Spending code part II

 

Think 2, 3, or 4 times before buying anything.

I do have to spend money to live but I do not have to live to spend it.

If I buy it how much effort will be needed to maintain it?

On rare occasions it is ok to be frivolous and really enjoy it (and I mean REALLY enjoy it).

Stealth is more rewarding than outward lavishness.

I am much happier with a few really nice things than a lot of so so things.

I am happiest when my spending is leads to shared experiences with friends and family. 

As I said in my last post this is my intrinsic code for spending money.  I categorized it as intrinsic because I never used it as a formal process for spending.  It is entirely based on my recollections of past purchases and how I emotionally dealt with the purchase.  As I mentioned in my previous post the two main factors that affect my spending is my inherent reluctance to spend money and my parents teaching me wants from needs.

As I was pondering this topic over the holidays I realized that this was unconventional in that it addressed spending and not saving.  Many personal financial advisors emphasize the tactic of paying yourself first.  Basically a save first spend second model.  I admit that I always felt that I used that approach.  After all it seemed to be the smart thing to do.  I've realized that even though I have a natural aversion to spending I still approach personal finance from a spend first mentality.  I just happen to be fortunate to dislike spending.  I am not sure that I dislike spending I think it is more that I dislike being thoughtless with money.

The best way to explain this is an event that happened 9 years ago.  I decided to surprise my wife with a pre Christmas trip to Las Vegas.  We had the time booked off work for something and it fell through.  So long story short I set aside some money to to play Black Jack.  It is about the only game that I understand.  I set aside some funds knowing full well that I was going to lose it.  I am fully aware that the only way to break even when it comes to games of chance is not to play.  I sat down at the table with the lowest stakes and began to play.  I could not have had a better time with that money.  The other players and the dealer were extremely kind explaining the more subtle strategies of the game.  Free beer while playing was an added bonus.  I won, I lost but I was having a great time.  Then suddenly some sat down at the table and plopped several $100 bills on the table.  When those bills hit the table the fun was over for me.  I was not comfortable seeing that amount of money carelessly thrown around.  It just freaked me out.  It was as if someone had thrown a bunch of rattle snakes on the table.  The new player was a complete stranger to me, for all I knew the person could have been multi, multi millionaire.  The money they threw down could have meant nothing to them.  However it did affect me.

In the end I have concluded that any personal financial success on my part has been mostly dumb luck.  Lucky in that even though I have concluded that my financial mentality is spend first and save second I dislike spending so much that I naturally save money.  Lets go over the spending code.

Think 2, 3, or 4 times before buying anything.

This mostly applies to wants and not needs.  Affordability is the major element within the thought process.  Other information is important as well.  Do I already have something that serves my wants?  For example replacing a computer.  Does my current one still meet my needs, or could my current computer be upgraded to meet my desires.  Can I maintain what ever I buy?  I like bicycles.  Some I maintain myself, more upscale bikes I usually have the bike shop maintain.  Maintaining the bike will cost money.  Probably the biggest thought is whether or not the item purchased is worth the effort to buy, use, store and maintain.  With all these thoughts it is amazing that I buy anything.  I think this is one of the fundamental advantages of Amazon.  They have definitely made the buying, shipping and receiving extremely easy.  Basically you can browse, order, pay and have the item shipped to you without getting up from your chair.

I do have to spend money to live but I do not have to live to spend it.

After much thought I have concluded that this is the most fundamental element of my spending code.  It encompasses the best advice my parents taught me, the difference between a need and a want.  Yes essentials need to be addressed.  We all need food and shelter to survive.  It is also nice to have enough money to purchase nice "wants".  However these "wants" are not going to maintain a happy and fulfilling life.  I have been reading lately about the Hedonic Treadmill.  One part of this theory is that people experience a temporary period of increased happiness after a positive event.  This happiness wanes and the person is back to a base level of happiness.  A subsequent event will again increase happiness for a brief period then regress back to the base level.  This cycle will continue as long as the person continues to experience these events (i.e. purchasing items), hence the term treadmill.  I would rather raise my baseline level of happiness than be stuck on a treadmill.

If I buy it how much effort will be needed to maintain it?

Dumping this one.  It is addressed in the first item.

On rare occasions it is ok to be frivolous and really enjoy it (and I mean REALLY enjoy it).

Frivolous may not be the best term here.  Also the word rare should be removed.  Better wording would be:

It is good to spend money and really enjoy it (and I mean REALLY enjoy it).

This clearly addresses the wants in my life.  This is represented by the trips I have taken with my wife.  We seem to go on a really nice vacation about every 5 years.  Not to bore you with the details but when we go we really enjoy ourselves.  Nice meals, comfortable hotel rooms, wonderful tours are some of the experiences.  I think one of the ways you can avoid the Hedonic Treadmill is to be wholly grateful for these experiences.  Doing these trips every 5 years or so allows for reflection and and for the memories to foster a sense of gratitude. On one of our first trips after moving to Texas I began to write letters to my mom each day.  I mailed each days letter every day.  I have continued this practice to this day.  Writing allows me to reflect and appreciate more fully each days memories.  This furthers my sense of gratitude.  I have actually expanded this practice to journaling my trips.  In fact I have already ordered my journal for this summers trip.

Stealth is more rewarding than outward lavishness.

This has a singular purpose.  I am much more at peace with what I have rather than wasting time and effort impressing others.  I just do not have the patience to worry about what others think about my car, clothes and possessions.

 I am much happier with a few really nice things than a lot of so so things.

I think I will drop this one too.  It is no different than "the good to spend money and enjoy it" item.

I am happiest when my spending is leads to shared experiences with friends and family. 

I might be inclined to drop this since it seems to be covered in most of the other items.  For that reason I am keeping it.  It sums up all the items.  I live for experiences not to acquire things.  Being able to share with friends and family increases our gratitude through shared memories and events.  No outsider can measure the depth of a quiet conversation between friends.

Mikes revised spending code:

I do have to spend money to live but I do not have to live to spend it.

Think 2, 3, or 4 times before buying anything.

It is good to spend money and really enjoy it (and I mean REALLY enjoy it).

Stealth is more rewarding than outward lavishness.

I am happiest when my spending is leads to shared experiences with friends and family.

I came across the Hedonic Treadmill In Dan Ariely's book "The Upside of Irrationality"