Some sensible advice here, but also ignoring all debt is not a good idea. I used to have a similarly black-and-white view, but now I realise that debt is simply another trade-off to be considered.
Remember, your life is precious. Don't live your 20s and 30s as an ascetic just so you can retire to a golf course in your 50s. I spend a lot now (but not beyond my means) because these are some of the best years of my life, and I know that there's a very significant probability (not guaranteed, but large) that my earning potential will continue to increase for the next 10 years at least (I'm 28).
I have made an informed, calculated decision to evolve my spending like this. My utility function is simply that $100 is worth more to me now that it will be when I'm 35. Ergo, borrowing (limited) money can be a net utility positive.
> I spend a lot now (but not beyond my means) because these are some of the best years of my life,
I agree with the second part of the statement, but not with the first one. In my life, there is almost nothing that could be further improved by spending more (or a lot of) money on. Currently, my biggest expenses are rent (allows me to live in London and have a very good job) and food (I buy the best, mainly because I believe that bad food will tax my body in ways that will only become apparent in several decades - but I eat home-cooked food as often as possible, so it's quite cheap). Other than that, I spend very little. I enjoy reading (books are cheap, so is internet), good conversation (again quite cheap, no need to spend 100s in bars), nature (parks are free), dance and sports (climbing, running, bodyweight training, skiing and surfing - the last two are a bit more expensive, but you don't need to buy your equipment if you're not doing it that often). If I lived in a smaller town, I would probably have a used car to travel in the countryside. I'm probably really lucky, but I really don't see the appeal of most of the more expensive stuff/experiences.
If you're not taking 3-5% of your monthly income and just blowing it on something fun (it doesn't have to be material things, trips, fancy dinners, and financially helping friends have the same effect here), you're missing out on life. It's a conscious decision which may not maximize your earnings across your entire life, but I've found that it significantly increases your enjoyment of your entire life.
I like the earning potential argument, and I also consider the useful life of the products I purchase: A canoe bought now has a long lifespan, and provides several years of enjoyment that will be lost if I wait to purchase the same thing. This argument does not work quite as well for something that depreciates, or deteriorates quickly, but paying more for immediate use of something isn't always crazy.
10 years is not a long-term view. Try 50 years. Your ability to make $100 now is must more guaranteed than your ability to make $100 when you're in your 70s. A lot can happen between now and then. You could suffer a debilitating illness or become disabled. Your currently bankable skills may no longer be in demand. If you're 28, chances are you have about 10, maybe 20 years left of barely increasing eating potential, followed by a pretty steep drop-off.
I, for one, don't want to be in my 70s thinking, boy, if I only saved a little when I was younger, I wouldn't be eating dog food right now and choosing between my arthritis medication and rent.
I've noticed that people on the poorer side of the spectrum have made peace with the fact that there are (many) circumstances outside of their control that they are simply unable to address. They don't try by buying the rafts of expensive insurances that middle class people often insist on mostly because they simply can't. Its almost a zen thing.
It costs time and money not just to acquire things, but to hold onto them once you have them as well.
Saving is so much easier than earning, and it’s a habit that once built will pay you back for the rest of your life.
There's a weird cultural meme that's convinced the middle class that the road to wealth is saving. The road to wealth is earning. This is just kind of an obvious thing, but I guess there are benefits to convincing people who will never earn enough to be wealthy that there are attainable ways to go about it. I'll tell you this much, if buying an iPad makes you broke, then not buying that iPad sure ain't gonna' make you rich.
This meme is just kind of annoying as it relates to the middle class, but it's downright dangerous when applied to the poor. It's useless to apply ideals of thrift to people making minimum wage, a level of earning at which no amount of saving can cover even predictable periodic expenses.
Investing $4000/month (which is what I do on a salary barely over $100k while living by myself in a 1 bedroom in the East Village, NYC and going out for every meal) at 3% will get you $1 million in 17 years. That means you'll be a millionaire by the time you're 40 if you start doing this right after graduating college.
3% happens to be the rate that stocks have historically appreciated above inflation, so by doing this you'll be a millionaire in today's money.
EDIT: For the poor, there are many structural problems that lead to a cycle of poverty, but it is possible to escape even that with very good money management. I dated a girl whose parents came to America on a raft, with a fifth-grade education. They slept outside the 7/11 where they worked at first (didn't have to spend any money on rent), and ended up owning a large portion of their town by the time they were in their 50s.
In short, don't knock thrift. Yes, earning more is always great, but savings combined with compound interest is magical.
There are pressures from both the earn and the spend side, but the surest path to misery is living above your means. Dickens had it pretty much nailed with, "Annual income twenty pounds, annual expenditure nineteen pounds nineteen and six, result happiness. Annual income twenty pounds, annual expenditure twenty pounds nought and six, result misery."
That's half the road, which is the OP's point. We all know tons of people who earn a ton of money, but they never get rich or free because they keep ratcheting up their spending.
The road to wealth is spending dramatically less than you make in an ongoing way.
During my 2 year drive from Alaska to Argentina, it took almost the entire trip for me to learn this lesson. At first in Mexico (and Central America in general) I genuinely thought people were just lazy and I would think "Why don't you get a job". The years rolled on, my Spanish improved, and I had many great conversations about this topic.
Finally, a great friend in Argentina explained the situation to me. It's all about debt. In the developed world, when we want something shiny (say, an iPhone), we walk into the shop, sign a piece of paper and are showing it off to our friends 20 minutes later at the bar. It's not a completely conscious thought that we'll be paying it off for the next 24-48 months while we mindlessly go to work everyday.
In the developing or undeveloped world, nobody can get credit, so when you want an iPhone, you have to save up for it and buy it outright. So you get a solid job, and start saving the ~$700 for an iPhone. Who in their right mind is going to continue going to work day in, day out for 6-12 months just to buy an iPhone that will be obsolete in a year anyway?
More realistically, after a week or three, you quit your job, and hang out with your friends & family, having celebrations and generally enjoying your time.
And so it is that "poor" people have so much more time to enjoy their lives, rather than going to work to pay off things they never needed in the first place.
I'm getting tired of all this "live debt free!" nonsense. There's good debt and bad debt, and people like this should learn the difference before giving financial advice.
OK, well look around. Do you know a lot of people (is it possibly even most of the people you know) who have 2 or more car loans, and at least one home loan?
That's the "norm". That's what "everyone" does (everyone who is in a first world country and has a decent job).
Is that somehow "smart debt"? Really? What's so smart about it?
It is smart for whomever loaned that money out ... they get back free money paid consistently over the years. How is it smart, in 90% of the cases, for the borrowers?
Our culture tends not to see this in the same way fish don't see water.
My experience with average folks tells me that "live debt free" is really good advice. I'd wager that most people don't take any consideration of the cost of interest, and thus it'd be super beneficial to just eliminate debt.
It's sorta a UI problem. The simpler, the better for the average person. "Live debt free" is painfully simple and it'd be a great start for most people.
I personally am much more likely to follow anonymous investment advice. Do you have any tips on how I could re-mortgage my house or get some cheap loans to buy gadgets or invest?
There can be totally valid reasons for not getting rid of your mortgage even if you have the opportunity - if you have something better to do with the money. If you are paying 3.5% on your mortgage but you can invest somewhere with a return greater than 3.5% after tax, why would you pay down your mortgage?
Dave Ramsey, who, for lack of a better term, one might describe as a "personal finance turn-around guru and radio personality", poses the question you ask in a different way. I paraphrase: "If you owned your house outright, would you go out and get a mortgage on it so that you could invest in the stock market?".
Financial management is about much more than maximizing returns. It's also about managing risk. For most people who have assets that they will depend on in the future, managing risk grows in importance as they grow in age. Taking on debt (a mortgage) in order to make speculative investments is a high-risk endeavor.
1) It is difficult to take a house away from you if you are worried about "bail-in" type scenarios.
2) Paying off your mortgage is a guaranteed investment (there is no default risk) and so it should be compared with long term investing in very high quality government bonds when looking at rates of return, rather than what you can achieve more broadly.
3) It eliminates any future call risk, where your broader investments tank and it becomes difficult to meet your fixed mortgage obligation without liquidating investments at fire-sale prices.
4) It is perfectly hedged against future housing costs, which you will probably always need.
5) This is controversial, but if you believe, as I do, that a fractionally reserved monetary system is immoral, paying off your mortgage (and all the rest of your debt) is as hard a blow as you can land against it.
There's also the option of spending a bit of that "free" money to live a life worth living instead of spending all of your free money paying something down which only offers benefits to your life later.
You might not be alive later. Don't put everything off until then.
For all the people who are saying "there is good debt and bad debt" and stuff about not paying off your mortgage early: what you say makes mathematical sense, but there is also something to be said for achieving a certain level of simplicity in ones arrangements.
For example, I paid off my student loans before my car and my credit cards, way back when I had my own brush with debt servitude. The student loans were the lowest interest of the bunch, but they were also the smallest by that point. I would have spent less overall by paying off the credit card first, but I was able to pay off the student loan immediately. Eliminating it completely helped me on an emotional level stay engaged in my debt reduction. A mile marker, an "easy win".
Most people don't have the patience or willpower to work their finances in the most optimal way. Borrowing at X percent to invest at X+Y percent makes no sense for people who have difficulty remembering to pay bills on time; the late fees will destroy them. And the solution is not "just pay the bills on time", because that's already supposed to be done.
Better to live life understanding what you're capable of. I freelance because I know I'm not capable of getting into an office at 8am for more than three days in a row (actually, it's any set time), and most employers would prefer you to do it 365 days in a row. We already tried "get me up earlier" and that didn't work. Time for new solutions to the problem.
He tends to scare normal people off with his incredibly aggressive cost reductions. Living on 8k a year is certainly something one can do to retire very early, but you can't have anything close to a 'normal' lifestyle on that.
Money Mustache or Root of Good both have much more palatable levels of self-deprivation for most folks - they emphasize spending carefully, and living within your needs rather than your means.
I run into this all the time as I bootstrap my company. I have a deep temptation to try to do everything myself. And, a lot of times, I will do so. But, I have to keep reminding myself that there's way more value in outsourcing things. I have enough extra capital to do so, so there's no reason not to. But, it's a mental challenge to allow myself to drain the bank account, as I instead feel comfortable spending enormous time tinkering with things on the side. Trying to do all the code myself only takes more time. And time is more than money in this business.
One things I don't see mentioned is the use of a mortgage as kind of a forced savings plan. For a bunch of reasons, it is really hard for people to plan/save for the future. That's why there is thousands of years of parables and social convention exhorting people to save and not be in debt (i.e. if it was easy to do, everyone would do it). Buying a larger-than-strictly-necessary house with a mortgage is a way to start applying current money to a need in the future. By making a mortgage payment, they aren't otherwise spending that money on more frivolous items. In 30 years time they'll at least have something tangible, instead of fleeting memories of vacations. Whether that trade of as an individual is worth it is debatable, but on a societal level, it probably is.
I think there is a similar, more short-term story with IRS refunds. People could have their paycheck deductions arranged so that their "refund" was nothing. But if it comes out "unvoluntarily", then they are excited to get it back in a lump sum, even if this is the mathematically sub-optimal solution.
By the time you pay off the mortgage you will have paid 3-4 times the value of the property because of the interest. So on a $400k house you will have put $1.2mil - $1.6mil into the savings account, but you'll only have a ~$500k property to show for it (IF the house appreciates, which it hopefully does, fingers crossed). That's a seriously inefficient way to save.
"Maybe it is because I don’t allow any advertising at all into my life..."
...How does he manage this? Advertising and marketing have become a major, major, nearly pathological personal issue for me, to such an extent that I sometimes fantasize, on the train on the way to work, for example, about the ability to temporarily turn off my ability to read.
No TV, no radio, a pretty heavy assortment of ad blockers for my browsers and I refuse to visit people that won't switch off their TV when they have guests or I leave if they don't. Yes, that's rude. No, I don't care. If TV is more interesting than real life people then the real life people have the option to go elsewhere.
It's actually not that hard. I very rarely see advertising, and I didn't even make a conscious effort to do it.
I don't have a TV, I don't listen to the radio, I don't read magazines or newspapers, I pay a subscription for all the streaming services I use and I use ad-blockers when browsing the internet.
None of these are conscious choices to avoid advertisements - I would do all of them even if they didn't have that pleasant side effect.
The only time I see advertisements is when I take public transport - the underground in London is full of them, but they're pretty easy to tune out.
I'm tired of seeing "people who are in debt waste their money" or "people who are in debt live beyond their means" as the default explanation for indebtedness.
I'm in debt. I have debt for a car, furniture, and medical expenses. (despite the fact that most of my furniture was acquired for little cost, and insurance covers most of my medical expenses) I also have a new MacBook Pro (I'm a developer), much to the chagrin of my baby boomer parents, who also think I should drink less Starbucks coffee. There's not a lot of understanding amongst the older generation that rent is high, food is expensive, and that's where most of the money goes, which makes it hard to pay off the debts. Starbucks represents about 1% of my income, the MacBook will be under 2% of my income over the 3 years I'll probably have it, and I'll make back probably 40% of that when I sell it.
One thing I heard once that has stuck with me: When you earn a dollar, you pay 30-40% tax on it, but when you save a dollar, you keep the whole thing. It pays to push on both the revenue side and the expense side, but one pro of putting effort into expenses is you keep 100% of the reward.
A lot of talk about mortgages here. I think as long as you do the math and let that guide your decisions, you'll come out ahead.
Take this year, for example. I happen to have a mortgage that I could pay off completely later this year without penalties. I've been saving to do just that, and parking the balance in the market until the day comes to pull the trigger. But what's this? I'm up 11.6% on the year thus far. It's hard to come up with an argument for not letting it ride a few more months and watching to see what happens.
Granted, there's always risk in the market, and using the fund today would net me a cool 4% risk free. But still...
Paying down a mortgage is probably the safest, guaranteed bet. Not everyone can get lucky on stocks or bear the risk of being unlucky. If there was an available investment opportunity with a higher risk-adjusted rate of return than my mortgage interest rate, I wouldn't want to pay down my mortgage either.
If I got all the money back I lost gambling on index funds and other "low risk" investments, I'd probably be able to pay mine off today.
It's my understanding that institutional money has been leaving the stock market while less sophisticated investors have been moving their money into the market (on average). If I were you, I'd be afraid of being the last one standing when the music stops, but then again, I have a history of being overly conservative (to my detriment).
Edited to add: If you aren't aware of what's happening with quantitative easing winding down, then do yourself a favor and read up on it.
Take a look at the historical returns of the stock market. Using the S&P 500 as an index, if you did the same in 2007 riding through 2008 you would have lost 37% of your money.
You could very well continue to ride the wave up, but there is a non-zero risk that it all comes crashing back down again, and that needs to be considered in your equation.
Humanity is driven by sexual pressure, and a big factor in that is social status.
Most of the time people don't make purchases with their neocortex, but rather with their "reptilian", so analysis about their lives are out of the question.
"Annual income twenty pounds, annual expenditure nineteen pounds nineteen shillings and six pence, result happiness. Annual income twenty pounds, annual expenditure twenty pounds and six pence, result misery." Charles Dickens, in "David Copperfield", published in 1850.
The notion of living within your means is not a new one. It's something that ought to be taught all the way through school. It's that important.
If you pay off mortgage you need some plan for the extra money every month. If you save and invest it that is one thing, but if you just spend more freely (waste it), you are not better off. Economically, the best way is to not buy too much house, and invest all extra money into equities (index funds) over 20-30 years. If there is no extra money to invest, then you have bought too much house.
This is the best advice I've seen in this thread. A great thing about having a mortgage for many people is the forced savings of paying down the principal, but you want to maximize that virtue of home ownership by not over-buying - which brings with it proportionally higher taxes, utility costs, maintenance costs. Buy the smallest cheapest house that doesn't suck, and make sure you have auto-invest transfers to a brokerage account set up to get that excess out of your grubby paws. Mostly you'll just spend it on crap. If you do want something important (e.g. a car), you can buy it cash, but it's painful to pull a big chunk money out. That's what you want.
> someone explained to me in a very serious tone of voice that getting rid of your mortgage is stupid because it is a deductible, better to wait with paying it off when you sell the house in 25 years
All else being equal, if you can deduct that from your taxes and spend the money on something else - like, say, index funds - you're going to be better off financially, no?
Well you also have to pay taxes on your gains, and there is risk involved. You could lose all of the money you put into index funds, you will not lose any money you spend on paying off your mortgage early.
[+] [-] NickPollard|11 years ago|reply
Remember, your life is precious. Don't live your 20s and 30s as an ascetic just so you can retire to a golf course in your 50s. I spend a lot now (but not beyond my means) because these are some of the best years of my life, and I know that there's a very significant probability (not guaranteed, but large) that my earning potential will continue to increase for the next 10 years at least (I'm 28).
I have made an informed, calculated decision to evolve my spending like this. My utility function is simply that $100 is worth more to me now that it will be when I'm 35. Ergo, borrowing (limited) money can be a net utility positive.
[+] [-] tomp|11 years ago|reply
I agree with the second part of the statement, but not with the first one. In my life, there is almost nothing that could be further improved by spending more (or a lot of) money on. Currently, my biggest expenses are rent (allows me to live in London and have a very good job) and food (I buy the best, mainly because I believe that bad food will tax my body in ways that will only become apparent in several decades - but I eat home-cooked food as often as possible, so it's quite cheap). Other than that, I spend very little. I enjoy reading (books are cheap, so is internet), good conversation (again quite cheap, no need to spend 100s in bars), nature (parks are free), dance and sports (climbing, running, bodyweight training, skiing and surfing - the last two are a bit more expensive, but you don't need to buy your equipment if you're not doing it that often). If I lived in a smaller town, I would probably have a used car to travel in the countryside. I'm probably really lucky, but I really don't see the appeal of most of the more expensive stuff/experiences.
[+] [-] falcolas|11 years ago|reply
If you're not taking 3-5% of your monthly income and just blowing it on something fun (it doesn't have to be material things, trips, fancy dinners, and financially helping friends have the same effect here), you're missing out on life. It's a conscious decision which may not maximize your earnings across your entire life, but I've found that it significantly increases your enjoyment of your entire life.
[+] [-] chrisBob|11 years ago|reply
[+] [-] ryandrake|11 years ago|reply
I, for one, don't want to be in my 70s thinking, boy, if I only saved a little when I was younger, I wouldn't be eating dog food right now and choosing between my arthritis medication and rent.
[+] [-] noonespecial|11 years ago|reply
It costs time and money not just to acquire things, but to hold onto them once you have them as well.
[+] [-] artmageddon|11 years ago|reply
Could you explain more on what you're referring to when you say insurances?
[+] [-] dionidium|11 years ago|reply
There's a weird cultural meme that's convinced the middle class that the road to wealth is saving. The road to wealth is earning. This is just kind of an obvious thing, but I guess there are benefits to convincing people who will never earn enough to be wealthy that there are attainable ways to go about it. I'll tell you this much, if buying an iPad makes you broke, then not buying that iPad sure ain't gonna' make you rich.
This meme is just kind of annoying as it relates to the middle class, but it's downright dangerous when applied to the poor. It's useless to apply ideals of thrift to people making minimum wage, a level of earning at which no amount of saving can cover even predictable periodic expenses.
[+] [-] dimva|11 years ago|reply
3% happens to be the rate that stocks have historically appreciated above inflation, so by doing this you'll be a millionaire in today's money.
Don't believe me? Try it: http://www.bankrate.com/calculators/savings/simple-savings-c...
EDIT: For the poor, there are many structural problems that lead to a cycle of poverty, but it is possible to escape even that with very good money management. I dated a girl whose parents came to America on a raft, with a fifth-grade education. They slept outside the 7/11 where they worked at first (didn't have to spend any money on rent), and ended up owning a large portion of their town by the time they were in their 50s.
In short, don't knock thrift. Yes, earning more is always great, but savings combined with compound interest is magical.
[+] [-] bradshaw1965|11 years ago|reply
[+] [-] webwright|11 years ago|reply
That's half the road, which is the OP's point. We all know tons of people who earn a ton of money, but they never get rich or free because they keep ratcheting up their spending.
The road to wealth is spending dramatically less than you make in an ongoing way.
[+] [-] grecy|11 years ago|reply
Finally, a great friend in Argentina explained the situation to me. It's all about debt. In the developed world, when we want something shiny (say, an iPhone), we walk into the shop, sign a piece of paper and are showing it off to our friends 20 minutes later at the bar. It's not a completely conscious thought that we'll be paying it off for the next 24-48 months while we mindlessly go to work everyday.
In the developing or undeveloped world, nobody can get credit, so when you want an iPhone, you have to save up for it and buy it outright. So you get a solid job, and start saving the ~$700 for an iPhone. Who in their right mind is going to continue going to work day in, day out for 6-12 months just to buy an iPhone that will be obsolete in a year anyway?
More realistically, after a week or three, you quit your job, and hang out with your friends & family, having celebrations and generally enjoying your time.
And so it is that "poor" people have so much more time to enjoy their lives, rather than going to work to pay off things they never needed in the first place.
[+] [-] lingoberry|11 years ago|reply
[+] [-] DontBeADick|11 years ago|reply
[+] [-] charlieflowers|11 years ago|reply
That's the "norm". That's what "everyone" does (everyone who is in a first world country and has a decent job).
Is that somehow "smart debt"? Really? What's so smart about it?
It is smart for whomever loaned that money out ... they get back free money paid consistently over the years. How is it smart, in 90% of the cases, for the borrowers?
Our culture tends not to see this in the same way fish don't see water.
[+] [-] andy_adams|11 years ago|reply
It's sorta a UI problem. The simpler, the better for the average person. "Live debt free" is painfully simple and it'd be a great start for most people.
[+] [-] nilkn|11 years ago|reply
[+] [-] jacquesm|11 years ago|reply
Hint: don't be a dick.
[+] [-] throwaway283719|11 years ago|reply
[+] [-] brightsize|11 years ago|reply
Financial management is about much more than maximizing returns. It's also about managing risk. For most people who have assets that they will depend on in the future, managing risk grows in importance as they grow in age. Taking on debt (a mortgage) in order to make speculative investments is a high-risk endeavor.
[+] [-] carsongross|11 years ago|reply
1) It is difficult to take a house away from you if you are worried about "bail-in" type scenarios.
2) Paying off your mortgage is a guaranteed investment (there is no default risk) and so it should be compared with long term investing in very high quality government bonds when looking at rates of return, rather than what you can achieve more broadly.
3) It eliminates any future call risk, where your broader investments tank and it becomes difficult to meet your fixed mortgage obligation without liquidating investments at fire-sale prices.
4) It is perfectly hedged against future housing costs, which you will probably always need.
5) This is controversial, but if you believe, as I do, that a fractionally reserved monetary system is immoral, paying off your mortgage (and all the rest of your debt) is as hard a blow as you can land against it.
[+] [-] falcolas|11 years ago|reply
You might not be alive later. Don't put everything off until then.
[+] [-] epx|11 years ago|reply
[+] [-] moron4hire|11 years ago|reply
For example, I paid off my student loans before my car and my credit cards, way back when I had my own brush with debt servitude. The student loans were the lowest interest of the bunch, but they were also the smallest by that point. I would have spent less overall by paying off the credit card first, but I was able to pay off the student loan immediately. Eliminating it completely helped me on an emotional level stay engaged in my debt reduction. A mile marker, an "easy win".
Most people don't have the patience or willpower to work their finances in the most optimal way. Borrowing at X percent to invest at X+Y percent makes no sense for people who have difficulty remembering to pay bills on time; the late fees will destroy them. And the solution is not "just pay the bills on time", because that's already supposed to be done.
Better to live life understanding what you're capable of. I freelance because I know I'm not capable of getting into an office at 8am for more than three days in a row (actually, it's any set time), and most employers would prefer you to do it 365 days in a row. We already tried "get me up earlier" and that didn't work. Time for new solutions to the problem.
[+] [-] gregorycarter|11 years ago|reply
http://earlyretirementextreme.com/
Very similar philosophy.
[+] [-] christiangenco|11 years ago|reply
He's a software engineer from Canada that never made more than $140 between him and his wife, and they happily retired when he was 30.
[+] [-] nevinera|11 years ago|reply
Money Mustache or Root of Good both have much more palatable levels of self-deprivation for most folks - they emphasize spending carefully, and living within your needs rather than your means.
[+] [-] ap22213|11 years ago|reply
[+] [-] wirefloss|11 years ago|reply
http://www.forumromanum.org/literature/seneca_younger/brev_e...
[+] [-] xrange|11 years ago|reply
I think there is a similar, more short-term story with IRS refunds. People could have their paycheck deductions arranged so that their "refund" was nothing. But if it comes out "unvoluntarily", then they are excited to get it back in a lump sum, even if this is the mathematically sub-optimal solution.
[+] [-] grecy|11 years ago|reply
[+] [-] gglitch|11 years ago|reply
[+] [-] jacquesm|11 years ago|reply
[+] [-] throwaway283719|11 years ago|reply
I don't have a TV, I don't listen to the radio, I don't read magazines or newspapers, I pay a subscription for all the streaming services I use and I use ad-blockers when browsing the internet.
None of these are conscious choices to avoid advertisements - I would do all of them even if they didn't have that pleasant side effect.
The only time I see advertisements is when I take public transport - the underground in London is full of them, but they're pretty easy to tune out.
[+] [-] jahewson|11 years ago|reply
I'm in debt. I have debt for a car, furniture, and medical expenses. (despite the fact that most of my furniture was acquired for little cost, and insurance covers most of my medical expenses) I also have a new MacBook Pro (I'm a developer), much to the chagrin of my baby boomer parents, who also think I should drink less Starbucks coffee. There's not a lot of understanding amongst the older generation that rent is high, food is expensive, and that's where most of the money goes, which makes it hard to pay off the debts. Starbucks represents about 1% of my income, the MacBook will be under 2% of my income over the 3 years I'll probably have it, and I'll make back probably 40% of that when I sell it.
[+] [-] JoeAltmaier|11 years ago|reply
[+] [-] unknown|11 years ago|reply
[deleted]
[+] [-] pjungwir|11 years ago|reply
[+] [-] jasonkester|11 years ago|reply
Take this year, for example. I happen to have a mortgage that I could pay off completely later this year without penalties. I've been saving to do just that, and parking the balance in the market until the day comes to pull the trigger. But what's this? I'm up 11.6% on the year thus far. It's hard to come up with an argument for not letting it ride a few more months and watching to see what happens.
Granted, there's always risk in the market, and using the fund today would net me a cool 4% risk free. But still...
[+] [-] ryandrake|11 years ago|reply
If I got all the money back I lost gambling on index funds and other "low risk" investments, I'd probably be able to pay mine off today.
EDIT: guaranteed -> risk-adjusted
[+] [-] BadCookie|11 years ago|reply
Edited to add: If you aren't aware of what's happening with quantitative easing winding down, then do yourself a favor and read up on it.
[+] [-] gtCameron|11 years ago|reply
You could very well continue to ride the wave up, but there is a non-zero risk that it all comes crashing back down again, and that needs to be considered in your equation.
[+] [-] ekr|11 years ago|reply
Oh really, you don't? Then you should do some reading on signaling[http://wiki.lesswrong.com/wiki/Signaling] and evolutionary psychology.
Humanity is driven by sexual pressure, and a big factor in that is social status. Most of the time people don't make purchases with their neocortex, but rather with their "reptilian", so analysis about their lives are out of the question.
[+] [-] onion2k|11 years ago|reply
The notion of living within your means is not a new one. It's something that ought to be taught all the way through school. It's that important.
[+] [-] mmmbeer|11 years ago|reply
[+] [-] markc|11 years ago|reply
[+] [-] davidw|11 years ago|reply
All else being equal, if you can deduct that from your taxes and spend the money on something else - like, say, index funds - you're going to be better off financially, no?
[+] [-] jacquesm|11 years ago|reply
[+] [-] gnopgnip|11 years ago|reply