The $400 Phil and Ted’s Stroller - Dissecting The Purchase

Posted on April 28, 2008

Sticker shock. That is probably your first thought, I know it was mine when The Happy Rockette first told me about the stroller. A little more than 3 months later, we own one! See the picture below for a quick look or click here for an in depth look at PhilandTeds.com.

Here are the criteria I used to evaluate the purchase and why I think it was a great purchase:

Pay Cash. The Rockette had been working every other Saturday to help out at her former job and decided she wanted that extra effort to go towards something. We had the money in two weekends or so. That month gave us some time to do some extra research and really get behind the purchase.
Aligned With Our Values. Being in a small condo, going outside is a must. We love going the park and hiking the trails, walking the boardwalk, going to museums, etc. With the addition of Pebble Jr. two strollers just made everything much more of an ordeal. The purchase would help us cope with a small house, provide us with much more convenient time outside, and contribute to the positive welfare of our children.
Get Good Value. Could we have gotten a $200 double stroller? Sure…so that what did we get for the extra $200 dollars.
- When we went to the store to check the stroller out in person, it was quite apparent that this stroller had years of research and design put into it compared to the other double stroller. It folded up smaller then our current one seater. Size is a big deal for double strollers. It provided multiple child configurations that accommodated our baby and a toddler all the way to two toddlers. The current setup has the Pebble Jr. laying down, and the Big Pebble perched on top. There was even enough room to change the Pebble Jr. which has come in quite handy. Handles are adjustable, covers and rain protectors are easy to use and store nicely, it is easy for The Rockette to push, and the list goes on. The value is in the design.
- Pretty much everyone who owns a Phil and Ted stroller raves about it. Not in an I drive a BMW or Mercedes kind of way, but in a “it’s made my life so much easier” way.
- The resale value on used strollers was not much less than brand new, usually $300 or more. This is an indicator of people’s willingness to pay and the quality of the product. It also helps justify the purchase to know that you can unload the stroller and get a decent portion of the purchase price back.
Get A Good Price. We searched for about a month until with found a new one for $399 with free shipping from Pish Posh Baby. I even emailed to see if there were coupons available, but they didn’t respond until they included a coupon code for pishposhbaby.com with my order. You can get 5% with the code Save5 though 5/30/2008.

So far we are very happy with our purcahse, even though I still have a little sticker remorse from time to time when I realize the the stoller is almost worth the same amount as my car. What do you think? Am I crazy and just justifying a silly purchase?

» Filed Under Cash, Children and Money, Spending

Cash Only Spending Experiment Analysis

Posted on January 9, 2008

Time to clean house. I have been carrying this dirty laundry around, since August.

In July I started an all cash experiment to test the Dave Ramsey argument that you can save 12-18% just by spending cash. View the cash only experiment details here and the benefits of spending cash here.

Some readers have asked me for the results of the experiment while back, but I admit I have none to offer. It took a few months, but I am finally willing to admit that the experiment was a failure. I apologize.

We didn’t fail to complete the actual experiment. We did go all of July without swiping plastic once, but what broke down was my ability to analyze the results. I still have an envelope with the receipts I was able to save from the experiment, but I don’t think I will be able to glean much from the incomplete set of data.

The truth is that the no cash month was such a radical change in my habits that I was beat down by the end of the month. I didn’t have the energy to stay on top of things during the month and I was so discouraged at the end of the month that didn’t complete the analysis. I think part of me didn’t want to see that it saved money, because I wasn’t ready for the change. Another part of me wasn’t sure that I had been diligent enough in my record keeping to make the data meaningful.

I have wrestled with it and tried to slide it under the rug, but the spirit in me that desires change won’t let it go any longer. The Happy Rockette also added some words of encouragement.

Yes it seems silly that a trivial change like spending only cash got the best of me, but it really did stress a large number of ingrained habits and required a lot of energy complete. I am OK with failure as long as it is a pathway to growth. With this admission, I think it will become just that. The time and energy was by no means a waste. The next time I try the experiment again or even different experiment I will have more insight, wisdom, discipline, and knowledge to bring to the table.

Sorry to disappoint anyone that was truly interested, but I hope to resurrect the experiment again with much better results. Is there anyone that would be willing to join me in the next effort? With a little more planning and discipline I think we could get some meaningful data out of it. Data that can help save money and improve lives!

» Filed Under Cash, Experiments, Psychology of Spending

Our Personal Paying Cash For Cars Story

Posted on September 19, 2007

Last post we talked about changing the way we talk about car loan debt, now let’s talk about avoiding the debt in the first place.

The picture to the right is the car we own today. Ok, ours is just a normal bronze Murano, but you get the picture. In this post I wanted to outline the strategy we followed after going $15,000 for a 1999 black on black Toyota Celica.

First off, I didn’t realize it until years later, but buying the Celica was a mistake. My wife liked the car so much that she may disagree, but going into $15,000 of debt in the first few months of marriage was not a wise choice.

The payment was just over $300 dollars a month, but the loan was our highest interest debt and was paid off in two years. During that time we decided not to go into debt again. We had a lot more debt to pay off, so we snowballed the freed up money into other debt.

Fast forward two years, and we were just about out of debt and had a brand new baby boy. The ride home from picking him up was quite a sight. The rear bucket seats of a sports car don’t accommodate a car seat well. The Rockette was smushed into dash, just so the car seat would fit.

We needed a new car, and fast. We didn’t have the money for the nice lower mileage SUV that we wanted, so rather then going into debt, we traded the Celica and paid cash for a four door Ford Focus hatchback. After a year we were quite unhappy with the Focus; to us it was a cheaply made lemon.

With no debt, we had been stocking away cash at a good clip. Finally, we traded the Focus and paid 8k in cash for a 2 year old bronze Nissan Murano. We had the car we wanted, and were able to avoid going into debt while doing it. Next post I will dissect this strategy, and share some tips for staying out of auto financing.

» Filed Under Cars, Cash, Debt Elimination

It’s Hard Without Habits - July Cash Experiment Update

Posted on July 11, 2007

10 days into the July Cash Experiment and we have seen our share of speed bumps. First was forgetting that Sunday the 1st was actually July. I hadn’t withdrawn any cash to start the month. My preparation wasn’t there and I resorted to the debit card to avoid a 2.00 ATM fee at Target. Probably not the best choice for the experiment’s sake, since dealing with fees is something that must be balanced when using cash.

The next speed bump was with paying tolls. I have EZ-Pass, an electronic toll collection system, so I haven’t paid cash in years. The ez-pass allows no waiting in lines or even stopping for that matter. I love my ez-pass, but the scary part is that I forget that money is exchanged when going through tolls. $30-$35 a month that is so automated I don’t even notice it anymore. With cash there would be no way to miss shelling out $3.00 every time I go into Pennsylvania.

One trip to the grocery store, I realized that I only had about $90 in cash. The bill came to $92, luckily I had my wife’s wallet with me to scrounge up two more dollars. The really interesting part is that I usually spend $120+ each week. $92 vs $120+ and amazingly we don’t feel like we are missing anything.

The last speed bump was the camping reservation that was held with a debit card, and then automatically debited when we checked in. An example of just how ingrained plastic is into our consumption.

The biggest problem has been that lack of habits surrounding spending cash. Not only do we have to fight our ingrained plastic spending habits, but we also do not have any cash habits. Things like a weekly trip to the bank/ATM and budgeted spending amounts (so i can make sure I have enough cash) will make spending cash much easier. Forming habits in your finances is a great tool for success. Habits like paying yourself first, automatic savings, and regular budgeting go a long way to making valuable tasks simple and reoccurring. We all have habits it is a matter of whether they are productive or not.

I haven’t reviewed any numbers yet, since I don’t want to skew the experiment. My gut tells me that we will save some money. Even if we don’t, the adventure from our comfort zone will provide some nice growth and perspective.

I refer you to Zen Habits for a few tips on building habits. Zen Habits is an amazing blog about forming positive habits in a variety of areas. Here are a small sample : how to stop a bad habit, 10 finance habits, and habits and goals.

» Filed Under Cash, Experiments, Habits, Spending

The Credit Card Premium. How Much More Are We Paying?

Posted on July 6, 2007

Duncan Simester created one of the first experiments that attempted to directly test how consumer’s ‘willingness to pay’ is affected by credit cards. In this experiment 1^st year MBA students were instructed to provide a sealed envelope with the amount that they would be willing to pay for sold out Celtics and Red Sox tickets. One set of instructions required cash payment and the other a credit card payment. In both cases the face value of the tickets were not given. The prize was to be sold to the person who wrote down the highest price, but sold at the second highest price. This system was designed to extract the participant’s true ‘willingness to pay’.

The results were no less then surprising. Consumers were willing to pay 133% more for the Celtics tickets, and 76% more for the Red Sox tickets when using credit cards.

One of the suggested reasons is that consumers use different anchoring points to assess value. In one case the amount of cash the person has on them or in their account is probably used, and in the other the credit limit or remaining credit is probably used. Although the reason isn’t fully known, that shouldn’t really matter to the frugal spender. What matters is that there is such a thing as a ‘credit card premium’ and we need to be aware of it.

Has anyone noticed whether this is true in their own lives?

Source - Note the experiment was administered at a time when the Celtics were a playoff contender.

» Filed Under Cash, Credit Cards, Favorites, Psychology of Spending, Spending

Benefits And Drawbacks Of Spending Cash

Posted on June 29, 2007

In honor of the upcoming cash spending experiment I wanted address the benefits and drawbacks of spending cash. I will revisit this list after the cash experiment to see if I have anything to add or critique.

Benefits of Spending Cash

First and foremost, spending cash makes it impossible to spend more than you have. Going into debt is impossible with cash.
Forces us to face the consequences of a purchase up front rather then delaying it until after it is too late. Thinking through the consequences of a purchase may change your decision. By consequences, I am talking about making needless purchases, over-priced purchases, impulse buys, and even spending money that should have been designated to other areas. With plastic a lot of this information is gathered well after the purchase, and by that time it is usually too late.
Spending cash constantly reminds us of the value of a dollar. Buying a fancy $4 Starbuck’s coffee on plastic can become so much of a habit that we become oblivious to the fact that real money is changing hands. The consumer industry would love to make consumption as much like a video game as possible, they benefit when you forget what your money is worth. In this day and age with direct deposit, automated payments, and credit cards it is possible to earn and spend money without ever physically seeing any of it. It even kind of sounds surreal when you describe that way.
Spending cash hurts. This may not hold true when buying a pack of Wrigley’s Juicy Fruit, but it sure does when filling up an SUV at Sunoco. Psychologically, parting with cash is much tougher than swiping a card.
Paying with cash is faster. No waiting for signatures or authentication. Hand over the the cash, get some change, and you are done. Stores have ‘Cash Only’ lines for this reason.
A fringe benefit is that paying with cash can put more profit per purchase in the store owners pocket by avoiding the credit card company fees. For me I would rather give a little mom and pop shop some extra profit than line the pockets of the credit industry. This point maybe nullified if spending cash significantly lowers the overall spending in a given store.

Drawbacks of Spending Cash

Convenience, Convenience, Convenience. The hassle of finding proper ATMs, making sure you have enough for large purchases, and saving receipts to track your purchases makes using plastic make more convenient. Spending cash seems annoying, but I will see how annoying it is during the cash only experiment.
Security. Lost your wallet? You can probably kiss your cash goodbye. Plastic affords you extra security measures that cash just can not offer.
Credit card rewards. If spending cash proves to cut my spending by more than 1%, rewards won’t matter. I included it because rewards are where the credit card users get all worked up. They get quite passionate about their rewards. Free money, right? I suspect the credit cards companies are armed with more information than the consumer. We will see if credit card companies have done a good job blinding us with rewards.

» Filed Under Cash, Credit Cards, Experiments, Psychology of Debt

Save Yourself 18%? Cash Only Spending Experiment

Posted on June 27, 2007

With June drawing to a close, I wanted to lay out the plan for the cash only spending experiment in July. I talked about the impetus for the experiment in the ditch the credit card and save post.

Using the scientific method here is the break down of the experiment :

Goal : Test whether spending only cash will save 12-18% as Dave Ramsey suggests.

Hypothesis : Spending only cash will reduce the amount of money consumed in a given month.

Control : Currently the plan is to compare the cash only spending to the average of the previous 2 or 3 years of July spending, which was 95+% on credit and debit cards. I need to dig into the numbers a little more to find the baseline numbers that will account for things like vacation and other irregular spending. I may end up using an average of the all the summer months, but I will flesh that out in a later post.

Experiment : Spend only cash from July 1st to July 31st. This includes everything except bills which will still be paid online or by check for lack of a cash alternative. At first, I thought I would still pay gas with plastic, but ultimately that defeats the purpose of the test. Shelling out 50$ cash to fill up will have a physiological impact.

I do not plan to budget at all, since we only do post spending tracking as it is. I want to try and replicate previous years spending conditions as much as possible. The plan is to have plenty of cash on hand to spend on anything we want, just like we did with credit and debit spending. We will save all receipts and I will enter them into Microsoft Money every weekend.

Analysis : I hope to show the effect that spending cash will have on different categories of spending and on the overall budget.

Post Experiment : I will report status throughout the month and then final wrap-up in August. If the experiment proves successful and doesn’t need a follow-on month, we will move to a cash only envelope system to test the added benefits of the extra planning and control.

» Filed Under Cash, Credit Cards, Experiments

Ditch The Credit Card And Save Yourself 12-18%

Posted on June 10, 2007

I admit it, we do 95% of our spending on plastic. We have been using our debit and credit cards for years to pay for just about everything. The discipline is there, so everything is paid in full at the end of the month. $20-$40 cash lasts me the whole month. The system works for us, because we have discipline and are not big spenders. Also, downloading the transactions to Microsoft Money is a quick and convenient way to track your spending.

With that in mind, I remembered Dave Ramsey saying that you spend 12-18% less when using cash. Spending cash hurts. Here is someone offering me a better return than any savings account or mutual fund out there. I have always glossed over people saying that using cash saves you money, but I really should take a look at this. Any credit card rewards pail in comparison to 12-18%. I mean, credit card companies most likely offer the rewards since it provides a net benefit to their bottom line. Maybe part of the benefit is that people spend way more than the 1-5% reward that they give back. Plus without using credit there is no chance that I can go into debt.

Where I am going with this? The same place we should all go when someone positively challenges our way of doing things…to the laboratory. Experimenting with potential growth areas is must on our journeys toward freedom. The great thing about experiments is that if they fail or we don’t like them, we can easily resume our old ways. If I can save even half of the suggested numbers, it will probably be worth the effort. I will have to do some more research on ditching the plastic, but my first thought is for plastic free July.