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The Simple Dollar

What is 'cheap'?

Frugality is easy when you’re seeking the best deal on a very specific item, Hamm writes. It becomes much harder when you’re comparing the merits of two similar items and trying to decide which one is really right for you.

By Guest blogger / October 11, 2013

Groceries are shown on the shelves at a Vons grocery store in Encinitas, Calif. The 'cheapest' item is not always the one with the lowest sticker price, Hamm writes.

Mike Blake/Reuters/File

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You need some cheddar cheese for a recipe you’re going to make, so you head to the store.

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The Simple Dollar is a blog for those of us who need both cents and sense: people fighting debt and bad spending habits while building a financially secure future and still affording a latte or two. Our busy lives are crazy enough without having to compare five hundred mutual funds – we just want simple ways to manage our finances and save a little money.

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The cheapest block of cheddar cheese costs… let’s say, $1.99. It’s got the logo of a giant multinational corporation on it. You don’t know where it was made. You don’t know what kind of milk is in it. There’s a long list of ingredients, but you don’t know what half of them are.

Right next to it is a block of cheese of the same size for… let’s say, $4.99. It’s got the logo of a dairy farm that’s twenty miles from where you live. There are only six ingredients listed. The package indicates that the milk is local, from cows you can go visit that live on an open pasture that you can also visit, and the cows are treated humanely and are not given hormones or antibiotics of any kind. The cheese was made at that facility, also twenty miles away.

Which cheese is truly the best bargain? 

Obviously, the quality of the second cheese is higher. The ingredient list doesn’t contain anything unknown. The cheese is likely healthier and may actually taste better, too. The cows that make the milk are treated well. There are no antibiotics or hormones floating around in the cheese. The cheese is also local, meaning that the cash is much more likely to stay in the local economy.

Those factors weigh directly against the cost of the cheese, though. Like it or not, the other cheese costs less than half of the expensive cheese.

It’s not an easy thing to decide, especially when there are a bunch of different cheeses on the store shelf, each with advantages and disadvantages. It has to do not only with objective things like price, but subjective things like how you value things like keeping money in the local economy and how much impact food additives have on your personal health over the long term.

Frugality is easy when you’re seeking the best deal on a very specific item. It becomes much harder when you’re comparing the merits of two similar items and trying to decide which one is really right for you.

So, how do you navigate these kinds of murky waters?

First, you need to figure out what you actually value. Is reliability important to you? What about an ingredient list that doesn’t include food additives that you can’t identify? What about the humane treatment of animals in the foods you buy, like milk and eggs and cheese? What about GMOs? What is the value in keeping money local? How desperate is your current money situation? Does the store you’re using practice ethical behavior with its employees and its supply chain?

I can’t tell you the “right” answer to these questions because there is no “right” answer. It comes down to what you value and how much you value it.

For example, if your approach to such issues is to focus entirely on making next week’s bills, then the value of saving $3 is going to supercede those other values. If you’re truly in an “every dollar counts” situation, then the lower price is incredibly important.

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