Alexandar Tzanov's Personal Blog

Best financial advice?

Someone I follow on Twitter asked – what is the best financial advice you have received? I do not think I can say that I have one specific example I can answer with. I do have several different examples I would consider good guiding principles for saving money.

From my mom

She always says it in Bulgarian, but it can be best translated in English as – be cheap on the expensive stuff.

What that means is to not cheap out and spend your money on low value items. But, to buy items of higher quality, you do not have to go for the most expensive ones. Buying items of high quality and well establish brands comes with better design, good customer service, guaranteed quality, and more infrequent need to replace said item.

I can also add that this way of thinking can eliminate buyer’s remorse. I do not have to look at the item I bought and wonder if there is a better one. If I had only spent little bit more what else I could have had, or how long will this thing last.

When you buy cheap, it feels cheap, it looks cheap, and at the end it cost more.

From once a guardian

On few occasions I heard this person say – if I still want it in two weeks, then I will buy it.

This is meant to prevent spontaneous purchases. Allowing yourself to decide if you really need the item, or if there is one better, or another way to accomplish what the item is meant to resolve. Spontaneous purchases can lead to money waist – when buying and when having to store the item; accumulation of unnecessary things and buyer’s remorse; which in turn can lead to unhappiness and depression.

From personal experience

The next two conditions are something I consider before making any choices that can have an effect on my future or peace of mind.

The first one is – micromanage your credit score.

A good credit score can prevent many problems. Ways to have a good credits score – only have at most two credit cards; only have a credit card from a bank; do not allow credit checks unless you are ready to commit; make sure you at least pay your monthly balance minimum every month; lastly – do not allow credit to be raised too high. For the last one – having a credit line above $24,000 can lead to false thinking and a balance you will not be able to keep up with.

The second one is – nothing is free. Someone has to pay for it. For me “free” is anything I pick up off the ground.

Free things usually come at some hidden cost, because someone had to pay for them in the first place. That cost very often is privacy. For example – to get free pens from a company you like, some swag, or an entry in a raffle – you have to surrender your contact information. Do you really want to keep getting messages just to get a mass-produced pen with a logo from a company you like … for the time being? Or a store discount at a store where you may or may not come back to, and is the discount you are receiving enough?

Collected contact information is sold and resold many times. Is your sanity really wort $0.50?

How are you paying for “free”?

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