I’ve been listening to a podcast recently with the admittedly cheesy name “I Will Tech You To be Rich” by Ramit Sethi. Basically his point is: Spend extravagantly on the things you love. Cut costs mercilessly on the things you don’t.
So far so good
But it made me reflect on the fact that I have always felt wealthy, even when I/we werent so objectively (read NW) speaking. Why? Three things I believe may explain most:
Know what matters to you and bring you joy and happiness and spend extravagantly on that.
When a student, travelling and self-sustaining my living ( independence) was most important. So travelled and experienced like no one else. Later in life we prioritized a fantastic home, it sucked up most our money, but made us happy. Zero regrets. Nada. Nowadays, it is back to travel, skiing, hiking, staying healthy and fit (and FI) our biggest expense by far is therefore travel - more than housing, food, transport combined. And we want to spend more on it
Tradeoffs are not sacrifices, they are proof you know what is important to you. We drive an ancient high-milage car because that is not important to us (and keeps us stealthy). We dont eat out, ever, except when we travel, of course, and then we love it. Like a treat. Never eat snacks and fast foods and god forbid sugary drinks. We spend next to nothing on clothes, “home improvements”, no pets, no cleaning/garden services, electronics, jewelry, .. you get the idea. Sometimes we discuss for 2 min if we should change the car, but then we go, nah, drives fine!
ignore others. We are not on social media platforms for a good reason. The issue is that in the past you’d compare yourself to your class mates, family members, friends, etc. People around you. Now the benchmark is the whole world, flashing Insta-porn. Fuck that. FOMO/ comparison are thieves of joy, Also, I dont need likes or comments of my travels and experience thank you very much. Not doing it for you, but for us
Back to Ramit, I like the podcast because he preaches about conscious spending and what actually matters to you. I realized we just may have got that right. Point is: Our net worth never really told the true story about us feeling wealthy - it wasnt even about money in the first place
For those of you in FIRE pursuit: if you feel you are making big sacrifices and deferring joy, you are likely doing it wrong. You may aspire to maximizing joy AND FIRE in parallel, and the way to do it is knowing what matters to you and spend accordingly.
I often say I am grateful I discovered FIRE later in life. Otherwise I may have been NW rich but missed out on joy.
I wonder if it’s also because you spend on sensible things which have a limit? for example you spend on travel which is an enriching activity and there’s a limit to how much you can travel.
You spent it on your home which is something you use every day and is a long lasting asset.
But if you spend it on say handbags maybe you would have a huge collection of handbags which take up a lot of space and maybe you would enjoy it but maybe you would not derive any longer lasting satisfaction from that?
Not sure the is a limit to travel expenses. You can go to the south pole and spend 100k+ on that, crazy expeditions, luxury cruises, even first class airfares and private jet - hell, there is even space travel
Building and prioritizing a home is a bit different. It is about providing, security, and a frame for also building memories. It is priceless in that sense.
What the above have in common is that experiences and memories compound over life
Lastly, I believe the dividend on spending money on stuff is much lower than on experiences. Instead you adapt and 6 months after buying the handbag, likely you forget about it. Now there may be exceptions, collectors for example
It reminds me of the 5 ways you do with money:
Buy stuff. 2. Buy experiences. 3 Buy time. 4. Save it. 5. Give it away
This is way too simplistic, learning to ride a motorcycle opens up a huge range of experiences, for example. You can argue that it is also “buying an experience”, but you gotta buy it (plus the lessons - easily 400 just for the Grundkurs, exams, gear for at least 800CHF) one way or another, even the most basic decent motorcycle will take 5000-6000 from “never put a leg over one before” to “having a license”.
What if what matters to one and brings joy is make the others think you are super rich even if you aren’t? Then spend extravagantly on shiny cars, jewelry, house, and stay poor forever. But happy?
I doubt that is what really makes people happy. If motivations are coming from what other people think of them, then they have some deeper problems to deal with.
I think the principle is broadly correct but that there is a lower limit to it, beyond which you have to cut on essentials or things you love, where you may be able to feel fulfilled (though it is harder to do so) but would have a very hard time feeling wealthy.
That being said, it is close from what I’m doing without monitoring closely my expenses. I classify items mostly through a 1-0 switch lense, that is, if the item/experience fulfill a need (not a want) or would actually bring me joy, I don’t count on spending on it. If it doesn’t, I don’t see why I’d spend 1 cent.
It cuts a broad range of stuff out of the picture, which frees means to spend on what truly matters. The same principle can be applied to time (though I am truly awful with it).
Edit: to clarify, I have fairly cheap wants. I think I also have a broad “this doesn’t cost much so I can spend on it” threshold that has varied between 100 CHF and 1000 CHF up to now. Over that threshold, I still think deeply about the purchase before making the expense. Maybe experience with the thought that I may not have enough to pay rent/buy food 2 months from now (which I have experienced deeply during studies and a few years after) has something to do with that.
I’ve wrestled with this idea for ages, years. My conclusion is…it’s complicated.
Some thoughts:
Consumption while aware of the potential negative consequences in the future should be a valid stance, it’s nobody’s business to criticize
It’s undeniable that some expensive things are genuinely better than their cheap counterparts (a Ferrari, hell an Audi, is better than a Dacia, Hilton is better than the Premier Inn)
Basing one’s happiness on others’ opinions is regrettable, and sign of a weak character in my opinion, but again some people are like this, I’ll look down on them in private but not berate or crucify them in public
Being self-aware, including on what makes one happy, is deep wisdom and a moving target, one that most people (myself included) are unable to hit
Feeling or looking richer than your peers, neighbours (and likely family too) has been found to provide lasting happiness in studies, if I remember correctly.
Not having owned any myself I thought ferrarris were terrible to actually use as regular car, cause they’re not that reliable and there are no local repair shops?
depends on the criteria. A modern Audi car is such an awful amount of technology expensive unreliable intrusive fragile electronic devices, I’d prefer something simpler, and certainly cheaper.
Yeah, well, you don’t get a Ferrari to drive to Aldi but to drive to Furka!
You raise a different topic, prices and what drove them up. It’s a problem that the cheapest new car you can get in CH today is CHF16,000 (and it’s a Dacia - which are doing great), but in terms of fit and finish, quality of materials, engines etc there is (still) a marked difference between brand tiers.
I’m not sure but this may be due to the fact they’re not equipped with latest technology which weights a lot in safety ratings nowadays. I don’t think they’re dangerous, maybe they would have ranked 5 stars 10 years ago.
Mit dem Lesen und der Teilnahme an diesem Forum bestätigst du, dass du die Forum-Richtlinien gelesen hast und damit einverstanden bist sowie den Haftungsausschluss auf http://www.mustachianpost.com/de/ akzeptierst.
