In a little less than two weeks, Thanksgiving will be upon us, immediately followed by “Black Friday,” the busiest shopping day of the year. Black Friday is quite often the day that pushes retailers over the line into profitability for the year (from the red to the black), hence the name. Naturally, since it’s the day following Thanksgiving, many people in the United States have the day off from work, and since the holidays are approaching, many will also use the day to get started on their holiday shopping.

In order to get customers into the stores on Black Friday, many retailers offer enormous sales on a handful of specific items. These items are often sold at a loss in order to simply get people into the store, because the logic goes that if a customer is in the store, they’re likely to buy other things. Plus, it provides some positive word-of-mouth promotion for that retailers, as people will talk about where they got enormous bargains on that day.

As a result, many retailers heavily advertise their “Black Friday” sales in the week or two leading up to that day. Websites proliferate online, tracking the bargains to be had.

And, through it all, the big goal is to whip consumers into a buying frenzy.

Such a frenzy is bad news. Getting caught up in participating in Black Friday just to get “deals” on stuff you don’t really want or need or items that may or may not be good gifts for others is a sure way to watch your money float away.

That’s not to say that Black Friday can’t be useful to someone with savvy – it certainly can. It just requires a bit of finesse and forethought.

Here’s exactly how I handle “Black Friday.”

I make a very careful list before looking at the fliers. In other words, I already have my Christmas list in hand. I know who I’m buying for, how much I’m spending on each person, and I also ahve a few ideas for each person to help me shop.

Beyond that, there’s often a specific item or two I’m looking for for myself. This year, for example, I’m looking for a replacement laptop. The ol’ frugal laptop has served me well for quite a while, but it’s suffering from a number of hardware issues. So, my eyes are open for a replacement, probably a middle-tier Windows 7 machine capable of photo editing and a bit of gaming.

Thus, before I even take a peek at a “Black Friday” flier or website, I know exactly what I’m going to be looking for.

Next, I use the internet to view lots of flyers at once and compare them. My preferred website for doing this is blackfriday.info, but there are lots of them that provide a similar service.

Why do I do this? First, browsing through lots of ads online – because they’re usually just lists of items – cuts down on the impulse buy possibilities. I’m not sucked in by intriguing pictures of items I’m not interested in buying.

Second, websites provide tons of sales lists to me at once. Instead of having to dig through lots of newspapers on Thanksgiving Day, I can just visit a website and get all of the details I want in one spot.

Once I’ve done that, I come up with a plan of attack. I’ll usually identify an item or two that’s got a strong price and matches something I’m looking to give out as a gift. On Black Friday, I’ll get up early and visit only those stores, and when I go, I’ll take a list for each store and get only those items. Everything else is just a leech on my wallet.

Finally, I’ll check online retailers a few times on Black Friday. Online retailers, particularly Amazon.com, offer all kinds of sales throughout the day on Black Friday (and sometimes even on Thanksgiving Day). I’ll check these a few times, looking for items that are actually on my list.

The big rule for all of this is simple: unplanned buys on Black Friday (or any day) are usually really bad ideas. Step back and think about what you’re buying and you’ll find value on Black Friday. Dive in head first waving your credit card like a mad man and you’ll come out of the day with a bunch of stuff you don’t need – including some fat bills.

Whenever I mention a company on The Simple Dollar – Apple, Dell, Nintendo, Williams-Sonoma, etc. etc. – I usually receive an email or two from a reader telling me how absolutely horrible the company in question is. They tell a long story about how their customer service from that company was nightmarish and that they tell everyone they know how awful the company is.

Here’s an example, from “Monica,” relaying a bad experience with Apple’s customer service:

In December, my iPod started acting really weird. Since it was still under warranty, I called Apple and got the runaround. I had to call their customer service line three times and ended up yelling at a supervisor. Finally they gave me an address to send it to and it took them a month or two to send it back.

Here’s the thing, though. If a large company deals with a million customer service issues in a given year, some small percentage of them will turn out badly. Simple human miscommunication, an overly demanding customer, unreasonable expectations from both sides, a customer service rep on a bad day – all of these can turn a routine customer service situation into a nightmarish one.

As a result, any sufficiently large company will have bad customer service stories floating around out there. Many of them are likely true and, if you believe that to be the norm of a customer service department, you’d likely be scared to ever use that company.

But it’s not the norm – far from it, actually. To put it simply, I ignore most horror stories about customer service when evaluating a company.

So how can you know if a company has decent customer service or not? I usually look at three things.

First, I look for stories of exceptional service. A company that goes the extra mile to stand out from the crowd enough that people will publicly talk about their service usually has very strong customer service. For some reason, as I write this, Land’s End comes to mind.

Second, I look at customer service awards. Such awards are typically done as a result of examining typical user experiences with customer service, often through extensive surveying that averages out the rare awful experiences.

Finally, I look at the company’s policies. If I can’t quickly figure out how to return a product, how to handle obvious customer service issues, or how to contact the company and get a live person quickly to address my questions, that’s a bad sign. The easier a company makes it to interact with them, the better, and one can usually tell this with a short trip to a company’s web site.

To me, there is significant value in good customer service. I will pay more for a product backed up with a solid customer service reputation than one that’s backed up with a poor customer service reputation.

One final note – local always trumps international. In other words, I’m willing to spend 20% more to buy a homebrew computer from a local store than one from Dell, for example. Why? The local store has stellar service – I can just go drop off a piece of equipment there any time I want and they’ll repair it quite inexpensively. They also dispense advice and information whenever I need it. The same goes for many products that can benefit greatly from good customer service, like a game store that offers free game nights or bookstores that facilitate book clubs and the like.

When we, as a customer, immediately boil a transaction down to the minimal dollar, we usually lose in the long run. The company that shaves a few dollars off the price at the expense of good service will end up leaving you high and dry when the product fails.

I’m often tempted to spend money that I shouldn’t.

I’m good at restraining my impulsive nature. I don’t simply go into stores and then emerge later with a hefty bag, a credit card bill, and a dazed look on my face. Still, in certain places, I am strongly tempted to spend. I look around and see tons of items that I’d like to have. Here are seven places that really fuel my spending desires.

Bookstores What can I say? I love to read – I read about ten books a month for my own enjoyment and probably five more for The Simple Dollar and other professional purposes. The smell and feel and sight of a new book is like manna to me. I usually resist most of my impulses by arguing to myself that I can get those books at the library or off of PaperBackSwap, but it’s definitely a struggle – one I don’t always win.

Williams-Sonoma As I get more and more adept in the kitchen, I’m slowly upgrading my kitchen equipment to superior versions of the cheap (and sometimes problematic) equipment I have on hand. Williams-Sonoma does an extremely good job of convincing me to accelerate this upgrade process, enticing me with better knives, a wide array of very nice pots and pans, and lots of other items.

Wineries If I stop at a winery and enjoy a tasting, I usually wind up buying at least a bottle. There’s something about the atmosphere of a winery that gets me into the right mindset, and adding onto that is the fact that I truly enjoy a glass of a distinctive wine, it’s unsurprising that I often leave wineries with a bottle or two in my bag.

Food co-ops Stores that put obvious care into their food selection often entice me to be much more willing to buy foods impulsively. At regular grocery stores, I usually avoid impulsive food purchases by knowing that the item is usually going to be full of ingredients I shouldn’t be eating or won’t taste all that good. At a food co-op, that’s often not the case at all – and thus I’ll find myself picking up items like feta made from sheep’s milk.

Gaming shops I love playing games against family and friends and gaming shops tend to bring out my strongest tendencies. I particularly like board games, and if I witness a game demonstration and the game seems fun at all, I’ll often be very tempted to talk myself into buying it.

Art supply stores My biggest weaknesses in art supply stores usually come down to notebooks/sketch books and writing implements. I can easily fill up notebooks with jotted notes, quotes, ideas, and other things, and the feel of a good pen in my hand is almost intoxicating and actually does a good job of fueling my writing tendencies.

The Apple Store I usually don’t buy anything at Apple Stores. Instead, they just do a great job of convincing me to save up and spend much more than I should to buy a MacBook Pro or a new desktop machine or an iPod Touch. Apple puts a lot of care into the little details of their devices and, after spending a lot of time using them, I’ve come to really miss them when I use other devices.

There, my confessions. Putting them all down on paper like that is fairly refreshing for me, as it helps me to realize that I use quite a few different techniques to minimize the temptation to spend in those places. I’ve mentioned some of these tactics before in various other articles, of course, but here are eight different tactics that I use to minimize the negative influence that these tempting places have on my wallet.

Avoid them entirely. The easiest way not to be tempted is to simply not visit these stores at all. This works to a certain extent. For years, I had a routine of going to a bookstore each Tuesday (to check out the new releases) and each Friday (to “celebrate” the end of a workweek). This routine usually meant that I would wind up buying a book or two at each visit, which could easily add up to $40 a week.

By simply breaking that routine, it was easy to see a tremendous amount of financial benefit – as much as $2,000 per year. While I still do visit bookstores on occasion, they’re no longer part of any sort of routine. This makes the individual visits much more enjoying, since they’re more infrequent and not based on any sort of schedule.

Take notes. If you visit a store, fall in love with lots of items, and are tempted to buy, stop. Pull out a notepad and write down all of the things that are tempting you. List the books, food ideas, clothing, games, or other items that are really intriguing you.

This serves two purposes. First, you can take the list home and do further research on the item(s) and some comparison shopping. Second, it allows you to utilize the “thirty day rule,” where you agree not to buy the item for thirty days and then re-evaluate at the end of the period whether or not you actually want the item.

Go with only cash. If you visit a place with such obvious temptations, leave your wallet behind. Just take in a small amount of cash, whatever you’re completely comfortable with spending there and won’t feel guilty about afterwards. So, if you’re going to a bookstore, take a $20 bill. This allows you to splurge a little, but prevents you from spending more than you should.

The real key here is to not bring in plastic, which effectively gives you access to far more money that you might otherwise have. Without strong willpower, credit cards can be a real danger, so it can be good to avoid them until you do have the personal fortitude to avoid over-the-top spending with them.

Go with the right kind of friend. Some friends encourage you to spend. They talk up the items they see, complement you on your choices and taste, and encourage you to splurge a little. Those kinds of friends will almost always cause you to have a bigger bill than you want.

I prefer shopping with either my wife or my closest friend, John. Neither one of them encourages me to spend more than I should. My wife usually makes no comment whatsoever if I choose to make a purchase. John usually just criticizes items in a humorous way, making them seem less appealing while also being entertaining. The end result? I buy less than I would if I were there with a heavy-spending friend.

Set an explicit budget. Each month, I allot myself a certain amount of money to spend on whatever I wish. Since I plan for it, I can spend that money without guilt, and this money is often spent at the places I described above.

Since I know what that limit is, I can spend up to that limit without any sort of guilt whatsoever. If I’m at Williams-Sonoma and see an item that costs two or three months’ worth of free money, I’m patient with it. I’ll wait two months without spending much “mad money,” then pick up that item without any guilt at all.

This is perhaps my most-used technique, and my wife uses it as well.

Use the ten second rule. Sometimes, on an impulsive whim, you’ll pick up an item and make the split-second decision to buy it. As you head to the cashier, stop for ten seconds and ask yourself if you really need this item after all, or if you couldn’t get a better deal on it elsewhere.

For me, this works quite well to at least slow impulse buys. I’ll usually put the item back and add it to my list (see the earlier tip). It doesn’t necessarily mean that I won’t end up with the item in the future, but it will be bought with a rational, not an impulsive, mind.

Never go without a purpose. And, no, social engagements aren’t a purpose.

Why are you shopping? If you’re doing it just to spend time with a friend – or even mostly to spend time with a friend – your wallet will thank you if you find something else to do. Why not go through the stuff you already have? Why not spend time in a public place that’s not designed to convince you to spend money?

If you actually do go shopping somewhere, particularly in places that you know tempt you to spend money, make sure you’re going with a specific purpose. There’s a book you want to pick up. There’s a French oven you want to look at. You have some technical questions about your MacBook. You get the idea.

Find a substitute. Remember above, when I mentioned that I’d buy three or four books a week at the bookstore? Sure, I did read most of these books, but very rarely more than once. So, why not use the library?

Most of the big temptations above have great substitutes for me. Instead of going to game stores (usually to talk and browse games), I visit a few community gaming websites to get most of the same effect. Instead of hitting food stores, I use farmers markets for the same effects. This helps me stay away from many of my worst temptations.

What places tempt you the most? And what techniques do you use to control your spending there?

My three year old son loves to go to the grocery store with Mom and Dad. He wanders around with us, listening to our discussions about which products to buy, and quite often expresses his own opinions. He’ll remind us that he loves V8 Fusion (our preferred fruit juice, since it’s 100% and also is half vegetable juice) and often dallies for a long time near the Pepperidge Farm goldfish crackers, as I noted two years ago (and depicted as well):

As we shop, we make tons and tons of little decisions along the way. Those decisions, on their own, seem inconsequential.

Should we buy the bulk can of diced tomatoes or the smaller can?
These tortillas feel softer, but they’re way more expensive – is it worth it?
The free range whole chickens are on sale! Should we stock up?

A choice one way or another here might save us a dollar or cause us to spend a dollar more. In the eyes of many people, it’s an inconsequential decision – just make it and keep going. One dollar doesn’t make a huge difference, right?

The problem is that each little buying decision you make is deeply tied to other buying decisions, whether consciously or not.

How so, you might ask?

All of our buying decisions are based on a set of principles in our head, ones that are often so well-grounded that they don’t even pop up in conscious thought.

Here’s a thought experiment to help you see what I mean. Imagine a product you would never buy in a grocery store – pork rinds, maybe, or perhaps insanely potent hot sauce. Now, what about that product would cause you to not buy it? You’re likely to pop up an immediate simple answer – I don’t like the taste or it’s unhealthy – but on other purchases, you’re quite willing to overlook that principle for other reasons.

In truth, when we make a decision to buy in the grocery store, we’re trying to reduce a big set of principles and inputs down to one split-second decision. And often we feel we’re completely justified in that decision – and we move on with life.

It is very easy to tease apart each little buying decision, tell yourself that it doesn’t really matter that much and that it’s okay to splurge, and then essentially ignore your final tally when you get to the checkout because each decision was justified in your mind. Doing that, though, is a game that will, time and time again, put your wallet in the hurt locker.

So, what can you do to overcome this problem?

The easy methods are the shopping list and the meal plan. Making a shopping list in advance of your visit to the grocery store simply serves to reduce the number of decisions you have to make. This, of course, leads you to making fewer bad decisions.

But that’s just the start. Once you’re in the store with your shopping list in hand, commit to three more things.

First, simply do not put anything in your cart that’s not on your list. Your list, if it’s thought out at all, should have everything you need for your meals for the next week. If you see something you feel like you need or deserve, jot it on the back of the list for next time.

Second, mark any items that you’re not simply searching for the cheapest version of. On our list, I like to put a little X by any item that I don’t intend to just buy the cheapest version of. For example, with diced tomatoes, the various brands and cans are identical in terms of ingredients, so we usually just get the cheapest version. This, again, reduces the number of opportunities for poor impulse decisions in the store.

Third, if you have specific brands in mind (because of coupons or because of previous buying experiences), put those on your list, too, along with the size. For example, we usually have a big stack of coupons for V8 Fusion (100% juice, half fruit and half vegetable). So, instead of just writing “fruit juice x 3,” I’ll write “46 oz. V8 Fusion x 3″ on the list. In other words, if you make the list more specific, you further reduce the number of potential impulse decisions in the store.

Using all of these techniques, you’ll end up making just a handful of in-the-moment choices in the grocery store – and with fewer potential decisions, you have fewer chances to make poor ones. The end result? A cart full of items that you actually want and a much smaller grocery bill.

Long time reader Bob writes in:

I like reading all of your suggestions about making a grocery list and searching for bargains. My technique is actually pretty simple. I trust Consumer Reports completely – they’ve never led me wrong. So each month when I get an issue, I write down their “best buys” in each product category. That’s what I buy – I just look for the best deal among these. I often use coupons for things on that list, too.

I actually really like this idea – it provides a wonderful balance of getting quality items for a good price. In fact, I decided to give it a try myself with a few product categories just to see the results with my own eyes, so I pulled out the May 2009 issue of Consumer Reports and went shopping with five product categories in mind.

Kids’ Breakfast Cereal
Consumer Reports identified four best buys for cereals for children, balancing health, tastiness, and price: Cheerios, Life, Kix, and Honey Nut Cheerios.

I pulled out the grocery flyers this past weekend and found a sale at Target on the General Mills cereals (Cheerios and Life). I then flipped through the coupons and quickly found a coupon for those cereals.

End result: the price for a “double box” of Cheerios or of Life, after the coupon, was cheaper than almost any other cereal in the aisle, with only some generics beating them. After doing an ingredient and Nutrition Facts comparison, Life was our product of choice. The kids utterly love it and it’s pretty good for them, too.

Glass Cleaners
Consumer Reports identified five best buys for window cleaners: Windex No Drip Foaming Action, Sprayway Ammonia Free, Windex Crystal Rain Ammonia Free, Glass Plus, and Streak Free with Ammonia (the Wal-Mart store brand).

The solution here is a simple one: shop at Wal-Mart and get the store brand at roughly a third of the price of the other brands.

Coffee
I’m far from an expert on this category (as I don’t make coffee at home – keeping it as an out-of-home treat keeps me from getting addicted to the morning joe), but Consumer Reports identified Eight O’Clock 100% Colombian, Caribou Coffee Colombia Timana, and Kickapoo Coffee Organic Colombia as the three best choices.

In the stores I visited, Eight O’Clock 100% Colombian was the cheapest of the three by far, usually costing less than $5 for a 12 ounce bag of whole bean coffee. Here’s the trick, though – there were many coffees that were less expensive.

Since I’m not familiar with this area, I asked my wife for some input and she said that unquestionably, the price premium of the Eight O’Clock coffee over Folgers is worth it. She claims the volume difference in the containers is deceiving, since it takes substantially more Folgers to make good coffee than whole bean Eight O’Clock. So, three votes for the Consumer Reports model.

Tub & Tile Cleaners
Consumer Reports says Comet Scratch Free Disinfectant with Bleach, Ajax with Bleach Scratch Free, Kaboom Shower Tub & Tile, and Green Works Natural Bathroom Cleaner are the best choices, with Green Works being not quite up to the standards of the other but the best of the “natural” cleaners.

Coupons for Comet are extremely easy to come by and they reduce the cost of Comet below the store generic brand for that item. It works well for cleaning our tubs.

Creamy Peanut Butter
This was the one area where there was some debate. Consumer Reports identifies Smucker’s Natural and Smucker’s Organic as the two best buys for peanut butter.

Smucker’s Natural is substantially cheaper than Smucker’s Organic, ringing in at $2.49 for a 12 ounce jar at my store of choice. However, there were several peanut butters available for substantially less on the shelves. Having tasted Smucker’s Natural, I can say that it is quite noticeably tastier (much stronger peanut flavor) than many of the lower-end brands, and the texture is better, too. An ingredient comparison shows that it’s healthier as well.

For me, Smucker’s Natural would be the purchase if I had a coupon for it. Otherwise, I’d put off buying the peanut butter.

My Conclusion
From my experience, Bob’s strategy simply works if you’re trying to get the maximum value for your dollar (and not just seek the bottom dollar). This strategy pairs up well with looking at coupons and flyers, reducing the price benefit that the store brand has over the “best buy.”

Will I switch to this strategy? Perhaps not completely, but I am starting a list of the Consumer Reports best buys. It works surprisingly well.

One common trap with buying in bulk is the fact that on some products, the higher volume version often has a higher cost per unit than the smaller version. For example, I recently spied two cans of tuna on the shelf at my local grocery store. The same brand (Starkist) featured a 5 ounce can for $1.29 and a 12 ounce can for $3.19. Per ounce, the smaller can featured tuna for $0.258 per ounce, while the larger can cost $0.265 per ounce, making the smaller can the better deal. This stuck in my head, so I went home and did some research on these price differences.

This “feature” crops up in many different products is called quantity surcharge, and it’s been prevalent in the supermarket and department store since the 1970s at least. Recently, while browsing through the Journal of Consumer Affairs (seriously – I live not too far from an academic library, and JoCA has lots of interesting material in it that serves as great food for thought), I came across an older article entitled Measurement of Incidents of Quantity Surcharge Among Selected Grocery Products. The article identified ten specific products where quantity surcharges often occur.

So, without further ado, here are ten products to study carefully before buying in bulk. I went to the store and tried to find them myself – my notes on what I found follow each item.

Tuna fish In the article’s survey, tuna suffered from quantity surcharge 84.4% of the time. In other words, the best deal on tuna is usually the small cans, not the bigger cans, as I noticed above.

Ketchup In the article’s survey, ketchup suffered from quantity surcharge 45.0% of the time. When looking for this, I observed it with Heinz ketchup. I also noticed that a ketchup multipack of smaller bottles was actually the best deal.

Canned beans In the article’s survey, canned beans suffered from quantity surcharge 40.7% of the time. When I looked for this one, I noticed it in virtually every type of Bush’s baked beans in my local store – most other brands had almost identical prices per unit in all sizes.

Salad & cooking oil In the article’s survey, oils suffered from quantity surcharge 36.5% of the time. This was perhaps the worst example I found. I found a store brand of olive oil in two different sizes, with the larger size costing almost 40% more per ounce than the smaller size. Even a cursory glance at the prices made it clear that the prices were out of whack.

Dishwashing detergent In the article’s survey, dishwashing detergent suffered from quantity surcharge 34.1% of the time. I found this in the store brand of dishwashing detergent – the name brands were cheaper to buy in bulk.

Laundry detergent In the article’s survey, laundry detergent suffered from quantity surcharge 33.3% of the time. Similarly, I found the store brands actually had a quantity surcharge, while the name brands did not.

American cheese In the article’s survey, American cheese suffered from quantity surcharge 31.6% of the time. Yet again, the store brand seemed to do this, while the name brand did not.

Canned vegetables In the article’s survey, canned vegetables suffered from quantity surcharge 13.0% of the time. I only found one incidence of this after examining quite a few canned vegetables, and that incidence was the result of a sale on the smaller cans.

Jams and jellies In the article’s survey, jams and jellies suffered from quantity surcharge 12.1% of the time. I couldn’t actually find different volumes of most jams and jellies.

Syrups In the article’s survey, syrups suffered from quantity surcharge 5.2% of the time. I didn’t actually find any when I looked around.

What lessons can we learn?

The best strategy is to always calculate the cost-per-unit yourself – or use stores that calculate it for you. Many stores give you the cost-per-unit right on the shelf. If your store does that, use the cost-per-unit as your metric for making a purchase. If your store does not, you can calculate it yourself very easily and quickly with a pocket calculator.

Sales and coupons easily make this confusing. Most of the time, sales alter the picture, but not always in the obvious way. I saw several incidences of the large and small versions both being on sale, where the regular prices had the smaller version being a better deal and the sale prices had the larger version being a better deal. This wasn’t clear, either, since the “sale” tags didn’t have the price per unit on it. Again, it pays to be able to calculate it yourself.

Store brands seem to do it more often than name brands. This might just be a quirk of my observations, but I consistently found quantity surcharges more often in store brands than in name brands.

Multi-packs were usually the best deal. Multi-packs of the smaller version of most items was the best deal overall – but it does require you to do things like buy three bottles of ketchup or dish soap at once.

Warehouse stores add to the confusion. I tried doing price comparisons between my local warehouse store (a Sam’s Club) and my preferred grocery store. I found that on almost every item I compared, the warehouse club was cheaper per unit than the same brand at the grocery store. However, the brands carried at each were often vastly different, so it’s hard to get a full picture.

In the end, though, the key is to just focus on the cost per unit. The larger item is usually the best deal, but as you’ve seen above, it’s not the best deal often enough that it’s well worth your time (and money) to pay attention when shopping.

Good luck!

When I turned sixteen, I had roughly $1,000 saved up with which to buy a car. Obviously, my biggest concern was what is the cheapest thing that can get me on the road? Reliability wasn’t a concern at all – I mostly wanted it to drive back and forth to school and to some extracurricular activities. I looked at several very low-end cars – many of them for sale by their owner – and carefully examined the pros and cons of each option. Mostly, my worry revolved around which one could provide about 5,000 or so miles of driving at the cheapest price.

In the end, a family friend gave me an old car of theirs as a sixteenth birthday gift. It wasn’t running, but it needed just a few hundred dollars’ worth of repairs to get it on the road again. I used the rest of the money for gas – and even though the car only ran for a few years after that, it served its purpose quite well.

When I purchased my next vehicle, a 1997 Ford F-150 pickup truck (purchased in 2003 – I spent several years without a vehicle, actually), my biggest concerns were low price and hauling capacity. Given my lifestyle at the time, I had constant need for the ability to haul all sorts of things, and I was mostly concerned about getting that hauling capacity at a low price.

What happened? Without a doubt, I was able to do plenty of hauling with that truck. However, the truck’s reliability has been highly suspect since day one, breaking down along the side of the road several times – and more than a few times, my kids were in the truck with me. A few of those times, the situation wasn’t good – tears and blankets were involved and bad dreams were the result.

Thus, the next time I was involved with a purchase, reliability became a major factor in the purchase, whereas before I wasn’t nearly as concerned about it. I was quite willing to pay more for that reliability because, for me, not stranding my kids along the side of the road is much more important than if it were just me.

Having young children naturally prejudices me towards buying cars with better reliability numbers and cars with lower mileage. I assign more value to those factors because of the current situation in my life. At other stations in my life, the values will be different. For example, if I have a small farm in ten years, the value of hauling capacity will go up substantially for me, while high-mileage reliability will be somewhat less important.

How about this example? A single person focused on their career is likely going to look for different factors in a washing machine than a person with a large family. A large family is going to be more concerned with large load capacity and reliability. A single person won’t need the large load capacity, but may seek quick washes and minimal water use.

It’s easy to run out the numbers on any major purchase and figure out what the best deal would be over the next ten years based solely on those factors. But those numbers rarely tell the whole story.

How much extra is a reliable car worth if you have a sick child at home?

How much extra is a smaller footprint on your washing machine worth if you have a tiny apartment?

How much reliability are you willing to give up to get a car for $1,000?

There is no exact answer to any of these questions because of the uncertainty in life and the varieties of personal experiences and situations.

There’s only one real solution when you’re making a major purchase. Figure out what factors really matter to you, do the research on those factors, and find the best deal with those factors in mind. It may be that your conclusion as to what constitutes the “best deal” differs greatly from someone else’s opinion – but that’s fine.

True frugality is not about finding the cheapest item – it’s about finding the best value for your situation. The trick is to figure out exactly what is valuable to you (and not necessarily to others) – and that’s not always easy. It’s a key part of really finding the best deal when you’re doing the research for a major purchase.

In a recent post about up front spending, quite a few people mentioned their anecdotes about buying a cheap washing machine and having it last for many years – and then used that as a justification to ignore reliability data when making a purchase and instead go for the cheap item.

Let’s explore that idea a bit. Take a look at this picture:

This represents the reliability of a hypothetical low-end washing machine over time. It has an average lifespan of ten years – and most of those models fail at around the ten year mark.

But there are exceptions to that general trend, of course. Some of them fail quite quickly – and this, being a cheap machine, doesn’t have good warranty support. Others last for a long time, even up to twenty years or more.

When you buy a machine, it’s going to wind up at some point on this curve. Most likely, it’ll be one of the ones in that big hump in the middle, lasting ten years or so like the average machine. However, there’s a chance that it might junk out in three years, or it might last you for twenty years.

Now, what about a more reliable machine? If you chose to spend a bit more and buy a more reliable machine, you’d get a curve that looks more like this:

It comes with a good warranty, so there are no failures within the first five years. Overall, the average failure comes in at about the fourteen year mark – and some will last for twenty five years or more.

Obviously, when you look at Consumer Reports or other such research, this second washing machine would have a higher reliability grade than the first one. People (like me) are willing to pay a bit more to get a reliability curve that looks like this one than like the first one.

Let’s overlap them.

Notice the three colored spaces? They each tell a different story, and their relative sizes are really important.

The blue area shows how likely it is that the cheap machine will fail before the expensive machine does.

The pink area shows something very similar: how likely it is that the expensive machine will last longer than the cheap machine.

To put it simply, you can combine the blue and pink areas – combined, they show the likelihood that the more expensive and reliable machine will outlast the cheaper and less reliable machine. There’s about a 70% chance of that.

Of course, there’s that orange area. That represents the chance that the cheap machine will actually last longer than the expensive machine. In this example, there’s roughly a 30% chance of that happening.

So what’s the story here? Paying more for reliability means that the orange area is your worst case scenario; buying the cheap machine means that the orange area is your best case scenario.

Let’s put it in terms of comments about low-end washing machines. Yes, you’ll hear occasionally from an individual that bought a $200 machine in 1987 that’s still running today. That person lucked out – they bought a cheap machine, but it happened to wind up in that orange area.

However, most of the time, the machine will be a blue one. It will fail before a higher-reliability machine ever will.

Similarly, someone might complain about the “supposedly highly reliable” machine they bought in 2001 that’s already failed. Again, it’s an orange case. Most of the time, that machine will be a pink one.

Here’s the real truth: the exceptional cases mean very little. If you hear about one or two cases, pure chance might give you a few tales straight out of the orange area – exceptional cases, whether or not it’s a good exceptional case or a bad one.

What actually matters is a lot of cases combined together. When you get a lot of cases together, you can get a real picture of the reliability of the machine. The whole curve fills out, with the poor exceptional machines, the great exceptional machines, and the average machines.

Whenever you go to make a major purchase, you’re placing a bet on reliability. You don’t know exactly how it’s going to turn out. Good reliability data simply means that the machine is likely to be more reliable than a machine with poor reliability data.

Given that a more reliable machine means less time investment (you don’t have to deal with time lost to a broken machine, nor do you have to deal with repairmen) and less money investment (the cost of repairs plus the cost of having to buy a replacement sooner than expected), paying extra for reliability is a bet I’m willing to take. I’m quite willing to pay a 50% premium to buy the machine with the pink curve than the one with the blue curve.