I’m annoyed that I think so hard about small daily decisions.
Is there a simple and ideally general pattern to not spend 10 minutes doing arithmetic on the cost of making burritos at home vs. buying the equivalent at a restaurant? Or am I actually being smart somehow by spending the time to cost out that sort of thing?
Perhaps:
“Spend no more than 1 minute per $25 spent and 2% of the price to find a better product.”
This heuristic cashes out to:
Over a year of weekly $35 restaurant meals, spend about $35 and an hour and a half finding better restaurants or meals.
For $250 of monthly consumer spending, spend a total of $5 and 10 minutes per month finding a better product.
For bigger buys of around $500 (about 2x/year), spend $10 and 20 minutes on each purchase.
Buying a used car ($15,000) I’d spend $300 and 10 hours. I could use the $300 to hire somebody at $25/hour to test-drive an additional 5-10 cars, a mechanic to inspect it on the lot, a good negotiator to help me secure a lower price.
For work over the next year ($30,000), spend $600 and 20 hours.
Getting a Master’s degree ($100,000 including opportunity costs), spend 66 hours and $2,000 finding the best school.
Choosing from among STEM career options ($100,000 per year), spend about 66 hours and $600 per year exploring career decisions.
Comparing that with my own patterns, that simplifies to:
Spend much less time thinking about daily spending. You’re correctly calibrated for ~$500 buys. Spend much more time considering your biggest buys and decisions.
For some (including younger-me), the opposite advice was helpful—I’d agonize over “big” decisions, without realizing that the oft-repeated small decisions actually had a much larger impact on my life.
To account for that, I might recommend you notice cache-ability and repetition, and budget on longer timeframes. For monthly spending, there’s some portion that’s really $120X decade spending (you can optimize once, then continue to buy monthly for the next 10 years), a bunch that’s probably $12Y of annual spending, and some that’s really $Z that you have to re-consider every month.
Also, avoid the mistake of inflexible permissions. Notice when you’re spending much more (or less!) time optimizing a decision than your average, but there are lots of them that actually benefit from the extra time. And lots that additional time/money doesn’t change the marginal outcome by much, so you should spend less time on.
I wonder if your problem as a youth was in agonizing over big decisions, rather than learning a productive way to methodically think them through. I have lots of evidence that I underthink big decisions and overthink small ones. I also tend to be slow yet ultimately impulsive in making big changes, and fast yet hyper-analytical in making small changes.
Daily choices have low switching and sunk costs. Everybody’s always comparing, so one brand at a given price point tends to be about as good as another.
But big decisions aren’t just big spends. They’re typically choices that you’re likely stuck with for a long time to come. They serve as “anchors” to your life. There are often major switching and sunk costs involved. So it’s really worthwhile anchoring in the right place. Everything else will be influenced or determined by where you’re anchored.
The 1 minute/$25 + 2% of purchase price rule takes only a moment’s thought. It’s a simple but useful rule, and that’s why I like it.
There are a few items or services that are relatively inexpensive, but have high switching costs and are used enough or consequential enough to need extra thought. Examples include pets, tutors, toys for children, wedding rings, mattresses, acoustic pianos, couches, safety gear, and textbooks. A heuristic and acronym for these exceptions might be CHEAPS: “Is it a Curriculum? Is it Heavy? Is it Ergonomic? Is it Alive? Is it Precious? Is it Safety-related?”
I’m annoyed that I think so hard about small daily decisions.
Is there a simple and ideally general pattern to not spend 10 minutes doing arithmetic on the cost of making burritos at home vs. buying the equivalent at a restaurant? Or am I actually being smart somehow by spending the time to cost out that sort of thing?
Perhaps:
“Spend no more than 1 minute per $25 spent and 2% of the price to find a better product.”
This heuristic cashes out to:
Over a year of weekly $35 restaurant meals, spend about $35 and an hour and a half finding better restaurants or meals.
For $250 of monthly consumer spending, spend a total of $5 and 10 minutes per month finding a better product.
For bigger buys of around $500 (about 2x/year), spend $10 and 20 minutes on each purchase.
Buying a used car ($15,000) I’d spend $300 and 10 hours. I could use the $300 to hire somebody at $25/hour to test-drive an additional 5-10 cars, a mechanic to inspect it on the lot, a good negotiator to help me secure a lower price.
For work over the next year ($30,000), spend $600 and 20 hours.
Getting a Master’s degree ($100,000 including opportunity costs), spend 66 hours and $2,000 finding the best school.
Choosing from among STEM career options ($100,000 per year), spend about 66 hours and $600 per year exploring career decisions.
Comparing that with my own patterns, that simplifies to:
Spend much less time thinking about daily spending. You’re correctly calibrated for ~$500 buys. Spend much more time considering your biggest buys and decisions.
For some (including younger-me), the opposite advice was helpful—I’d agonize over “big” decisions, without realizing that the oft-repeated small decisions actually had a much larger impact on my life.
To account for that, I might recommend you notice cache-ability and repetition, and budget on longer timeframes. For monthly spending, there’s some portion that’s really $120X decade spending (you can optimize once, then continue to buy monthly for the next 10 years), a bunch that’s probably $12Y of annual spending, and some that’s really $Z that you have to re-consider every month.
Also, avoid the mistake of inflexible permissions. Notice when you’re spending much more (or less!) time optimizing a decision than your average, but there are lots of them that actually benefit from the extra time. And lots that additional time/money doesn’t change the marginal outcome by much, so you should spend less time on.
I wonder if your problem as a youth was in agonizing over big decisions, rather than learning a productive way to methodically think them through. I have lots of evidence that I underthink big decisions and overthink small ones. I also tend to be slow yet ultimately impulsive in making big changes, and fast yet hyper-analytical in making small changes.
Daily choices have low switching and sunk costs. Everybody’s always comparing, so one brand at a given price point tends to be about as good as another.
But big decisions aren’t just big spends. They’re typically choices that you’re likely stuck with for a long time to come. They serve as “anchors” to your life. There are often major switching and sunk costs involved. So it’s really worthwhile anchoring in the right place. Everything else will be influenced or determined by where you’re anchored.
The 1 minute/$25 + 2% of purchase price rule takes only a moment’s thought. It’s a simple but useful rule, and that’s why I like it.
There are a few items or services that are relatively inexpensive, but have high switching costs and are used enough or consequential enough to need extra thought. Examples include pets, tutors, toys for children, wedding rings, mattresses, acoustic pianos, couches, safety gear, and textbooks. A heuristic and acronym for these exceptions might be CHEAPS: “Is it a Curriculum? Is it Heavy? Is it Ergonomic? Is it Alive? Is it Precious? Is it Safety-related?”