When Frugal Becomes Cheap

(or, "Sometimes You Have to Spend More to Save More")

A few weeks ago, my good friend got a hankering to buy a new handbag. Nothing fancy with all the bells and whistles of a Gucci couture bag. She simply wanted a well-made, fashionable leather bag that would hold up better than her previous Target bags had fared over the course of only a few months.

So she set out on her quest, knocking on the door of every website on the web, desperately seeking not Susan, but a somewhat stunning, quality handbag sans the stunning, unaffordable price. I empathized with her purse plight. We're a lot alike in the frugality department, and both thrive on finding the best deal possible (maybe that's why we're such good friends!). Initially she wanted a Coach bag ... lower-end designer, a pinch more affordable than, say, Marc Jacobs, but still quality. Even though she had the money saved up for said handbag, the $350 to $400 price tag chilled her to the core when push came to shove. So she kept searching. The more she searched, the lower her price point became until finally she inevitably found herself in the below-$100-range, looking at handbags made not of leather, but what looked to be parachute vinyl and faux croco-pleather.

She had lost sight of what she wanted: A quality leather purse that could withstand the wear and tear of (at least) a few years. Instead she had become consumed with the number on the price tag alone. The cost, and not the value, had become the determining factor in her what-turned-out-to-be-vinyl-laden voyage.

Which brings me to the topic du jour: When is that line crossed when the art of frugality becomes just plain being cheap? How do you know when you've become too frugal? Is there really such a thing?

I think that frugal people see the inherent value in potential purchases, whereas cheap people only see the cost.

Lets face it: It feels great when you find a bargain, be it in the clearance bin at Circuit City, a special deal on flat screens at Target, or a mega sale at Banana Republic. But finding a bargain can become a habit -- one that may not always be the most cost-efficient over the long term. Case in point: I always buy my most frivolous purchases on sale. These include DVDs, books and CDs, where I turn to the Amazon marketplace and usually score any item I want for under $10. Also under the frivolous purchase category are trendy clothes that I want for cheap (usually bought at places such as H&M, etc.), coffee when I'm on the go and those yummy spiced-cinnamon-scented candles that remind me of Fall (they're a guilty pleasure). These sort of purchases are illiquid and don't hold much value.

I've conditioned myself to always find everything at the cheapest price possible -- it's become an exciting challenge of sorts, and gives me a fabulous feeling of pride and accomplishment when done right. This is great for when I buy knockoff jewelry I don't care about losing or some shirt I know will go out of season by Winter, but unfortunately, applying this mentality to even the slightly bigger purchases in life can end up costing more in the long run. How? Well, by buying the cheapest, say, laptop now instead of investing in the mid-priced one, you invite the probability of expensive problems occurring in the short term and the likelihood that the laptop will need to be replaced sooner than one with perhaps a better brand name or better parts. The same could be said for vehicles, vehicle maintenance, kitchen appliances (such as coffee makers, blenders and refrigerators), or (ahem) quality handbags.

Notice that I used the word "investing." These types of purchases should be viewed as investments into securing at least the next few years as dependable and maintenance-cost-free. Granted, if Home Depot is having a 4th of July sale on refrigerators, then by all means take advantage of those savings padded with the premise of red, white and blue. But don't wander into BestBuy and purchase a $20 Apex DVD player just because it's the cheapest find. Why? Because you'll probably have to replace it by year's end after it's eaten your copy of The Devil Wears Prada and refuses to give it back, even after repeated verbal pleas, coaxes and eject button presses. (I speak from personal experience.) Bargaining with said generic DVD player also doesn't work. ("If you give me back my Devil Wears Prada, I'll trade you with Love's copy of Minority Report. ... No? ... Sigh.")

So that $20 DVD player could actually cost you more in the long run, with the initial $20 cost on top of whatever you pay to either have it fixed or replaced with a slightly-more-expensive, better-quality one.

Going back to my handbag-hunting friend, if she invested in a more well-made, "pricier" handbag, her need to buy a new bag every few months would diminish. Say she bought a leather Dooney and Bourke bag for $300. The price seems shocking to us savvy savers, but considering that this isn't the type of purchase we make on a regular basis -- and it's one that will literally last years (think 10 to 20) -- it's okay. Really. After you've gotten over the initial sticker shock, consider how much you'd spend on a handbag from Target or Nine West, and how often each cheaper bag would need to be replaced.

A $50 handbag will probably last two years, on average. It varies from girl to girl. To replace it with new bags, whether because of wear and tear or because it's plain not in style anymore, would cost $500 over the course of 20 years. And let's face it, ladies: The cheaper the bag is, the more you feel "okay" about buying others to add to your growing collection of cheap bags. If you bought the more classic, well-made Dooney and Bourke bag for $300, that's how much it would cost. Plain and simple. (I recently bought a D&B giraffe bag as a birthday present to ... myself ... in April, and believe me -- the leather and stitching will definitely carry me into at least my 40s, if not beyond!)

That saves you at least $200, if not more due to the psychology of buying things cheap. What do I mean by that? I believe we feel that when we save money on items, we feel like we've earned the right to buy more ... we saved by finding that fabulous deal in the first place, after all. This, of course, negates the whole idea of finding the cheapest buy. But it feels positively marvelous leaving a mall or store with bags of goodies versus one bag with one or two items. Like we've gotten our true money's worth. But have we, really? I think we've gotten too used to the feeling that we need more items for our money versus less. Quantity, in essence, has become our mantra over quality.

So don't just look at the cost on the price tag. Look at how much your purchase will actually cost you overall. It may be a higher price upfront, but after you've gotten over the sticker shock, know that it could end up saving you more money in the long run.