Begin Here - My Spending Story
I came from very modest beginnings, reminiscent of The Deal Method in so many ways.
One of my earliest memories is drinking lemonade out of a repurposed Duck grape jelly jar that doubled nicely as a glass. My brother and I were trying to hustle neighborhood pocket change for something we couldn’t afford – probably a Super Nintendo.
Drinking out of a recyclable wasn’t a big deal – I knew no different – and it served that purpose just as well as any glass.
Our family made do with what we had. We repurposed the materials around us, salvaging the money we didn’t have to spend on glasses. Anytime we broke one, we bought some “fancy” jelly and got a free replacement.
As we earned more, we upgraded those glassed to a bargain set from TJ Max. We clipped coupons, shopped the clearance sections, and learned to use eBay. Consigned threads built the illusion that we could spend freely.
Each Deal provided a bit of leftover money by paying less than we were willing to pay. That leftover was our consumer surplus: money we were willing to pay but needn’t. And we were pumped to have one for the first time.
Then, we got a bit carried away, squandering it on a vacation and a fancy new car. And then the bills arrived and we had to tighten the belt again.
It felt amazing to have that car and that experience together; but we hadn’t considered the total cost of owning that fancy car or the likelihood we might overspend on our vacation, and credit cards were now our worst enemy. We got a little carried away without a backup plan to cover us.
#1 - Build Frugal Ingenuity, Self Sufficiency
As I moved out on my own, I carried that frugal ingenuity with me and built upon it.
When my car broke, I attempted to fix it before paying a mechanic. I changed my own oil, later increasing the value saved by using Amsoil to change my oil once yearly rather than every 3 months, and fixed my own flat tires.
My mom gave me a crash course on cooking before I left for college. And I continued to experiment with recipes, later going “pro” with a Rouxbe video course.
When I couldn’t afford high heating bills in Central Pennsylvania, I found insulation on closeout and blew it into the attic some 9 months later with the help of a handyman. Our heating bill was instantly cut in half.
But there were costs to consider as well.
Many do-it-yourself jobs require new tools and materials. But those tools equate to downstream savings from a growing toolbox and are available as Deals if you allow ample time to capture them. And tools and leftover materials can be saved for future projects.
I won’t attempt to tackle everything myself; I’m no contractor. I undertake 80% of “doable” jobs and save the unforgiving or risky ones for the professionals. This manages the risk of making the situation worse and incurring more costs – I know my limits but also understand they’re rooted in my inexperience. I then stick around to learn from the experts I’m paying, selecting reasonably priced ones that don’t mind if I hover and ask questions. In this way, the learning increases the value I get in return for my money.
The more I do, the more I learn, and the more jobs become “doable” as my comfort level grows. Experience reduces the risk that I’ll {oops!} flood or burn the house down.
None of these ideas are particularly unique so much as they’re an essential part of The Deal Method, collectively powerful. Frugal ingenuity can be applied to any part of your life with a global intent to operate as lean, or as efficiently, as possible.
Is Frugal a "Poor" Thing?
My parents look back upon our humble beginnings abashedly, but they shouldn’t. They wanted to provide more for me, but instead, did what they could with what they had. And that was enough. It was enough for me to graduate college when my parents hadn’t, to pay my way through school, enough to become a pediatrician, and to earn an MBA (next semester anyway).
Though making the most of what you have is a behavior one might associate with low-income households, it works in any household. So, no, it’s not a poor thing. It’s an efficiency thing.
Beyond necessity, anyone can learn to use frugal ingenuity to build self-sufficiency, lowering costs and salvaging money they would otherwise spend.
The shrewd build wealth and the newly minted wealthy stay that way by being frugal. You can do a lot with very little if you do it efficiently. Business empires are built on this simple idea; it can help you succeed as well.
The question then becomes: How do I apply the wisdom of frugal ingenuity to save while getting everything else that I need? And what else can I do to master my money?
#2 - Build a Spending Plan, Ditch the Budget
You’ve heard them both a million times:
“You just need to save more” OR “you just need a budget,” as if they’re age-old cure-alls. But to anyone buried in debt or struggling paycheck to paycheck, these words are obtuse. It’s easy to offer up a solution to someone in hell when you aren’t living it.
Ground gears aside, I take them to mean, “maybe you should shore up your spending” to earn more money quicker. The essence of these comments is on point, but in an oversimplified way. What you need is a means to build your surplus: the extra money left over to play with when you account for what you earn, less than what you spend.
You DON”T NEED A BUDGET. Budgets are trifling. So why not ditch that budget and go with the flow? You just need to build the right tool for the job. I’ll explain.
What Sized Shovel are you Working With?
Take these shovels, with which you can move almost anything – even a mountain of money.
If the amount you shovel represents the “gap” between the upper limit, your earnings, and the lower end, the money spent every month, then the width or size of your shovel is the size of your monthly surplus gap. That’s your earning efficiency.
When you visualize setting aside money that way, as a function of your gap, it’s a bit more straightforward to see why some folks can “save-sprint” towards their financial goals while others run in place.
Folks deep in debt struggle to impact an avalanche with a garden trowel. They’re often told a budget is a solution to all their problems when aggressively lowered your costs while you earn more is the actual key..
Does Anybody Really Need a Budget?
The ease at which one can earn extra cash these days renders having a budget obsolete for most.
Only those that like the restriction of a budget will benefit from one. I focus on maximizing the surplus I earn instead.
Spending is – and should be – fluid over time. You don’t spend the same every month. If you did, you’d likely miss out on some Deal opportunities.
Spending 30% extra over the holidays is no big deal if you’ve saved in advance or can recover in January.
Embracing that fluidity allows us to shift focus towards aggressively lowering costs while getting more, better Deals.
Having a spending plan instead of a budget buffers your spending habits. When this plan is based on what’s reasonable, I find myself staying on track naturally, and getting carried away less often.
Minding the gap allows you to focus on the value you’re getting from the spending itself, to get what you need for as little as possible. Spending to save alleviates the guilt of that pesky budget – suddenly spending is more fun as long as you don’t get carried away!
Spending Tendencies Inform your Spending Plan
When you refocus to save while you spend and minimize costs, reasonable spending ballparks emerge to keep your spending behavior in check.
Instead of a budget, I prefer a spending plan. Here’s an example of the way I think about this:
One of the easiest ways to spend a lot of money is eating takeout or delivery often.
Bearing in mind that the food we order is often less healthful than homemade and 2-4x more expensive, my wife or I cook whenever we can. We’ve both learned how to support one another during busy phases when the seesaw of life demands more legwork from one of us to support each other.
The more we practice, the tastier the food we make and the less draw to spend on ordering out. This leaves us only to improvise when we plan to cook but just don’t feel like it. We aim to eat out once or, at most twice, a week. We’ll usually eat out about three other times throughout that month. Once from a burger joint worth the splurge and the other two based on special occasions or cravings. About once every three months we get carried away during a busy period and then reel it in. All bets are off when we travel.
We frequent Chipotle because it’s cheap, delicious, responsibly sourced and a healthier offering compared to the alternatives. We can squeeze two meals from every burrito bowl and our kids can manage 4. This equates to a higher “value density” as it’s cheap and enough food for subsequent meals you now needn’t spend to provide. The full strategy is far more nuanced than this but you get a general idea.
That’s our loosely defined restaurant spending guideline – we focus on operating within it and otherwise don’t worry about it. When the plans are built to save, we don’t sweat it.
Ours may not work for you and yours, but it represents our preferences defined enough so that I know when I stray from them, yet fluid enough to allow reasonable deviation as needed. See? No budget jail. No restraint, pain, or guilt.
I built a system to save while I spend, aggressively lowering costs, in every area I can, one bite at a time.
Build Yourself A Snow Shovel
There are two simple ways to carve out a bigger shovel.
#1 – Earn more while spending the same amount.
OR
#2 – Cut your costs by paying less for what you buy – but don’t be a cheapskate at the expense of your happiness.
Both can allow you to save more by increasing the surplus. A plan to build in both areas will get you there quicker. That’s The Deal Method.
A growing surplus instantly allows you to do more. What that more is, is up to you. That’s freedom baby!
#3 - Apply The Deal Method to Every Purchase
The Deal Method 101 - Maximize Your Deals!
The Deal Method is a systematic way to maximize the value you get from every purchase. Both directly through paying less and indirectly through the many ways to recapture value around that transaction.
So how do we do that?
1. Select The Right Product: By choosing the right, reliable product from the outset, you save the time and money you’d later waste replacing it. This happens in cases of partially met needs or premature failure.
2. At The Right Price: We use pricing data trends to buy things when they’re available on the cheap. There’s a world of information and tools out there we use to streamline finding and maximizing each Deal.
At 40% off of retail – near or below cost – you lock in a price point close to zeroed profits AND settle near the price anyone will pay for many items second-hand. The less you pay up front, the less you lose in depreciation between getting the item and selling it on.
If you then avoid paying for shipping and ensure you can return it if needed, without a restocking fee, you’ll avoid other potential future costs.
3. Recapture Value: No Rush Shipping, Coupons, Promo Codes, Cashback, Shopping portals, credit card points and miles, receipt scanning, and surveys are all opportunities to recoup a cut of the money usually paid out to marketing and banks. If you know how it works, you can get your hands on a sizable amount of the money otherwise syphoned from the retailer.
4. Marketplace Resale and/or Donation: You can get almost every dollar you put into items bought with The Deal Method by reselling them. Or, if you’d rather not bother, then donate them instead. Donations to a worthy cause today are itemized deductions and tax dollars you won’t pay tomorrow.
5. Choose products and retailers you that follow through: Choosing retailers with generous return policies is a great backup plan. Treat every return window like a trial period after which you’re stuck with what you bought. Warranties are useful for big purchases, especially if extended by your credit card.
Working with Customer Service to rectify grievances is another often-overlooked opportunity. Things are lost, damaged, misrepresented, or incomplete all the time, and when you make time to ask that those situations are made right, there’s huge potential to unlock hidden value capture.
6. Do all of these things FAST and in series. Everyone is familiar with some of these, but few apply them all, in series, to create killer “Stacker” Deals. The Deal Method will teach you how to do just that. Often overlooked, your time is your most valuable resource once you’re earning enough to meet your financial goals. You don’t want to spend an entire day saving $50 on a TV when your time is worth $50 or $100 an hour. The Deal Method aims to save you time while saving money.
Putting It All Together
Though it may seem complicated, even overwhelming, we reduce the process into a concise, approachable way such that anybody can apply it. Work is no longer duplicated. The Deals just flow.
We’ve listed all the areas we use to maximize Deals below:
Effective Card Use
Credit cards get a bad reputation.
And it’s easy to see why – it’s a little too easy to run up a balance, by design. If you aren’t careful, you might get carried away or overwhelmed by unexpected expenses. But if you maintain good credit and plan for these hurdles, there is immense value on the table.
It’s crucial that you not carry a balance, ever, if you can help it. No cash back or reward points can justify the exorbitant interest you’ll pay by carrying a balance.
It’s for this reason that we suggest an emergency fund to back you up. This covers you against the unforeseen and can also be moved between accounts to take advantage of introductory incentives, while remaining available at all times, further adding to your surplus. Both your spending and surplus can build upon themselves.
The Golden Egg here is reward travel. Anyone with good credit and a desire to learn can earn free or deeply discounted travel through credit card points and travel miles. Those with bad credit can turn it around so that they, too, can unlock this door.
Without diving too deep into this rich and rewarding, crucial piece of The Deal Method, we’ll just share a couple of key facts:
- Earn between 5-20 points per dollar by using having/using the right travel rewards credit card
- Then redeem those points for between 0.5 cents per point to as much as 13.5 cents per point (!?)
- Every point you earn, if redeemed to capture the most value, can be worth MUCH, MUCH more than you put on the card.
- An example ideal would be earning 125,000 American Express points from $6,000 on a platinum card, for ~21x, and then spending it on top class tickets on ANA airlines at that peak of 13.5 cents per point.
- This means that every $1.00 you spend earning those points earns you a cash equivalent of $2.81 if you instead paid cash. I won’t ever spend $15,000 on a single airfare ticket, but I’d cash in that value equivalent any day!
How This is Possible
My family is headed to Italy in business-class luxury this summer. We saved $16,500 on the flights we booked through a combination of Chase and American Express rewards points.
At 4.4 cents/point, we know our family got a great deal to Europe during summer break. We also know that we can build this luxury experience into our modest parenting strategy because we paid the cash equivalent of coach tickets and worked for the free upgrade. No entitlement, we worked smarter, not harder, and earned our just rewards.
And I didn’t rob anybody or break the law to get us there!
Banks work with the travel industry to make this possible. The travel industry loses money on every empty seat, rental car, and hotel room. And they’d rather not. The banks need a way to incentivize folks to get and use their credit cards often. That’s where we come in—earning points and miles to travel works well for all parties involved, especially you.
The critical point is to ensure you’re getting the most out of them. Some redeem their points at a poor value because what they get is valuable to them and some travel is better than no travel. I’d prefer to get a killer value instead.
Deals like this are out there for those that know how to earn points. Killer deals are within reach for those that know where to look and how to earn enough points efficiently.
Full disclosure: mastery of rewards travel is the most challenging area of The Deal Method to master, but it also holds the most promise to strike pampered travel gold. I recommend that everybody build it into their process and learn as they go. Whether you intend to devote hours to this area or not, it unlocks a whole new world of travel value. For our purposes, it’s just one of many areas we leverage to get more for our money. Each area works synergistically with others to boost your surplus.
Trade In that Shovel for a Snow Blower
The Deal Method is lifestyle efficiency. With it, you can build a unique advantage in your life, stretching your money on all the things you buy, and grow an abundant surplus.
Everything we buy is at a Deal, splurging sparingly. Every dollar we spend equates to savings as best we can arrange, all things considered. Through frugal ingenuity and Deal optimization, we save at least 40% off of retail or question whether we really need it.
Every dollar we don’t spend is a dollar we saved or a dollar invested in a bigger shovel. A baby step towards transforming your life into what you want it to be. And that endpoint, in a word, is freedom. The freedom to do what you want, when you want, with whom you want.
We travel more often, more luxuriously, for less. We return from vacations more recharged, to jobs we love and/or are building not to rely upon.
We explore how to build healthy relationships and raise resilient kids, teaching them humility, courage, and appreciation for what they have.
This is The Deal Method.
Join us today to learn how to apply The Deal Method to your life
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Things this article is NOT:
The Deal Reflection Model, Deal Model Finance, as in the Deal Model (Ash and Clayton, 2009). This so-called DEAL model for critical reflection adapted from Ash Clayton Moses 2009 is an evidence-based model to appraise learner aptitude and improve learning. That, commonly confused with this website, is distinctly different.
