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The Price of Immediate Gratification

We live in a now world. We’re not taught to delay satisfaction of our wants and desires, but why is it so important to own something new at the first moment possible?


If you look at marketing, there are curves of acceptance. Early Adopters is the term for people who pick up something early on. They help to pave the way for the masses that will follow. When you combine that curve with the concept of economies of scale, you realize that as more people buy the product, the price invariably becomes cheaper. Prices will also drop once initial demand is supplied.

A great example of this is with DVDs. When a new DVD goes on sale, the cost is usually much higher than it will be a month later. Yet, people still go to buy DVDs when they are first released. Why?

Delaying gratification isn’t as hard of a concept as it seems. Yes, you deny yourself something you want for a time, but that’s getting easier as time goes on anyway. It used to be that you would need to stay up late to watch TV shows, or miss out on something else. Then VCRs came along. Now we have PVRs and DVD recorders which are even more efficient. Instead of losing sleep, these appliances help you take something you want and move it to a time where it benefits you more. When you look at the bigger picture, isn’t that similar to waiting a month to get half off the price of your DVD?

While being an early adopter can be fun, it’s an expensive place to be in. You will pay more for goods and services that generally aren’t as good, as the bugs get worked out by the first users.

Delayed gratification means you experience all of the same things, but by doing so later, you save yourself time. So, while immediate gratification can be a good feeling, is it worth the cost to you?

Letting fear act on you

“Should we buy more angelfood cake mix?” I wondered as my husband and I walked down the aisles of our local Kroger. “It’s only up twenty cents.”

“I’m not buying beef jerky,” my husband said several aisles later. “I can’t stomach paying that much for that little.”

“Eggs are almost as bad as back in Seattle,” I noted further down the store.

“We’ll never again see 4-for-$10 deals on pop,” he predicted, not stopping in that aisle.

“Floss is cheap; I’m going to get two,” I said. Then realized that floss wasn’t food and, unlike everything else in the store, its price probably wasn’t going up.

Psychological studies have found that fear works as a motivator–but only when the fear is accompanied by a message on how to avoid danger. Take global climate change, for example. People who realize that it’s a real problem and may in fact lead to disaster down the road are generally panicked and depressed, because there aren’t any clear messages yet on how to fix things. (We’re getting there, though, slowly.)

In the current economy, people who are afraid of rising prices but can’t think of anything to do about them are likely to be paralyzed, afraid but unable to act. People who can think of things to do–use coupons, buy store brands, skip luxury items–are very likely to do them, and by doing do, mitigating their fears.

Fear can be a very useful persuasive tool. Letting it work on you can achieve big changes–just make sure they’re ones that are good for you, not good for the ones using the fear as a message.

5 Ways we Lie to Ourselves about Money

We’ve talked about the different ways that our brains and the way we think can work against us when it comes to money, but what about how we outright lie to ourselves?

Yes, in many ways, we’re the victim of our own lies when it comes to money. But generally, even if we trick ourselves into thinking our financial situation is stable and in order, we still can’t escape the fear that comes from being financially unstable.

Let’s look at some of the ways we lie to ourselves.

1. Looking at an incomplete picture: This has become easier with time. We have accounts with one bank, credit cards with another, a mortgage with yet another again. By shopping around, we get ourselves the best rates and can save ourselves money, but we also make it more challenging to get a complete financial picture. As anyone skilled in the art of lying will tell you, the key to a good lie is to make it as true as possible. So, we look at the good side of things. We might have 4 credit cards with which we’re doing GREAT, but it only really takes one bad one to make it a lie.

2. Spending money before we make it: With easy credit, overdrafts, payday loans and other services, this is easier than ever. But, when you spend money before you make it, you get ahead of your income.

3. Not planning for the future: Surprises happen. We can all hope for beautiful weather and cloudless days, but into every life, a little rain must fall. Clothes wear out, cars break down and houses need fixing. These are facts of life, neglect them at your peril. If you don’t plan for expenses in the future, you risk not having the available funds to meet these expenses.

4. Not knowing where our money goes: It might seem like a small thing, but when you start getting unpleasantly surprised by your bank balance, you are on the road to trouble. Not knowing what you have means you might spend more than you can afford, which is where a lot of people start down the road to trouble.

5. Not looking at the big picture: This is a broad statement, but it is true in many senses. You might save money buying larger sized products in bulk, but they could also spoil before you use them all. You might fall in love with fruit that’s on sale when it is in season locally, but buy it when it’s imported from across the world and costs accordingly. You could get a job that pays you $5,000/year more, but then spend $10,000 extra on gas, insurance and car maintenance because the commute is twice as far. Look at the whole picture. It’s complicated, but it’s also the only way to truly understand money.

Nobody likes a liar. Lies, even little white lies, often cause far more trouble than they save, and they can delay you from attacking problems while they are small and easily solved. Look at your small habits and how you think of money. Are you lying to yourself?

Negotiating and Culture

Firstly, my thanks to Million Dollar Journey and their entry Confessions of a Car Salesman which discusses negotiating techniques used by used car salesman. Reading that blog got me thinking on the topic of negotiation.

Through my travels, I have often been fascinated by cultural attitudes towards negotiation.

In a number of places in the world, prices are flexible. They can be negotiated, bartered or otherwise influenced. Some individuals are raised in a culture of negotiation. They always try to talk their way to a different price.

Many of us in North America have been raised in a culture of price tags. What we see is what it costs. We look for sales and can try to maximize our value through those, but ultimately, we pay the listed price. Now, is this bad? Not necessarily. It means that in day-to-day life, you don’t have to worry about negotiating. However, in a few remaining areas of North American life, negotiating is common and almost required. These areas include buying cars, arranging salaries and asking for raises, and buying houses. Also, in a not so coincidental way, areas such as these are ones in which many of us feel uncomfortable.

Why do we have issues with negotiating? There are a multitude of reasons. First and foremost, for many of us it comes down to issues of appearances. If we negotiate, we can feel poor or vulnerable. I have had the privilege of witnessing master negotiators at work, and they let no sense of shame interfere in their bargaining process. They will claim poverty, starvation, the need to support a family and many other items as they push the price in the direction they want. Frankly, a good negotiation between two skilled parties is a fascinating spectacle. Not all negotiations are showy and loud though, everyone has a different style of negotiating that can work for them.

We need to look past the “price tag culture” in which many of us have been raised in order to see the benefits that lie in negotiating. A fraction of a percentage point lower interest rates for a mortgage can lead to savings of thousands of dollars over time. A few well placed words can cut hundreds or even thousands of dollars off of a car. Price tags make simple things like shopping trips to the grocery store faster and more convenient. However, by accepting prices on the larger ticket items, we often might be throwing our hard-earned money away.

So, look past any insecurities you might have on the topic, and examine the benefits you might receive from negotiating. Rather than sacrificing any self-esteem, you might end up thousands of dollars ahead for putting in a little time. As a good starting point, take a look at the entry on Million Dollar Journey, it can help you see just how easily we get sold up on prices, and how we can turn those tricks to our own use. Remember, sometimes you CAN look beyond the price tag.

Addictions – Retail Therapy

We’ve discussed the ventral striatum in this blog before. It’s a component of the brain involved in processing rewards in the brain. When you do something that makes you feel good, it helps to release a positive neurotransmitter such as dopamine.

Scientists believe that this rewards mechanism served an evolutionary purpose in that it helped reward people for trying and exploring the unknown. When the world was full of obvious harm, such a feature was dangerous, but it also helped to develop the drive to explore that helps to define humanity. However, in a modern world, where the wildest place many of us explore is the local mall, such instincts cause problems for us.

Marketing and sales build up products so they take on grand proportions. New and novel, these products play on that ancient brain response, triggering a positive sensation. Some indications link this response to stress relief, which can be addicting in itself depending on your personality type.

Our defense against this is the conscious brain. If something makes you feel good, ask why? Are you buying because of novelty? The tragic part of novelty is that it does resemble drugs. Eventually you build up a resistance, and you require more and different types to break through that resistance. That new novelty often costs more and more to achieve.

Don’t buy for novelty, buy for value and true pleasure, the results last much longer.

A Rose by Any Other Name

Part of the art of marketing is in repackaging goods and reselling them in hundreds of different configurations. We pay more and more for things we could get cheaper in other forms.

Through advertising, marketing and product placement, retailers and companies play an elaborate game of smoke and mirrors in order to convince us to buy product variations. One fantastic example of this is the new trend towards 100 calories (or that range) candy bar variations.

On a recent shopping trip, I purchased a regular Coffee Crisp and a 100 calorie Coffee Crisp Single. I LOVE Coffee Crisp Bars. The singles were placed in an arrangement close to eye level, with all 100 calorie variations clustered together. The larger, obviously less favored bars were positioned lower and away from their lighter and “healthier” cousins.

The 100 calorie single weighs 19 grams and cost 89 cents where I purchased it. The standard Coffee Crisp weighs 50 grams and cost 99 cents. The standard Coffee Crisp is 260 calories. Now, let me show you a neat trick:

50 grams divided by 19 grams = 2.63

260 calories divided by 1000 calories = 2.60

The proportions are the same. We are paying about two and a half times as much money, for two and a half times LESS chocolate. Is there a reason why we can’t just divide the larger bar into smaller sections? No.

Truth be told, there are people who will eat an entire chocolate bar if they open it. For them, these smaller pieces can be a good compromise. However, if you can manage the willpower and want your chocolate fix, buy the larger one and divide it up. You get just as much satisfaction and all you lose is the packaging.

Flattery Will Get You Everywhere

One of the most interesting facts about how products are sold, is that the products which can do you the most harm are often the most flattering to you in their ads.


Flattery used to belong to the domain of interpersonal relations. You “buttered someone up” if you wanted something from them. You flattered someone to influence a result in a positive direction. Sadly, this tool has been adopted by the marketing industry.


We like being flattered. Plain and simple, there’s no one who doesn’t like it, though they may be shy about receiving such flattery in public. There’s a rush of recognition and pride in knowing that others share a good opinion of you. How does this translate to marketing?

Alcohol companies talk about exciting lifestyles, smoking was always for the adventurous and stylish, and our cars tragically live more exciting lives than we often do. Credit card companies are the most entertaining with how they offer you a veritable Olympics of card recognition. First gold cards, now platinum, then platinum plus. You are given more and more recognition as they flatter you. Pre-approved applications come with directions indicating that they will be handled with “special care” as the company is honored to offer you your due.

Attending bars and drinking alcohol are marketed as part of adulthood, which makes them all the more attractive as soon as youth turn of legal age. Credit cards, also viewed as a staple of adulthood, are offered in universities to youth eagerly trying to establish their adult identities.


Just as with flattering individuals, we need to look through at the motivations behind the flattery. In the end, we truly are doing a favor to a company when we buy or use its product, but we do owe it to ourselves to make sure we receive the maximum benefit for the money we spend. So look beyond the flattery, and see what the flattery is trying to hide.

On looking poor

Smart Spending recently discussed a Saving Advice post on how looking poor can benefit you. The comments are great reading; a lot of the readers have anecdotes on how some snobby salesperson missed out on a great commission by passing over a person who didn’t look like he had much money to spend. There are definitely advantages to looking poor–or at least not looking rich. The original poster, Shannon Christman, lists some: it can help you negotiate, it can net you freebies and like-minded acquaintances, it can make you feel good to laugh up your sleeve at an unsuspecting salesperson.

So why don’t more people do it? Because we don’t; we go to the bar with friends when we really can’t afford it, we buy a new dress for our friends’ weddings because people we know will be there, we send our kids to school with lunch money when we should be getting financial aid.

Generally speaking, people don’t like to look poor. We like to keep up with the Jones, to look like we’re winning at life–to socially conform. “Normative influence” is the pressure we feel to be like others so that we’ll be accepted. If we look poor, we won’t look like everyone else, and then they might not accept us.

Blunt Money posted on this a while ago, saying, “For me, it’s easier to do what I really want to do when I have the money to do otherwise. I’m less concerned about what others think…But when I really had very little money coming in (there were a few years not that long ago when I made $4,000 or less per year) I was more concerned about what people thought.”

Similarly, a recent post on FAIL blog: (via Get Rich Slowly) is about someone who’s looking for a new service: “video rental store but for books.” This would be a great idea, maybe even something for a young entrepreneur to jump on…if not for the fact that we already have something called a library. (Or a used bookstore, perhaps.)

But look past the apparent tragic unawareness on the poster’s part of public services. Why, in fact, do people use Netflix instead of the library? Would people actually use a book-Netflix? I suspect they would, even if they were getting the same service for a little money rather than for free, because “only poor people can’t afford to pay for books.”

How much does your fear of looking poor influence what you do? Do you truly want that new car or shiny watch, or do you just want to look like a well-to-do member of society? If you didn’t care what other people thought, would your spending habits change?

Separating necessities and luxuries

Memorial Day Weekend is almost over. Are you satisfied with however much money you spent for it?

$4 gas prices have significantly affected people’s spending habits in a way that hitting the $3 mark didn’t, Marketwatch says. There are articles all over describing how people have been trying to save money on Memorial Day weekend–though not always by canceling plans. “You can’t make financial decisions based on happiness,” said a man whose family used their economic stimulus refund to fund their family gathering (but decided not to buy steak for it).

Money may not buy happiness per se, but it can buy some things that will make you happy–a plane ticket to see your family, or food for a birthday party, or that painting you’ve been wanting for your bedroom. And, of course, money also supplies the necessities of life–food, clothes, medication–without which we find it harder to be happy.

The problem comes in defining and obeying the line between discretionary spending (luxuries) and autonomous spending (necessities)–particularly if you are used to a certain level of discretionary spending and are finding yourself required to reduce it. (more…)

Addictions – Fatty Foods

We’ve looked at the addiction to caffeine, but are there other addictions that impact our financial and physical health?

When people are stressed, often we turn to our comfort foods. Foods that might help bring up happy memories, or just ones that we associate with relaxation.

A lot of food companies try to tap into this as well. They use different marketing tools to try and get us to associate relaxation with their chocolate brownie sundae, with their cake, or with any other “sinful” dessert treat that we “deserve”. Each of these treats comes at a cost, both to our health and to our pocketbook. Treats such as these are in excess of our ordinary food budget. A single chocolate bar a week adds up to about $50 per year. Make that a $5 dessert instead, and you’ve spent $250 on food you don’t need.

It’s easy to argue that it is needed. It’s a luxury. It’s something that makes us feel better. Well, some studies have shown that fatty food does in fact create a physiological response in the body that can help to reduce stress. So, you have something that you can eat which makes you feel better. That is definitely the definition of a comfort food, but also something to which you can become psychologically addicted. Why change your lifestyle when you can just eat something to feel better?

Now, the kicker to this is that this same positive feeling can be achieved WITHOUT the comfort foods. Comfort foods are an easy path to the result, but they are one of the many factors leading towards higher rates of obesity. This in turn starts a downward cycle of lifestyle. We then spend money to counter that downward cycle by joining gyms, buying exercise equipment and so on.

So, get out of the cycle. Rather than getting yourself a sundae for your stress, take a walk. Rather than having a chocolate cappuccino, get an extra half hour of sleep! You save yourself money in the short-term AND save your health in the long-term.

Gardening is good for the mind, body, and pocketbook

My garden is just getting into full swing. The lettuce and spinach are just about ready to pick; the onions and leeks are slender versions of their mature selves; the carrots and dill are putting out their delicate foliage. I’ve got squash and melon plants waiting for slightly warmer weather, but when that warmer weather hits, my yard will be full of good things to eat.

Why post this in Money and Minds? Because gardening is good for your mind, body, and pocketbook.

Digging in the dirt has actually been found to be beneficial for mood. A Neuroscience article last year described the finding that bacteria in the soil may have the same effect as antidepressants. Antidepressants work by increasing the amount of serotonin, a neurotransmitter, in the brain, which then goes on to affect various brain structures. Current neurotransmitters either reduce the brain’s ability to inactive serotonin (MAOs) or slow its ability to remove it from synapses where it does its work (SSRIs). These bacteria, on the other hand, cause neurons to release more serotonin. The result: if you’ve got your hands in the dirt, you may be happier.

Anyone who’s done gardening–any yardwork at all, in fact–knows it can be a workout. Researchers have found that any daily physical activity, including housework, gardening, and sports, is correlated with lower risk of psychological distress. The minimum level of activity that showed a benefit was 20 minutes per week, but the more activity, the better the mood. And being more active helps keep your body fit, which improves your self-image and, ultimately, benefits your bank account through fewer doctor’s visits and medications.

And the benefit of vegetable gardening to the pocketbook should be evident to anyone who’s buying food these days. When you’re saving money by shopping for produce in your backyard instead of your local grocery, rising prices of gas and bread aren’t quite so painful. A packet of lettuce seed, for example, will cost you around $1.50, but contains enough seeds to keep you in salad for as many years as the seeds will last (around 5 years if you store them cool and dry). A single tomato plant, also around $3, will typically yield around ten pounds of tomatoes. And the taste is far superior to anything you can get at the grocery store.

Gardening gives you exercise, fresh vegetables, and a good mood, both from the serotonin and from the feeling of empowerment. Anyone with access to sunshine, water, and seeds can do it. You might have a few startup costs, but the price of a couple of bags of soil and a spade will be more than offset by the cheap, delicious, nutritious vegetables you can grow. If you’ve never gardened before, a book from the library or a search of the Internet will help you. Here are a few sites to start with:

It’s not too late to start a garden. We’ve just come upon the last frost date for many regions, which is when you want to wait to plant most vegetables. So consider digging in a bit of earth, growing some cheap food, and reaping the benefits.

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