Tip #29: Stop being a loser and pay money to save money

Ramit Sethi

This is Tip #29 of of the Save $1,000 in 30 Days Challenge. (See past tips.)

Today’s tip is to spend money on things that will save you money in the long term.


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Too many people think that “saving money” is about cutting costs relentlessly until they can cut no more. And then…what? Who wants to live like that? Reading some of the frugality sites, it becomes clear in about 2 minutes that you can’t outfrugal a nutty frugal person. And as they say, if you win the rat race, you’re still a rat.

I’ve been crystal clear that when you buy things you want, you should focus on the value, not the cost. That’s why I bought a new (not used) car. It’s also how I distinguish cheap vs. frugal people.

“Saving money,” as I’ve described in this Challenge, is about cutting costs, earning more, and optimizing your existing spending. Instead of constantly looking for ways to cut your spending, sometimes it’s ok to actually spend more in the short term if you’re saving in the long term. This is a bewildering and frightening thought to many people, most of whom don’t read personal-finance blogs, leaving me free to mock them openly.

A great example of this is something like the Entertainment book (or any coupon book). I bought one a couple weeks ago because I can make the $20 back, guaranteed, plus much more. The key, of course, is actually using the coupons when you would ordinarily be going out anyway.

In this simple example, it’s easy to see that the money you spend will be directly made up. Still, many people don’t even want to spend for something where the ROI is so clear. For many people, buying something to save money down the road is unfathomable, confusing, and just plain weird. Those people are crazy and need to understand that long-term savings are still savings, even if you spend a little money right now.

That’s also why this lady who once sat next to me would have been 100% right to pay $2,000 for a computer class.

A fun example of nutty cheap people
To get myself geared up to write this post, I checked out one of my FAVORITE old posts: Stop Being Cheap and Go Buy Something Valuable Today. I had done an earlier webchat and told people I might be starting a paid podcast service. People freaked out:

person1: don’t charge though
person2: yeah, please don’t charge
person3: I have universtiy debts to pay for… =… O(
person4: It feels punitive
person5: your good karma will come back to you muliplied if you do not charge
person6: because people dont want to pay lol my guess is you will lose many readers if they have to pay
person7: No charge….comeon! you cant ask us to pay to learn saving 🙂
person8: one thing that would concern me if you charged is that the quality of material would need to match the fee
person9: i think you should charge. you weed out the ppl who aren’t willing to make basic investments in their investments
person10: dont charge
person11: frankly your latest work hasn’t been great ;(
person12: we cheap 😛 don’t charge. we hear to save money here XD
person13: suze orman does not charge for her show
person14: Dude, there are people who CAN’T pay. (Me, for example, here in Bangladesh, I don’t have a way to pay for stuff in the web.)
person15: you’ve been giving out quality information for free, i think i’ve gotten used to it…
person16: Charging is not a succesful business model for editorial content on the web, currently
person17: people dont know what the advice is worth before getting it but you have to pay first
person18: you will NOT attract new audience members by charging….existing ones, maybe
person19: Payment is a barrier between the reader and the important information; I would think you of all people would understand how dangerous it is to erect even minor barriers for people.

You really should check out the entire post.

These are exactly the kind of people who are overly focused on cost, not value. They see something that costs $10 and fail to realize that they could save $500, or $10,000, with the advice inside. Do you think any of them have ever bought a book on personal finance? Or attended a course to learn something after they graduated from college?

Of course not. Because it’s transparently easy to see money going out of your pocket right NOW, but it’s harder to understand that you’re actually investing in yourself. And when you invest in yourself, there’s no upper bound on what your return can be.

Applying this to your life: Paying for something that will save you money
Let’s get tactical. What can you buy that will save you money over the long term?

I’ve subscribed to a magazine called Before and After, which gives you great tips/advice on making beautiful designs for websites, graphic design, etc. It’s helped me take some drab stuff that I came up with on my own and make it look a lot better. And based on the rates I pay professional designers, I’ve saved over $800 for the work I’ve been able to do.

What books have you bought to help you save money? Have you picked up something from Suze Orman? Or maybe a book on your job. Come to think of it, when was the last time you asked your boss to attend a conference or buy you an industry publication? At work, I encourage our employees to ask for any resources that will help them do their job. One person asked to attend a conference, which paid for itself in about 4 days when he presented what he’d learned.

The other day I was at Border’s Books and I bought my first audiobook. I forced myself to skip the business section (my friends always make fun of me because I have a bookshelf overflowing with business books, which all look the same to them…they just don’t understand). I bought Madeleine Albright’s Memo to the President Elect CD: How We Can Restore America’s Reputation and Leadership to try to learn from a true leader. It cost $40, which seems outrageously expensive, but there was one line in there that will probably save me tens of thousands of dollars over a lifetime if I apply it. Paraphrased, she said, “It’s sometimes worth trading off efficiency to get others involved and do the right thing.” I had never thought of it like that, and you can bet I’m applying it in business.

Or a trip — when was the last time you invested the money to go meet someone interesting for business? When I was in college, I cold-emailed Seth Godin and told him I wanted to be his intern. I pushed hard to meet him in person and told him I would fly out to New York anytime. He invited me, I bought a ticket, and the rest is history. How much was that $300 plane ticket worth? Over my lifetime, from the things I learned from Seth and the connections I made (including my book agent), it will probably be over $250,000.

Paul from ResultsJunkies puts aside thousands of dollars each year in a “networking budget,” which he uses to meet interesting people, take them out to dinner, etc. This is similar to my idea of The Best $20 You’ll Ever Spend, which is literally the easiest way to invest in yourself.

If it were me starting to think about how to spend money to save money for the first time, this is what I would do:

1. Pick an amount for your “Strategic Spending-to-Save” account. For example, I might start with spending $50 each month on anything that I think will eventually help me save (books, courses, taking someone else out to lunch).

I logged into Mint and added a category: “Spend to Save”


2. Spend the money! Do it each month. At the end of the month, you should end up with $0 in that account. Don’t let the money accumulate. In fact, just like hitting on a girl in a bar, if you don’t do it in the first minutes, you probably won’t do it at all. In the first 5 days of each month, commit where you’re going to spend that money.

I set up a budget for $50/month:


Ironically, unlike the rest of your budget, if you are under your target of $50 for the “Spend to Save” category, you’re doing something wrong. Spend the money to save!

You can open a Mint account here.

3. Come up with a crisp list of things you will spend on. Not sure where to start? Check out the I Will Teach You To Be Rich bookstore.

3. Don’t lie to yourself. Don’t rationalize that buying jeans is going to save you money because you’ll hold it for the long term. No you won’t. You bought those Sevens last year and here you are buying new jeans. Buy something that you could show to your mom, dad, or high-school teacher and say, “I’m buying this to invest in myself and save money.” If you can look them in the eye and say that, it’s probably a pretty good purchase. Books are always a good bet. Courses too. If you have other ideas, leave them in the comments!

4. Apply what you learned. There are millions of people who buy self-help book after self-help book and never apply what they learn. If you do one thing, do this step. Apply just one thing and you will win.

Total savings: Unknown at first, but $50 to $1,000 per month once you start applying it.

Last thing to do
1. Check out the other tips in the Save $1,000 in 30 Days Challenge
2. Leave a comment on this post describing how much you’re saving with this tip and any unusual techniques you use to make this tip work.

If you found this post helpful you’ll probably like my new Ultimate Guide to Personal Finance. This is an excellent place to learn more simple ways to improve your personal finance and money management.

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  1. Yale

    Ramit, this post is just very well-timed. I always wanted to buy one of these entertainment books, but I never saw the advantage until now. I just went over to the site, and saw that they were $10 off the regular price, so I am now waiting for my new 2009 book to arrive. Only $15, with FREE SHIPPING!

  2. Eric J. Nisall

    I completely agree with your rationale. There is a very thin line between being frugal and cheap, and sometimes that line gets blurred. Your mention of your trip to Borders is a prime example. All of the “frugal” bloggers claim that buying books(even finance books) is a waste of time, that it is cheaper to go check it out of the library. I see it as being cheap, and that buying the book provides more value in the sense that it is available for reference at any given moment and you can mark it up by highlighting certain passages, dog-earing pages, and writing notes in the margins without worry. As it turns out, I, like you have an accumulation of business books which I either purchased online at deep discounts or from Borders using the coupons they e-mail every week or so, and find myself going back to them relentlessly for inspiration, tips, and ideas. Basically I see the value of many purchases rather than the costs associated with them.

  3. Chris Yeh

    Ah, but you’re promoting a false dichotomy. For example, you may very well get tens of thousands of dollars in value from Albright’s book (though I doubt it). But that doesn’t mean you need to spend $40 to get it. Why not wait until it’s available at your local library?

    As for Paul’s networking budget, I think it’s just an excuse to spend money. I get plenty of networking in, and never pay a dime.

    Yes, you can get value by spending money, but it’s not an if and only if. You can get value without spending money, and spending money is no guarantee of value.

  4. liv

    This post sounds like a rant…a really awesome rant. Some people read the blogs and talk the talk, but never walk the walk. I admit that I am like that sometimes (I have pretty cheap moments), but the more you act, the less you will be in your situation…or regret that even if the investment failed, you took a shot instead of sitting in a corner being scared to spend the money hoping it will work.

    Waiting for something to be free can be a potential time waster. What is that book never goes to the library? Maybe you’d feel better if you had a coupon at the minimum.

  5. Todd

    I agree with the spirit of this post.

    Here’s a real life example of “Spend to Save” in action.

    Last year, my energy costs were out of control. My electricity bill in September 2007 was over $450. I have a 1500 square foot home in northwest Houston, TX and we kept our thermostat at 85 degrees. Lots of ceiling fans and desk fans helped keep the house tolerable.

    My wife and I decided that we had to do something – our A/C unit was undersized for our meager house and the insulation was non-existent over the kitchen and over the garage.

    We opted for a complete A/C replacement and re-insulation of our attic.

    The A/C cost $6000 and the insulation cost $1200. We also replaced all of our incandescent bulbs with CFLs (cost about $200 total) and started unplugging appliances/etc when not in use.

    Total out of pocket expense: ~$7400.

    September 2008 bill was $112.

    Savings (for that one month) = $338. Granted, we had Hurricane Ike come through that month so we were actually without power for 36 hours… but still, that’s a huge amount of savings for a single month.

    It won’t take long for us to completely recoup the out of pocket expense and actually “get ahead”.

    Moral of the story: Don’t be afraid to drop some cash in the short term if it will save money or earn money in the long term. 😀

  6. Mark

    I guess the lesson to be learned is that sometimes spending a little bit of money can lead to an opportunity that is not financially measurable.

  7. Mike

    I have a good example of a perceived savings. I do like to read, especially history. On occasion, I do purchase a book from a major book chain.

    At the checkout counter they always ask if I want to join their book club and receive 10% on all my book purchases. It sounds great until the details are brought to light.

    The book club has a yearly membership fee of $25.00. I would have to buy $250.00 worth of books just to break even! I always politely decline.

  8. Ricky Martin

    I always look at the cost benefit when offered these types of memberships/books. one that came to mind not too long ago we were looking to buy a new TV shopped around and decided we wanted to go with the Vizio 42″, after doing the research I found that the best price on it was at sams club, I didn’t have the membership, without it they would have added 10% to the price on a large purchase that can be quite a bit, in this case was about $50, the membership only cost $25, so no brainer got the membership first and then bought the tv. Still came out cheaper with the membership than buying it anywhere else…also added bonus you can get refunded for your membership if your not happy, which we ended up doing just before we moved to the UK Since they don’t have any stores on this side of the pond.

  9. Aaron

    I can’t wait to see you try to charge for podcasts. There is nothing unique on your site that can’t be found elsewhere on the web for free. I think your opinion of your own self worth is a little bloated. You may have a lot of readers but thats because you work in a free medium. Charging for extra ‘added value’ content is like demanding more milk out of the cash cow that has been visiting your farm for free.

  10. Claire at Choyster Cash

    Ramit –

    I can’t watch your readers keep spending on the Entertainment Book when they can actually *make money* to get it! Please tell your readers they can actually buy the 2009 Entertainment Book FOR A PROFIT!!!

    Now there is no excuse not to save.

    See directions on how to do it (very simple) at Choyster Cash

  11. Scott Williams

    The only qualifier I’d put on buying books is that they be the *right* ones. In my profession (software development) there are tons and tons of crappy Learn X in 24 Hours! books that essentially copy and paste official documentation from the Internet. These books are useless, whereas something like Code Complete or The Pragmatic Programmer are worth their weight in gold.

  12. Prime

    Most people would rather be frugal because it’s easier and a no-brainer. You just dont pay PERIOD. It’s more difficult to invest. because you need to spend more time, energy (and yes money) just to calculate the potential returns. As for me, I always believe that knowledge is power – it will give me more options as a journalist and as human being. That is why I don’t mind spending money buying books on spirituality, good fiction, media and business ( I have loads of books too, Ramit. That’s why I have to donate some of them so I can have some space in my bookshelf) or attending workshops or networking (like treating and meeting up a potential editor – I did just that, I flew from Singapore to Bangkok to meet an editor and got a job as a correspondent for a news agency that i always admired). But of course, if I can get something for free, i take advantage of it. I never pass up an opportunity attending company-sponsored senminars or going to the library to borrow a book.

  13. John Comberiate

    I just recently invested some money in new dress clothes. I actually drove out to an outlet, and bought enough so that getting the $50 gift card for a 15% discount on the total purchase was worth it.

    The point though, was that I wanted to transition how I dressed into something more professional. I was tired of dressing for the job I had, rather than the job I want. I’m going to start my own business and I want to look and feel like a business owner. The cost now will be worth it since it has boosted my confidence enough to work harder on making the transition and selling my product.

    Not only do I get complimented on how I look, it gives people a reason to talk to me, which is a great opening for new networking and potential sales.

  14. Battra92

    I’ll agree with the spirit of this more than the actual substance.

    Investing in your own career path is certainly worth it. If I was super cheap I wouldn’t have gone to college for example (all paid out of pocket from my part time jobs and with loans I am paying off now.)

    I’ve been trying to find a good telecom class that work has already stated they will pay for (if there is one not too far from here) and pay for me to take it during work time.

    My old boss was a a tight-fisted hand at the grindstone, a squeezing, wrenching, grasping, scraping, clutching, covetous, old sinner! Yet his personal home was filled with antique furniture and wonderful, beautiful items because, he once told me, with antiques you can always sell them and get your money back, new junk goes to a tag sale for $1 or in the trash. It’s something that has always stuck with me and it is why I plan to furnish my future house with antiques.

    @liv Inter-library loan is an awesome thing. Check and see if your local library has that option. Even here in Western MA (the boonies) wa can get just about any book we want.

  15. Sarah C.

    I agree with the spirit here, but I don’t agree that spending-to-save is always wise. Just because something might save you money later doesn’t mean you shouldn’t investigate some way to spend less on it. Spending money on books that may or may not help you could be a waste. I’ve bought tons of books thinking they would teach me something, and they didn’t. Or sometimes, I just plain never got to them. I’d recommend the library – if you don’t read it quickly you have to return and you spend nothing.

    I do believe this in the case of buying something of higher quality so you don’t have to get it fixed all the time (like a boiler or something really long term). I just don’t think that it should be taken lightly – savings should be calculable.

    With your “paid podcast” example – not everyone who doesn’t want to pay was just being cheap. Some people might just be skeptical that the paid podcast would actually help them save any more than free content online would. So $10 on a chance might be a waste if they don’t know what they are getting.

  16. tauretz

    Ramit –

    Awesome post. Two things I wanted to suggest to help save some cash – on very closely related to this post.

    1) USE COUPONS for things that you’d buy anyway. I’m brand new to this and being a 20-something male coupons have NEVER appealed to me. I was at Walgreen’s killing time a few weeks back and had to pick up a few things so I decided to look at the weekly circular that is provided in the store and half the stuff I needed was on sale. I saved over ten bucks on the stuff I was going to buy anyway. Its definitely worth a look before you hit the register.

    2) KEEP THE CHANGE. This is a system I developed a few years ago. Personally, when I come home at night I empty a pocket full of change into a coffee can and every few years make a trip to the bank with coins in tote. That’s usually a great day cause I walk away with a lot of green that was totally unrealized. Now I do this: every morning I take 17 cents and put it in my 5th pocket of my jeans. That is 1 dime, 1 nickle, and 2 pennies. 4 coins total (IMO this is the best amount of versatility for the number of coins/ pocket space). In the past every time I bought something I knew for the rest of the day I’d have change in my pocket. The problem is the subsequent purchases I’d make I’d never use my change because I wasn’t sure what I had or I didn’t want to fumble with it or various other reasons. Now I know if its under $XX.17 then I have the change and I use it when I purchase something and I find myself getting a whole dollar back or at least a more useful coins (quarters are worth gold in an urban world of laundry mats). Anyway the point is I’m realizing that money now and not keeping it in a jar in my closet.

  17. Jennifer

    If you need to buy these items anyhow, this seems like a good tip. However, this can often be used as an excuse to buy more stuff… Like, “Oh, I’ll get a gym membership so that I can later save healthcare costs in my old age.” But then you never go to the gym.

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  19. JimE

    For all you library people, it’s fair to note that unless you have a good local library Borders or B&N may be your only choice for a good business book. Plus most bookstores let you read the book in the store, so if you’re that serious about it you can preview a book before deciding to buy it for reference. I volunteer at our local library and we are lucky enough to have a small business section, but I’ve been to others where you would have a better chance of finding something worthwhile in the childrens section. Everyone should always check whats available to them, set their own budget for what they want to invest in themselves and if they find an option that satisfies their preconcieved conditions they should pursue it instead of wasting time trying to cut their costs by 10% more. This works for all things, those who pursue that 10% need to be honest and admit chasing that last 10% was always their goal, not the original investment.

  20. Eric J. Nisall

    @ Jennifer:

    You are confusing the issue a bit. The reasoning behind the gym membership is plausible, as it will help now and in the future by improving physical health, potentially lowering insurance costs, doctors visits, etc. If a person does not follow through it is not a sign of the plan or concept being faulty, but rather the individual being unable to stick with a plan. Taking the same argument in a slightly different direction…spending time to develop a budget is a similar case. Some people simply cannot control their spending, so does that mean spending time developing a budget isn’t a good idea? Of course not, the fault falls on the person who cannot follow through on a course of action.

  21. Jessica

    I totally agree. I have an additional suggestion for those who make a living by writing: spend money on good prose. Reading excellent prose is one of the best (and most fun) ways to become a better writer. Subscribe the The Atlantic, The New Yorker, your local paper, etc. Buy Strunk & White’s Elements of Style and refer to it often. I just found it on for $2.00.

  22. Bill M.

    I like this idea, but people still can forget. I like the idea of automation. Setup your direct deposit to deposit 10-15$ into an online savings account.

  23. BigBossT

    I call BS on your magazine example. You clearly had this site designed by a design team, and I doubt you get the full value out of that product. Buying things based only on value is not a good way to run a business, but I suppose it might work for personal finance. Had you bought a $10k used Honda you could have put the other $10 in saving, investments, or heck, even a CD, saving you even more money. How on earth is a used car saving you money? Financing a new car means it’s financed, there is still an interest rate involved. Not paying a monthly payment is simply short changing the American economy. I guess I beg to differ.

  24. Ryan

    @ BigBossT

    This site “design” is exceptionally simple and it is basically a general template that has been modified. That is what is “clear” about this site… if Ramit paid big money for a “design team” to design the site then I would love to start working with him because he is obviously a sucker… and he isn’t. Again, the site “design” is quite simple. If you would like your own, check out WordPress and look through the wide assortment of free (and paid) templates available on the Internet.

    Anyway, I love places like Sam’s Club and Costco. I have heard many people tell me “yeh but you have to buy a membership!” I think of the lowly $25 annual membership fee as a way to keep out the total retards… that membership fee pays for itself every time I go.

    Spend money to make AND save money.

  25. Alex K


    I once had a Costco membership but realized I only really used it to eat cheap hotdogs and free food samples while checking out the milfs who shop there. Now I use my expired card to get in and eat cheap hotdogs and free samples. Its great!

    I prefer the library to book stores. Not only is it free, but that way I don’t have to have tons of book shelves in my house, taking up space. Not to mention the backaches and chiropractor visits I’m preventing during futures moves.

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    […] Stop Being a Loser and Pay Money to Save Money ( A very thought provoking article from Ramit Sethi. Very often, we think of frugality as being whether or not you save money in the moment. But as Sethi points out, there is value in also considering future money saved. For example, taking a basic computing course may have an initial cost, but you can very quickly regain the cost because of increased skill level and productivity. […]

  27. mattyfu

    Some of the best money saving books I’ve picked up are handyman type books, a book on troubleshooting appliances ($1 or so @ a used book store, they’re always plentiful and the general information never really changes from generation to generation) combined with ebay saved me $200 easy on parts and labor of an appliance technician for what was a 10 minute part replacement on my dishwasher. A for dummies type book on computer hardware assembly pays for itself the second you have to replace something and the savings can skyrocket if you build your own computer from a barebone kit at a site like tigerdirect or newegg.

  28. Lucy

    I use the library. Both local and my University one. But if i read something good, I often will get it at Borders with one of their weekly vouchers so I can continually refer to it. Best to check the book out before purchasing. Save cash that way.

    My way of investing in myself – saving up from lasik eye surgery. Expensive – yes. But over the course of my lifetime those contacts, glasses and check ups add up to more.

  29. her every cent counts

    Love your post. I agree that sometimes you have to spend in order to save. It’s hard to figure out when spending is a value. It’s not always black and white. I find it interesting that you chose to buy a new car versus a used one when most people, even non-frugal types, say that a car loses so much of its value the second you drive it off the lot that it makes sense to buy used. But reading your post does make me realize that the cost of a graduate education – that I’m longing to obtain – might be worth it in the long run. The price tag is terrifying, but reading how you and other successful people have spent in order to earn more in the long run is inspiring and calms my nerves… a bit. So thanks for that.

  30. mortgages

    If someone want to buy these items then these are good tips for him. I agree with you that sometimes you need to invest to save your position otherwise you could loose your position.

  31. Kimmy B.

    This post is right on! I have a budget for things that I know will pay off in the long run. I’m a blogger and I invest in my blog each month. I’m getting out of debt and have a growing library of personal finance books. Yes, free is great but I know that with a budget, anything is possible. If I’m going to get out of debt and expand my blog, I have to invest some money. It doesn’t have to be much but once you start, any you see results, you won’t mind putting aside some money each month. I am so excited because of the results I’m seeing from the investments I’ve made. I know that I’ll be a millionaires. You can not put a dollar amount on much I’ve learned and how much I’ll earn. I can’t wait to have my financial break through!

    Kimmy B. “The Prosperity Blogger”

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  33. Generation Millioinaire

    We use the entertaiment book all the time – great idea. We still get to go out and enjoy a good meal but not break the bank.

  34. ekrabs

    I’m late to the party, but I completely agree that it’s important to be able to distinguish the difference between frugal and cheap. Some people who are cheap think they are frugal, but they are not. They are hurting themselves by not realizing this. On the flip side, some spendy people think frugal means cheap. They too are hurting themselves by not realizing this distinction.

    Anyways, I try to see everything in terms of value and investment.

    For example, my most commonly-used conventional light bulbs have been replaced with CFLs. Though they are quite expensive up front, I’ve calculated that they should save me more money in lower electrical bills in the long run.

    Another one that may be somewhat controversial is that I have a premium mattress. I’d rather not say exactly how much it costed, but it was a lot. Hehe. Still, I did some calculations, weighed the pros and cons of different mattress types, and determined that if I take good care of it, it has a good potential to save me money in the end.

    But the truth is, the potential long-term savings was more of a secondary thought in this case. I would have gladly paid more if it translated to a better night’s sleep.

    That, to me, is the difference between frugal and cheap. A cheap person would have simply found the lowest cost mattress possible. I went out to find the best mattress possible, regardless of the price. I don’t want to put a price tag on a good night’s rest, but it certainly helped that I found one that will save me more than constantly replacing cheap mattresses over the course of its lifetime.

  35. JACK

    Let me chime in on the notion of agreeing in spirit and not in substance. The bottom line: if you are going to spend in order to save, then do so wisely.

    This is no different than the business adage that you need to spend money to make money. It’s all a question of what is an investment that has a good rate of return.

    But this idea of just generically setting aside money to spend in hope of saving money in the future is downright silly. You need to have a plan.

  36. Claire at Choyster Cash

    Another great option is to save a *ton* by buying coupons through ebates.

    See how here
    or go directly to ebates to get $25 gift cards for $1.70!!

  37. Clara

    Spending a little money for an organization system is definitely worth it in the long run. It will save you money and time in the long run.

  38. JT

    I really liked this post, and it got me thinking a lot about the difference between frugal and cheap. While we all want to save more and spend less, it is possible to take it to an extreme where you literally deprive yourself of something that may actually enrich your life, if you would only belly up to the bar and fork over some cash to get started.

    My recent experience: I took a basic photography class with a friend a few years ago through our local recreation dept. I was surprised at how much I enjoyed it, and put everything I learned to good use. People have been telling me the photos I’ve been taking with my old point & shoot camera have gotten really good. I’ve been reading (via the local library, read: frugal) on some photography techniques in my spare time and have been wanting a DSLR camera for a long time, but they seemed so pricey and not really a need, that I always talked myself out of it. (read: cheap) Well, no more…I finally placed the order, and my new Canon Rebel XSi should be arriving in a few days. Where it gets tricky is that this isn’t really spending to save, per se. But it is spending to stretch my imagination. And I’m learning a lot about things that I otherwise wouldn’t get a chance to experiment with: composition, colors, exposure. At this point its just a hobby for me (so I wouldn’t do it if I had to go into debt to buy the camera – pay as I go only), but I do get a lot of personal enrichment from taking good photos, and sharing them.

    And who knows…in a few years maybe it will be hobby that I can earn some income from. There is only one way to find out, and that is by doing!

  39. Sean

    I personally didn’t find the links in this post to be very valuable. The only exception is That service is great, and it’s free. I get a weekly email reminding me of my 401k balances, savings accounts, and investments. It really is a great alternative to expensive microsoft money. They are in Beta now, and have a little bit more to go, but I would definitely agree that people should sign up for an account.

    As far as the Personal MBA link, I think that’s a bit much as well. Can you put “PMBA Feb. 2008” on your resume? Do people really believe that others go to business school because of the classes’ literature? You go to business school to be involved in class discussions, personal interactions, and gaining contacts through the alumni network and your class’ network.

    So yeah, $100-$200k in debt is a lot of money, but there are studies that show you what sort of return on investment you get at each school on average.

  40. Nick

    I like the idea of this post, but just be careful what you spend money on to ‘save money.’ There are lots of personal ideas of what will save you some money in the long run, but just make sure you’re not being impulsive. That being said, I recommend netflix. I’m a huge movie watcher, and the last time I checked, it cost over $5 to rent one movie at blockbuster. So if you plan on renting at least a few times a month, netflix is a bargain, and they have a bunch of tiers that you can subscribe to for your specific needs.

  41. Jonathan

    Ramit, why the derisive negativity? (“Stop being a loser…”)

    It’s off-putting and motivates me to not read your post. You can have an edge and a personality to your blog without doing that.

  42. PennySeeds.comt

    Sometimes you do get what you pay for, but don’t outright push aside free information either! I’ve learned so many great things for nothing; that have been so valuable to me.

    I learned how to build, and fix computers for absolutely no money with the resources available for free online. Now, I can fix my systems myself without anybody’s help. Probably one of the best things I’ve ever gotten into to be honest with you! It’s very rewarding being able to do things yourself. : )

    That spend to save account idea is interesting though – I might set that up for myself in my own mint account.

    Great post.

  43. Great Minds Think Alike!

    […] I Will Teach You to Be Rich Post: Stop Being a Loser and Pay Money to Save Money Comments: Need a new car? Got a leaky roof? Don’t skimp on important things. Pay the money […]

  44. Katrina

    The worst comment regarding your announcement to do a podcast was the person who said charging is not a successful model for online editorial content.

    If professional writers like you and I believed how other people valved these services, we’d never make rent. It’s like the concept of one painter charging $10 an hour and the other $50 … who do you trust? Aren’t you the least bit suspicious of how $10-an-hour work looks like? There is everything right with flexing your income muscles in order to be taken more seriously.

  45. Ramit Sethi

    Katrina: Exactly. That person will never be a customer, no matter how much they whine and make up excuses for why they don’t want to pay. There are tons of people like that online. But there are a smaller group of dedicated people who value great content and are perfect customers.

  46. Pete

    I hope you find the irony in this statement. If your perceived notion of graphic designers is that they simply make things pretty, I would bet you haven’t actually worked with a professional design firm in the past. This whole paragraph is contradictory to the title of your article, and frankly, a bit insulting to professional designers. I’ve enjoyed your website up to this point, but would be a bit more careful in the future.

    […] I’ve subscribed to a magazine called Before and After, which gives you great tips/advice on making beautiful designs for websites, graphic design, etc. It’s helped me take some drab stuff that I came up with on my own and make it look a lot better. And based on the rates I pay professional designers, I’ve saved over $800 for the work I’ve been able to do. […]

  47. Ramit Sethi

    Um…I don’t think designers just make things pretty.

  48. Pete

    The point is if you are telling people to pay money to save money in the long run by purchasing high quality goods or services, skimping on something you need to be of high quality (ie. graphic design) is probably not the best course of action. You can obviously find books to teach yourself a huge number of things, but most are best left to professionals. You might be able to fix some dental problems on your own, but in the long run, I’m going to the dentist.

  49. Ramit Sethi

    Definitely agree–you have to decide what to spend money on and what to do yourself. For example, I paid someone to design this site (and will pay someone else to redesign it). But for handouts that aren’t very important, I can design those myself.

  50. Pete

    Sounds good. I may have been a bit reactionary in responding to the post, as it sounded like you were making an overarching statement about design and creative work. Keep up the site, looking forward to future posts!

  51. Dee

    Everyone loves the library! Yay! But it is good to make wise investments. I get books at the library and buy others. Sometimes I check the book out from the library first and only buy it if I know I can’t live without my own personal copy. Knowing when to buy is important as well as knowing yourself well enough to know you will make use of your purchase (reading those books or getting yourself to the gym). And good design would be an area where it might be good to pay money to save money. A professional-looking website draws in potential customers and may even get them to trust you more.

    But Ramit – could this thinking be applied to taxes? No one likes to pay taxes but I would rather live in a community with a well-stocked library, clean parks, good roads, excellent public safety, etc. Recent studies have shown that the ROI for taxpayers on the public library is 4-to-1! Well-funded, well-run cities attract better workers. Good schools ensure a consistent supply of reliable staff. I feel like one of the few people out there with this opinion.

  52. Sean

    I’m not arguing that the unqualified information saying the ROI for taxpayers is 4-1 for public libraries, but I would probably argue that the ratio of taxpayers that USE the public library is probably much lower than 1/4, meaning that qualification doesn’t really mean i should be paying taxes.

    This isn’t the topic that started, but taxes are made to be more of an “air bag” for society… so if the economy is slowing, taxes can be lowered and give people more money to use (see: economic stimulus package), if it’s too hot, they can be raised and give people less money to use. public services do need taxes, but not the amount you and I pay.


    Wow. Couldn’t agree more.

    I run a website that is centered on saving money, and therefore attracts quite a few “fanatical frugalites”.

    In the end, I think the phrase “you can’t it with you” sums up my feelings. If you are saving money, you should be saving it for something that pleases you or enriches your life, or someone else’s.

    If you feel the same about “green”, have a look at Seth Leitman’s blog.

  54. Terry

    Sometimes you live on a shoestring and can’t afford those upfront costs which would improve your financial position in the long run.

    My budget holds an illustration:

    Monthly income $1004

    Rent (a room in a house with nine people) $650
    Medical exp $110
    Student loan payment $136
    Everything else $118

    I live on fumes and food stamps and can’t afford those little optimiozations disposable income would allow.

  55. Rick Francis

    Another example of paying now to save in the future is refinancing a mortgage. I paid a couple thousand in closing costs to refinance my home mortgage last Jan but if I keep the house for the entire 15 year term it will save me more than $35,000 due to a significantly lower interest rate.
    As for charging for your podcast, I guess it depends on your goals for the podcast. If you want to be the most popular financial podcast I don’t think it would work given some of the excellent and free competition. If you want it to be a reasonable source of income then it’s possible. I don’t think it would be easy for just anyone to get enough subscribers to adequately compensate the large amount of time required to make a polished podcast. However, you are in a unique position because you can leverage your current success with Iwillteachyoutoberich. I think you should give it a try, if it doesn’t work you can always post the content on Iwillteachyoutoberich so it isn’t a waste.
    I liked what fat2fitradio did with their podcast- the current content is free but if you want the older episodes you pay. I paid the $20 for the 1st season and was very happy with the information that I received in return. You could have the latest podcast free for a while then older ones are available for a fee individually at one rate and collectively at a lower rate.
    -Rick Francis

  56. A Layoff Should Mean All Hands On Deck |

    […] No, we mean it! After you’ve figured out the status of medical coverage, filed for unemployment and finished exit interviews, you need to get down to the business at hand. Your new job is finding a job, and even in this economy, they’re out there. The good news is, you don’t need to buy a Giorgio Armani suit or wine and dine your cousin Bob the Billionaire to do it. (Although a few strategic purchases can go a long way — check out I Will Teach You To Be Rich’s post on spending money to make money.) […]

  57. steve

    I agree with this post. In my own life I have lost big time in at least one instance by not following up sufficiently on a business idea of mine, even after getting interested by a successful and experienced start-up veteran with financial contacts. The situation is a little different than what you are writing about, but not really. And even after that stage, I had further opportunities to proceed and develop proof-of-concept in my market area for relatively small amounts, yet I held back my wallet and effort for various reasons. (I also had a lot going on in my life–another mistake—now I know that to be a winner at a big project you need to have the ability to quit others and focus and devote yourself to the new project..)

    Circling back more closely to the point of your original post, I agree that it is definitely worth it to put aside cash for the purpose of spending to increase investment/savings. The key here is not just the spending (although that’s important too) but mindset, having the mindset that you are going to find something or create value somehow. Just buying the thing is not the key, it’s the motivation and the fact that you get in the habit of spending resources to gain advantage., rather than getting in the habit of just being passive and defensive (mere frugality). That’s what you are writing about and I wholeheartedly agree.

  58. Nicole Crimaldi

    I absolutely LOVE this post! You are absolutely right that cheap isn’t always the better choice financially. Every time I skimp I end up buying 3x as much to replace the broken stuff, or just end up buying the more expensive product later. Thanks for sharing!

  59. Scott H Young » $10,000 Ideas

    […] even a steep $10,000 price tag should seem cheap.  Ramit Sethi expresses a similar sentiment in his article, “Stop being a loser and pay money to save money”:     They see [a book] that costs $10 and […]

  60. Asia Nelson

    I’m a full-time yoga teacher (talk about someone who needs this site!!). A few years ago I got a call to do private yoga instruction. Private instruction is a goldmine for an instructor – same time commitment, but only one or two clients instead of having to fill a room, and each client pays me $60-120/hr instead of $12-15/session.

    Problem was, I had no idea how to deliver a private session! I’d never taught or even taken one. I said to the client, “Sure, see you Thursday” on Monday and promptly sought out the teachers in my area with the best reputation. I invested my own $60 to have a session with one, experienced being a private client, noted what I enjoyed, what I didn’t, and built my own private teaching experience on the fly from there. Now half of my business is private instruction. That initial client alone gives me ~ $3 000.00/yr in business.

    I vowed to keep this kind of personal investment up, and have … mostly. Your idea to schedule to invest every month and set a budget is a great idea. It’s a small adjustment with bigger results – actually ** commit ** to investing, rather than having the intention and executing sporadically. Thanks for the nudge, Ramit!

  61. steve

    @ “But this idea of just generically setting aside money to spend in hope of saving money in the future is downright silly. You need to have a plan.”

    , I think that you might find that having made a written obligation to “spend to save” $50 this month will cause you to look high and low for the best way to do that and *form* a plan where none existed before . Which will mean you will evaluate things in your life with a different eye.

    I do agree that just going out and dropping $50 a month with no analysis or forethought won’t help–but the discipline of *actively* and *analytically* paying attention and looking for opportunities to “spend to save” will more than pay for the $600 per year or $50 per month I am giving as an example. It may also turn up some opportunities that have an even higher cost, but a correspondingly higher return. This can help you to move to a more active, opportunity-seeking and creative financial existence–as opposed to a more passive, just trying-to-manage-an-income-stream, financial existence.

    Basically, unless you start aiming higher, you will be stuck on the same trajectory you are on. Try aiming higher *this month* and see what the exercise does for you.

  62. jp

    THANK YOU, I really enjoyed this post. I totally agree with the message, and have been implementing this for a while knowing that the investments I make in educational workshops, books (I do not like to collect a lot of stuff I don’t use, so I only buy reference books or ones I know that I’ll read all the time. Otherwise, I’m a frequent public library user), good organic food to invest in my health – will pay itself off in the future. I still slip up now and then by convincing myself that a(nother) new pair of shoes is a good investment for my business image, but otherwise I’ve found it useful to be really truthful when I ask myself “is this a good long-term investment?” every time I consider buying something.

  63. CB

    This post reminds me a lot of my parents!
    I was raised by parents with two different styles of spending money, which has led me down two different paths. My mother tried never to pay retail and always bought the cheapest priced item, regardless of quality. When we’d go on an outing with her, she’d stop and get us a drink at Quick Trip if we wanted one. When she died, she was in debt. My father saved money a lot, pinched pennies, but told me he always paid more for quality because it would last longer. If we asked to get a drink when we were out, his famous reply was “you can have water when we get home”. He is not rich, but he does have savings.

    I started out spending with my mother’s philosophy early in life, and I racked up a lot of debt. Now I’m more like my father, and I try to balance price and value and not spend on unnecessary things. For the first time in my life, I have savings!

  64. Deb

    My story is a bit different, and I hope I am not hijacking this thread.

    I also believe in spending money (in an intelligent, reasonable manner) to make your dreams come true.

    My field of work is now primarily done through telecommuting. I take online continuing education classes to keep my skills up and to stay current. I can write these off on my taxes and my employer also subsidizes them. Yes, I have to spend some money and time, but it’s worth it.

    And because of the telecommuting, I am able to pursue my dream.

    I took a nominal amount of equity out of my home in the city, which I am now renting out for a positive cash flow (and that covers most of the home eq. loan) . I purchased a shoebox of a house on 4 acres in a nearby rural area.

    My passionate dream is to develop a small hobby farm, and grow organic produce, to sell at farmers markets and local restaurants. It will cost me money, but it will save me money.

    I first alloted money every month, for many months, and then after much research, I purchased several books related to my dream – seed propogating, organic gardening, root cellaring, hobby farming for profit, etc. To me, that library of how-to information is money very well spent! It will definitely help me to save and make money on my venture!

    I am now saving money every month to go towards supplies such as rain barrels, deer fencing, seeds, and a small greenhouse. I will save money by growing my own food that is healthy and organic (I’ve also learned to can and preserve food). I will save very good money by having a nice tax write off for my enterprise!

    I battled cancer 4 years ago. It was rough. But the silver lining is this: I realize that we often spend far too much time planning for the future, and not enough time living in the moment or allowing ourselves to truly reach for our dreams.

    I’m not procrastinating anymore, or telling myself “I can’t, I shouldn’t”. Instead, I focus on “how can I make that happen”, and I put that into action. I had to spend some money to make it happen. But I’ll live my dream, and I’ll save money doing it!

    *Please*, take the risk to reach for what you want. Believe you can do it, and don’t allow negative thoughts to dissuade you. Be willing to save for it, and then invest in it. It’s not always easy, but you CAN do it!

  65. $10000 idea « Journal of Eddie G

    […] a steep $10,000 price tag should seem cheap.  Ramit Sethi expresses a similar sentiment in his article, “Stop being a loser and pay money to save money”:     They see [a book] that […]

  66. Mike

    Ramit is right when he points out that some things are worth spending money on. A man’s suit, for instance. A cheap suit will not last long enough to justify the money you spend on it (even if you get it free, you still have to spend money to clean it), whereas a good quality suit will hold up for several years, assuming your weight doesn’t change much as you age. If you wear suits only occasionally, just two of good quality will probably be all you need.
    I remember as a kid, being dragged off (with my father) by my mother to ROBERT HALL men’s stores, where she would search out the Hart, Schaffner & Marx, etc., suits for the both of us, and if she found a bargain, even if it was a bit bigger, she’d tailor it to fit, or have a cleaners do it. Me and Dad were sharp!!

  67. jon

    Ramit it seems you’re even further wandering the line between blogger and affiliate marketer.

  68. Why not wait? | Ya Que Quiero

    […] comment at Ramit’s: Ah, but you’re promoting a false dichotomy. For example, you may very well get tens of […]

  69. O RLY? Or: Why not wait? Pt. II | Ya Que Quiero

    […] post got me a couple of emails. To spare you the click and since it’s short: A comment at Ramit’s: Ah, but you’re promoting a false dichotomy. For example, you may very well get tens of […]

  70. why god hates me » Save Money by Spending Money [Shopping]

    […] movement has other supporters as well. Ramit from I Will Teach You to be Rich is a proponent of spending so you can save as is Yahoo, who lists zoos, aquariums, AARP, Warehouse Clubs, AAA, and amusement parks as places […]

  71. How We Paid Off Our Car Loan

    […] on some feedback from Green Panda Treehouse readers. Thank you for your advice and support! We also followed personal finance tips from other bloggers.  Another bill bites the […]

  72. Ramit’s Series — Tip #29: Stop being a loser and pay money to save money — | New Mexico Bankruptcy Law Blog

    […] personal entrepreneurship. His series outlines the various ways we can keep money in our pockets.Tip #29: Stop being a loser and pay money to save money Today’s tip is to spend money on things that will save you money in the long […]

  73. Cindy

    There are other ways to spend $$ to save $$ than buying books. I just bought a new house last summer w;th a big yard. I’m spending money on gardening supplies so I can grow some of my own food. I’m hoping to break even this year and make a “profit” next year.
    I think a “victory garden” is a good thing to spend money on.
    I’m lucky enough to have the space to be able to plant fruit trees and bushes. They are a long term investment, worth spending money on now to save money later.
    Love your tips and your book.


    Hi Ramit,

    Excellent. I have been a member of your site for the last one month, but this one suggestion has impressed me a lot i.e., to have a budget and spend some money to save money. I am a versatile reader and have been reading the books of Dale Carnegie(How to Stop Worrying & Start living, How to win friends and influence people, How to enjoy your Job and worklife, Public Speaking); Dave Ramsey(My Total Money Make Over & others); Rich Dad & Poor Dad series; Stephen R Covey’s Seven Habits & First Things First and a lot more time management and personality developmet books.

    By reading your suggestions for the first one month, I thought they were not of much of a use – which were all focused on saving tips. But today’s post changed my opinion on you. Good work. Keep it up.

  75. Markus Ossi

    Spending money to save money sounds a lot like investing. The thing with investments is, you have to discount the future income into the present.

    People are frightened for a reason as all investments involve a risk.

    Net Present Value calculations might seem like overkill, but the concept is still an important one.

  76. chessiq

    One of the best PF blog posts I have ever read.
    Many thanks!

  77. Behind the scenes: 3 case studies about money that will make you laugh, cry, & vomit | I Will Teach You To Be Rich

    […] Paying for value is a sign of successful people. She caught me off guard when she offered to hire me as a consultant, but when I was thinking about it later, it didn’t surprise me. Most of the successful people I know are willing to pay for value. They pay for training courses and understand that you can’t out-frugal your way to being rich — you sometimes have to spend money to earn money. […]

  78. Education is not the solution to all personal-finance problems | I Will Teach You To Be Rich

    […] don’t want information, we want solutions.) But if you do — if you’re willing to pay for value — there should be tools that help you get far ahead of others who accept vanilla […]

  79. What’s the best investment you’ve ever made? | I Will Teach You To Be Rich

    […] previously written about how this woman should spend $2,000 on a computer course, and how you should stop being a loser and pay money to save money. I’ve also written about the best $20 you can […]

  80. Attention whiny complainers: Why you STILL aren’t saving money | I Will Teach You To Be Rich

    […] this: They’re fiercely combative about their money, they generally don’t believe in spending money to make money (e.g., they would never spend $20 to take someone out and get their advice) because the other […]

  81. 30 Tips That Can Save Your Money This Month

    […] Tip #28: Use price-protection guarantees to always get the lowest price (travel, retail) Tip #29: Stop being a loser and spend money to save money Tip #30: How I’m saving $25,000+ in […]


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