Conspicuous Consumption

[Siv]

I don't understand people with "THINGS". Life is so much simpler and easier when people only live with what they need. As for me, I'm happy to declutter but yet can't do things paperless. At the office I still have 1 side cabinet full with personal files...I wonder how much that will grow to in another 30 years.

I learn how not to accumulate since in college. It was an eye opening of how much I can live with only 1 cooking pan from a set of 12. From having an apartment with my sister and brother, I went to share with roomate then renting a room, move several times...kept some belongings in storage then at the end I thought geez...the hell, what a trouble, just give them all away.

That attitude has stick...I still look at my desk right now and think what else I don't need.

 

[Martha]

So Martha what kind of sports car was it?

I am embarrassed to admit it was a Merker XR4Ti.

 

[audreyh1]

And then there is the rather unfortunate fact that our hobbies and interests may change over time. The kinds of books that gave me so much pleasure just 10-15 years ago leave me mostly cold now and I am stuck with thousands of them  That's why these days I try to make sure that my hobbies do not result in the accumulation of bulky "stuff" that may turn into dead weight at some point. Thankfully, DVDs take up very little space if you store them right 

That's a really good thing to figure out. I was bad about accumulating stuff and/or for hobbies for a couple of decades. Seemed like a good (and exciting) idea at the time. But it inevitably resulted in a pile of stuff that then got stored in some drawer or corner of a closet or garage, and then lived there for years before I finally admitted that the interest was just not that important to me and that it was highly unlikely that I would never get around to it. When you finally admit that - it can bring serious relief - although it's also very embarrassing.

Wish it hadn't taken me to decades to learn to proceed cautiously when exploring a new interest, and let the interest "prove" it's longevity before spending serious money on it.

When we cleaned out our house getting ready to sell - I had to deal with a huge amount of stuff from discarded hobbies. What a waste! Glad I know better now.

Audrey

 

[saluki9]

I am embarrassed to admit it was a Merker XR4Ti.

Ok, that is stretching the definition of "sports car" a little far!

 

[Scrooge]

Otherwise people tend to behave like a little child who feels "denied" or deprived when he makes a choice.  I suppose this comes from our childhood when someone else made the choices for us and handed out the goodies.  But as adults, we have to manage our own "inner child" and lay out the real tradeoffs that we are making.

That's an interesting point. Remember back when you were a child and adults would tell you that you could do X, Y and Z (make your own decisions, drive, drink alcohol, etc) only "when you grew up"? Well, to a child, "when you grow up" is an eternity away! Similarly, when you are 18, it's hard to imagine that some day you will be 48, 58 or even  (eek!) 78 and you need to plan for it.

In some situations and societies, it may even be rational behavior. Suppose you were born in Germany, China or Russia in 1895.  All three appeared quite stable at the time, each in its own way. And yet over the following 50-75 years you would live through enough wars, revolutions, civil wars, private and state sponsored violence to make any idea of orderly planning and retirement pretty much fanciful.

Even in America, which escaped the worst excesses of the 20th century, there was the Great Depression, which saw many people's hopes of rational retirement planning undermined if not destroyed. I have read some post-Depression letters where the writers scoffed at the very notion of saving money because it could be "gone tomorrow".

In other words the thinking is more like - "Gosh, I would love this toy X, but it's really going to cost me Y in terms of consequences".  Then you can make an informed decision as to whether you want to pay that cost.

I have found that my "universal exchange rate" is "extra days at work". If I spend $100, which delays my retirement by a couple of days, is it really worth it? Sometimes it is, but usually it isn't.

A lot of people see cost of things only in $$$ terms.  Things often cost a lot more than $$$.  They cost in time, effort, maintenance, space, distraction.  You have to take all of that into account.

Kids who have just graduated from college seem to be particularly bad at it. I remember having a really hard time calculating the total cost of ownership of the house that I was renting in my early 20s. And I thought I was good at math 

 

[free4now]

When I moved to the Bay Area after college, I realized that with real estate so expensive the true cost of ownership for most items is the space they take up. For instance, I would have liked to buy some huge tower speakers for my stereo, but I calculated that the speakers would need a few square feet of real estate each, and real estate rented for about $10 per square foot per year at the time. So if the speakers would be costing me at least $50 per year just for the space they take up.

And that's just the start, there's also the hassle of protecting them from people running into them, worrying about whether they'll get stolen, adding them to the insurance, paying for depreciation, dealing with girlfriends who think they make my place look tacky

I ended up with smaller "tabletop" speakers for my stereo system.

This kind of analysis is very useful for bulky items... Yes I could buy that piece of exercise equipment I saw on late night TV for only a few $19.99 payments, but storing it might require $200 worth of real estate per year.

 

[Craig]

Nice to see Rand quoted here ... Dagney was very quotable ... great book, 'Atlas Shrugged'.  Classic read, especially for those looking for the balance between freedom and government.

My wife was always better at LBYM than me, but she trained me, generally.

Now our "excesses" tend to be on eBay, where we're buying kayaks now ... will get two for the price of one.  And, if and when we tire of that sport, we can sell for probably 80% of our investment.  eBay is very helpful for LBYM.  We've bought used books for years, used cars, even used clothing.  It all depreciates very quickly anyway, so where possible, we try to buy low, sell low when it comes to personal property.

I think it was the "Millionaire Next Door" that convinced me that driving an old Ford pickup was a pretty good thing to do ... when someone kids me about it, I just think of how we own it free and clear, and how our portfolio improved because of such decisions.

I think it is ironic that it is often those who can least afford it who tend to go the conspicuous consumption route.

 

[saluki9]

I ended up with smaller "tabletop" speakers for my stereo system.

This kind of analysis is very useful for bulky items... Yes I could buy that piece of exercise equipment I saw on late night TV for only a few $19.99 payments, but storing it might require $200 worth of real estate per year.

Pardon me for being nitpicky, but wouldn't that only be true for the marginal costs of renting more space? I'm assuming your landlord doesn't have a couple extra sq ft that he can miracle into your appt? I'm assuming you aren't having to rent a whole new appt for your speakers?

 

[free4now]

Pardon me for being nitpicky, but wouldn't that only be true for the marginal costs of renting more space?  I'm assuming your landlord doesn't have a couple extra sq ft that he can miracle into your appt?  I'm assuming you aren't having to rent a whole new appt for your speakers? 

Of course.  The actual real estate expenditures are lumpy and usually get adjusted when you move, remodel, or buy outside storage.

But it would be a serious mistake to think that because the expenses are lumpy they don't count.  That's the same fallacy as "This trip is free because I'm using my frequent flyer miles",  or "Because my car is paid for, insured, and maintained, I only have to pay for gas to drive my car".

If you have more space than you need, then you bought that extra space at some time in the past and the fact that you are only now filling it might be an indication that you have been wastefully underutilizing it for a while in the past.

 

[TargaDave]

I've always found that "stuff" that requires skill (sometimes significant skill) has been the most rewarding for me. New gear for my favorite sporting activity (and associated travel) are probably my biggest consumption. It's worthless stuff unless you have (or develop) the skill to get the benefit. I usually don't upgrade until I've developed more skills or worn out the stuff. And I get the exercise-health benefit, always a big plus.


Passive "stuff" always bores me, so it's alot easier to aviod. That is unless I make it active. I have a little sports sedan (WRX). What makes it worthwhile is actively autocrossing (organized racing) and working on it. Otherwise it's a hunk of metal that gets me from A to B.

 

[kcowan]

...If you have more space than you need, then you bought that extra space at some time in the past and the fact that you are only now filling it might be an indication that you have been wastefully underutilizing it for a while in the past.

Yes we do home swaps with other retirees and one thing they seem to have are the handcuffs that come from having too much space and having it all filled. A mjor barrier to them downsizing is getting rid of all the stuff.

Yet they love our place (a penthouse that we donwsized into). And we even provide them with closet and drawer space that they cannot provide to us when we swap. Fortunately they have spare bedrooms that we can use as walk-in closets.

 

[Sheryl]

I think the urge to buy stuff is a lot like an appetite for a particular food. Like French fries. Typically I never eat them and don't have any interest in them. But I notice if I have them a few times in one week I will start craving them. The less I have the less I want.

I used to love to go clothes shopping, and had a hard time limiting my purchases to one or two items, I wanted it ALL. Once I got out of the habit, I completely lost interest. I can walk thru the same department stores and have no interest in the stuff whatsoever. Same with antique malls.

Part of the change in mindset was the conscious goal to FIRE, but even more, I think it was the desire not to be surrounded with more stuff than I need/want/use.

 

[Martha]

I think the urge to buy stuff is a lot like an appetite for a particular food.  Like French fries.  Typically I never eat them and don't have any interest in them.   But I notice if I have them a few times in one week I will start craving them.  The less I have the less I want.

Good way of putting it. I find the same for me. I used to like going to the antique places and getting a particular type of glassware. It became popular and the prices went way up. I had to stay away from antique places for a long time. Now I can go and I don't get too tempted.

It is harder for food because it isn't so easy to avoid.

Power of habit.

 

[Sheryl]

I used to like going to the antique places and getting a particular type of glassware.  It became popular and the prices went way up.  I had to stay away from antique places for a long time. 

Same with me! I collected Hall China teapots and water pitchers. It was fun for a while to search for them, find a bargain - but when the prices went up to $100 each or more, I quit. When I get some time (like when I finally retire) I will probably sell them on e-bay because I've lost interest in dusting them.

 

[Billy]

Just think of all the stuff in the McMansions that won't last as long as the 30 year Mega Mortgage.  The super sized SubZero Stainless side by side and the Industrial strength Mega range with matching pot filling water spout will all be resting in the scrap yard long before the the payments are over.  How many times will the carpeting be replaced while the first piece is still on the books of the 30 and long yardage mortgage?  How many furnaces and ac units and roofs will you have before the first ones are paid for?

Just imagine buying a $250 water tank and paying to have it installed on a 30 year loan!!!!   

And then you get to pay to have it hauled away.   

You are so right on point with this UncleHoney... Most people don't know how much a house really costs them in daily living expenses. Challenging the notion of keeping a home is like a sacred cow - to think any other way is considered heresy.

There was a recent Wall Street Journal piece that came to the conclusion that keeping a home up to standards with repairs can easily exceed the initial cost of the home by four times. We wrote a commentary on that for The Motley Fool in July : http://www.retireearlylifestyle.com/cost_of_working.htm

And conspicuous consumption has been bred into us over the years through advertising and creating appetites for things we don't need. We say Retire to Simplicity http://www.retireearlylifestyle.com/retire_to_simplicity.htm and reap the rewards in many ways...

Kcowan:

A mjor barrier to them downsizing is getting rid of all the stuff.

And it doesn't get any easier... Things seem to collect and pile up even without effort at doing so. Even with periodic cleanings and lettings-go, stuff just seems to want more stuff around it! yikes!

Best,
Akaisha
Author, The Adventurer's Guide to Early Retirement

 

[flipstress]

And it doesn't get any easier... Things seem to collect and pile up even without effort at doing so. Even with periodic cleanings and lettings-go, stuff just seems to want more stuff around it! yikes!

Yeah, my consumption falls behind some of my better-heeled friends, and it's not conspicuous to them or in the way Jay_Gatsby is talking about but it's still conspicuous to me in the literal sense.  My stuff's everywhere in the house!  Granted, a lot of my furniture, books, and clothes are second-hand, but they're still a lot and distract me for sure.

A few years ago, I became aware of this book and borrowed a hardcopy version from the libe:  Material World:  A Global Family Portrait.  It was pretty interesting to see the number and variety of possessions of an "average family" from different countries of the world.  The most striking photographs were the main ones where their stuff was hauled outside their home and the family was photographed surrounded by their stuff.  It was eye-opening to an non-traveling sort like me to see how little some families had, like those from Ethiopia and Afghanistan IIRC.

 

[Scrooge]

The most striking photographs were the main ones where their stuff was hauled outside their home and the family was photographed surrounded by their stuff.  It was eye-opening to an non-traveling sort like me to see how little some families had, like those from Ethiopia and Afghanistan IIRC.

Well, it's certainly true that people in poor countries have less "stuff" than people in rich countries, but I suspect that the primary reason is that they can't afford the extra stuff, not because they don't want it.

And conspicuous consumption has been bred into us over the years through advertising and creating appetites for things we don't need.

It's hard to tell what causes conspicuous consumption since it's a relatively recent phenomenon, at least on this scale. Throughout human history, a vast majority lived very close to the edge where even survival becomes problematic. Perhaps we should wait another 10 generations or so to see how our spending patterns may change once we internalize the prosperity that the last few generations have enjoyed. Assuming that the prosperity is here to stay, that is 

 

[spideyrdpd]

I am trying to remember when life changed. There were "skips" and there were keds. They did come out with a few other accepted brands before nike came out and changed things. The same thing with Blue jeans. It had to be levi's or wranglers. Neither were all that expensive. Then came the "designer" jeans. I was never really sure what the lure was since I thought wranglers were still better.
Its also interesting how things have changed. I can understand that 8 tracks were pretty awful but some day soon they will find out a way to make cd's obsolete. People with regular tv's will probaly have to replace or buy a box to get the hdtv reception . They now sell satellite radio. Although every kid I know already has an ipod or some other mp3 player. Plus of course everyone had to have a fancy cell phone and a digital camera  

 

[Billy]

Cut throat:

Whenever I spend money on life's necessities. - Grocery Store, Property taxes, Medical care, utility bills, Gasoline - I'm not having any fun

You have a point there... I remember one time a girlfriend of mine in Thailand was asking me the difference between the words 'pay' and 'spend.' It took me a little while (I don't walk around with a dictionary so I had to wing it..)  but I had decided that 'pay' wasn't a fun word. I paid for things like the above mentioned items. It was something I had to do in order to remain in good standing, but you are right, the fun factor was missing.

'Spend' on the other hand had fun, delight or skill involved as in "I only spent this much for these airline tickets" or I feel like going out and spending some money today!

'Pay' had an obligation to it, like a debt, whereas 'spend' was more my choice.  I could be wrong here... 

Let's not confuse Conspicuous Consumption with our own Jealousy.

From Retire to Simplicity: http://www.retireearlylifestyle.com/retire_to_simplicity.htm: "The American middle class is one of the most affluent groups of people ever, yet the goalposts marking our satisfaction level keep moving, and instead of having a sense of fulfillment, many feel discontented."

I think this is what the advertisers are counting on to be sure that we continue to consume beyond what is necessary, playful or rewarding.

Spideyrpdp

I am trying to remember when life changed. There were "skips" and there were keds. They did come out with a few other accepted brands before nike came out and changed things. The same thing with Blue jeans. It had to be levi's or wranglers. Neither were all that expensive. Then came the "designer" jeans. I was never really sure what the lure was since I thought wranglers were still better.

I'm not sure that it has actually changed that much... I think having the 'right' clothes or the 'right' look or address or car has pretty much always been there. It's a way to separate the masses and classes. If you buy into that concept one can feel pretty crummy about one's self. If you don't buy into it, there is tremendous freedom of mind, with room to be authentic, unique and for personal creativity. That being said... being authentic, unique or creative might not be someone else's value. They would rather have the right look, address or jeans... 

Nothing is free. Everything has a trade off. Coming to peace with that helps.

Akaisha
Author, The Adventurer's Guide to Early Retirement

 

[unclemick]

Good viewpoint - I like the idea of being a pay less so I can spend more kind of guy.

heh heh heh

 

[UncleHoney]

Question.

Isn't all this spending what keeps the market growing, companies expanding and fueling the economy?

My big fear is when everyone has maxed out the CC's and exhausted the HELOC's what's going to happen.

Ron

 

[Billy]

Good viewpoint - I like the idea of being a pay less so I can spend more kind of guy.
heh heh heh

Yeah, me too. It's all about personal choice...

Question.  ..Isn't all this spending what keeps the market growing, companies expanding and fueling the economy?

My big fear is when everyone has maxed out the CC's and exhausted the HELOC's what's going to happen. 

I understand your point. However, I can't worry about what 'Everyone else' does.. I  simply try to manage my own life - which at times - simple as it is -- can be overwhelming.

Keeping chaos at bay, managing consumption based on my own choices, and having my values prioritized takes up about all the free time I have (!!) There will always be people who 'need' more or think that they do... and you are right - it's what keeps a good deal of the economy going.

We all make choices, and so long as you know you have choice...  you are ahead of the game.

Best,
Akaisha
Author, The Adventurer's Guide to Early Retirement

 

[flipstress]

Well, it's certainly true that people in poor countries have less "stuff" than people in rich countries, but I suspect that the primary reason is that they can't afford the extra stuff, not because they don't want it.

I agree--poverty limits one's consumption.  In some poor countries, the people have probably not even seen a lot of products available in the developed countries.  So they can't even want what they don't know exist.  As they get exposed to what's available and see other people in their "peer group" having them, then they might start wanting them.  This is where advertising exerts a big influence, creating desire for something not necessarily needed but added to one's want list, or to put a positive spin on it, creating material ambition or something to strive for, with the ambition directed not only to acquire the goods themselves but also to achieve a certain lifestyle or standard of living.

I just brought up the book as an aside in case it might be interesting for some of us to see what people in other countries have (or had since the book was published some years ago).  It shows how adaptable we are as humans in terms of what we can survive on.  But then, my definition of a good life means more than just surviving;  my ideal would be between just surviving and heedless acquiring/consuming.

 

[Jay_Gatsby]

I've sometimes heard conspicuous consumption described as an attempt to fill a hole. Yet the "hole" isn't the type you see in the ground, but rather more like a hole in a dam. You buy lots of material things in an attempt to patch the dam, but somehow -- like water -- the negative emotions still find a way to get through. The key is to focus on lessening the flow of "water", not on strengthning or patching the dam.

 

[Scrooge]

This is where advertising exerts a big influence, creating desire for something not necessarily needed but added to one's want list

Well, there aren't that may things in the life of a denizen of the First World that are really "needed" as opposed to "wanted". Shelter, food, water, and bare bones health care are pretty much all you need for survival. Everything else, including things that we take for granted like music, books, radio, computers, television, movies, travel -- any form of leisure, really -- education, daily showers, etc are "wants" rather than "needs".

And once you are in the "wants" territory, there is always something bigger and better out there: a bigger house, HDTV, plasma, high speed internet, HD and satellite raido, leatherbound books, live performaces, bigger cars, SUVs, iPods, foreign vacations and the list goes on and on with more "stuff" being added to it every day.

One possible stimulus for conspicuous consumptions is competition for mates, something akin to the birds' mating song and dance. Granted, one might think that a fat checking account and the security that comes with it would act as a more powerful aphrodisiac than a fast (and fast depreciating) car, but then many humans are not that much brighter than birds