Saturday, March 13

The "Latte Effect"

Way back in the early part of last year when I started writing this blog I did a post called "Saving by Spending". I thought about that post today (thanks to an e-mail from SSBF's mom) while I was driving to work in the soaking rain.  I also thought about where I have been going with this blog as of late. I feel like I have been heading in a direction that is not all me. This blog started as a way for me to hash through my financial struggles and gush about all the things I love (Clothes and SSBF, and maybe a few others). It sucks to kind of feel like you lost yourself, but I think that is pretty indicative of the position I am at in life anyway. (I digress) 

In the spirit of Saving by Spending I give you my version of what personal finance guru's call the "Latte Effect"

In case you've never even opened a personal finance book, the "Latte Effect" is basically a metaphor for frivolous daily spending. i.e. you can save "x" amount of dollars per year by skipping you're daily Starbucks fix. Personally, I don't have a daily anything fix so for the most part I always skipped over that part of the book. However, while shopping one day I realized I have a reincarnation of this in that, if I buy one thing at a store more often then not I will but a second or a third. More specifically it happens when I am shopping online, and when I am buying relatively cheap items that add smaller amounts to the total. (think $15 and less)

A perfect example, I ordered a shrug a couple weeks ago from Old Navy, that was the single item I wanted, but ultimately added a t-shirt to the order because it was only $5 and who can't use another t-shirt?!

The "Latte Effect" is a nod toward conscious spending, or knowing where your money is going. In my case when I add one item and then another I'm not making a conscious differentiation in price. I am just seeing the total or maybe the total savings instead of seeing each item as more of my money.

After realizing the error of my ways, I was also enlightened to the buy 1 get one 50% off scam. Damn those marketers are good.

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