Saving: Be a Latecomer not an Early Adaptor!

Don't be a donkey by spending your precious money on fashion items! (seen in Barcelona, Spain)

Don’t be a donkey by spending your precious money on fashion items! (seen in Barcelona, Spain)

Finally, a new post on money and saving.

Today we will learn how to safe 1.200 EUR per year.

Hurray!

I mean, much of this topic has been covered already, but there is one more thing people systematically seem to do wrong about consumption:

People always want to have the newest and coolest stuff.

I guess, to some degree this is understandable – man, who does not want to be cool?!

Unfortunately, being cool by buying “sexy” stuff comes at an incredibly high price, a price that is likely to severely slow down your downshifting plans.

So the real question is:

Do you really want to be cool on the price of slaving away in your job an ugly 40 hours/week, 46 weeks/year?!

Or should you try to get your coolness from something else than from new “gadgets”.

But lets look at some background first:

The principle of “inter-temporal competition” is very well-known in economic theory.
Intertemporal competition means, that besides “normal” competition (against other products/companies), each product today is competing against sales of itself in the future. That means, if you try to sell a product (lets say a smart-phone), it normally will get cheaper in the future. As people know that, some tend to wait, decreasing demand today.
On the other hand, each company wants to make profit rather today than tomorrow. This especially holds true in today’s short-lived, impatient business climate, where all people and investors seem to care about is the next business quarter.

So what will companies do to fight intertemporal competition?

They will try to add value to the today purchase of the product by trying to convince you – the consumer – that a purchase today is better than a purchase tomorrow.

How do they convince you to buy at a high price today instead of waiting until tomorrow?

1) Well, one thing is ever-changing technology.
Companies will try to tell you what there offer is so ground-braking that you really have to own it today.

This is what I call the “Weisser Riese” Effect in German, as I came to realize this phenomenon 15 years ago on the example of a washing powder called “weisser Riese” (“white giant”). Advertisement for “weisser riese” went that way: This washing powder is so sophisticated that it creates the most white color for your shirts that is ever possible.
Wow, ok, fantastic, you guys convinced me, I’ll have to buy it !! It’s more costly, but if it is that great…!
But then, one year later, there was a new version of “weisser Riese” out there, with a refined formula, and even much better results. And one year later this thing came in mega-perls, providing still much better results due to what-god-knows great progresses in chemicals. And so on.But, you see the point:If the first product was already perfect, how does it come that they can improve it every year?! Either there was no improvement, or the first product was far from good in the first place.

2) Second method it to creat a fashion.
Telling you that you will be so un-cool if you do not keep up and join in today.

Both 1) + 2) are mostly achieved by the means of advertisement.

This is one major point why you should get rid of your TV.
Because if you like it or not, there is ample evidence that advertisement will affect you on a subconscious level, even if you think you are able to ignore it.

Actually, bullet 2, fashion, is the thing that seems to work best in todays consumption driven world, and in a world where many people lack meaning in their lives, and thus tend to define themselves by appearance, status, the things they wear and own, etc.

Thus, you will see the wheel of fashion spin quicker and quicker, and expanding to product categories that where not as prone to fashion 30 years ago.
Like kitchen tools, furniture, you name it.
With this there also comes a shorter durability of products and less products available featuring an unspectacular or ageless design.

Now let’s have a look at how this affects your budget.

My claim is, that an average household in Germany (total spending on consumption 2.245 EUR per month, see here), can safe up to 1.000 EUR per year by simply switching to a “late-comer” consumption style, i.e. without buying less, but by consequently buying products that are already a bit out of fashion.

Let me show you some examples I observed over an extended period of time:

  • TV, Toshiba, flat screen, 26”, at time of market entry in March 2012: 400 EUR.One year later: 220 EUR (-40%).
  • Smartphone, Samsung, at time of market entry Feb 2012: 300 EUR.
    Today, 1,5 years later: 130 EUR (-60%).
  • Computer Game, at time of market entry: 40 EUR.
    1 year later: 25 EUR (-35%).
  • New Car, at time of market entry: 24.000 EUR.
    3 years later: New car, same edition, around 20.000 EUR (-15%).
  • Jacket, well-known brand, market entry Autumn 2012: 250 EUR.
    3 months later, winter sale Jan 2013: 150 EUR (-40%).
  • Carver Ski Set, at market entry: 250 EUR.
    1 year later: 199 EUR (-20%).
  • Computer, high-end machine, state of the art, including monitor, at market entry: 2000 EUR.
    1 year later, same specification: 1300 EUR.(-30%)
    2 years later, same specification: 1000 EUR (-50%).
  • Semi-professional Camera, body only, at market entry: 800 EUR.
    3 years later: 600 EUR (-25%).
  • Movie DVD rental, at market entry: 3,50 EUR.
    2 months later: 2,50 EUR (-30%).

And so on.

Now lets look at total average household spending:

  Av. Spending p.month Saving by Late Coming Total Saving p.year.
Cloths 106 EUR -25% 318 EUR
Household Equipment 113 EUR -20% 271 EUR
Vehicle purchase / maintenance (estimate) 150 EUR -10% 180 EUR
Electronics / Telcom 65 EUR -30% 234 EUR
Entertainment, other 200 EUR -10% 240 EUR
Total     1.243 EUR

Voila, there you go:

Potential savings of 1.243 EUR per year!

And that is without having to surrender anything, but just by running a bit behind the herd.
This is what I like: Gains by pure efficiency, without having to giving up on anything!

Plus there are some additional benefits of late coming:

  • The herd will already have found out for you if the product is of high quality or not
  • You have enough time to ponder out if you really need that product at all, or if it was an affect made you belief you need it.
  • Used items will be available by then, opening the possibility to save even more.

The only minus is:

You will not be able to boast around with your new gadget!

But hey, more than 1.200 EUR per year only for boasting?
That’s 12.000 EUR in 10 years, and 72.000 EUR in 60 years!
A small fortune!

Well, not with me…

Decide yourself!

Cheers,

Woodpecker

Dear Grandpa. Or: What does it need in life to get ahead?

The street of life can be narrow at times - do you still have it all to get "ahead"?

The street of life can be narrow at times – do you still have it all to get “ahead”?

When Woodpecker was a young boy, my grandfather (may he rest in peace) was a very impressive person for me. A man of high figure and of very resolute statements. And of scary yet fascinating stories from the past.

One of his prefered wisdom I remember was:

“Im Leben da kommt nur voran, wer arbeiten, rechnen und sparen kann”.

“In life only gets ahead, he who can work, calculate and save.”
(Well, the rhyme only works in German.)

So today, when I was cycling to work, this slogan crossed my mind.
I started to think about how I would score on these three ingredients – work, calculate and save – and I really had to smile:

Because, let’s be honest about it, you might have guessed it already, and I have to admit it frankly now:

Woodpecker really is kind of a lazy shit when it comes to working!

I mean, we all, we who are reading these downshifting and early retirement blogs are, aren’t we?

And why not, because laziness is human nature.

It even is said to be a strong booster for creativity and development. Some historics claim that laziness is one of the primal drivers for invention – as people are lazy, they try to find ways to make their lives and work more easy, so they invent things.

Anyway, standing up for your laziness is a difficult thing in todays work-manic and ever-hectic world.
At least in Germany I’d definitely not recommend to boast about this anywhere outside your close friends (Comments welcome on other countries!)

But let’s come back to the slogan.

Self assessment:

Work

How do I score?
Lazy shit yes. Oh yeah!
But then on the other side Woodpecker is quite efficient at his job.
And this isn’t a co-incidence.
You too can find that job where you are really efficient at. If you are searching very hard, if you find courage to swap jobs a few times in the beginning (I had 6 positions with 3 employers in my first 8 years of career), plus if you avoid the career trap, i.e. better think carefully before climbing a ladder as fast as possible simply because it is there. And of course always prefer efficiency over perfection. Perfection seldom is needed, and generally is way too inefficient to reach.

So that’s the fun thing:
Due to the above and despite being a lazy shit, I receive some signals that obviously I do quite good work at my current job. Feedback is excellent and trust by management is high.

It took me a while to understand what is going on here, because there are so many colleagues out there who seem to achieve less or the same while investing much much more time and effort!
Note that I don’t think I am more clever than them, but so many of them just seem to work inefficiently – and/or they are simply so keen on career that they spend endless unnecessary extra hours in the office just to be seen, to impress someone or whatever!

Strange world.

Anyhow. Summary: Overall score 6/10.

Not too much, grandpa would be shocked, but let’s move on to more cheerful things than work:

Calculating

Yeah!
I think I am good at that.
And besides I like it.
Already as a kid I was boring others by introducing extra-hotels, debts, interests, special rents and huge new banknotes  to any Monopoly game, so that we could play on for 3 days while accumulating the big money.

Good thing is, calculating is a skill I can use at work as well – comes in very handy, because if you are good at it, you are actually very quick, whereas others grant you quite some time to do the task.
So no matter how unsexy it was at school – better at least know your maths if you are already a lazy worker like Woodpecker.

Overall Score 9/10.

Saving

Not too bad as well.
I mean I am not nearly as bad-ass as many of the hardcore early retirement fans out there, nor do I want to live up to this extreme. But, compared with the average modern consumption addicted family, the Woodpecker clan is doing fine I think.
I even came to enjoy the slightly embarrassed looks when announcing in the canteen that we are going on vacation to lets say Romania / Poland / Slovenia. Or that we stay at camp sites or in Youth Hostels. For e.g. 4.000 EUR  total budget for 4 weeks.
Instead of flying to Bali for only two weeks, staying in a fancy resort with the family and throwing 12.000(!!) EUR down the drain, like my colleague did recently. (i.e. for his budged in one day, we can travel 6 days)

Overall Score 8/10.

 

So, do I get ahead in old grandpa’s sense?

He might not fully agree, as his own focus was on this strange “work” thing,  but I think: Yes! At least I’m not at all unhappy about how things develop.

So what do we learn from this little exercise?

I think it’s not “You only get ahead if you can work, calculate and save”, but fortunately it is rather “You only get ahead if you are good at least at two out of the three, work, calculate and save”. I mean, all three obviously is great, but two is still ok!

Good news, isn’t it? Pheeeee…no need to get more ambitious at work in Woodpeckers case. 😉

So what about you?

What’s your self assessment?

Let me know in the comments!

 

Cheers,

Woodpecker

 

Sad part of the story is that poor grandpa actually died as an unhappy man.

However, this was not because of his philosophy or work ethics or his honorable achievements, but because he had to fight in WWII.

This was an early lesson for Woodpecker what terrible things war is doing to people. In fact I think one should not be too fearful in life. But war, and any other kind of physical violence are the exception. They are to be feared and are to be avoided at any costs.

Plitvice Lakes National Park – Woodpeckers Croatian Highlight

This park with its hundred of waterfalls was benchmark setting for Woodpecker - and belief me, I have seen a few waterfalls before!

Plitvice park and a few of its hundreds of waterfalls. Benchmark setting for Woodpecker! …and belief me, I have seen a few waterfalls before!

Last post on Woodpecker clan’s little spring travel.

You love nature and water? You love spectacular landscapes, clean air, beautiful creeks and unspoilt mountains?

You live in Europe and think about a trip to Africa, Southern America or wherever you can see all that fantastic nature?

Forget it! Save 5.000 EUR by simply following Woodpecker’s advise and go to:

Plitvice Lakes National Park.

This is a quite huge and unspoilt area in the Center of Croatia, where there still life all sorts of wild animals, including bears, wild cats and so on. And it hosts some benchmark setting waterfalls, that are created and are ever-changing due to a complicated sedimentation process typical for this area.

An astonishing area that we visited on a day trip from out base at the sea. And we were incredibly lucky – it was about the only day of the trip that entirely lacked rain.

Not perfect, but ok weather indeed for taking photos, see yourself (hover for captions, click to enlarge):

Cheers,

Woodpecker

A chilly trip to Croatia

Zadar, Croatia, Thunderstorm approaching.

Zadar, Croatia, Thunderstorm approaching.

Woodpecker clan is back from it’s little spring trip.

After the beautiful and relaxing Ljubljana we continued to our camp site in Croatia.
This was planned to be this years beaching highlight (as summer will bring an inland trip to Romania) – but boy, had we a shitty weather!

With rain virtually every day and temperatures well below 20 degree C most of the time. And then the wind!

Not really what you expect when you are up to a new sand-castle record with the kids.

So actually the only person who had a minimal bathing experience (would go so far and call it fun), was Woodpecker who forced himself to the sea for 10 minutes on a relatively dry day.

But what can I say?

Thanks to the kids, who once again proved amazingly immune against mood-swings due to bad weather, Mrs Woodpecker and me somehow managed to maintain a good spirit and after all it was a pretty good time down there! (although the single pullover and the single long trouser I brought were quite sticky after a week or so while the pile of short cloth remained untouched in the car.)

Actually the good thing is that few situations lack a positive side to them.

In our case, we had ample chance to test the rain-proofeness of our new (and fortunately very large) tent in all sorts of precipitation:

– light rain

– dripping rain

– enduring heavy rain

– horizontal wind gust driven rain

– heavy thunderstorm rain

– ordinary splashing rain.

So now we know: The tent is waterproof! A good thing to know in fact, isn’t it?

Another pro was the entire relief from any time pressure at all.

I mean we all seldom took so much time to get up in the morning, I don’t think I ever spent so long under a warm shower before, we often extended cozy breakfasts in “bed” until noon or so and when rain was pausing we strolled with amazing slowness through a little village or countryside we did excursions to.

Belief it or not, being forced to do so little was an experience in itself!

And then, the few time the sun came through: Ahhhh!

This were quite magical moments!

People flocking out to the open, breathing the fresh rain washed air, the light magic with a clear and crisp blue sky with contrasting heavy clouds in it and the light a paradise for a photographer.

See yourself (hover for captions, click to enlarge):

Next post I’ll add some fantastic pictures from an excursion to the Plitvice lakes (see here). Got lucky there and full sunlight the whole day!

Cheers,

Woodpecker