Good article RE why you spend more when working

[shasta]

Your Lifestyle Has Already Been Designed

Contains a lot of the common theory and themes on this forum. I found much of it to be agreeable and in line with my own take on things.

 

[panacea]

I think this is very true with the general population. As the article says, it's pretty easy to be a little loose with the cash flows when you know more income is on the way. As a LBYM group on this forum, I know we're better at controlling frivolous spending than the averages but can see how after I've FIREd I'll experience a mental shift toward even smarter spending.

 

[Shanky]

I think this is very true with the general population. As the article says, it's pretty easy to be a little loose with the cash flows when you know more income is on the way. As a LBYM group on this forum, I know we're better at controlling frivolous spending than the averages but can see how after I've FIREd I'll experience a mental shift toward even smarter spending.

I think much of what he says on spending holds true for this group too. Those on this board with much higher assets or income will spend more than those with less. It is unrelated to "needs" and more tied to "wants" Spending is correlated with wealth. LBYM does not require spending only on needs. (We may still rationalize a want as a need, but we can afford it)

 

[H2ODude]

I agree with just about all he says as it applies to the general population. However, most of us here were either raised to avoid this trap or grew into a LBYM lifestyle that makes what he describes appear very illogical.

I am befuddled at the marketing universe. Whether it's the unending prescription drug ads during the news, ceaseless ads for all the things men are supposed to need during a football game, on and on. As I look at what I spend my disposable income on I can't make any connection. I know I'm not immune but pretty close to it, I think. This is why I can't understand the "value" of FB or Twitter IPO, all about advertising to people to buy stuff. Really? It's absolutely true that the economy would collapse if everyone bought into our LBYM lifestyle.

 

[harley]

I had never heard of Parkinson's Law before - "work expands so as to fill the time available for it's completion". Excellent point. I now have the rest of my life to complete my to do list, and that's exactly how long it's going to take.

 

[ziggy29]

I had never heard of Parkinson's Law before - "work expands so as to fill the time available for it's completion". Excellent point.

And its corollary -- productivity gains mean doing more work in the same amount of time, not producing the same amount of work in a shorter period of time.

 

[HFWR]

It's absolutely true that the economy would collapse if everyone bought into our LBYM lifestyle.

Probably, though I don't see that happening...

 

[daylatedollarshort]

Good article and very true. Even though we have always had a LBYM lifestyle, these last few years we have ramped down our work hours and our consumerism. We've been happier having more free time instead of more stuff.

There were so many things I just accepted as normal due to marketing, like paper towels, single use batteries and other disposable products. I realize now are very expensive over the long term compared to reusable products.

I don't think our current economy would collapse if we didn't have so much marketing, but it would change, maybe for the better. Instead of focusing on growth as a leading economic indicator, some countries are starting to focus on happiness indicators.

 

[harley]

There were so many things I just accepted as normal due to marketing, like paper towels, single use batteries and other disposable products. I realize now are very expensive over the long term compared to reusable products.

I'm not sure I buy this. I've never seen a report that does a good comparison based on all the aspects of comparative products. Like for paper towels vs cloth napkins. We started using cloth a couple of years ago, and it's really cut down on our paper towel use. But in order to really know the basis, you have to consider the footprint for growing the treesvs cotton, the processing costs, the over-time cost of constantly washing the napkins, buying new ones when they get too grungy, etc. Same with rechargeables. Do the costs of the materials and disposal actually make up the difference over the single use ones? I don't know. But I don't think it's a given that it does. Sometimes appearances can be misleading.

 

[H2ODude]

I'm not sure I buy this. I've never seen a report that does a good comparison based on all the aspects of comparative products. Like for paper towels vs cloth napkins. We started using cloth a couple of years ago, and it's really cut down on our paper towel use. But in order to really know the basis, you have to consider the footprint for growing the treesvs cotton, the processing costs, the over-time cost of constantly washing the napkins, buying new ones when they get too grungy, etc. Same with rechargeables. Do the costs of the materials and disposal actually make up the difference over the single use ones? I don't know. But I don't think it's a given that it does. Sometimes appearances can be misleading.

+1 I especially love those who rail against disposable diapers (They're filling up the landfills!). Meanwhile, to reprocess a cloth diaper there's a lot of sewage created, water produced, energy consumed for hot water and drying…on and on. I'm sure someone has a thorough analysis somewhere complete with scientific basis. There are a lot of mandates for "cleaner" environmental standards that have unaccounted for environmental costs.

 

[explanade]

Consumer spending is 2/3 of the US GDP. But it's lower in other industrialized countries.

Keynes predicted that by the end of the 20th century, workers wouldn't need to work more than 15 hours a week because of productivity gains.

There are some who have theorized that there's a "conspiracy" to prevent workers from having so much free time:

http://www.economist.com/blogs/freeexch ... -markets-0

 

[NW-Bound]

The article referenced by the OP says

The more we make, the more we spend. It’s not that we suddenly need to buy more just because we make more, only that we can, so we do. In fact, it’s quite difficult for us to avoid increasing our standard of living (or at least our rate of spending) every time we get a raise.​

That is very true when I observe people around me, relatives included. They are caught in the rat race, and feel that they have no choice but to work hard, to get ahead, to get promoted. For "he who hesitates is bossed".

And when they work that hard, they feel that they need to reward themselves in some way. It most often means an upgrade to a large McMansion, a fancy car. It is also a status symbol to show that they get rewarded for their hard work.

I think they occasionally feel trapped, but also that they are helpless to escape. If my specific circumstances did not lead me to become free of megacorp, I would be in the same shoes.

 

[W2R]

He makes some good points about unnecessary spending while working. One thing he hinted at but didn't specifically address was the "good-for-me" present. These can sometimes impede our progress towards FI, and can even delay retirement in some cases. An example would be my spending after a grueling week of 14-hour days while on travel to DC for work. Upon returning home I would want to buy myself something as a reward. I tried to keep it to something small for LBYM reasons, but I still DID it.

One nice thing about being retired is that I only buy what I want, never what I think will cheer me up (good heavens, I'm cheerful enough in ER) or what other people think I should want.

 

[ziggy29]

The article referenced by the OP says

The more we make, the more we spend. It’s not that we suddenly need to buy more just because we make more, only that we can, so we do. In fact, it’s quite difficult for us to avoid increasing our standard of living (or at least our rate of spending) every time we get a raise.​

Very true. Which is why I made it a point to immediately crank up my 401K and IRA contributions with every raise, so I didn't just spend every extra dollar of cash flow when we didn't need to. (Of course, I almost never got a raise after 2007, but by that time I was maxing out my 401K, two Roths and an HSA anyway.)

 

[haha]

An example would be my spending after a grueling week of 14-hour days while on travel to DC for work. Upon returning home I would want to buy myself something as a reward. I tried to keep it to something small for LBYM reasons, but I still DID it.

I think this was mostly a good adaptation. Without it, you may have taken up drinking or smoking, or quit work too soon, or just quietly gone around the bend.

Life cannot be led always in the future. Many of us understand and accept that, either intellectually, or behaviorally as you did.

Ha

 

[daylatedollarshort]

I'm not sure I buy this. I've never seen a report that does a good comparison based on all the aspects of comparative products. Like for paper towels vs cloth napkins. We started using cloth a couple of years ago, and it's really cut down on our paper towel use. But in order to really know the basis, you have to consider the footprint for growing the treesvs cotton, the processing costs, the over-time cost of constantly washing the napkins, buying new ones when they get too grungy, etc. Same with rechargeables. Do the costs of the materials and disposal actually make up the difference over the single use ones? I don't know. But I don't think it's a given that it does. Sometimes appearances can be misleading.

While I haven't specifically conducted original research on the subject, most of the how to save energy / sustainable living books I have read recommend rechargeable batteries when possible, for cost savings plus decreasing landfill waste -

Use Rechargeable Batteries (Wisconsin Public Service)

I wash laundry in cold water with a front loading, energy efficient washing machine and I use drying racks, so I would be very surprised if paper towels and paper napkins cost more overall for us than cloth.

Here is an article on the cloth vs paper napkin costs:

http://www.mnn.com/lifestyle/responsible-living/stories/paper-vs-cloth-what-are-the-greenest-options

We have cut quite a bit off our annual expenses since we started getting serious about ER and sustainable living. We have cut our grocery bills, energy bills and weekly trash volume by at least half, so overall these kinds of tips we have been implementing from the sustainable living books and sites, including not using single use products where possible, seem to be working out for us. Your experiences may differ.

 

[ziggy29]

I think this was mostly a good adaptation. Without it, you may have taken up drinking or smoking, or quit work too soon, or just quietly gone around the bend.

Life cannot be led always in the future. Many of us understand and accept that, either intellectually, or behaviorally as you did.

This is why I believed in LBYM but not LAFAPBYM (Living As Far As Possible Below Your Means), because a certain amount of current discretionary spending made my life more pleasant in the here and now, and there was no guarantee I'd live to see (or be healthy enough to enjoy) all the tomorrows I was anticipating.

 

[NW-Bound]

...because a certain amount of current discretionary spending made my life more pleasant in the here and now...

which by my personal definition is whatever being contained inside the 3.5% WR, which does not even include future SS.

 

[tuixiu]

An example would be my spending after a grueling week of 14-hour days while on travel to DC for work.

Yup. My business travel reward is to make sure I arrive at the airport an hour early so I can unwind with a couple nice beers at the airport before getting on the plane.

Normally I wouldn't buy beers that cost that damn much, nor would I go to a bar alone.

 

[Meadbh]

Yup. My business travel reward is to make sure I arrive at the airport an hour early so I can unwind with a couple nice beers at the airport before getting on the plane.

Normally I wouldn't buy beers that cost that damn much, nor would I go to a bar alone.

My business travel reward to myself was an annual frequent flyer lounge pass. It was cost effective because I could escape to the relative comfort and tranquility of the lounge, have a beverage, soup, salad, etc. and get some work done. I rarely paid for a meal at an airport. It was a godsend a couple of times when I had delayed connections.

 

[Options]

I think this was mostly a good adaptation. Without it, you may have taken up drinking or smoking, or quit work too soon, or just quietly gone around the bend.

Life cannot be led always in the future. Many of us understand and accept that, either intellectually, or behaviorally as you did.

Ha

Exactly. As one who is still working, the very small things are what keeps you going (otherwise I probably would take up drinking). My weakness is mochas. Given that I don't spend thousands of dollars traveling or on other huge expenditures currently, that I LBMM about 60%, I think I can indulge in a mocha. While I'm an extremely goal-oriented person, it's very true that life cannot be led always in the future. It's a balance, and only each of us can gauge what's right for us.

 

[Trooper]

Let me start by saying I haven't read the subject article yet, but what I fear most during retirement is the amount of free time to spend money.

Currently, while working we spend the majority of our money on the weekends. When retired everyday will be a weekend.

I would like to think we will adjust, mainly because of 1) the mindset that there are no more paychecks, and 2) we will have more time to shop for deals and flexibility with travel.

Thoughts?

 

[Meadbh]

Let me start by saying I haven't read the subject article yet, but what I fear most during retirement is the amount of free time to spend money.

Currently, while working we spend the majority of our money on the weekends. When retired everyday will be a weekend.

I would like to think we will adjust, mainly because of 1) the mindset that there are no more paychecks, and 2) we will have more time to shop for deals and flexibility with travel.

Thoughts?

I was worried about that too. However, it hasn't been a problem. I now have time to shop for fresh, unprocessed food and cook delicious, healthy and economical meals. In fact my friends have been complimenting me on my cooking for the first time in my life! There are so many activities that don't cost any money, just time. For example, hiking in the local park that your taxes have paid for! I have established a budget with categories for sports and entertainment and so far I have a positive variance on both.

 

[Walt34]

Let me start by saying I haven't read the subject article yet, but what I fear most during retirement is the amount of free time to spend money.

That was a concern of mine too but it proved to be unfounded. While I did go back to work for a while after retirement we knew it was "temporary" income and when the job was over the unplanned-for income would end. While we did feel free to spend a bit more we saved about 75% of that income and that was a rate we were comfortable with.

And most important of all of course I wanted the freedom to walk away from the job when I didn't want it anymore or if/when things went sour, which they did, and so I quit.

All this does require the ability to LBYM, whatever those means are, something that alas seems all too uncommon.

 

[NW-Bound]

Let me start by saying I haven't read the subject article yet, but what I fear most during retirement is the amount of free time to spend money...

There might be some pent-up demand prior to retirement, and there was a recent thread about that. Many posters here splurged for a few years after retirement, mostly on travel.

I have some inexpensive pastimes like above posters. The only costly activity is travel, but too much of that and it seems like work to me.

Very few can be a perpetual traveler, hence people stopped or slowed down after the first few years. I have been reading blogs of full-time RV'ers who slowed down drastically after 3-5 years, and some even sold their motorhome and went back to a stick home.