4 ms·

There's probably a corollary, although I don't know the name for it. I still have one pair of shoes and a week's worth of shirts and underwear, an old projector

There's probably a corollary, although I don't know the name for it. I still have one pair of shoes and a week's worth of shirts and underwear, an old projector and 10 year old speakers although I own a house and have a net worth over $1m. I've certainly felt the sudden gravitational pull that comes from having one nice new toy enter your life. It manifests as a sense that "wow, this little overpriced thing is so enjoyable... why am I sitting on a pile of savings and denying myself things that would make my life so much nicer?" Slowly, I started spending $20 for a bag of coffee beans I really like instead of $12 for something that's just okay. But it has to stop somewhere. I realize I only buy the big ticket items when I either am seriously depressed or feel like I'm going to die soon, or both. The rest of the time, money in the bank is more interesting to me than nicer stuff. This is probably a phobia of spending money that I'll go to my grave with.

dmix 4y ago
This sounds like a useful corollary for a high income individual that should apply generally, but if you watch videos on the "death of the middle class" videos you'll learn that the middle class in America didn't actually die recently, its actually just as big as it ever was, it's just stuff like spending on cars and housing is wayyy more expensive than ever so even us well paid software people are functionally poorer than we should be. https://youtu.be/0sj-8pjt9Xk https://youtu.be/0sj-8pjt9Xk IRL the vast majority of these consumer spending things don't play a massively damaging role in the average consumers life / upward mobility... at least relative to history or other regions. But a few things do. When you start getting serious about personal finance people tend to obsess about the small less important things we're wasteful about. Mostly because it's more obvious locally and easy to feel guilty about (consumer electronics, clothes, restaurants, etc). But in practice for healthy well employed workers 80-90% of the time self-imposed poverty comes down to two things: cars and renting housing. Cars ranks #1 easily in terms of actionable things, if you asked 90% of middle class households making >$100k you'll find car loans/costs are easily the biggest burden on disposable income. People buy cars they can't afford and getting $30k+ loans plus the associated costs of nice cars (damaging them, insurance, etc) it becomes very apparently the biggest thing stopping someone from having extra money that could be invested in 10x+ more value like paying off high interest credit card loans (rather than adding another +interest car loan) or simply investing in better things like real estate, small businesses, personal development, stocks, etc etc. The other elephant in the room that far, far outweighs spending on vanity consumerism is housing. This one involves plenty of personal responsibility but of all the things in Americans/western life this is the least to blame individuals. Stopping Americans from buying stupid expensive cars is a very hard mostly social problem, but housing is something that could be solved much more simply through stuff like ending zoning and anti-NIMBY laws. We could gain plenty from working on the smaller tier consumer stuff at the same time (every dollar really does matter and you don't know until you track it) but education about cars and gov action on increasing housing supply would be the most productive work in the short term.
- anovikov 4y ago
  I seriously don't understand how is it possible to overspend on a car. House sure, because many people, conveniently for developers, confuse it for investment, but a car? Besides, cars are cheap and getting cheaper vs inflation let alone incomes. Are people just trying to buy the most expensive car they can get a loan approved for?
  - peepee1982 4y ago
    I'm baffled by how much people spend on cars. But I get it. Everyone else is driving a nicer car, so you feel left out. Even if your rational side knows it's stupid, you still feel less than. It's the same with homes. But as you say, at least real estate tends to hold it's value somewhat.
    - hgsgm 4y ago
      > But as you say, at least real estate tends to hold its value somewhat. Expensive land usually does appreciate (in some areas, only until interest rates go up?), but the house on the land is a money pit.
      - noduerme 4y ago
        In America, the best investments in the past 100 years have been structures like car dealerships built on cheap land around the exurbs of major cities. You get commercial use of the structure, wait 20 years for it to be surrounded by residential development, then sell the land. This, working hand in glove with the driving and commuting culture, had been the middle class gear in the system attached to the resource extraction itself. I'm not here to pass moral judgments on this method of creating wealth, although to me unnecessary mineral extraction for energy is largely fraught with moral hazard. But to say that real estate isn't an investment is to consider the past two centuries of American economic growth to be a temporary aberration, and I don't think you can do that in light of the degree of economic reliance that has grown up around it.
    - noduerme 4y ago
throwawayyy9237 4y ago
I feel like I'm the same. In my case, personally, this is a product of my upbringing. My parents were the first generation of our family to have a little extra income (grandparents were poor farmers). I have a good salary by all accounts, but still count the beans, since this was what my father taught me. I am extremely weary of spending large sums of money in anything.
- noduerme 4y ago
  not weary. Wary (it's a different word: weary means tired, wary means suspicious). You are right. All Americans of the 3rd generation miss this. Many of the 2nd generation miss it. COUNT THE BEANS. Teach your children to count the beans. The moment you stop counting the beans, you become a degenerate consumer zombie. That means: Make money AND save money.
trabant00 4y ago
I feel guilty spending money on nice things I can do without. I call it therapy by shopping. But I made a rough calculation of how much it added up to over the last 10 years: < 2 months of income. I would not be a whole lot better off having that money in the bank. So, as always, it's a matter of balance. You can't judge spending as good or bad, what matters is how much relative to your means.
- hgsgm 4y ago
  > what matters is how much relative to your means. Needs, not means. (And some comfort/relaxation is a need). Being richer than most isn't a reason to splurge more, it's a signal that something may be wrong with society.
  - trabant00 4y ago
    > Being richer than most isn't a reason to splurge more, it's a signal that something may be wrong with society I have to disagree hard with this. The rich _should_ splurge, as that makes the money flow back to the economy. And in some cases go to artisans that have no mass market appeal.
- MandieD 4y ago
  A one-time $1k splurge is less expensive than a new $10/mo habit as long as it really is one time - the whole Diderot Effect thing helping us to think about why the splurge might not be as bounded as we’d hoped, though. I try to think of recurring expenses in terms of how much capital it would take to fund them in perpetuity (because I may well live another 50 years!), at 3% interest. That $10/month subscription? $120/yr, or $4,000. That’s not at all guaranteed to support the expense forever, but I find it’s a useful way to think about little recurring expenses before they add up out of control.
  - ginko 4y ago
    A one-time expense also has an opportunity cost though. If you invested your $1000 with an average 4% yearly gain it'd be $4800 after those 50 years. (but then of course the same opportunity cost also applies to your monthly payments)

dmix 4y ago

This sounds like a useful corollary for a high income individual that should apply generally, but if you watch videos on the "death of the middle class" videos you'll learn that the middle class in America didn't actually die recently, its actually just as big as it ever was, it's just stuff like spending on cars and housing is wayyy more expensive than ever so even us well paid software people are functionally poorer than we should be. https://youtu.be/0sj-8pjt9Xk https://youtu.be/0sj-8pjt9Xk IRL the vast majority of these consumer spending things don't play a massively damaging role in the average consumers life / upward mobility... at least relative to history or other regions. But a few things do. When you start getting serious about personal finance people tend to obsess about the small less important things we're wasteful about. Mostly because it's more obvious locally and easy to feel guilty about (consumer electronics, clothes, restaurants, etc). But in practice for healthy well employed workers 80-90% of the time self-imposed poverty comes down to two things: cars and renting housing. Cars ranks #1 easily in terms of actionable things, if you asked 90% of middle class households making >$100k you'll find car loans/costs are easily the biggest burden on disposable income. People buy cars they can't afford and getting $30k+ loans plus the associated costs of nice cars (damaging them, insurance, etc) it becomes very apparently the biggest thing stopping someone from having extra money that could be invested in 10x+ more value like paying off high interest credit card loans (rather than adding another +interest car loan) or simply investing in better things like real estate, small businesses, personal development, stocks, etc etc. The other elephant in the room that far, far outweighs spending on vanity consumerism is housing. This one involves plenty of personal responsibility but of all the things in Americans/western life this is the least to blame individuals. Stopping Americans from buying stupid expensive cars is a very hard mostly social problem, but housing is something that could be solved much more simply through stuff like ending zoning and anti-NIMBY laws. We could gain plenty from working on the smaller tier consumer stuff at the same time (every dollar really does matter and you don't know until you track it) but education about cars and gov action on increasing housing supply would be the most productive work in the short term.

anovikov 4y ago
I seriously don't understand how is it possible to overspend on a car. House sure, because many people, conveniently for developers, confuse it for investment, but a car? Besides, cars are cheap and getting cheaper vs inflation let alone incomes. Are people just trying to buy the most expensive car they can get a loan approved for?
- peepee1982 4y ago
  I'm baffled by how much people spend on cars. But I get it. Everyone else is driving a nicer car, so you feel left out. Even if your rational side knows it's stupid, you still feel less than. It's the same with homes. But as you say, at least real estate tends to hold it's value somewhat.
  - hgsgm 4y ago
    > But as you say, at least real estate tends to hold its value somewhat. Expensive land usually does appreciate (in some areas, only until interest rates go up?), but the house on the land is a money pit.
    - noduerme 4y ago
      In America, the best investments in the past 100 years have been structures like car dealerships built on cheap land around the exurbs of major cities. You get commercial use of the structure, wait 20 years for it to be surrounded by residential development, then sell the land. This, working hand in glove with the driving and commuting culture, had been the middle class gear in the system attached to the resource extraction itself. I'm not here to pass moral judgments on this method of creating wealth, although to me unnecessary mineral extraction for energy is largely fraught with moral hazard. But to say that real estate isn't an investment is to consider the past two centuries of American economic growth to be a temporary aberration, and I don't think you can do that in light of the degree of economic reliance that has grown up around it.
  - noduerme 4y ago

throwawayyy9237 4y ago

I feel like I'm the same. In my case, personally, this is a product of my upbringing. My parents were the first generation of our family to have a little extra income (grandparents were poor farmers). I have a good salary by all accounts, but still count the beans, since this was what my father taught me. I am extremely weary of spending large sums of money in anything.

noduerme 4y ago
not weary. Wary (it's a different word: weary means tired, wary means suspicious). You are right. All Americans of the 3rd generation miss this. Many of the 2nd generation miss it. COUNT THE BEANS. Teach your children to count the beans. The moment you stop counting the beans, you become a degenerate consumer zombie. That means: Make money AND save money.

trabant00 4y ago

I feel guilty spending money on nice things I can do without. I call it therapy by shopping. But I made a rough calculation of how much it added up to over the last 10 years: < 2 months of income. I would not be a whole lot better off having that money in the bank. So, as always, it's a matter of balance. You can't judge spending as good or bad, what matters is how much relative to your means.

hgsgm 4y ago
> what matters is how much relative to your means. Needs, not means. (And some comfort/relaxation is a need). Being richer than most isn't a reason to splurge more, it's a signal that something may be wrong with society.
- trabant00 4y ago
  > Being richer than most isn't a reason to splurge more, it's a signal that something may be wrong with society I have to disagree hard with this. The rich _should_ splurge, as that makes the money flow back to the economy. And in some cases go to artisans that have no mass market appeal.
MandieD 4y ago
A one-time $1k splurge is less expensive than a new $10/mo habit as long as it really is one time - the whole Diderot Effect thing helping us to think about why the splurge might not be as bounded as we’d hoped, though. I try to think of recurring expenses in terms of how much capital it would take to fund them in perpetuity (because I may well live another 50 years!), at 3% interest. That $10/month subscription? $120/yr, or $4,000. That’s not at all guaranteed to support the expense forever, but I find it’s a useful way to think about little recurring expenses before they add up out of control.
- ginko 4y ago
  A one-time expense also has an opportunity cost though. If you invested your $1000 with an average 4% yearly gain it'd be $4800 after those 50 years. (but then of course the same opportunity cost also applies to your monthly payments)