I like stuff – gadgets, gizmos, and thingamajigs. I also like saving money. So, I’ve created the $100-A-Day-Rule.
For every $100 that I want to spend on the purchase of a new product, I must wait one day before I make the purchase. This creates a self-imposed ‘cooling-off’ period.
If a new gadget costs $100, I have to wait one day until I can purchase the gadget.
If a new gizmo costs $400, I have to wait four days until I can purchase the gizmo.
If a new thingamajig costs $1400, I have to wait two weeks until I can purchase the thingamajig.
I tend to live ‘in-the-moment’, which is just a fancy way to say, I like to impulse buy. In the past, when I wanted something, I just went out and bought it. And, in the past, I’d be stuck with payments, long after the desire for the product had gone away. I once purchased a video game console – because a good buddy had one – and I don’t even like video games. I used my credit card, bought the console, played a few games of Madden, and then never touched it again. A $250 gaming console sat, unused, in my entertainment center, for three years.
Now, when I want something, I use the $100-A-Day-Rule. I spend time researching, looking for cheaper alternatives, and deciding if I really want the item.
Since implementing the $100-A-Day-Rule, I have seen a dramatic reduction in the number of things that I actually want to buy. In fact, in most cases, once I leave the store and get home, I forget why I ever wanted a particular item in the first place. But, if I do find that I still want a particular item, I have built-in system which allows me to take time to do some research and find the item at an affordable price.
While I am researching an upcoming purchase, I save my money in my ING DIRECT USA – Orange Savings Account. Transfers to and from my bank are free.
At $100-a-day, it would take about 3 1/2 months to decide on whether or not to purchase a $10,000 automobile. 3 1/2 months is long time to ‘cool off’ from ‘new-car fever’. Imagine if every person, when they went to the lot to purchase a new car, were required to wait 3 1/2 months before they could make a purchase? Might we see some dramatic changes in shopping/buying habits?
Side note: As the numbers move higher and higher, the cooling-off period grows longer and longer. There is a point at which the length of time gets a bit ridiculous – shopping 2.5 years for a $200,000 home might drive anyone crazy. So, I’ve capped my cooling-off period at 6 months. If I want/need an expensive item, and I’ve shopped for it for six months, and if it’s in our budget, I go ahead and purchase it.
Here are a few recent examples of how using the $100-A-Day-Rule worked for me:
Wanted: $500 set of golf clubs. Waited: 5 days, purchased a different set for under $300.
Wanted: $1,400 lawn mower. Waited: 14 days, decided not to purchase but to look for alternatives.
Wanted: $1000 HDTV. Waited: 10 days, decided I needed more information, waited additional 2 months, purchased similar HDTV for under $900.
Wanted: $400 driver to match new clubs. Waited: 4 days, decided that my golf game does not merit the purchase of a $400 driver. Heck, my golf game does not merit the purchase of a $40 driver!
Want: A new laptop. Waiting: 10 days, and counting. I want/need a new laptop, so I am spending some time, looking for a good deal on a new laptop. I can’t decide if I want to spend $400 on a cheap model or $1500 on a better system, so I’m using the higher price as my guide and looking at all options.
Final notes: I have found that the MORE I want an item, the LONGER the cooling off period needs to be. I never want to be in the position where I am making a purchase, based on my emotions. So, if I really, really, really want something, I double the time that I have to wait, and then I make my purchase.
Edit: I want to thank JD over at Get Rich Slowly for sharing the story of Joshua, one of his readers, and how Joshua used this technique to avoid a an impulse purchase.
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