Thriftiness Best Practices

Here are 5 rules that help me save money:

NEVER focus solely on cost-side optimization – This is the most important rule for my fellow thrift enthusiasts out there. In personal finance, I frequently find it helpful to frame your life like running a business. Ultimately, the objective function is not to minimize costs, but to maximize profit. It takes valuable resources (mostly time and effort) to save money, but if these resources can be invested elsewhere to bring in more money than you are otherwise saving, then you are actually losing money by opting to save money instead. For example, you can spend 10 weekends in a row shopping around for a used car and end up saving $1000, but you could also be spending that time studying for an upcoming job interview that could double your salary. A penny saved is a penny earned, but the vice versa is also true (albeit perhaps less so due to income tax).
Cost grows faster than linearly versus quality, so aim for mass consumer brands if upmarket quality is not necessary (it almost never is) – There is a simple economic intuition behind why this is a good idea. Products aimed at a mass market are able to sell at lower margins due to high volume of sales, and economies of scale allow supply chains and assembly lines to optimize for efficient production, whereas luxury products require higher margins to remain profitable as less people are able to afford them. Built into this equation, the cost of these margins get passed onto the consumer. Every marginal increase in product quality inevitably results in a disproportionately high increase in price. Try this as a thought exercise: is a $200k G-Wagon worth 10 $20k Corollas? The difference in utility from not having a car to a Corolla is substantially greater than upgrading from a Corolla to a G-Wagon, yet the difference in price tag does not reflect this. Smartphones are another perfect example of this; try comparing a $1200 iPhone to a $400 Xiaomi, which from a hardware side gets you at least 80% of the way to an iPhone. To find the best bang for your buck, identify brands and/or product lines that focus on a mass market, value-oriented business proposition.
Be especially wary of recurring costs - This is perhaps obvious, but a recurring rate really adds up. I won’t go into debt traps as I assume if you are reading this, you are already wary of what a bad idea it is to carry credit card debt; instead, I’ll urge you to pay attention to typical payments such as your rent, insurance bill, phone bill, water bill etc. A couple hours researching alternatives can pay off even if it’s shaving razor thin margins. Another example, during the first weeks of the pandemic, I stopped going to the gym, which in my area cost around $400 per year (again, not a huge amount I thought at the time). Instead, I bought equipment to set up my own home gym (weights, bar, rack, bench, and a stationary bike) which ended up costing me about $600 total. Doesn’t take a CPA to conclude that I’ve already earned back my initial investment (before the pandemic even subsided); needless to say, I will not be needing a gym membership anymore.
It is a terrible idea to splurge on depreciating assets - A depreciating asset is something that has value that decreases over time. There is a common saying that a new car loses half its monetary value the moment you drive off the lot, so before you make that next big purchase on a depreciating asset (it’s unavoidable), know you are effectively burning a check by making such a decision. Another good example of this is streetwear. A $20 jacket from H&M is worth pretty much $0 the instant you leave the store. However, paying retail price for a $500 “hype” piece will net you possibly many times the initial payment several years of use down the line even after many uses (assuming you know the market and have some taste). This is also a good rule to keep in mind when following rule #2 as well, as a cheaper product that cannot hold its value can end up costing you more money in the long run, so balance these constraints when evaluating your optimization equation.
Practice mental conditioning – This one is a bit advanced, and has the potential to be quite unhealthy so discretion is definitely advised. In summary, this is the act of training one’s mind to enjoy certain activities or unlearn proclivities by mentally equating it with a realizable benefit, which may or may not be financial in nature. Personally, I realized how malleable the human brain was during my first big diet, when I cut over 50 pounds in 6 months by giving up all the unhealthy foods I grew up loving. For about two weeks, I experienced cravings, headaches, restlessness, among other discomforts, but since I mentally associated the sensation of hunger with weight loss, I quickly lost the desire to consume foods I perceived to be unhealthy entirely (which, again, has potential to be harmful, and took me very long to unlearn). Likewise, such tricks can help form good financial habits. Have an old car? Trick yourself into thinking every bump you feel on the road is a dollar saved by not buying a new one. Hate having roommates? Trick yourself into thinking every noise complaint is a dollar saved on rent. Find yourself always eating out? Trick yourself into thinking every bite you take of your home cooked meal is a dollar saved that otherwise would’ve gone to a restaurant.

Some rapid-fire actionable tips:

Keep a low credit limit even if you qualify for higher. This is a small hack to disincentivize spending as you will be forced to pay your bills more frequently.
Do not buy something just because it's a good deal. A sale for something you don't need is still a waste of money.
Buy used cars, electronics, clothes etc. The moment you buy a something new, it becomes used. Ebay and Craigslist are amazing resources. Additionally, I find that this actually helps assuage my compulsive behavior of keeping my belongings in perfect conditions, after all they’re used already! You will get duds every once in a while, but when amortized the savings are still going to be substantial.
For things like video games, not only buy used but sell them as soon you are done playing. If you are utilizing the second hand market to your advantage, you end up barely paying any money at all.
Opt for third party alternatives when available, especially for things like car repair or printer ink.
Avoid eating out unless it’s for social reasons. And even then, you don’t need to spend money to hang out!
Stop eating meat. Not only are there environmental and health benefits, meat is also the most expensive part of my grocery bill.
Get a roommate. In my house-hunting experience, 2 bedroom apartments are only about 20-30% more expensive than a 1 bedroom. Plus you’re less lonely.
Take advantage of free trials, especially if you only have a limited or very specific use case.
Buying in bulk. Good candidates are regularly used items such as floss, toothpaste, paper, pasta/grains that can be stored.
Consume more foreign content (if you are multilingual). Foreign media is often made available for free because the primary audience, hence the money being made, is elsewhere. For example, many Chinese tv shows are uploaded by official distributors for free on YouTube.