Ok. This might be sensitive topic for many of us as we all think we are worth it. Please don’t consider this as lecturing as I am same guilty of many excesses in the past and even now when I am FIRE. All I want is to raise awareness of certain mental processes which lead people to overspend on most of the things and that follows to them being locked to money earning activities like on hamster wheel.
Cars
Let’s start with large spending item. Cars. Why do we need NEW and LUXURY vehicle? “Because we are worth it.” No just kidding. Do you realise how many years extra you have to work just to be able to afford it? Rotating new cars every 3 years wipes off around 40% of car value each time. Car depreciation slows down after 3 years so in my view 4-6 years old car with low or highway kms can become good value as opposed to the new car. Second value destroyer is buying bigger car than we need. That Audi Q7 drives and looks well but boy it costs. Most of luxury large vehicles depreciate fast so if you think you have bought an asset, you might change your mind 3 years later when the dealer might offer you 40% of the original paid price to buy the car back.
If you just make research you should be able to buy 4 years old Japanese or Korean car, in most of the sizes desired, which drives well, depreciates slowly, is safe and reliable. Yes mostly it will not be for “showing off” but if you want that, you might have to pay for it with unnecessary retirement postponement. As long as you are aware of the price.
My car lifestyle inflation
I will say that I am guilty as charged as my cars were all used – $2000 Suzuki Swift, second and third $15000 Toyota Corolla and Mazda 3 and currently I have $25000 Mazda CX9. You can clearly see the spending creeping up. As my defense I have now twin boys and we need extra space. I could have saved about $10k buying something which would work too without leather and 7 seats. You know, all of us sometimes battle lifestyle inflation and nobody is always winning.
Housing
House. I am trying to be good here. I have always bought cheaper property than I could afford. In the apartments we have let out rooms, in the city house lower level and now in the country we letting out second house on our property. This made my house spending quite reasonable and I consider it a major hack which got us towards FIRE. But I do know few people in Sydney buying houses for over $1.5m while on salaries of $80k. Should they have done it in my view? No way. They have blown potentially decades of possible earlier retirement. Well, when “you are worth it”?!
Furniture
How about furnishing these expensive houses. I am now 45 and still big fan of Ebay and Gumtree where you can buy good used stuff for fraction of costs as new. Main benefits outside getting you towards or keeping you in FIRE is that you don’t have to worry about it as it didn’t cost too much. With twin toddlers writing on and throwing everything I am quite grateful for that. Another benefit is that you can keep that product from getting to the tip and damaging environment. One more benefit is that even less environment will get damaged by not mining materials and not manufacturing new product which you don’t need to buy. Reuse, repair, reclaim me thinks.
So yes. We have heaps of second hand stuff in our house. Vast majority of the furniture and even al TVs were purchased used. We do buy new usually kitchen products, (not fridges though as used ones are just fine), mobile phones and laptops (these had often hard life and used ones are often “iffy” from my experience). I met many people who though not rich at all think that to buy used product is like losing the face. Luckily I don’t have this problem as it would cost me hundreds of thousands of dollars which instead becoming consumer waste can go to the investments to produce income and growth for our family.
Everyone has choices what to do with their resources and our choice is not to waste it. Of course that there is a limit to it and we do have with the wife sometimes small quarrel like if we should keep our old (second hand) dishes, or replace with the new ones. I am at this case normally the stingy one but at the same way I usually give in, especially when seeing that the better looking half of the family has a point.
Where to dress?
Clothes? I do understand that some well heeled ones can blow couple of hundred bucks on nicely printed t-shirt or thousands on dress with some tiny designer logo on it. But it is beyond me why some people on average or even basic salaries would spend their daily wage on t-shirt or weekly wage on shoes. And yes I know some and there are many mostly women blowing their monthly pay on a handbag! The only thing I understand there is that the Marketing budgets employed by these luxury brands have done great job in persuading some of the people on basic salaries that they are almost in top 1%. By the way what handbag should then buy multi-millionaire if many low wage occupations employees are sporting $3000 bags. I know. Most of them could not be bothered to pay more than couple of hundred bucks anyway.
Some southern European men are famous that they are one of the best dressed men in the world. They also are well above average represented among 35 year olds who still live at home. There will be some connection highly likely I think. K-mart is just fine for me. I will rather blow some extra cash on gym.
Time away
Holidays? I spend big here too. But… $500 a night 4 stars hotel in Paris? Business class to Tokyo? You must be smoking something. Always cattle class (as long as I am paying for it) and well reviewed 3 star hotel in reasonable location or AirBnB will do. And again it looks like many ordinary workers are blowing similar amounts of money on their holidays in unnecessary expenses. Like $400 dinner for 2 because it is only this time. Unfortunately “only this time” happens so many times in their lives that they might need to get payment plans for their power bill but still spend big.
As I am getting older I realise that money is just small part of the life. But the freedom it can buy you is incredible. F-you money stash allowing you to do whatever you wish will always beat any experience of the night in 7 star hotel in Dubai or helicopter skiing in New Zealand in my mind. As they say time is money. And all of us, we don’t have unlimited time and should not be blowing it on things which are not worth it to us. Choose wisely according to what you want the most.
