all that important?

How much time do you devote to your personal finances?  To your budget? To coupon clipping?  In the end, does any of it make a difference?  Or are we merely just going through the motions because of some larger issue?  Ever since my Junior year in high school when my english class went through a whole section on propaganda, I’ve (rightly so) questioned anything and everything.  We don’t deal with propaganda on the level of that they did in war times, but we still deal with it on a regular basis.  And at it’s root is the necessity by those companies who are spreading the propaganda to further the consumerism society that we’ve become.

Over the last few months, I’ve been reading a lot of books on the subject of breaking free of what you are, and becoming what you should be.  Books like “No More Mondays” and especially “Early Retirement Extreme” have brought me to take an even closer look at the consumerist lives that we live.  Jacob (the author of Early Retirement Extreme) lives on somewhere around $10,000 a year.  A Year!  Could you even make it 3 months on that?  I know that I would have an incredibly tough time even trying to come close to living on 10k a year.  It would take some very radical changes for me, but I might try working towards that by reducing my consumerist habits.

And, when you reduce your consumerist habits, a funny thing will likely happen.  Your expenses will go down.  And you’ll be able to “live” on less and less.  And another thing that will happen, is that personal finance will become less important.  We worry about the most frugal way to do this or that, or the proper way to save for retirement or buy a house or pay off debt, or even the best way to negotiate a better deal on your next car when what we really should be worrying about is why we are living the lives we are.  How many of you are working jobs you don’t want to because you have all this debt from your house and your car or from all the fun “stuff” you bought on credit?  I know my hand is raised.  How LIBERATING would it be to walk out of your office today and not look back.  And not have to worry that someone was going to come and take your house away.

Do me a favor.  Take 15 minutes and watch this movie that Adam included in his post on focusing on what truly matters.

*direct link to youtube video if my embed doesn’t work for some reason: http://www.youtube.com/watch?v=3Cakm2nIQWo

Now, tell me.  Could you stop and not keep going if you had to?  Or are you so tied to your “career” and “job” that you have to “keep going”? Take the steps today to free yourself of the consumerist lifestyles that we live.  Free yourself from the eternal “going” that we experience every day.  You likely won’t accomplish it in a day, or even a month or year, but if you take a little step every day, you can get there.  I’m taking that journey, step by step, and it’s difficult.  It’s difficult to give up some things that we don’t really think about.  But, if we want to be able to stop whenever we want to, we need to be able to do that.

Financial Gluttony

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Gluttony is all around us.  I’m as guilty of it as you likely are.  The most classical example of gluttony is the act of eating much more than you need.  It leads to obesity, which is a rampant problem in this country.  Gluttony is described as the excessive indulgence in food and drink.

But, since this is a personal finance blog, let’s expand that description a bit and talk about financial gluttony. In fact, lets get down right philosophical about it.

The excessive indulgence of money. It may not be an official one of the 7 deadly sins, but it certainly is one of the deadly sins of personal finance.  It’s the rampant consumerism that often runs wild in our society.  Especially around this time of year.  We spend and spend and only stop when our credit runs out.  We give little thought to what the resulting consequences will be of our spending.  Over spending, over extending, gluttonous use of money.

The excessive indulgences of finance.  I’m going to go out on a limb here and guess that many of you have probably not thought of this side of the argument.  What I’m talking about is the gluttonous use of financial maxims to save and perform frugal acts.  Moderation is good for all things, even the stuff that is good for us.  You’ll garner no argument from me that saving money and being frugal are good things.  But, it is possible to take it too far.  Making soup by boiling your old belts, not because you can’t afford food, but because it’ll save a buck or two is finance gluttony.  Ok, that’s a pretty extreme example, but you get the point.

What I really want to get at here is that there are extremes for everything.  If we eat too much we get fat.  If we spend too much we get broke.  If we save too much, we fail to appreciate what our money can do for us.  So, the next time you’re doing your budget or even just balancing your checkbook, take the time to think about that.  Are you being financially gluttonous?