Does it pay to be a contrarian?

Does it pay to be a contrarian?con·trar·i·an

A person who takes a contrary position or attitude

Contrarian is a term that is usually applied towards investing. That is, you buy when others are selling and sell when others are buying. You buck the trend by going against the popular market sentiment.

Warren Buffett became the third richest man on this planet by following this strategy. In this age when we are sending rovers to other planets and setting up a permanent base in space, Warren Buffett is currently obsessed with Railroads!

No this is not a cynical post about Buffett or even investing. This is about using the same philosophy in our everyday life. Does it pay to be a contrarian in everyday life?

My phone isn’t very smart.

I work in an industry where almost everyone carries a smartphone. Very useful in those long boring meetings when you can tune out life around you and check Facebook. I have a brick. It does not support data, but it does have my favorite game – Snake! But I can’t really play that game because there is no way to turn off that annoying beep each time I press a key. My phone isn’t very smart.

I’m forced to focus, no matter how long the meeting is. I can neither check nor update Facebook. But then I realized, I don’t have a Facebook account! Most of the time I’m connected either via my work PC or through my laptop at home. The only time I’m not connected is while driving to work, but then I reserve that time to listen to music and I wouldn’t use the phone anyway. Why do I need a smartphone?

Can I afford one? Of course! Do I have to have one? No. Instead, I use the money saved – about $2000 a year and apply it towards my mortgage as extra principal payments. My prepaid plan costs me $100 a year!

Chasing a customer away with breadsticks…

I was once offered free breadsticks along with my lunch order. I always order the same thing and don’t buy a drink but do tip and when owner of the pizzeria heard that I just had a baby and I’m on a single income, she somehow thought I was barely scrapping by! I felt very guilty eating those breadsticks.

No Honey Boo Boo for you!

When friends come over to our house, which is in a very affluent neighborhood, they gasp at our 32″ TV that has no cable! But for me, it doesn’t make sense to have cable. We don’t have time to watch TV with a hyperactive 3 year old and we don’t want him catching this habit. Neither of us are big sports fans so big screen TVs mean nothing to us. That’s a savings of about $700 a month. But it is not about the savings, it is about us. If it doesn’t make sense, cut it out. Doesn’t matter what others think. On the other hand, if they make PBS a cable-only channel, we would definitely consider cable!

I don’t pay $100 for an oil change!

No fancy car either. Definitely within our means, but again the purpose should be a genuine need, not a status symbol. The savings in gas, insurance and maintenance is a nice bonus.

Home work!

As a new homeowner, I wasn’t prepared for home maintenance. When the faucet started leaking, I decided I’ll fix it myself rather than hire a plumber. This time it wasn’t about the money or time, but pride! I’m an engineer, I build robots in my spare time, fixing a faucet shouldn’t take more than half an hour!

Took me 2 dirty, soaking wet days.

Since I didn’t have the right tools or even know what tools to have, had to make multiple trips to Home Depot, spent hours sawing rusted pipes, learnt about the utility of vinegar in removing rust, almost locked myself in the bathroom but at the end of day 2, emerged dirty but victorious with a shiny new faucet and brand new door knobs!

The next time we have a leaking faucet, I really wouldn’t take more than half-an-hour! 2 days was the price I had to pay for this education and it was worth every penn…second!

Looking back it was a fun experience and I’m glad I didn’t call the plumber! What am I going to do with all the money I saved! Nice problem to have!

Yard work. The typical response is your time is more valuable and you should pay someone else to do this. Yes it is if I’m doing something else that pays more than the $30 or so for the yard work! Not if you are sleeping or watching TV! The way I look at it, doing yard work is a good excuse for some fresh air and exercise.

Being contrarian can prove expensive

Contrarian doesn’t always equate to saving money. Sometimes you spend more, way more than you have to. When it comes to stuff for the house, I pay a premium. The faucet I bought was almost thrice the price of a regular faucet. Faucets are notorious for springing leaks and I don’t to deal with this very often. Quality versus lower cost.

A good vacuum cleaner is hard to come by. Most for us, last at the most, a year. I bought one that is 5 times what a regular vacuum costs! Not just based on the price, but for the 7 year warranty and based on the positive reviews. Hopefully I wouldn’t have to worry about this for the next 20 years!

The same goes for other fixtures as well. LED bulbs cost as much as 30 times a regular bulb. But they last a lot longer and consumes a fraction of energy and is good for the environment.

When we decided to purchase our house, I simply sent an email to our condescending agent and said ‘We’ll take it’! We had no pre-approval, we didn’t look like we could afford the house (I’m sure my phone was the culprit here!), and ‘We’ll take it’ is no way to let an award winning million dollar club agent know that you are interested!

We weren’t insulted, we were amused! We had no doubts in our minds about financing and hence didn’t bother with a pre-approval. Paid 20% cash to avoid PMI and bought the house.

We are no different than others, we just have a contrarian view of life. And being contrarian can save you money. Who knew!


11 thoughts on “Does it pay to be a contrarian?

  1. Being contrarian isn’t easy but as you show it can pay off. I think everyone who ever started a business, including Jobs, was a contrarian.

  2. Yes it does pay but like you mention in some cases it can and will be costly. Its a matter of is what everyone else doing for you or are you just doing something because everyone else is doing it? Take the real estate market – When everyone started buying back in the day I said it was already to late. Those who knew real estate were the ones selling to the people trying to hope on the band wagon. Most people are willing to take risks and therefore will only join when they know that something can work because its working for thousands or millions of others.

    I am a contrarian and proud of it!!!

  3. I love it! I guess we are contrarian this way too. I still have a flip phone & even get laughed at for it. Mr. Pennies does all of our home repairs/maintenance plus most of the work on our cars. Yes, he is an engineer too & has the attitude that he will find a way to fix it! I understand about that pride thing. When you don’t let others set your goals for you, you are free to allocate your money and time the way YOU want to!

  4. Count is as one of the cleaning snobs with an insanely expensive vacuum cleaner, but the logic holds. It’s lasted for years, and it beats having to buy a new cheapie every single year.

  5. I just upgraded to an iPhone 5. Foiled again! Interesting how you put the savings to good use by buying high quality items when you need it. Seems like you’re winning on both sides. Maybe I need to be more contrarian!

  6. I was late coming to the smart phone market but I’m totally hooked now. I can see how you’re saving a ton without one though because data plans can get really pricey, same with cable!

    Nice job tackling some home improvement projects! I’ve done a lot of DIY projects but the closest thing I did to plumbing was replacing a flapper in a toilet. Much much cheaper than dealing with a plumber and easy to learn on youtube.

  7. I think I would just hire the plumber because time is money, too, but yeah, sometimes it does pay to be a contrarian! In fact, I think it can pay a lot but actually I don’t really see it as being “contrarian” in the sense of necessarily just going against the flow, but rather going toward your own personal flow in terms of your own values, as well as taking those opportunities that others may have missed.

  8. If it doesn’t make sense, cut it out. Doesn’t matter what others think. — love it!!

  9. Well is there a point to live “in a very affluent neighborhood” ? You paying more in property taxes and probable overspend on the house as well.

    All these extra efforts – shabby mobile phone and stacking pennies of no drink are going towards phantom reality. Should you be in a different place, you could easily slash $100 K and nobody would wonder why there is no cable?

  10. Great insights on being a contrarian through normal day life. I would consider myself to be one as well even though I could not give up all my favorite tv shows ;-)

    I am more of a contrarian investor. I look for stock positions that have become overly popular then bet on the opposite view. Similar to what is happening with Apple right now. Everyone and there mother loves Apple. You can’t open your mouth to say one bad thing about Apple without someone disagreeing with you these days. That’s a sure indicator for me!

  11. I think that it does sometimes pay to go against the odds. Analyzing and questioning things are what make us human. Making sure that you are spending your money wisely is always a good financial choice. Great post, I am going to share it on Dinks Finance next Friday in our roundup. Happy Easter.

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