Liz Weston is the author of The 10 Commandments of Money and other personal finance books. She had this question on her blog Ask Liz Weston a couple of months ago.
Dear Liz: Although I’m able to pay my bills, it’s the decisions regarding cable, telephone, Internet and various insurance options that drive me nuts! I’ve tried to seek out independent groups that discuss such issues, but none exists in my area; and these decisions are not covered by my financial planner, nor do I wish to pay a senior money manager for this advice. As an elder orphan, I’m finding these decisions and others regarding repairs, workmen, etc. very stressful. Friends don’t really want to help and be held “responsible” if their recommendations don’t work out. What do you suggest?
My answer is stress goes away when you stop wanting the best. We live in a world with abundant choices. Every product or service has reviews. Some people say the product or service works great. Some people say it’s the worst. When you must have absolutely the best bang of your bucks on everything, you can drive yourself nuts looking for the sweet spots. However, if you simply pick what works even though it may not be “the best” you avoid the stress altogether.
I relate to two experiences recently.
New Washer
It’s been almost four years since I successfully repaired our washer (see Pay For Advice Or For Using a Screwdriver). It was still working but I thought I got enough years out of it (15 years total). I decided to replace it preemptively.
I could’ve gone to Consumer Reports and read which washer they rated as their CR Best Buy. I could’ve studied the features of various models and read reviews for each model. When I reflected on how I had been using my washer, I just didn’t see how much performance I demanded of it. It had several settings but I always used only two: warm wash for white and cold wash for colors. I don’t remember how much I paid for it originally. I estimated over 15 years, with the cost of a repair, it came out to maybe $70 a year. I figured any random washer I buy would work just fine.
I went to Home Depot’s website and I just picked one of the least expensive front-load models that looked solid. Judging washers by the look is not the best way. I know. It was a Maytag 4.3 cu. ft. High-Efficiency Front Load Washer with Steam in White, model number MHW3505FW. When it was on sale, with new hoses, sales tax, haul-away fee, and after a rebate from local utilities, it came out to under $500 total. Is it the best? I doubt it. Should I have gone with a top-loading model for less money? I don’t know. Could I have gotten a much better one if I spent a little more? Quite possibly. I’m confident it will work just fine though.
I had no stress when I bought this washer because I didn’t look for the best. I only added a wall-mount surge protector to help protect the control board from being fried again.
New Loaf Pan
I was using a glass loaf pan for baking bread and I wanted a metal one. I was attracted by the look of this Williams-Sonoma Goldtouch Nonstick Loaf Pan.
Except it costs three times as much as this Wilton Ultra Bake Pro 9″x5″ Loaf Pan from Target. Does the more expensive pan work better than the less expensive one? Will I be able to tell? If I’m able to tell, does it work three times better? I doubt it, but I still picked the more expensive one because I liked its look.
Judging by the look again, I know. I did it because I like the reverse latte factor: waste money on small things, win on big rocks. I expect this small splurge will last a long time.
You don’t have to comparison-shop and look for the best for your money all the time. Stress goes away when you stop wanting the best.
Back to our usual topic of investing. You can go crazy in trying to figure out what will work the best “in this environment” or you can just go indexing and own the entire market. Indexing is not going to be the best. You can stress about whether to go with small cap and value tilts, the newfangled quality and momentum factors, or plain vanilla indexing, or the choices among target date funds, lazy portfolios, Vanguard PAS, Fidelity Go, Schwab Intelligent something, Betterment or Wealthfront or you can just pick one that you can stick to and move on. Whatever you choose, it’s not going to be the best. See also What Makes Investing Hard?
Say No To Management Fees
If you are paying an advisor a percentage of your assets, you are paying 5-10x too much. Learn how to find an independent advisor, pay for advice, and only the advice.
Tyler says
It’s been a while since I read it, but I think this is essentially the premise of “The Paradox of Choice” (my recollection is that it was worth reading). Life is too short to stress yourself out over a loaf pan. Great article!
Sam Seattle says
I agree. Life is too short to stress out over a loaf pan.
nicoleandmaggie says
I was gonna say this exact same thing– The paradox of choice is awesome. (Here’s our book review: https://nicoleandmaggie.wordpress.com/2010/07/21/satisficing-as-a-life-philosophy/ )
Though I do get a lot of pleasure out of getting a high quality pot or pan. We’ve had the target knock off Le Crueset and we’ve had the genuine Le Crueset, and after a couple of years there’s a big difference between the two. Sometimes spending the extra money is worth it.
Our method of satisficing is usually to go on Amazon and look for the highest rated item in our price range and just buy that. We used to use Consumer Search but then they stopped updating as frequently so we don’t use it as much.
Mrs. Picky Pincher says
I read a Frugalwoods post a while back that relates to this. Their point was that, by living frugally, your options are already automatically limited. You don’t need the newest or the best of everything; just buy what makes sense for your needs. If something better comes along and saves you money, leap for it!
We all make mistakes and it’s okay to learn about a better deal after the fact. Don’t let the choices or fear of failure keep you from acting. Just pick what you think works best for you (because everyone is different and no one solution is always the ‘best’), and the rest will fall into place.
Mark Zoril says
Thanks for this post, Harry. I have, generally speaking, pursued many of my purchases with this approach. I didn’t do much shopping. I just purchased what seemed to be the best for my situation and got on with my life. I didn’t worry about it much. My wife is the opposite. We came into our marriage with different ideas on this. She seemingly does a spreadsheet for virtually everything we buy. It is a bit of a compulsion. In many cases, she clearly has saved us some money and gotten us better values. By and large, I am happy that we have this balance, though it can be aggravating to examine some of this info in too much detail.
financeBuffReader says
Agree with the overall point. My spouse and I have had a similar debate with vacuum cleaners. I don’t think the premium vacuum cleaners offer any utility over the budget vacuums.
But I disagree with the washer example. $500 is not pocket change. Saving a $100 because of shrewd research can cover the cost of a special night out.
Unreliable appliances can be a stress factor, particularly for those like me, that can barely change a light bulb. In my area, repair people are expensive and only available during business hours (ie repair requires time off the job).
Quality matters. When I was doing my research, I found a large number of quality complaints with the latest energy efficient washers.
Features do matter – a larger washer size saves me time from having to do multiple washes.
I guess it comes down to where you draw the line between small and large purchases and which factors trigger stress.
Harry Sit says
$500 isn’t pocket change to me either. I just didn’t think there was a reliable way for me to judge the long-term reliability of any specific model.
Stephen L. Nelson CPA says
Good thoughts Harry.Thank you. And this is maybe the same thing…
I sometimes realize I’m fixated not on the glass being half empty rather than half full… but on the glass being ten percent empty when it’s also ninety percent full. Yikes. Not the way to manage stress.
Living Free says
Haha. I cannot help but laugh as I read this post. This is so true.
The entire world is all about being THE BEST. We all aim for the best job, the best car, the best house, the best everything.
But, nobody actually considers the opportunity cost of being THE BEST. There’s a price for everything in life, I guess.
Maybe, being average is the best? 😀
Tank says
It’s like a scene from The Americans where the 2 older Russian spies are in a diner and remarking that they have 14 kinds of omelets and 17 sandwiches, They decide to order tea, and the waitress says, Green tea, Darjeeling, decaf, Black, and before she can say another word the woman says “JUST BRING US SOME TEA!”
Choice tends to freeze us up, but all things being equal I’d rather have it our way than in some working class store in today’s Russia, or almost anywhere but the first world…
Desi Hisab says
Nice post..Today, the options are in abundance so we tend to get confused.In today’s world, we think it is important to be assertive and confident otherwise everyone will ruin you under your shoe.
Daniel Akst says
Good post. Herbert Simon won a Nobel Prize for this insight. Satisficing is the way.