My Confession

[hocus]

I love to spend.

I reject the idea that spending is bad, something to be avoided. I love to spend. And I see no conflict between my love of spending and my love of saving. To the contrary, I see my love of spending helping me in my effort to save. It's because I love to spend so much that I have become able to save effectively.

When you save money, you are not doing something different with it than what you do with it when you spend it. The purpose of saving is to have money to spend at a later time. So the difference between the two money choices is not a difference in kind. It is just a difference in timing. To spend is to transform those green pieces of paper into goods and services immediately. To save is to elect to do so at a later time.

Some money advisors urge those trying to save to try to develop an aversion to spending, to switch off commericals, to throw away catalogs mailed to the house. But that doesn't make sense if the ultimate purpose of your saving effort is to spend. It is your desire to obtain goods and services at a later time that drives your saving effort. The more desire you feel for those goods and services, the more motivated you will be to save. It is ultimately the same motivation--a desire for the benefits of goods and services--that is the engine for both spending and saving.

Say that you were to wake up tomorrow with zero desire for goods and services. How long would it be before you were rich? A long time. With no desire for goods and services, you probably would not even bother heading off to work in the morning. You would just mope around the house all day. Is that the path to great wealth? I don't think so.

It's spending that makes you rich. It costs money to buy a health-club membership. But if if makes you physically fit, is there not a good chance that you will end up with more money in your pocket because of the purchase of the health club membership rather than with less? It's the same with the purchase of a home computer or with the purchase of fine clothes or with the purchase of a cell phone or with the purchase of a new car. All of these things cost money, but all of them also can cause money to come flowing in to you in the long run. Are there not many cases in which the amount of money that flows in ends up being greater than the amount of money that flows out?

I of course understand that there are times when one needs to say "no" to spending. If you say "yes" to every temptation to spend, you will never save anything, and that will mean that you will never acquire any lasting wealth. To always spend and never save is an unbalanced approach to money management. What I don't go along with is the idea that saving is more virtuous than spending, that spending is somehow dirty and shameful and a sign of weakness.

I earn money for the purpose of spending it. I aim to direct my spending to good purposes. What the heck is shameful about that? Do I save too? I sure do. A lot. Not because I view saving as being more virtuous, though. I save because I see saving as in some circumstances being a more efficient use of my limited pool of earnings. When spending gives me more bang for the buck, I spend, and when saving gives me more bang for the buck, I save.

I love to save. I love to spend too. I love to save because I love to spend. Saving allows me to spend more. That's why I love it so.

 

[John Galt]

Well money isn't much good unless spent
(eventually) for something. You can't eat it or wear it,
and it won't even make much of a fire. My ex wife's
motto was "I am, therefore I spend!" She talked the talk and walked the walk. Nice lady though

JG

 

[Eagle43]

If you don't spend it, your survivors will. I've always known that my grandchildren will know exactly what to do with those mutual funds.

 

[azanon]

I earn money for the purpose of spending it.

I'm earning and saving a lot of money so i eventually dont have to work anymore. That I have to spend some money on a daily basis is a given, and the reason why I haven't already quit.

 

[flipstress]

Some money advisors urge those trying to save to try to develop an aversion to spending, to switch off commericals, to throw away catalogs mailed to the house. But that doesn't make sense if the ultimate purpose of your saving effort is to spend. It is your desire to obtain goods and services at a later time that drives your saving effort. The more desire you feel for those goods and services, the more motivated you will be to save. It is ultimately the same motivation--a desire for the benefits of goods and services--that is the engine for both spending and saving.

I know I am weak, so I try not to get tempted by advertising to purchase items that I do not need. In addition to their power, catalog and paper ads clutter up the house, and I waste my time lusting after stuff--they clutter my mind! So, I try to shun them. It's best for me to seek out info about goods only when I am ready to buy them, that is, I need them or realize I really, really want them.

Say that you were to wake up tomorrow with zero desire for goods and services. How long would it be before you were rich? A long time. With no desire for goods and services, you probably would not even bother heading off to work in the morning. You would just mope around the house all day. Is that the path to great wealth? I don't think so.

Actually, if I were to reach such a state of no desire for goods or services (nirvana!), then I wouldn't even care about amassing great wealth. I'd be free then if I could just enjoy/use whatever is present or available. I'd also be dead in short order if I didn't secure the basic needs like food, shelter, clothing, medical services...

I do see your point about saving as the choice of future consumption over present consumption.

 

[hocus]

They clutter my mind! So, I try to shun them.

I think that's a good reason to shun them. They definitely send too many catalogs to the house. And I definitely throw nine out of ten of them in the trash.

Perhaps one out of ten, though, helps you learn about something you actually can make use of. And that one is doing you a real service by helping you identify something worthwhile to spend money on. When you spend on stuff you that enriches your life in some way, spending offers a very strong value proposition.

Bad spending is bad. But not all spending is bad. And not all saving is good either. There's such a thing as bad saving.

My point in the thread-starter is that it is a mistake to think of saving as always virtuous and spending as always wasteful. Neither money allocation choice is good or bad by its nature. It's whether that money choice helps you realize your life goals in a particular circumstance that determines whether it is the right way to go or not.

 

[retire@40]

My plan is to spend every penny I have before I die without running out of money before then.

 

[unclemick]

Being semi - brain dented, left handed, INTJ and having spent 29 yrs more or less in R&D:

I view money as an opportunity to purchase machinery/equipment which will produce a product over some useful time frame. Normal people call them - stocks(divs), bonds(interest), balanced mutual funds(both), etc. When the ah er machinery gets old - presumably it will retain some used/scrap value when sold.

Sanity is overrated.

Heh, heh, heh, heh.

 

[haha]

Sanity is overrated.Heh, heh, heh, heh.

Don't worry about that at all, Mick. You are safe here with your friends.

Mikey

 

[Jay_Gatsby]

***** and Anzanon make valid points. The average person saves so he can spend, while the FIRE-minded person saves so he doesn't have to work anymore. The wealth-minded person combines the two. He saves for financial independence, and thereafter to spend.

 

[xprinter]

I was reading from the Simple Living Network web forums, and I was amazed at some of those folks saving percentages. The SLN is a web site the started from the book "Your Money or Your Life" that has been discussed previously on this site. Anyway these people live on nothing and save between 50-80 percent of their income. I was dumbfounded. I like to save also, but I feel you need a life too. We save about 27%. We have a nice home, go out to eat once a week, do not travel, have broadband cable hdtv and modem, cook with premium ingrediants. I would hardly call us extravagent, but if you read that forum we are.

 

[Whakamole]

I was reading from the Simple Living Network web forums, and I was amazed at some of those folks saving percentages. The SLN is a web site the started from the book "Your Money or Your Life" that has been discussed previously on this site. Anyway these people live on nothing and save between 50-80 percent of their income. I was dumbfounded. I like to save also, but I feel you need a life too. We save about 27%. We have a nice home, go out to eat once a week, do not travel, have broadband cable hdtv and modem, cook with premium ingrediants. I would hardly call us extravagent, but if you read that forum we are.

I'd argue that they're just as obsessed with money as the stereotypical guy on Wall Street. They're just obsessed with saving it, rather than making it.

I remember watching "Affluenza" which talked about the "keeping up with the Joneses" mentality, which I agreed with; but then talked about people who would kayak to work, live in group homes, etc. Not many of us want to do that either! There is a fine line.

 

[Guest]

It's easy to save 50% or more if you're making good money. You just have to make sure your expenses don't rise as rapidly as your income.

 

[Eagle43]

My plan is to spend every penny I have before I die without running out of money before then.

There's a book I read called "Die Broke". One of the key lines I remember is your last check should be to the undertaker, and it should bounce.

 

[Bob_Smith]

The SLN is a web site the started from the book "Your Money or Your Life" that has been discussed previously on this site. Anyway these people live on nothing and save between 50-80 percent of their income. I was dumbfounded. I like to save also, but I feel you need a life too.

Xprinter, I think there's more to it than this. I should point out that, like you, I followed the discussion board at the Simple Living Network forum and was not at all impressed with it for three reasons: First, I didn't learn much there, although I did like the Dominguez/Robin book. Second, I don't like the "tone" of the place. It smacks of a cult, with participants convincing each other that their lifestyle of self-denial is the best way. And finally, the SLN folks tend to dwell on every excruciating detail of their self-denial with a cult-like fervor that borders on fanaticism. Many of these folks come across as one-dimensional and just plain weird. Amy Dacyczyn's stuff strikes me the same way. There are obsessive and miserly elements to their thinking that leave me cold. IMHO, the mindset displayed in that forum is one step removed from survivalist types who build underground shelters and stock them with dried food and ammunition. Furthermore, I don't think many of them will actually achieve FI because they tend to focus on piddling expenses that don't amount to squat in the grand scheme of things.

That being said, my wife and I saved ~50% of our gross earned income for 13 years until 2004, and our gross earned income was probably less than almost everyone who posts here - in some cases FAR less. We were raising three kids at the time, helped get the oldest through college with zero debt, lived in a small, modest (but nice) home, owned two cars, had central air, ate very well, owned three TVs, two VCRs, two computers, had full internet access and cable TV, went out to eat, wore nice clothes, took vacations, made sure our kids had all the advantages their peers had (and some many of their peers didn't have), enjoyed time with family and friends, enjoyed nature, did our best at work, fought some good battles and won them, enjoyed a terrific marriage, wrote a book, loved our kids (and turned out three responsible, well-adjusted, hard-working citizens), and generally focused on all the important things (to us) in life. It really doesn't take all that much money to have a good life. It does take some planning, luck, and determination, but having a great life while saving 50%+ is doable. We did it, and those were great years. For us it started with  my wife and I having a long talk about what we wanted in life from that point forward. I asked her about her hopes and dreams, and our conversation lasted into the early AM. We were both very much on the same page, decided what we wanted, and determined what we were NOT willing to sacrifice to get there. We implemented a plan and made changes on-the-fly. Don't let the SLN folks discourage you. You can save large amounts without being fixated on money all the time, and without becoming goofy about it.

 

[xprinter]

First, I didn't learn much there, although I did like the Dominguez/Robin book. Second, I don't like the "tone" of the place. It smacks of a cult,

thanks Bob, I tend to shake things up on SLN when I post. The moderators are quick to warn anyone that has opinions different then them. I have been warned often. I find the climate at ER much better. Just curious if you would share. About how much did you earn during the years you saved 50% of your income? My wife and I see eye to eye when it comes to saving. Thats critical to have any success IMO.

 

[haha]

Bob, except that I know how honest and meticulous you are, I would think your achievement as described above would be impossible. You did it, so it is definitely possible. On the investing side, did you have any big hits or was it more of a singles game? Also, what ages were you when you and your wife made your plan for a new life?

It is a huge help when the couple are both on the same page. Then they can together lead the children. I imagine it would be a lot more pleasant too.

Mikey

 

[hocus]

It smacks of a cult

"Your Money or Your Life" is my favorite personal finance book of all time. But I think there is a bit of a cult feel to the book too. The feeling I got was that you were supposed to save so that you could spend the rest of your life working for environmental groups. I have nothing against people working for environmental groups. But that wasn't what I saw myself doing. I tried to make use of the powerful ideas put forward in the book to take things in a different direction.

I don't get the same feeling from Amy Daczyzen and her book "The Complete Tightwad Gazette." She has her detractors. But I see her stuff as being practical and rooted and fun. I don't think that she would entirely disagree with what I say above re spending, for example. She said that she loves good furniture and is willing to spend money to get it when required to do so.

 

[Jay_Gatsby]

For us it started with my wife and I having a long talk about what we wanted in life from that point forward. I asked her about her hopes and dreams, and our conversation lasted into the early AM. We were both very much on the same page, decided what we wanted, and determined what we were NOT willing to sacrifice to get there. We implemented a plan and made changes on-the-fly.

This is one of the smartest things I've read in a long while regarding FIRE. It's not enough to ask your spouse whether s/he wants to become financially independent and/or retire early. Everybody does. Few people are willing to have a deep conversation about their hopes and dreams, as well as prioritize their lives to achieve those things.

I also ready the Dominguez book, but I didn't find it all that valuable. It seems to be focused on playing "great defense" as the authors of the Millionaire Next Door put it. You also need a "great offense" in terms of planning and investing. Your money needs to work for you, rather than you just working for it.

 

[unclemick]

I agree

If I 'ever' go back to my one year, 12k personal best, - the SO has a frying pan with my name on it - " You may be bigger but you gotta sleep sometime".

So much for cults.

Heh, heh, heh.

 

[xprinter]

here is a post from the SL forum today

I'm fortunate in that I'm able to save 67% (or 2/3) of my net income yearly. I live on around $10,000 per year.

Thats below the poverty line.

 

[John Galt]

Yep, living on 10K per year makes my $50 per day look
like the lap of luxury. In fact, it would seem to be for a lot of people.

JG

 

[Cut-Throat]

Xprinter, I think there's more to it than this. I should point out that, like you, I followed the discussion board at the Simple Living Network forum and was not at all impressed with it for three reasons: First, I didn't learn much there, although I did like the Dominguez/Robin book. Second, I don't like the "tone" of the place. It smacks of a cult, with participants convincing each other that their lifestyle of self-denial is the best way. And finally, the SLN folks tend to dwell on every excruciating detail of their self-denial with a cult-like fervor that borders on fanaticism. Many of these folks come across as one-dimensional and just plain weird. Amy Dacyczyn's stuff strikes me the same way. There are obsessive and miserly elements to their thinking that leave me cold. IMHO, the mindset displayed in that forum is one step removed from survivalist types who build underground shelters and stock them with dried food and ammunition. Furthermore, I don't think many of them will actually achieve FI because they tend to focus on piddling expenses that don't amount to squat in the grand scheme of things.

Another great post from Bob Smith!

I have never visited the SLN Forum, nor will I plan to. This lifetstyle actually sounds worse than going back to work for me. And going on 4 years from work, that is a stretch.

 

[Jay_Gatsby]

I'm sure most people here would agree. What good is retiring early if you can't enjoy your retirement?

 

[blackhillsbob]

I think the simple living forum and the ER forum both have their strengths. The ER forum is great for getting ideas on where and how to invest safely. Where the simple living forum and YMOYL shines is helping with this little switch in your head that goes from. " I am stuck in this hell of a Job untill I am dead" to " I have a way to freedom and here is how I do it, and here is how I measure how close I am to being free"
The folks on the sl forum generally have a lot less than the folks here, but enjoy their freedom just as much.
My switch was flicked by "your money or your life" about five years ago.
The other site which does not get much press here is "countryside". The great magazine presents the self sufficient side of the equation. And of course you can also ad a dash of preparedess to spice things up.

There are different tacks that you can take to get to the FI goal. The nice thing about it is that you can pick and choose between the different ideas and come up with a plan that is ideal for you.
What these different groups are about are freedom and security. Thats what we all want.

Security for me is enough money coming in to pay the expenses, A couple years worth of fire wood stacked in the shed, a barn full of hay, and a pantry full of food.

Freedom for me is to do what ever I want when ever I want.

My plan has taken us out of the big city and corporate hell and plopped us on 8 acres of heaven in the Black Hills with an income and expenses in line with the low end of this group. What amazes me is that we can live comfortably on 15% of our former income. Having no debt and paying little in taxes makes all the difference in the world. If your looking for cheap entertainment, Chickens are hillarious.


So don't look at any of the groups out there as Cults or subversive groups. Each train of thought can provide you with little insights to make your life the best it can be.

And of course, It would have not been possible if not for the wonderful wife.