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When do the savings kick in?

Micah asked me an interesting question last night.

“So we’re saving money by borrowing Buffy instead of renting it or buying it. But when do the savings kick in? Are we saving money right now because we didn’t spend it? Are we saving money only as we watch each episode? Did we only save money on the day we borrowed the DVDs?”

Sometimes this sort of thing gives my little brain a run for its money. In circles.

It’s pretty obvious that we’re saving money when we bring in $2000 and spend $1800. Anything we do to avoid spending money in that time period is part of the saving money.

But we wouldn’t be watching Buffy anyway if it weren’t that our friends nagged us into borrowing their collection (and then we got hooked, darn it!). And even if we did want to watch it, we wouldn’t if we had to rent it…we’d look for friends or the library. So are we not saving money at all? Because we never would have spent the money?

Does this ever make your head spin? What do you count as saving money?

Based on your thoughts and other things, the reflection continues that evening.


{ 4 trackbacks }

Saving the Enron Way | Mrs. Micah: Finance for a Freelance Life
January 20, 2008 at 8:30 pm
Re: When do the savings kick in? | All About Appearances
January 20, 2008 at 11:03 pm
» January 20, 2008 Link Payday Uncommon Cents: (Hopefully) simple personal finance
January 21, 2008 at 12:10 am
Frugality: Increasing Your Quality of Life for Less.
February 16, 2008 at 7:02 am

{ 15 comments… read them below or add one }

Frugal Bachelor January 20, 2008 at 10:47 am

I count money as “saved” when I transfer it to my (deposit-only) savings account. If I ‘save’ $10 by not going out for dinner one night but spend it on lunch the next day, I actually haven’t saved a dime. But if I transfer it to savings, then I count it as saved. I personally transfer left-over money to savings account on pay-period intervals.

FourPillars January 20, 2008 at 11:06 am

Interesting question.

I think you “save” on individual purchases when you wait for a sale or buy a cheaper version or even just don’t buy it at all, but the important and “real” savings comes from spending less than you earn – whatever is left over is the real savings.

Mike

Amphritrite January 20, 2008 at 11:57 am

Considering that the complete collector’s set retails at $199.98 in most stores, and if you consider this part of your ‘entertainment’… You just “saved” $200.

If you rented, consider that each season would run you $6-$10 to rent, and there’s 7 seasons, you’re talking $42-$70. Even if you take -that- number instead… that’s still almost my complete entertainment budget.

Now, whether you would have watched it or not is nothing doing. Do you laugh and enjoy yourself watching her pop crazy one-liners at the undead? Great! You’re entertained. Mission accomplished. Do you like watching it with your sweetie for a little ‘together’ time? Hooray! Double bonus.

If the answers are no, then you save nothing. Hee 🙂

Julie January 20, 2008 at 12:31 pm

I think that it depends on what else you would be doing with your time. If you hadn’t borrowed Buffy, would you have gone to the movies this afternoon? Then, I would count the money not spent on movies as “savings”. But, you’re probably not just watching Buffy, you’re probably writing posts or working on your crafts, which could earn you money. This doesn’t exactly add to your savings, but it increases the value of the time that you’ve spent watching Buffy.
I agree, it’s very confusing.

Philip Brewer January 20, 2008 at 1:47 pm

I really don’t think of “spending less” as saving money. I figure that I save the money when I spend less than I earn, not when I spend less than I might have.

Enjoying something borrowed rather than bought raises my standard of living. (Which is a good thing, especially when it doesn’t come at the cost of a lower standard of living in the future, but which is not the same thing as saving money.)

Brooke (Dollar Frugal) January 20, 2008 at 1:56 pm

I think you’re saving money, but not as much as you would have if you spent nothing. Here’s an example…I think you work at a library. Is there nothing there that you could watch (for free) instead of paying to watch the Buffy movies? Or what about your local programming. If you can eliminate the cost, that’s when you really win!

Also, I think you “save” at the point that you transfer the money (i.e. pay debt or make a payment that you’ve been saving for). Anytime before that, the money could be spent on something frivolous.

Emily January 20, 2008 at 2:20 pm

I consider it saving money if I spend less than I would’ve or could’ve otherwise. And it’s ONLY saving if I then put the money saved into savings. It doesn’t count if I “save” $30 on a purchase and then spend that $30 on something else.

her every cent counts January 20, 2008 at 2:36 pm

Money saved is money that I can put into my savings or investment accounts. Any money that is still liquid I do not consider “saved” because I will ultimately spend it somewhere else. However, if you are getting entertainment for free is also money saved. But only if you would have been doing something else that costs money during that time.

Early Retirement Extreme January 20, 2008 at 3:14 pm

One of my pet peeves is when the cashier tells me that “you just saved $10 on groceries”. “Well, could you write me a check for $10 so I can put it in my bank account then?” – turns out they can’t, so I didn’t really save anything after all. It’s just paper savings i.e. an accounting gimmick, because there is no cash flow. Similarly, you have not saved anything by borrowing the DVDs because there is no cash flow.

Jim January 20, 2008 at 3:20 pm

Saving money happens when you don’t spend it. You are keeping it for another use. Some days you save it for tomorrow. Some days it is saved for the car insurance. Some days it is saved for “the future”.

Jim January 20, 2008 at 4:35 pm
Jim January 20, 2008 at 4:37 pm
Dad January 20, 2008 at 4:58 pm

You may not be “saving” but you are increasing your standard of living at least a little by adding this entertainment at no cost.

fathersez January 20, 2008 at 6:00 pm

Mrs. M,

As you said it’ll make your head spin.

Perhaps you can grade actual money that you put in your savings or investment accounts as Grade A savings.

And money that did not go out to be spent as Grade B savings. THis is a mental account, perhaps slightly more than a gimmick, as it does have real positive benefits.

You like these movies or DVDs. And you are seeing them without money actually being paid out. So you have just added to your Grade B savings account.

Have a great time, you and M are doing it right!

deepali January 20, 2008 at 6:24 pm

I think you can consider it “saved” if you would have spent more otherwise (ie, buying the set, or paying for another activity during the time you used to watch the show). But I wouldn’t necessarily consider it “savings”.

Regarding the grocery store experience – for the same basket of goods, you’ve spent $10 less. That’s money saved. The question really is, did you spend $40 when you would have spent $50, thereby allowing you to put $10 into your savings account, or did you actually plan to spend $40 (because you knew the deals in advance)? Then I wouldn’t consider it savings, unless you still plan to put the remaining $10 in your savings account.

Those grocery store savings are tricky though – they actually get you buy more, even if you aren’t spending more.

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