July 25, 2012, 5:00 am

Are You Willing to Pay Too Much? Maybe You Should

by: The Financial Blogger    Category: Personal Finance
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A few weeks ago, I read an interesting piece from Allen Tucker who says that it’s best to pay too much. After so many technological progress and the economic phenomenon of globalization, we all expect to pay less, not to pay too much. This concept is totally counter intuitive. Nobody wants to pay too much for something. When you compare what you have with your friends or your neighbour, you always want to be the one who got the deal.


I  Hate Paying Too Much


I’m the first one to be frustrated when I pay a premium on any goods. If I buy a TV, car or dishwasher, I have this stupid tendency to check flyers and rebates for a month following my purchase. When you think about it, I’m not adding any value by doing this. At best I’ll be wasting an hour or so checking for potential deals that I can’t even benefit from and at worst, I’ll find a better deal than I paid and be frustrated.


On the other hand, this “after the fact research” process is only the last step of a bigger process. Each time I have to make an important purchase, I take about a month to identify exactly what I want and establish what the market price is and what is a deal. So far, so good, I’ve been either lucky or just do a good job at researching the right deal in the first place.


But I Pay Too Much All The Time, Still…


Here’s an interesting twist. I truly hate to pay too much for something, but keep paying too much all the time. How’s that possible? Because I value things I buy and don’t want to go cheap. That was Tucker’s point when he says that he is paying too much for many goods he buys. It makes sense when you think about it: if you pay a higher amount for something, chances are that you are getting more quality and durability. What if you buy something and pay more than the average but it lasts a lot longer? Would it make more sense? I find that quality overcompensates for the price you pay Vs buying cheap stuff for the sole sake that it’s cheap!


Here’s a list of things where I really pay the price:

Suits – I’ve bought cheap suits and they don’t last and they look and feel like cheap stuff

Sporting Gear – I have had the same bike for the past 15 years

Electronics – I have the same TV for the past six years (my previous TV lasted 17 years!)

Food – It doesn’t last longer but I guess it will taste better!

Appliances – I have the same microwave for the past 15 years!!! My refrigerator is also pretty old and still running like a new!

Cars – I don’t go crazy with cars but I like them well equipped. It’s better for the resale value and way more comfortable!

Mattress – My sleep is not the same anymore since I paid $2,000 for a mattress!


Beware of Cheap


The hard part in today’s consumer environment is that some times, expensive is cheap and cheap is expensive. On the other hand, you can also go cheap on some stuff and end-up getting a lot more for your buck. For example, someone who knows how to invest, buying index ETFs or doing stock picking could do well and save a 2% fee charged on mutual funds.


There is no free lunch in life; if you save on something, it’s because there is something you are leaving on the table. If you take the investing example; you save on the management fee but you are also leaving professional advice and financial planning on the table. If you don’t get the advice along with the plan and you are still paying the 2%, then you are not on the winning team. If you don’t need advice and financial planning, then you don’t need to pay the 2% fee. I guess it’s the same thing if I was able to make my own clothes; I wouldn’t need to pay for higher quality suits! So I manage my own portfolio and buy suits 😉



I guess I’m more trying to optimize my money rather than save it!

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Maybe purchasing shouldn’t be based on how much it cost only, but rather how much value it provides and the cost associated with it. At least, I think that’s what you are trying to say. For instance, I am sure you can make a suit… and someday it might be a good one (if you practice making one enough), but you probably make more money managing your own portfolio while “outsourcing” other needs of your life to make your life more efficient and valuable.

Sometimes if you pay on a CC and see a better deal within X days your CC may offer price protection/match. Might want to look into it if you find it happens to you a lot. I agree paying for a good mattress is some of the best money you can spend.

by: The Financial Blogger | July 25th, 2012 (1:48 pm)

Hey John,

you got it right :-). and I’m not going to make my own suit 😉 hahaha!

thx for the tip! I didn’t know that! I’ll take a look at what my CC is offering me!

I value quality, but always pay less for it. I hate paying retail for everything. I recently bought a new car and and was able to get it for dealer invoice (dealer cost). If I cannot get quality items at a good price, I won’t buy it.

Though we have a specific budget for food and groceries, I am willing to spend more on food and electronic gadgets. My family loves dining out and trying new dishes. I am also willing to spend for the latest gadgets because I will need them for my job.

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