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The art and science of spending money

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Re: The art and science of spending money

#61

Post by grecy »

imtringued wrote: post #55
iammjm wrote: post #17

Two money aspects that I find useful, which weren't mentioned in the article: Price per use: if I buy X, how much/often will I use it vs. it's price Time sacrifice: considering my current hourly wage, how many hours of my life do I need to spend in exchange for this item?

The time sacrifice thing doesn't work in practice because the division of labor has a very big expense called taxes. If you do things yourself then you avoid the tax burden. But if you decide to let someone else do the work you have to pay VAT and income tax.

When quoting your hourly wage deduct income tax and all expenses you incurred to earn it - commuting, meals, clothes, etc.

You’ll see suddenly your hourly wage is not so high, and it a huge number of hours of your life for that tv

Re: The art and science of spending money

#62

Post by [deleted] »

monero-xmr wrote: post #2

Growing up poor and then becoming self-made wealthy - nothing like it. My life is so sweet because I am one of those fabled bootstraps people who walked 15 miles to school both ways uphill (paraphrasing). And what is my favorite thing? I can buy any meal at any restaurant I want and I never care about the price. It’s a glorious feeling. I eat whatever I want. Unfathomable

[deleted]

Re: The art and science of spending money

#63

Post by EVa5I7bHFq9mnYK »

ant6n wrote: post #35
monero-xmr wrote: post #2

Growing up poor and then becoming self-made wealthy - nothing like it. My life is so sweet because I am one of those fabled bootstraps people who walked 15 miles to school both ways uphill (paraphrasing). And what is my favorite thing? I can buy any meal at any restaurant I want and I never care about the price. It’s a glorious feeling. I eat whatever I want. Unfathomable

> I can buy any meal at any restaurant I want and I never care about the price. It’s a glorious feeling. I eat whatever I want. Unfathomable My budget for food used to be limited by money, now it’s limited by calories.

And time. Restaurants are very time consuming.

Re: The art and science of spending money

#64

Post by Jensson »

darkwater wrote: post #11

Loved this article, very spot on. > Frugality inertia: a lifetime of good savings habits can’t be transitioned to a spending phase. This is my first thought when faced with the FIRE community, and even when such a thing didn't exist yet, there were always people like that. A personal example: my uncles. They lived a very humble life, no kids, had a total of 2 small cars in the 30 years I knew them, went 15 days on ho…

Yes, money in the bank means you don't worry, that is by far the most impactful part of money. Spending more doesn't make you happier but having money so you don't have to worry is huge.

Ads try to tell you that you will be happier if you spend money, but if you learn to ignore those signals you can be perfectly happy on very little.

Re: The art and science of spending money

#66

Post by Jensson »

darkwater wrote: post #22
harvey9 wrote: post #20

Earlier quoted context omitted.

Depends. Do you think they were happy with their lifestyle? I have a friend who is happily collecting his pension, has plenty of cash in the bank, but still works because he chooses to. He's a bit less frugal than your uncles but still lives well below his means.

Happiness for sure is a personal concept but I think they were in general on the "we came into these lives to suffer" boat. So, I think they were not "happy" for a healthy definition of happy, but they probably not even interested in being happy.

> I think they were not "happy" for a healthy definition of happy

Being happy with what you accomplish and do instead of trying to be happy through consumption and excess seems very healthy to me.

What do you think is wrong with that?

Re: The art and science of spending money

#67

Post by nickjj »

kettleballroll wrote: post #29
trabant00 wrote: post #4

I have two rules to guide me that can be summed up to maximizing the joy of spending: It's not what you have, it's what you do with what you have that matters. Going with a car example, spending significant income for a nice car that you use for normal transportation like commuting and shopping will bring little joy. On the other hand if you are into motor sports, regularly tour on or off-road, like to restore classi…

Just being pedantic here, but: if we take your approach to the extreme, we would only ever pick the one thing that maximizes joy. Eg say one week trips above are the coolest thing you can think of. then you'd compare any potential purchase against it, and it would fall short. So you'd end upmnever buying anything (except tickets for one week trips). Don't get me wrong, your strategy sounds sound, I'm just saying that…

> then you'd compare any potential purchase against it, and it would fall short. So you'd end up never buying anything (except tickets for one week trips)

I think there's a number of folks out there who do this all the time, except it's not trips. It's saving for retirement in general.

If all you do is compare every outgoing dollar to "but if I invested this instead, then over X years it would have compounded to $X" you never buy anything non-essential because spending $400 today really means $1,787 in 30 years at 5% (of which $1,387 is interest), so now you need to ask yourself if future self is happy about that decision.

This becomes more important with larger purchases, a $30,000 car is really $134,032 after 30 years at 5%. Now this becomes a question of "is this 30k car worth trading 1 year of my life while working?" because it kind of is, especially if you factor in income tax on a pretty normal software developer's salary.

Re: The art and science of spending money

#68

Post by darkwater »

Jensson wrote: post #66
darkwater wrote: post #22

Earlier quoted context omitted.

Happiness for sure is a personal concept but I think they were in general on the "we came into these lives to suffer" boat. So, I think they were not "happy" for a healthy definition of happy, but they probably not even interested in being happy.

> I think they were not "happy" for a healthy definition of happy Being happy with what you accomplish and do instead of trying to be happy through consumption and excess seems very healthy to me. What do you think is wrong with that?

It would be a bit too long/detailed/personal answering that, but IMO a healthy definition of "happy" involves using the money you earn to make your life easier most of the time, during different phases and under most situations. For example, living in a house that is physically loosing pieces, that should be fixed to avoid problems, it will not generate happiness through consumption, but it will relieve you from stress of possible bad consequences. Not doing that when you do have the money indeed, it's not healthy.

Re: The art and science of spending money

#69

Post by mythhouse »

tehCorner wrote: post #24

> Frugality inertia: a lifetime of good savings habits can’t be transitioned to a spending phase. Coming from a poor family and knowing the hard way the issues of not having money I've been obsessed with saving money since I got my first paycheck 8 years ago and I always thought "at the point I would earn current salary + x I will start enjoying life more and stop worrying about money" but that never happened. 8 year…

hey are you Indian by any chance? I've noticed this with my indian family and friends. They don't think they are any downsides to saving too much and only upsides. There isn't even a realization that there is something wrong with saving too much.

Re: The art and science of spending money

#70

Post by Jensson »

darkwater wrote: post #68
Jensson wrote: post #66

Earlier quoted context omitted.

> I think they were not "happy" for a healthy definition of happy Being happy with what you accomplish and do instead of trying to be happy through consumption and excess seems very healthy to me. What do you think is wrong with that?

It would be a bit too long/detailed/personal answering that, but IMO a healthy definition of "happy" involves using the money you earn to make your life easier most of the time, during different phases and under most situations. For example, living in a house that is physically loosing pieces, that should be fixed to avoid problems, it will not generate happiness through consumption, but it will relieve you from stre…

Spending money on those things takes a lot of effort though, maybe they just had ADHD and didn't want to think about all the ways they could spend money?

Typically it is much easier to not spend money than to spend money. A trip to a foreign country is more effort then a local vacation, an expensive renovation is more effort than just living as is etc. A big home is more effort to clean, a big yard is more effort to manage, a big car takes more work to keep reasonable etc.

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