5 ms·

The average is not really that important. As long as your income is not at the lower end of the distribution it’s a just a matter of choice to live as if your i

by kgwgk 7y ago

The average is not really that important. As long as your income is not at the lower end of the distribution it’s a just a matter of choice to live as if your income was lower than it is (except in the cases where you would have access to subsidies if your income was actually lower).

oposa 7y ago
I have found this to be distinctly not true. I don't know of many places were living a more modest life is a good choice. It seems like most people who says this have already benefited from cheaper education, real estate, their partner or career. In many countries average savings doesn't keep up with the increase in property values, especially not in attractive job markets. If you don't have wealth, or go into debt, you are falling behind. I really don't see it, maybe you have some example?
- CWuestefeld 7y ago
  I think the kind of things you're talking about are more exceptions, and probably don't matter as much to a given family in the long run. For example, once I've managed to buy a house, that's a stake in the ground; it doesn't matter that property values continue to rise beyond that, since you've already got the housing you need. But so many other things really are choices. I see lots of my colleagues replacing their new cars every 3 years; mine is five years old, having replaced the car I previously owned for 12 (and they were a Hyundai and Subaru, respectively, even if I could afford a Mercedes). Having cable TV with all the movie and sports channels is very much a decision that anyone can pass by. How often and where you eat out makes a big difference in expenses. Clothes, shoes, jewelry, furniture, matching stainless steel appliances with wifi, ... the list goes on and on.
  - oposa 7y ago
    Maybe a couple can survive changes in the housing and job market well enough that it they don’t mind the changes to their quality of life. But it very likely will be noticeable to their kids when other families have stronger finances and better access to housing and job markets. If you can’t save more than the difference to such markets what you get for the money is de facto less. It is sort of inflation by inequality. Then the theory doesn’t really hold and the frugality has just been to try and keep up. I am all for frugality but in many places it hasn’t worked out in the last 10 years because you haven’t had the same access to growth. Unless you already had assets in the first place.
    - CWuestefeld 7y ago
      Huh? I guess I'm really not following your reply. It seems like you're saying that my willingness to keep a car for a dozen years and to bring my lunch rather than buying, and my wife having a $30 purse rather than a designer one, hasn't actually helped my financial situation. That seems a rather silly claim.
      - wolco 7y ago
        You also close the door on opportunity. Your wife with a better purse could be making unboxing videos bring in thousands. Bringing vs buying could be an opportunity cost. I've worked in places that provided food perhaps a job change could help pay fof the lunch.
        CWuestefeld 7y ago
        Apparently I'm wrong, and there's no point in trying to be economical. The evidence is wrong, and people who spend wantonly actually end up with more net available funds. Who woulda thunk it?
        wolco 7y ago
        Life is not black and white and studies study only certain things. Don't consider yourself wrong because certain use-cases may lead to other outcomes. Being economical will save you money. At some point being too economical will mean you have to accept lower quality/value. There is a tradeoff. If your parents were being economical they might not have purchased a computer in the 80s.. It was seen as an expensive toy and not purchasing one would have saved them thousands. Long term the opportunity cost would outweigh the purchase cost. Buying a cheap kettle it might last 6 months paying a little more and you don't need to replace it for 5 years. There is an old British saying. Penny wise / pound foolish.
        kgwgk 7y ago
        Sure, and you can also buy an expensive kettle today and replace it with an even more expensive Alexa-commanded kettle next-year. It’s silly to say that not going to Hawaii for a week or not buying a $1000 handbag is going to cost you more money down the road... Where is the opportunity cost in bringing your own lunch to work? Would he increase his chances of getting a better job if he stopped doing that in his current job?
- kgwgk 7y ago
  An example of what? If you are getting by with an income of $X and you get a raise of $Y you have the choice to keep your spending at $X and save the additional $Y.
lsc 7y ago
>As long as your income is not at the lower end of the distribution I think this is key. If you make $200K/yr, saving 1/10th that means you drive a lexus and not a benz. The Lexus is not worse than the Benz in any objective way; you paid less and got a car that is going to be more reliable and cost less when it does break. I mean, don't get me wrong, I like how the german cars drive, but you've gotta be really dedicated to own one out of warranty. The problem is that sure, at a high income, you can usually save a lot of money by making sacrifices that are merely aesthetic, by buying goods that are objectively no worse (and sometimes objectively better) - but below a certain point, buying a cheaper good is going to get you something objectively worse; often something that will end up costing more in the long term. Downgrading from a 15 year old Toyota to a 25 year old ford is going to get you something that probably costs you more, in total, to operate, even though the initial purchase price will be lower. I mean, I think the disagreement here is mostly at what level this happens.
- kgwgk 7y ago
  No, the point is that you have the choice of making real sacrifices, getting something that is objectively worse than what you could afford if you spent every single cent that you have and then some. (That’s true at every income level, anyway, not having a mansion in the Hamptons is “objectively” worse than having one.) Eating chicken today and saving so you can eat chicken in the future may be a better idea that eating prime rib and starving if you lose your income.
  - lsc 7y ago
    >(That’s true at every income level, anyway, not having a mansion in the Hamptons is “objectively” worse than having one.) I'm assuming, from context, that the figure of merit for this discussion is having money in the future. Obviously, in the context of getting a reality tv show, a mansion in the Hamptons is "objectively" better than having a bunch of cash and a modest place to live, but we're talking about having money in the future here. Buying and living in a mansion is... usually not a great way to go about furthering that goal; I'd argue that living in a mansion, in the context of the goals we're talking about here, is objectively worse than living somewhere modest and putting the rest of the money you would have spent on the mansion in a low-cost index fund or something. >Eating chicken today and saving so you can eat chicken in the future may be a better idea that eating prime rib and starving if you lose your income. That's kinda my point? I mean, that if you can downgrade from beef to chicken (something that doesn't interfere with your current ability to earn money and does not incur future costs... something that will in fact lower future costs, as chicken is healthier than beef, and if you are poor, you are paying a lot more of your healthcare out of pocket than I am) sure, that's great. If your figure of merit is money in the future, eating chicken could be said to be objectively superior to eating beef. When you aren't buying the absolute cheapest good available, you can usually find substitutes that are cheaper and impose fewer future costs, and sure, seeking those things out is great, and important to think about all up and down the income spectrum. But there is nearly always a point at the bottom of the spectrum where there are no cheaper options that are actually cheaper long term - that don't impinge on your current ability to make money or impose big future costs. If you don't have any place to cook, that dollar menu burger looks pretty good. If you can't get a regular loan and need a car for work, paying way too much for a low quality car at a 'buy here pay here' lot looks pretty good. Of course, both those things will cost you down the line, but what are you gonna do? you've gotta make it through today or there won't be a tomorrow to worry about at all.

by kgwgk 7y ago

oposa 7y ago

I have found this to be distinctly not true. I don't know of many places were living a more modest life is a good choice. It seems like most people who says this have already benefited from cheaper education, real estate, their partner or career. In many countries average savings doesn't keep up with the increase in property values, especially not in attractive job markets. If you don't have wealth, or go into debt, you are falling behind. I really don't see it, maybe you have some example?

CWuestefeld 7y ago
I think the kind of things you're talking about are more exceptions, and probably don't matter as much to a given family in the long run. For example, once I've managed to buy a house, that's a stake in the ground; it doesn't matter that property values continue to rise beyond that, since you've already got the housing you need. But so many other things really are choices. I see lots of my colleagues replacing their new cars every 3 years; mine is five years old, having replaced the car I previously owned for 12 (and they were a Hyundai and Subaru, respectively, even if I could afford a Mercedes). Having cable TV with all the movie and sports channels is very much a decision that anyone can pass by. How often and where you eat out makes a big difference in expenses. Clothes, shoes, jewelry, furniture, matching stainless steel appliances with wifi, ... the list goes on and on.
- oposa 7y ago
  Maybe a couple can survive changes in the housing and job market well enough that it they don’t mind the changes to their quality of life. But it very likely will be noticeable to their kids when other families have stronger finances and better access to housing and job markets. If you can’t save more than the difference to such markets what you get for the money is de facto less. It is sort of inflation by inequality. Then the theory doesn’t really hold and the frugality has just been to try and keep up. I am all for frugality but in many places it hasn’t worked out in the last 10 years because you haven’t had the same access to growth. Unless you already had assets in the first place.
  - CWuestefeld 7y ago
    Huh? I guess I'm really not following your reply. It seems like you're saying that my willingness to keep a car for a dozen years and to bring my lunch rather than buying, and my wife having a $30 purse rather than a designer one, hasn't actually helped my financial situation. That seems a rather silly claim.
    - wolco 7y ago
      You also close the door on opportunity. Your wife with a better purse could be making unboxing videos bring in thousands. Bringing vs buying could be an opportunity cost. I've worked in places that provided food perhaps a job change could help pay fof the lunch.
      - CWuestefeld 7y ago
        Apparently I'm wrong, and there's no point in trying to be economical. The evidence is wrong, and people who spend wantonly actually end up with more net available funds. Who woulda thunk it?
        wolco 7y ago
        Life is not black and white and studies study only certain things. Don't consider yourself wrong because certain use-cases may lead to other outcomes. Being economical will save you money. At some point being too economical will mean you have to accept lower quality/value. There is a tradeoff. If your parents were being economical they might not have purchased a computer in the 80s.. It was seen as an expensive toy and not purchasing one would have saved them thousands. Long term the opportunity cost would outweigh the purchase cost. Buying a cheap kettle it might last 6 months paying a little more and you don't need to replace it for 5 years. There is an old British saying. Penny wise / pound foolish.
        kgwgk 7y ago
        Sure, and you can also buy an expensive kettle today and replace it with an even more expensive Alexa-commanded kettle next-year. It’s silly to say that not going to Hawaii for a week or not buying a $1000 handbag is going to cost you more money down the road... Where is the opportunity cost in bringing your own lunch to work? Would he increase his chances of getting a better job if he stopped doing that in his current job?
kgwgk 7y ago
An example of what? If you are getting by with an income of $X and you get a raise of $Y you have the choice to keep your spending at $X and save the additional $Y.

lsc 7y ago

>As long as your income is not at the lower end of the distribution I think this is key. If you make $200K/yr, saving 1/10th that means you drive a lexus and not a benz. The Lexus is not worse than the Benz in any objective way; you paid less and got a car that is going to be more reliable and cost less when it does break. I mean, don't get me wrong, I like how the german cars drive, but you've gotta be really dedicated to own one out of warranty. The problem is that sure, at a high income, you can usually save a lot of money by making sacrifices that are merely aesthetic, by buying goods that are objectively no worse (and sometimes objectively better) - but below a certain point, buying a cheaper good is going to get you something objectively worse; often something that will end up costing more in the long term. Downgrading from a 15 year old Toyota to a 25 year old ford is going to get you something that probably costs you more, in total, to operate, even though the initial purchase price will be lower. I mean, I think the disagreement here is mostly at what level this happens.

kgwgk 7y ago
No, the point is that you have the choice of making real sacrifices, getting something that is objectively worse than what you could afford if you spent every single cent that you have and then some. (That’s true at every income level, anyway, not having a mansion in the Hamptons is “objectively” worse than having one.) Eating chicken today and saving so you can eat chicken in the future may be a better idea that eating prime rib and starving if you lose your income.
- lsc 7y ago
  >(That’s true at every income level, anyway, not having a mansion in the Hamptons is “objectively” worse than having one.) I'm assuming, from context, that the figure of merit for this discussion is having money in the future. Obviously, in the context of getting a reality tv show, a mansion in the Hamptons is "objectively" better than having a bunch of cash and a modest place to live, but we're talking about having money in the future here. Buying and living in a mansion is... usually not a great way to go about furthering that goal; I'd argue that living in a mansion, in the context of the goals we're talking about here, is objectively worse than living somewhere modest and putting the rest of the money you would have spent on the mansion in a low-cost index fund or something. >Eating chicken today and saving so you can eat chicken in the future may be a better idea that eating prime rib and starving if you lose your income. That's kinda my point? I mean, that if you can downgrade from beef to chicken (something that doesn't interfere with your current ability to earn money and does not incur future costs... something that will in fact lower future costs, as chicken is healthier than beef, and if you are poor, you are paying a lot more of your healthcare out of pocket than I am) sure, that's great. If your figure of merit is money in the future, eating chicken could be said to be objectively superior to eating beef. When you aren't buying the absolute cheapest good available, you can usually find substitutes that are cheaper and impose fewer future costs, and sure, seeking those things out is great, and important to think about all up and down the income spectrum. But there is nearly always a point at the bottom of the spectrum where there are no cheaper options that are actually cheaper long term - that don't impinge on your current ability to make money or impose big future costs. If you don't have any place to cook, that dollar menu burger looks pretty good. If you can't get a regular loan and need a car for work, paying way too much for a low quality car at a 'buy here pay here' lot looks pretty good. Of course, both those things will cost you down the line, but what are you gonna do? you've gotta make it through today or there won't be a tomorrow to worry about at all.