Never, never, never give up. –Winston Churchill
I don’t want to change the world, and I don’t want the world to change me. -Ozzy Osbourne
One of my friends is months away from graduating with an advanced degree. She’ll be starting out making somewhere around $70,000 per year and has almost no debt. What a great situation! Recently, she asked me for financial advice. I almost jumped out of my socks with excitement! I love talking about personal finance.
The discussion lasted about half an hour. I explained to her how important it was to start saving early. We talked about compound interest and the rule of 72. I told her not to mess around chasing risky stuff; stick to index funds. I told her my dreams of early retirement and showed her how it was possible. I told her to make her way over to Mr. Money Mustache and read every post there. She seemed receptive to everything, but then the conversation took a turn for the worst:
- Friend: I like everything you’re saying, but I want a new car.
- Me: Well, your car is almost new; how many miles are on it and isn’t it paid off?
- Friend: It only has 30,000 miles on it and yes, it’s paid for.
- Me: What’s wrong with it then?
- Friend: Nothing! I actually love it, but I want the hatchback version. It will allow me to carry more stuff around.
<At this point, smoke is starting to come out of my ears.>
- Me. At your age, this would set you back years. Your car has lost over half of it’s value to depreciation. You’re going to take on years of payments that you could have been investing; just because you want a different version of the same car! Also, you still have some student debt to pay off and don’t you want to buy a house some day?
- Friend: But… I just want it!
I’m a calm, introspective person, but at this point, I wanted to run outside and yell vulgar profanities at the top of my lungs while pounding my fists on the ground! In fact, Clark Grizwold pretty much sums up my state of mind here (fast forward to 1:40):
Now, I don’t think my friend is a “sack of monkey sh**,” but I do question some of her decisions. This got me thinking; why don’t people act in a frugal manner? I am no psychologist or money manager, but here are some causes that I came up with:
- Spoiled life growing up: This is part of the problem with my friend. Her parents bought her the car, pay for the insurance and always gave her money. She went on lavish trips while in college, most financed by mom and dad. She doesn’t know what it’s like to really work for money and doesn’t appreciate it. I am frugal because I had none of that. I ate crap food during my college years because I could afford nothing else. Growing up, my dad was out of work consistently. We didn’t have a lot of money and life was miserable at times. At a young age, I vowed never to be like them* in this respect and I am not. I tend to cling to money because I never want to suffer again.
- Long term thinking is difficult: Humans aren’t wired to think long term. Think about it. 100 years ago, we were lucky see 35. Retirement didn’t matter because we’d work the duration of our short lives. Long life spans are relatively new and are still only commonplace in first world countries.
- Peer pressure: If you run around with a group that spends $150 at the bars every weekend, likes to hang out at the malls and drive fancy cars, you’re much more likely to get sucked into their consumer traps as well.
- No financial education: Some folks just don’t know any better. More on this next Tuesday.
All of this got me thinking about what this blog is really about. Part of it is my mission to retire a bit early. More than that though, I want to show people different ways to think about money and how the frugal life is more fulfilling than a consumer one.
In person, I try not to be overbearing. People don’t like to be lectured to. I’d rather lay out some facts or give them a good book and hope that they see the light for themselves and take action. Gentle nudges here and there and lots of advice should they ask. So, the Ozzy quote at the beginning of this post isn’t totally accurate, I would like to give the world gentle pushes in a better direction.
It sure isn’t easy though. Sometimes, I think I’m the Don Quixote of bloggers; getting my butt kicked by big spending windmills. However, I’m never going to give up!
*I had friends who came from similar situations where the family was financially disfunctional. Surprisingly, most of them went on to repeat the errors of their parents. This shocks me. Perhaps the lack of long term thinking goes in reverse too?
Join the 10s who have signed up already!
Subscribing will improve your life in incredible ways*.
*Only if your life is pretty bad to begin with.