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I often wonder why so many people spend the time to clip coupons, buy only what's on sale, cut corners on every expense possible and overall live a "cheap" life only to save up for an expensive car or big house.
It seems to me that the marginal benefit these big purchase items bring like cars and homes are not worth their cost. Now don't get me wrong, most people need a car and owning a home is wise investment, I'm referring to the people who pinch pennies yet own a BMW and a 4000+ square foot house.
These big purchases will definately be fun for a while and for the first few months give you the "status" you've been chasing, but like everything in life the excitement wears off and we get used to our new standard of living. Meanwhile, the large car and mortgage payments are restricting our lifestyle.
I've noticed its very easy to sock away 15% a year for retirement, buy a round of shots for buddies at the bar and order a steak dinner on Saturday night and not have to feel guilty about it. The secret is being cheap on the big expenses.
In my opinion, these constant little splurges and financial freedom bring greater happiness than a few large purchases that wear off after a while. Sure I can save a few grand a year by being frugal on the little things but being frugal can be stressful and inconvienent.
Take the stress off your life, drive your car to the ground, don't buy a house greater that 3X your income, throw 15% a year into retirement, after that spend like you want to spend, I think you'll enjoy life better.
I agree with this. There is no such thing as something for nothing. If you go to a poor person's house its usually full of clutter. The reason is that they have to buy more stuff because cheap stuff usually breaks.
For example when you buy cheap cleaning products you usually end up using a lot more then if you would have a bought one of the better brands. Another example is clothes I always bought higher quality clothes and my clothes hardly ever wear out no matter how long I have them. My brother buys clothes from Wallmart and Kmart and they look like they should be replaced after the first or second washing.
I'm sure a lot of people that are really into being thrifty won't believe this but its usually true.
What if a BMW brings them enjoyment? If someone is going to spend the money on a BMW, a steak dinner, and rounds of shots, they may not be able to save 15% for retirement.
Why are your priorities in life the only valid ones?
BMWs are fine....but if you can't put that 15% away for retirement because you bought an expensive car then you really can't afford the BMW!
Now, it's all well and good to say you don't care about your retirement or you're going to work until you drop dead. But that's not a realistic plan. The more likely plan is you'll end up unemployed or underemployed in your 50s and 60s and end up declaring bankruptcy.....sticking the bill to the rest of us (this is the exact scenario that happened to a friend of mine---he didn't go for status cars...he frittered money away little by little until he hit a 5 year unemployment/underemployment dry spell).
People say they don't care about their retirement.....yet then they scream loudly when all they have is a meager Social Security check to live on in old age.
Also, psychologists are finding out that people severely overestimate the happiness they'll derive from purchases of "stuff" such as cars. It turns out giving yourself little rewards will actually make you happier than purchases of big ticket items. Big purchases that do make people happier???? Travel or various other kinds of experiences (assuming you can really afford them, of course).
Now, maybe you're the exception. But most likely, your brain is wired the same as everyone else's.
Last edited by mysticaltyger; 08-13-2010 at 06:44 AM..
It is not unusual to see someone's home in a high-income area and often there is old furniture and they probably have little saved, but they justify it because the schools are great. If they lived in a modest home in a less-fashionable area they could afford private school tuition.
It is not unusual to see someone's home in a high-income area and often there is old furniture and they probably have little saved, but they justify it because the schools are great. If they lived in a modest home in a less-fashionable area they could afford private school tuition.
however they justify it, homes are a very important part of what makes people happy. Lots of people wouldn't be happy in a modest home in a less-fashionable area. It's not like a car, where having a nice one can get old after a while. You get what you pay for, and if you cheap out on a home, then there's a good chance you might end up miserable.
BMWs are fine....but if you can't put that 15% away for retirement because you bought an expensive car then you really can't afford the BMW!
Now, it's all well and good to say you don't care about your retirement or you're going to work until you drop dead. But that's not a realistic plan. The more likely plan is you'll end up unemployed or underemployed in your 50s and 60s and end up declaring bankruptcy.....sticking the bill to the rest of us (this is the exact scenario that happened to a friend of mine---he didn't go for status cars...he frittered money away little by little until he hit a 5 year unemployment/underemployment dry spell).
People say they don't care about their retirement.....yet then they scream loudly when all they have is a meager Social Security check to live on in old age.
Also, psychologists are finding out that people severely overestimate the happiness they'll derive from purchases of "stuff" such as cars. It turns out giving yourself little rewards will actually make you happier than purchases of big ticket items. Big purchases that do make people happier???? Travel or various other kinds of experiences (assuming you can really afford them, of course).
Now, maybe you're the exception. But most likely, your brain is wired the same as everyone else's.
You presume too much, and know nothing about me.
My post was a response to the original, suggesting that if one had to choose, why is one necessarily better than the other? Who are you do make that determination?
Many little rewards will easily topple the cost of one big one. One steak dinner + cost of cheap car payment will probably be more than a low end BMW.
The assumption that buying large ticket items precludes one's ability to save money.
It is not unusual to see someone's home in a high-income area and often there is old furniture and they probably have little saved, but they justify it because the schools are great. If they lived in a modest home in a less-fashionable area they could afford private school tuition.
The high income area tends to have other pluses besides the schools. It's just easier to justify that 'it's for the kids' than to go into an explanation of all the other reasons why you want to live in the nice part of town in a way that doesn't make you sound like a snob.
We live in what some people think of as a snobby suburb. Thing is that, yeah the schools are good if you need the excuse, but the people actually are quite nice. You should have seen the way everyone around here pulled together after Hurricane Ivan. And the location is excellent- 15 minutes to work, 10 minutes the other way to fun at the beach. We could have bought a 3000sf McMansion in the exburbs for what we paid for our 1700sf house, but we didn't need that much space and I feel like life's too short to spend any more time than that on a daily commute. Plus, it's one of the few places around here that's actually pedestrian-friendly and set up for active people. Yes, you have to and I do pay a premium around here to be able to walk or bike to the town shopping center.
As for the furniture, guilty as charged for many a year. The old furniture worked well enough, and we decided we'd rather keep the old stuff longer and save up for our 'forever' furniture (at least for the non-upholstered pieces) instead of getting something that was fiberboard and veneer and would be totally trashed in 5-10 years. When we finally bought, it was well-made classics that would work with a whole bunch of different other furniture styles.
I agree with this. There is no such thing as something for nothing. If you go to a poor person's house its usually full of clutter. The reason is that they have to buy more stuff because cheap stuff usually breaks.
For example when you buy cheap cleaning products you usually end up using a lot more then if you would have a bought one of the better brands. Another example is clothes I always bought higher quality clothes and my clothes hardly ever wear out no matter how long I have them. My brother buys clothes from Wallmart and Kmart and they look like they should be replaced after the first or second washing.
I'm sure a lot of people that are really into being thrifty won't believe this but its usually true.
My parents are poor (guilty as charged!) and they're minimalists, only buying what they need.
I buy the Wal Mart brands but I keep a close eye on how the clothes are made because that tells me whether they will last a while. The Danskin workout pants are $12 while $30 in a sports store. It's a good brand but it's the detergent that makes a difference!
Each purchase eats away at your income and cash reserves. Even the small stuff matters, it all adds up to bite you in the end.
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