We opt for a small house in the city rather than a McMansion in the ‘burbs. We choose to be where we are as family (my parents & my inlaws) is within walking distance and the neighborhood city schools are compareable to the ‘burbs. This affords us the possibility of living off just my income and having my life partner be a stay @home. Others might not choose this.

We do many small things to save money (I bring lunch, take the bus rather than a second car) but we have our areas of splurge for the kidlets- a few trips per year to the amusement park, rare Chuckie Cheese excursions, cable etc. We talk to our oldest about choices we are making in regards to finances for the family.

I see the overall quality of both being important.

I just have one thing to add: I have a good friend who garage sales and finds amazing bargains, then afterwards she often treats herself by having caviar (she loves it) for lunch (this is really true). When my friend was a young married woman, one day she was shopping her terminally ill mother. They saw a beautiful expensive comforter. My friend said, “I am getting this for you.” She spends on things that matter.

I have learned alot from April about spending money on quality items that bring you joy. The savings on things you don’t really care about add up so you can spend more on the things that improve the quality of your life or bring you the small daily joys.

Numerically, you’re right that saving on small frequent purchases is likely to be better for the bottom line than saving on big infrequent purchases. (Every programmer knows that the best place to optimize is the center of a small tight loop that runs 50 thousand times, not the big initialization stuff that runs once, since the former improvements have massively leveraged payoff.)

But the law of diminishing returns also applies. Each cut is going to be harder to make than the one before it, and pretty soon you’re getting depressed and resentful, and pretty soon after that you’re basically rebelling…against yourself. I’ve been there, and the prevalence of people who don’t understand that being in that space is both self-destructive and utterly inevitable once a certain level of cutting is reached are the main reason I stopped reading misc.consumers.frugal-living.

My solution? I cut costs wherever cutting costs won’t affect the quality I want, and nowhere else. This has always been my natural inclination, so I won’t say it’s saved me a lot of money vs what I’d do anyway, but as time has gone on I’ve been more systematic and analytical about it, and that’s helped improve the yield by about 10% vs what I was saving in my early 20s.

I buy gasoline wherever it’s cheapest, since gasoline is 100% fungible. I choose to make as many retail purchases as possible in Indiana instead of Chicago, since the extra tax in Chicago adds no value whatsoever to the product itself. I buy lunch meat from the deli counter instead of the refrigerated prepackaged stuff (indeed it’s both cheaper _and_ better-quality that way, so double-win there). And I buy store-brand breakfast cereal and paper products. But when I’m buying peas or corn to make Chinese Pastry, I go for the Del Monte, and don’t trouble myself with how much cheaper the generic is, because the generic veggies consistently make the final dish watery, and no amount of savings is worth ruining the experience of my favorite meal in all the world. Nor do I set my thermostat above 70 degrees during the summer, because no amount of savings on the electric bill is worth sweltering all day while I’m trying to sleep.

If I were a consumer of coffee or alcohol, I suspect I’d be very unreceptive to the notion that a cheaper variety of a superficially-similar product is really equivalent. I don’t drink coffee, but I know that Maxwell House is not a substitute for Starbucks. I don’t drink beer, but I know that Budweiser is not a substitute for Guinness. Which is perhaps more obvious to a non-drinker than the fact that GPC is not a subtitute for Benson & Hedges is to a non-smoker, but nevertheless the latter is equally true for me.

So these are my rules. In application they’ll vary for everybody, but in general I think they’re pretty good universally:

1. Where you can save money without losing quality at all, do so.
2. Where you can’t save money without losing quality, skimp on something whose quality you don’t especially care about.
3. Otherwise, don’t worry about it. If #1 and #2 aren’t enough to get you in-budget, then your budget is defective, and you’re better off adding more income (and writing a more generous budget) than trying to stick to it.

Addressing both issues is necessary to really boost savings for most people.

If you need incentive to start doing it, use whatever’s in there at the end of the month to do something nice. When it gets to be a habit, you can stop doing that and just save the money (or keep spending it — depends on why you’re cutting back).

I don’t tend to buy many big-ticket items, so cutting down on the little stuff works better for me.

I think it can spur one into the cycle of spending more time on getting smaller savings, too.

It’s those little expenses that really start to add up and make the difference in being able to meet your budget for the month.

Shopping for a good deal on a large ticket item is important, but I think the minutiae of daily life is what eats up your money fastest.

It’s a lot easier for me to shop around for the best deal on a tv or car or computer I’m going to buy, than it is to pack my lunch. For a car, I can immediately see the $1000 savings, but day to day it’s harder to see the benefit of saving $5 because, after all, it’s only $5.

So, I need to emphasize more in my life saving on the small things and the benefit that can add up to.

Example A: Take a person who’s got a bloated mortgage or who pays $100 bucks for cable television or who has minutes leftover every month on a overkill cell plan… these things are repetitive hits to the pocketbook that might not even be missed, but would really free up some change. Some folks are willing to take a nit picky look at certain (insignificant) things, like lunch or coffee (which isn’t bad, but) without thinking bigger and changing more significant life-level priorities.

Example B: You love Thing-That-You’re-Saving-$3-A-Day-Not-Having and get grumpy or feel that you deserve a reward for going so long w/o it. You buy a new *whatever* that probably eats up all that savings (cause it’s there, natch). Spending is emotional for just about everyone, and sometimes $3 a day is worth the balance and emotional good vibes it brings.

It’s not black and white though. There’s gray in all of this. You save a little on the big, you save a little on the little… you take ‘em both and there ya have the facts of life (oh wait, what?).