Frugality and investments: calculating payback time

This is update #7 in my series on the No Spend Summer Challenge. Hubby and I are saving up this season for a down payment for our first home, so we’ve enacted a fiscal freeze.

 

Monday I went to a consignment shop to get my teenage daughter, who insists on getting an inch taller every month, a new dress or two. (Needed clothing is a no-spend exception.)

While there, I spotted 5 cloth diaper covers, the lot costing around $10, and snatched them up. Then I thought about having to post here about getting all spendy and almost felt guilty.

That is, until I picked up my Tightwad Gazette and read a section about investment purchases and calculating payback time.

“Calculating payback is a simple but often overlooked process and is a fundamental process of successful tightwaddery.” 

An example would be buying a pair of high-quality hair cutting scissors that allow you to cut your kids’ hair at home.

You see, baby #7 was a “surprise surprise!”. I sold all the baby stuff, including all the cloth diapers, after #6 was through with them.

Because of the nature of my pregnancy, I bought nothing to prepare for the baby. Literally. We didn’t know what the future held in terms of his survival, and I knew I couldn’t emotionally deal with having to sell or give away baby stuff that … wasn’t needed.

I didn’t start buying needed baby items until Josiah’s NICU stay drew to a close and we knew he was going to be ok. I didn’t buy cloth diapers because, given all the stress and extreme sleep deprivation (he came home on a monitor that initially went off every.few.minutes.all.night.long), we chose to use disposables.

In recent weeks, however, I had been thinking of going back to cloth for two reasons. One, because they’re cheaper. I hate spending $30 a month on what amounts to wearable trash. And two, because I know that cloth diapered babies potty train faster and easier, and that time is only a year (or less) away.

But since he would only be in cloth for several more months and there will be no more babies, I didn’t want to invest in a cloth stash.

Enter The Tightwad Gazette.

In this section of the book, Amy D talks about how sometimes it’s the most frugal thing to go ahead and buy something that in the end will save you money. Simply calculate the payback time and figure out if it’s a worthwhile frugal investment.

Those diaper covers cost $10. A dozen cloth prefolds bought on eBay or Craigslist will cost me less than $20.

The payback time of my cloth diaper stash is less than 2 months.

Done. 

Not to mention, cloth diapers and covers can be re-sold, meaning I can recoup some of that investment. (I’ve even sold stained diapers on eBay – as long as you are honest about their condition and post plenty of good pictures, you’re golden.)

When many new parents talk about cloth diapering, they think of investing a few hundred bucks in those fancy, $15-a-pop pocket diapers. Those are nice, I admit, and I’ve used them in the past.

But it’s entirely possible to cloth diaper for well under $100 for the lifetime of the kid, if you use simple one-size covers (multiple sets of snaps make size adjustments possible) and prefold diapers (the thirstiest, workhorse diaper).

Another objection to cloth diapering is finding a nighttime solution. I didn’t have trouble with cloth diapers leaking at night until around my 5th or 6th baby (the memory is sketchy!), who was a very heavy wetter at night. We ended up using a disposable only for nighttime. Still, using cloth the rest of the time can save you a ton, since one pack of diapers will last you nearly a month if you’re only using one a day.

Therefore, I won’t feel guilty, even during the No-Spend Summer, about buying something that will quickly pay for itself.