4 ms·
This is a profoundly alien mindset to me. Which is not to say that it's wrong, or bad, just very different from how I think. Before spending money, in additio
by amalcon 10y ago
This is a profoundly alien mindset to me. Which is not to say that it's wrong, or bad, just very different from how I think. Before spending money, in addition to "Can I afford this?" I also ask myself, "Is this worth it?"
I could afford to spend, say, $2k/yr on my skiing hobby. It wouldn't be that hard to do: modern equipment, frequent trips to expensive mountains, things of that nature add up in a hurry. I'd probably enjoy it more that way, and I'd certainly get to do it more often.
Instead, I use a decade-old pair of skis that I received as a gift, with a third-hand pair of boots that's literally from the 1980s, and warm outerwear that probably cost a total of $300 in various outlet stores over the past eight years. I go 2-3 weekends a year, to relatively inexpensive mountains, and my amortized annual expenditure comes in at under $500 (including a reasonable price estimate and amortization schedule for the skis). Why? The marginal benefit just isn't worth it.
Now, obviously, "worth it" is subjective. Buying a new pair of ski boots for the coming season won't directly impact my retirement or anything like that. Indeed, there isn't a single concrete thing that it would trade off against. When I break it down, though, I decide the work I did for that money is worth more than my benefit from the new boots. In that case, better to hold onto the money in case a better opportunity comes along.
- roel_v 10y agoWhen your income off investments is 100k a month, the threshold for making something 'worth' 6k is very low. So they might have the exact same mindset you have, just a different frame of reference. I'm not wealthy but I'm better off than I was 10 years ago - I certainly spend on things I'd find laughable to spend on back then. Yet my financial thinking hasn't changed, just the marginal utility. I don't know how old you are, but if you're in your 20's and in the same field most of us here are, I suspect you will go through the same process.
- charlesdm 10y agoExactly. Life is just different with $10k in the bank, vs $800k in the bank.
- usrusr 10y agoSimilar mindset here, although my cycling habit is much more expensive (but that gear also gets used much more frequently than a low number of weekends per year). My (not) buying decisions can be roughly grouped into two categories: "will the goods be more valuable to me than the freedom to spend that money on something different?" and "can I afford to spend that money not only once, but can I afford to make a habit out of that kind of spending?". Cutting down on a luxury is much harder than never starting.
- charlesdm 10y agoI've acquired some wealth, and can easily spend a (few) grand or more on clothes (and regularly do so). The more your investments throw off, the easier it gets to spend (or waste) significant money. What is more money in the bank worth, past a certain point? If you're worth $5M, and you make 10% a year on that, what do you do with $500k per year? Second, I agree on the 2 points you brought up; 1) can I afford it?, and 2) do I want to spend money on this? But the more you have, the less it matters. Forget retirement. If you enjoy skiing, why wouldn't you buy a pair of excellent ski boots? Luxury items can be awesome.