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No Desire To Spend

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41 pointsleeHS84 comments

I spent more than a few years scrimping to the bone earlier in my twenties. The notion has an intrinsic appeal to me. Just so you know the context when I say:

For what it's worth, if you're a HNer, I'll tell you something Ramit Sethi says often which would have been useful to internalize, oh, five years earlier: it is very hard to cut expenditures in such a meaningful fashion that your financial situation qualitatively changes. (There's only a few big wins there, and lattes or "stop buying books" do not qualify.) By comparison, the amount of impact you can have by moving your salary up is quite substantial indeed, particularly because there's just a crazy dynamic range in our industry and, well, most of us by default do not make choices which tend to land us on the top tiers of that range.

Seriously: I get people who email me on an almost weekly basis saying they got $5k ~ $15k a year just by asking for a raise. You know how many trips to the library it takes to move your financial situation by that much? You won't accomplish it in your lifetime. And that's between a few hours of work or, literally in some cases, minutes.

If you can get a raise, that's fantastic, and congrats! My experience however is that without asking "why do I buy the things I do", people tend to raise their spending to their new salary level. Why not two or three latte's per day? That's what $15 per day, or about $4000 per year.

> Why not two or three latte's per day?

Because that's close to 900 calories.

I question how effective the Ramit Sethi tactics would be here in Sweden. Has anyone here tried and gotten a raise?,

Good point, to an extent is a vicious cycle.

If you want to get that salary raise, at some point it has to be backed by somebody actually buying something.

If everybody becomes super frugal then the economy shrinks and unemployment gets worse. I guess this is because we're at a point where we don't need anything close to 100% employment to cover everybody's 'basic' needs.

This is a REALLY good point. The benefits of being frugal are increased when the majority is not. It's sort of the same thing with the birth rate. Our economy will grow as long as we keep replacing the workers.

Yes, the best position to be in is to be the guy who only owns a bicycle but sells ferraris. It becomes difficult to be frugal when other people are because business and government don't actually want to let that happen.

I remember when the recession started in the UK, there was a lot of advice going around to the effect of, "When you go shopping, don't buy brand name foods instead by the supermarket value brand equivalent'.

The supermarkets seem to have responded by simply taking a lot of the value brand products off the shelves or making them only available in bulk quantities.

This has a negative effect on equality. If your business is struggling because the lower and middle class aren't buying your products you must either decide to take lower margins or you will focus your products instead on the remaining people left who do have disposable income and start producing high end products only.

I think much of the utility of frugal living is the mindset it ingrains in you. It becomes a valuable life skill that has a much wider impact than simple finances. You gain a reflexive ability to determine the true value of a purchase, both in the now and in the future.

Say you have 2 people earning $30k/yr. One is trying to live frugally, the other is not. Suddenly the latter gets a $10k/yr raise "just by asking". I'd wager that the person with the deliberate, frugal mindset will still have more discretionary cash the day before payday than the one who got the raise.

On difficulty of cutting expenditures: It also means it is very painful to shift down to a lower salary and more satifying (or less stressful etc) job. Income lock-in.

Just to add to this, I spent roughly the first two years of my career with 80% of my attention on reducing expenses at 20% on earning more. I got about the same amount of money from both. Later on I shifted that ratio, and significantly increased my income over the next two years. I did increase my expenses, but I'm saving much more as both a percentage of my income and as an absolute quantity.

It's also helpful because the same technique that helped me earn an X% raise has worked over and over again, with roughly the same results. So when you learn to negotiate, you're changing the rate at which your income grows, as opposed to a one-time increase in income. That has a massive effect in the long term.

It's certainly easier to make an extra couple thousand by asking for a raise than by scrimping on lattes, but I'd argue that a frugal mindset is every bit as important. Unfortunately, spending every cent of $200,000 a year is exactly as easy as spending every cent of $50,000. There are plenty of people whose approach to financial management is to simply... spend their money. Doesn't matter whether that's a little bit of money or lots of money. If they make 50,000 a year, they spend 50,000. If they make 200,000, they spend 200,000. If they come into an inheritance, they spend the inheritance till it's gone.

I'm a student who's never had a full-time job in her life, and I have more money in savings than many well-paid professionals I know, simply because I actually put money into savings.

"The people who generally have their financial shit together don't usually realize when it's pay day."

Seems like a pretty specious argument. If you pay bills, then you know when bills are due and you know when payday is. That's finance in a nutshell - managing your AR and your AP.

"Do you live within biking distance from work? No? Then move closer to work."

I live in one of the better school districts in the area and pay a premium to do so. Why would I move from a better school district to a worse one?

I realize that this is Hacker News, and that many people here are younger than I am (and I'm young myself), but this person is trying to give advice about something he may not be quite old enough to understand yet.

I'm 34, married, one son.

"Do you live within biking distance from work? No? Then move closer to work." is dubious advice. If you have to pay 2x what you pay now to live closer to work, are you saving enough by not having a longer commute? Better advice is "Use common sense with where you live and work."

The vast majority of the American public underprices their commute. "Common sense" would be incorrect. If people actually put together the price of commuting and compared it to the cost of rent closer in, more people would live in urban areas. It'd be even more lopsided if roads and pollution were priced correctly and schools were purchased separately from housing.

That issue isn't age-correlated. I'm over 40 and never had kids, but there are 25-year-olds who are concerned about teacher quality (and during the grades it matters most).

There is an age-correlation , people over 40 are statistically more likely to have kids than 25 year olds.

If you pay bills, then you know when bills are due

USAism because you're still using checks and other old money tech.

In the modern world: My rent, insurance, electricity, heating, phone, mastercard, newspapers, etc are payed automatically every month. Whenever I get a bill, it contains a 'subscription id' which I enter in my online bank, and all following bills are then sent as an electronic invoice to my bank which then automatically performs the requred transfer of money on the due date. I don't even see those bills unless I want to spend time looking at it. I don't receive those bills in the paper mail. Everything is online.

Same with my wage. It just goes into my account after taxes are automatically payed. I don't need to do any work to pay my taxes.

Thus, I don't need to know when it's pay day unless I use too much money.

I pay one bill each month with a check, because it's actually easier (car loan from some crazy remote credit union) than using ACH. The rest are electronic, but they still need to be approved before fund transmission.

I've always known when bill day is, but in the last years I have never thought about which weeks pay day falls on except for one bad month when property tax and first+last at daycare happened during the same week.

Another thing to take into account is that a lot of jobs tend to be concentrated in specific in particular locations. This means that property closer to these locations tends to become more expensive which may wipe out a lot of the savings made by an easier commute.

"The people who generally have their financial shit together don't usually realize when it's pay day." isn't a specious argument. You would have enough to pay your bills whether or not you got paid for a multiple of months.An emergency fund that covers 6 months of expenses is the first step to having your financial shit in order.If you can manage that it gets easier.

They only time I notice I got paid is when I make a ATM withdrawal and see the balance go up.

"It goes like this. The people who generally have their financial shit together don't usually realize when it's pay day. Those who live pay-cheque to pay-cheque always know, and will remind you as well! I once received an email from a colleague who signed off with Happy Payday!. It's a very telling test."

I've got my finances setup pretty well and I still know when payday is and enjoy it very much. No, I don't need the money to get through the next two weeks but it's still fun to receive money. I'd almost argue that if you don't know when payday is, and when money is coming in and out of your account, you don't have your financial shit together.

Besides that, this article doesn't really provide any tips or advice that a generic "save more money" article on MSN would offer. Some examples from the authors personal financial "hacks" would have been helpful.

I'd almost argue that if you don't know when payday is, and when money is coming in and out of your account, you don't have your financial shit together.

My impression is that the usual cause of payday unawareness is when people have enough liquid funds that "getting paid" doesn't have any significant effect. There's an argument to be made that such people probably have too much liquidity and should be more aggressive about investing their wealth, but that's certainly a better position to be in than not having enough liquidity.

Well, having too much liquidity is one of the reasons I know when payday is. If you have direct deposit, do you just let your check sit in your checking account (or where ever it is desposited)? I don't have funds automatically moved to various accounts, I do it by hand because sometimes things come up and funds need to be re-appropriated. That is probably why I know when payday is, I have banking to do!

I generally don't know exactly when payday is, but I know it's a bit before the last weekend of the month, and I know most bills have to be paid by on or after the last weekend of the month. So last Sunday of the month is banking day.

It's also worth pointing out that for many people, servicing debts is one of their biggest monthly expenses. Credit card debt and car payments especially will sap your ability to save in any meaningful way. If you have debt, the #1 goal should be to pay it down as fast as humanly possible.

Yes, this is what I am doing right now. I find that what helps is to do the math and then mentally mark the price of everything up by the amount that it would cost not to put that money into paying debt instead.

Do you live within biking distance from work? No? Then move closer to work. This has three huge benefits...

It also has one huge downside the article neglects to mention. If your work is in the center of town (as many offices are) you often either have to greatly increase the amount you spend on housing or greatly decrease the 'quality' of the housing.

For disclosure sake I do live in an apartment in the center of town, but in doing so I'm sacrificing things like a garden and a my daughter getting her own room. It's a price I'm willing to pay, but I'm fully understanding of people who aren't.

Does the quality of the housing mean space? Living a more minimalist life also means having less stuff. The reason why we build everincreasing houses is that we need space for our stuff.

Sure it can mean space. I disagree that the only reason to want more space is to hold more stuff. I want more space so that I can have a room that I can close the door on and call my own (and by extension let my daughter and girlfriend have their own rooms as well). I'd like rooms with dedicated functions like a workshop for me to build things in and a room where my girlfriend can paint. I'd like a guest room so I can have friends stay the night without being forced to sleep on the couch in the living room. I'd like a small garden so I can grow food and cook outside.

Now as it stands non of these wishes have become important enough for me an my girlfriend to give up the city, and they are all 'problems' that can be worked around, but there are more reason to want space than simply to store things

I sometimes question the utility of guest rooms.

I've often seen people layout their house so the guest room is in some prime area of the house and the workroom they use all the time is in a horrible dungeon.

I've always thought that the rooms should be allocated based on their utility.

I've always thought that the rooms should be allocated based on their utility.

I personally agree with you, but I guess it all comes down to how much utility you put in hospitality and being a good host. My girlfriend feels really bad about only being able to offer guests a sofa bed in the living room to sleep on, so do her being able to offer guests a private room with a comfortable bed has a huge utility.

If your income exceeds your expenses you're in good shape. For too many people that involves an endless game of chasing more income when the 'expense' side of the equation can usually be brought under control with less effort and right now, not "sometime in the future after my next promotion/job change".

"The people who generally have their financial shit together don't usually realize when it's pay day."

This. I've lived this way for the past 8 years and it's been a breath of fresh air. To me, this is the definition of "living within your means."

Although I think it's not for anyone. Some people actually enjoy pinching pennies or spending frivolously while watching their bank account constantly in either case. I can't really identify with that, and it would drive me crazy.

Coursera has just announced a class : "Fundamentals of Personal Finance" (https://www.coursera.org/course/financialplanning)

The big problem, at least in the UK is that cost of food and other essentials has gone up by a lot while wages have remained stagnant. This can make even a frugal budget fall apart because at the end of the day you still need to put some food in your face.

It's easy enough to stop buying consumer stuff that you don't need, but you do need some way to entertain yourself and if you want any social or family life at all eventually you're probably going to end up in some pretentious bar with overpriced drinks.

I think one should some hard math on how much food costs vs. some of these other expenses that the article says to start cutting _first_. TV is 100$, which is easily 5 days of food in New York City if you live on a budget. A car is 500$, which is a month worth of food. Even if food prices were to go down, it wouldn't be by 50%.

I agree, don't buy stuff you don't need if you are buying stuff you don't need then stop doing that.

My point is more that this is trumpeted as ground breaking financial advice but actually in many cases you can still have financial problems even if you aren't buying crap you don't need at which point trying to cut expenses gets exponentially harder.

This has been happening for 40 years in the United States.

Here is my own piece of financial advice that I learned from a wise man 20 years ago: You have to double your income in order to improve your standard of living by 10%. Many people get a raise or a new job and they think they are now rich and can spend like crazy. You can't. Double your income and you'll honestly only see a 10% lifestyle change. Don't forget it. Keep saving. Limit spending. And give a percentage of your income back to charity.

While it sounds like a compelling anecdote, it's complete bullshit. If you are just squeaking by at 30k, and you get a raise up to 60k, you suddenly have an extra 30k per year to play with.

That can mean many things - for every year you work, you could theoretically retire one year earlier. You could now afford a car that doesn't cost more in maintenance than gas each year. You could now afford to double your extremely tight grocery budget and spend more money on healthier foods.

"Lifestyle" and "standard of living" are unquantifiable, which is why this is a compelling factoid, but the reality is that, ignoring inflation, a 10% increase in salary is a 10% increase in disposable income.

Now obviously if you have more disposable income than you need, a 10% increase doesn't mean much. If I was pulling down 200k I wouldn't move for 220k if I was happy where I was at, but if I was pulling down 40k I would move for 44k in a heartbeat.

"While it sounds like a compelling anecdote, it's complete bullshit. If you are just squeaking by at 30k, and you get a raise up to 60k, you suddenly have an extra 30k per year to play with."

That is if you live in a tax-free zone :)

You do have to take taxes into consideration if you are in a country with progressive taxation.

I think it might better to think that if your income doubles you should only increase your lifestyle by 10% or so.

You should put as much of the extra income into investment , savings , getting clear of debt etc.

> "Lifestyle" and "standard of living" are unquantifiable

Happiness can be quantified, then there are things like the Human Development Index, Satisfaction With Life Index etc.

Please quantify happiness.

It generally works by asking people how happy they are + statistics to work out causes or correlations. I gather psych people do this kind of thing all the time about seemingly subjective things.

WP on measuring happiness: https://en.wikipedia.org/wiki/Happiness#Measures_of_happines...

More generally: Measures of emotion: A review <http://www.ncbi.nlm.nih.gov/pmc/articles/PMC2756702/>;

Follow what patio11 is saying. But follow what the OP is saying too.

If you are a ordinary working class citizen, you are not likely to make it big unless you save and invest when you are having it good. I've seen a lot of people who didn't save and invest only to be saying later, If at all I had done so...

Saving money cannot increase your income by drastic size. But not saving, can sure decrease it.

That's the whole point.

If you like this, you'll love http://mrmoneymustache.com (no affiliation.)

Please explain why, otherwise it still looks like spam.

It does? MMM has tons of great articles on personal finance - you might disagree with him, but it's not spam.

I've read a few of the MMM articles that have landed on HN before, and I think the original article was very reminiscent of the tone and style of MMM (but without the details and examples that MMM would have included).

I kind of see what you mean, but what more could I have written that wouldn't look like spam desperately trying not to look like spam? I wrote "no affiliation" to indicate it was not spam; since I am the only Robin Message on the internet, and I suspect the whole world, my word is my bond ;-)

I didn't mean spam, as in by bots, per se. What I've meant is, explain why "if you like this, you will love that" - are they similar, talk about the same things, etc... Some context. Otherwise I just have to rely on your word, your subjective opinion, and no arguments. I don't know if what you're saying is true, unless I actually click the link.

Btw, I wasn't commenting on MMM, just on the content of your post. I find MMM quite interesting too (thou I can't really learn much from it).

I'd recommend this too. It's a financial blog by a married 38yo former software engineer. If you're into hacking your finances and living a less consumer driven lifestyle, I'd check it out.

I'm always surprised that more people don't bike to work, if they can do it in a reasonable amount of time and safety.

Laziness. I'm able to commute by bike, on a well-maintained bike path, no less. However, more often than not, I don't do it. Why? Because since I also have a car, I'm more likely to drive when running late (which is basically ALL the time).

This is literally the main reason my wife and I do not own a car. If we need one for a long trip or a holiday, we rent or borrow one.

We have discussed renting a garage a couple of miles from our house if we ever do buy a car though.

I felt enormously liberated after giving up my car.

Two caveats: I live in a city with fantastic public transport. I would not be any faster at work by car, probably slower on most days.

I'm a member of a car sharing cooperative (something like ZipCar, but on a non-profit basis). If I do need a car I have a dozen (literally) at my disposal within 5 minute walking distance.

The range is from a Smart to a Mercedes transporter. And I use this option about 3-4 times a year.

Not owning a car saves me 5-6k (USD) a year. And this includes my yearly public transport pass, car hires and even longer term rental and leaves a few hundred $ for cab rides.

If you can do it it's extremely liberating and leaves a lot of cash on the table for more useful things. Like nice vacations.

On the other hand, owning car enables me to live in a lower cost of living area. Based on some online cost of living calculators, it would cost $15-20,000 more per year to live in a city that provides the amenities that you utilize, which, even with the $5-6,000 you quoted to own a car, is still a net win for me.

Though I definitely see the appeal of not owning a car at all.

I am guessing that most people aren't able to work. Just taking a survey from the people around me, no one lives close enough to work to bike. I also live in Orange County and the Los Angeles area so everything is very spread out.

in many american cities, if you want to have enough living space to raise 2 or more children, your options are to spend several million dollars on housing that is close enough to your downtown office that you can bike to work, or, move to the suburbs.

There's a lot of people who are physically incapable of biking to work -- not because of distance, but because of some combination of {age, injuries, lack of fitness, difficult terrain, luggage}.

It's easy for a fit 20 year old who lives on a flood plain to say that more people should cycle to work. It's not so easy for an overweight 40 year old who needs to drop her kids off at daycare, works at the top of a steep hill, and needs to buy groceries on the way home.

The fact is most people work within biking distance of work, yes there are SOME that can't, but most just plain don't want to. In NYC is is faster to bike then any other mode of transport.

If you are in fact a overweight 40 year old who has kids and luggage needs then what about: http://www.kickstarter.com/projects/faradaybikes/faraday-por... ?

An electric bike for hills, add on a kids seat on the handle bars and on the rear wheel and then put your groceries in the front basket. Solution. Physically incapable?

This bike is on the expensive side at $9.50/day, but compare that to car, gym membership and public transportation cost and you might be breaking even.

Of course this might not work in all locations, but it is a solution for many.

A bike can't offer anything more than a cardio workout for your legs. That's not a substitute for a gym with benches and weights and suspension. And showers, because if you don't break a sweat the ride is even less of a substitute.

"put your groceries in the front basket"

That may work fine for one person who lives alone, but the average front basket will barely fit the toilet paper and milk to last a four-person household a week, never mind the two dozen other things they'll need. And someone with two kids doesn't have time to go shopping every single day just because her transport will only hold a fraction of the groceries they need.

If she bikes to work she might not be overweight for much longer.

I agree though , probably the biggest factor here is managing kids and working everything around their timetable.

I know plenty of people who could bike or use public transport to get to work but like the piece of mind of knowing that if they need to go anywhere they can just jump in the car and go without the planning headaches.

out of the ~25 people who bike to work at my office the youngest person is 35. The majority of the hardcore cyclists are 45-55.

But there is only one person who uses a chariot to drop their toddler off at daycare on the way.

My grandmother lived at the top of a steep hill, and biked to buy groceries until she was 75 or so. There are not many people who are physically incapable of biking, especially if you have a bike with gears then almost all hills shouldn't be a problem; just go slow.

There's actually a good article on this: http://www.mrmoneymustache.com/2011/10/06/the-true-cost-of-c...

Basically, the idea is that for every mile you live closer to work, you can afford another $15,900 worth of house.

It's also interesting when you throw in cycling to work; I used to argue with a friend about going to the gym (which I'm not fond of). I told him I could bike to work (20 minutes) and bike home (20 minutes) for a total of a 40 minute workout during my commute and save myself the extra hour (maybe more) it would cost going to the gym everyday.

Workout at a gym is not really comparable to a bike ride.

Workout at a gym is not really comparable to a bike ride.

You're right; I get a better workout biking home against the wind than I do on the step mill!

It's crazy inconvenient, not particularly pleasant and offers weak health benefits[1]. If someone likes it, great but for most of us getting sweaty right before classes/work (and likely keep sweating while there), not being able to dress properly and not being able to go out afterwards is a deal breaker.

And you can't even ditch the car and all the maintenance costs and efforts that go with it because you will still need it occasionally.

[1] http://medicalxpress.com/news/2012-09-short-intense-health-l...

I'm not sure it's fair to say it offers weak health benefits. The linked article shows how something else (short bursts) offers in some respects substantially more health benefits but nothing to suggest that long bursts (e.g. cycling) aren't still dramatically better than sitting in a car/ on a train.

There's no reason you can't get short , intense bursts of exercise on your commute especially if there are hills in the way or you time yourself and try to get it down.

Years ago I used to do a 40 mile round trip to work by bike with a few good hills on route , so there was a mixture of hard anaerobic effort and lower intensity pedalling. After about 3 months of that I was probably never thinner and fitter.

Regards sweat, this depends on if you can shower at work I guess and also how sweaty you get. If you wear cycling clothing that can absorb a lot of the sweat and then change and spray some deodorant when you get to work you really don't smell all that bad.

This article sounds a lot like minimalism (not design but the one similiar to simple living). There are lots of other people out there with a similiar mindset.

e.g. reddit.com/r/minimalism http://zenhabits.net/start/

I wouldn't forget what day I get paid any more than I would forget what day of the week it is. Being cognizant of the details of your life says nothing of your financial health.

Limiting your expenses also gives you more freedom. You can quit your job, take a lower paying job if it's more inspiring, or just afford to work fewer hours on your day-job.

I found one easy way to save is to think of it like spending. Like, sweet, I just bought $500 in stock, cha-ching.

My wife and I have found this type of investing really fulfilling. Instead of investing in larger but more infrequent chunks, we'll buy stocks 50 or 100 at a time to add to our portfolio.

Since we've started, we've increased our annual allocation to long-term savings 100%. Investing is also a lot more fun.

How is that working out with brokerage fees?

Are there only fees for selling?

Not too bad. For short-term investments the fees would kill us, but since we're looking at longer term (and paying minimal fees) we're in okay shape.

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