The Joy of a Bare Bones Budget

the joy of a bare bones budget

Photo by Matheus Bertelli on Pexels.com

My friends still talk about the buffet to this day – raw oysters, fresh shrimp, smoked salmon, caviar, fresh carved prime rib. And all sorts of other foods that were delicious (and expensive). Beautiful ambiance.  It was cheaper than what we thought they could charge, but it wasn’t so cheap that we suspected something.

And it was all a bit too much.

When Being Cool Has a Downside

I have this same feeling whenever I do something obviously cool. Like getting free NFL or NHL tickets. Seeing an awesome concert. Going on vacation. Even traveling at all. I used to take the bus to New York, but now I only take the train (economy class). Once, my ex used his points to upgrade us to first class on the Acela and I thought, wow, this is WAY TOO NICE. In the timeless words of Wayne’s World: we are not worthy.

When the experience is way more luxurious than I am used to, I wonder if I’m deserving. I also start to wonder, am I really enjoying this as much as I should? And the weird thing is you feel a little guilty. Like here’s this amazing experience and you don’t know if you’re getting enough out of it. That guilt takes away part of the joy.

I imagine it’s the same if you had a perfect life. If you have the great job, the perfect spouse, adorable children, and beautiful house. I think you’d look around and think, ok this is as good as it gets. Am I enjoying it enough? Am I even happy? And then your perfect life is a little bit less perfect.

The Joy of Being Lame

I grew up in a middle class family of five on the East Coast. That meant that we couldn’t fly somewhere cool every summer. That meant we had some pretty boring vacations, because we would go to where we could drive. I mean Kitty Hawk, NC, Pigeon Forge, TN, Dayton, OH. Yep, we went to Dayton, Ohio on vacation and we don’t have any relatives there. My parents thought it would be nice to visit. (We also drove by Gary, Indiana, but we didn’t stick around.)

There’s nothing wrong with these places. (I grew up in a small town in New Jersey – I don’t judge). But they’re nothing to brag about.

I never disliked these vacations though. In fact, I look back at them fondly. Because the experience is so uncool, it takes the pressure off. Your expectations are so low that even when you’re mildly amused, it’s like a jet rocket of happiness. And if you’re disappointed, that’s ok too. When your circumstances are less than perfect, you are finally free to feel however you are meant to feel. You can complain a little sure. You can make fun of yourself and your ridiculous family vacations to Pigeon Forge.

You can also enjoy it.

And the best part of enjoying the weird, bizarre-o vacations is that you know that if you can enjoy yourself in the simplest of situations, you can enjoy yourself anywhere. The awesome place or the exhilirating situation becomes less a focus. You can focus on yourself or on family or friends. You don’t have the pressure to be having the best Instagrammable life ever. It’s nice to realize that your life is too lame to be on social media. Then your life becomes private and precious.

The Joy of a Bare Bones Budget

I like to practice this idea of, well I guess I could call it “being lame,” but also having a “bare bones” lifestyle. I don’t have a problem with lifestyle inflation – I spend roughly on par with my lifestyle from 13 years ago, when I made a fifth of what I do now. But even so, sometimes it still all seems excessive. Sometimes I still wonder if I’m enjoying this enough. I realize all the blessings I have – good food and drink, nice vacations – and I want to ensure that I can still be grateful without any of these things.

The beauty of a bare bones budget is that you don’t have to pretend that everything is great. You can live a not-so-great lifestyle, and somehow it’s still amazing and wonderful. Because you’re alive and you’re appreciative and you realize that all the luxuries and excess are fun – but they’re not what your life is about.

What this means is that sometimes I’ll have beans and rice (but if you season it well, it’s delicious). I’ll have ramen (actually I love ramen, so this is more of a treat). Wander around my city on a staycation. Spend the day organizing my apartment. Attend free events around my area (super easy to do in DC). I’ll use what I have. If you can derive joy and a feeling of wealth from free lame things, that’s real joy. And that’s real savings.

Conclusion

It’s fitting that I’m posting this at the end of Ramadan. I think the tradition of fasting for a month is so beautiful – as a reminder of those who do without. The joy of a bare bones budget is that you realize that you can appreciate what you have. The joy comes from knowing that you wouldn’t be any happier with more. The joy is that you can be happy with less. And the best part is that you know you have the freedom to choose if you’re happy or not – and you choose yes.

The Expert Budgeting Advice I Don’t Follow

The 50-20-30 budget is a cornerstone rule-of-thumb according to personal finance budgeting experts. In it, you spend 50% on needs, 20% on savings and debt reduction and 30% on “wants.”  This may be sacrilege but this seems like a terrible plan for your budget.

Frittering money away on a budget

Consider the following hypothetical 10-year spending of a 23-year old who makes approximately $30,000/year post-tax and who follows this budget.
Age Posttax $ Annual wants Monthly Wants
23 30,000 9,000 750
24 31,200 9,360 780
25 32,448 9,734 811
26 33,746 10,124 844
27 35,096 10,529 877
28 36,500 10,950 912
29 37,960 11,388 949
30 39,478 11,843 987
31 41,057 12,317 1,026
32 42,699 12,810 1,067
 Total $108,055

Starting with a modest entry-level salary and modest raises, this person has spent $108,055 over just 10 years on indeterminate “wants.” Over a 40 year career, this number could be half a million or more.

What do you get if you spend 30% on wants?

What do you think these wants are? Well, if you look at the number as $100k, and think of spending a lump sum like that, it seems like you could have bought some really awesome stuff that would be valuable now. You could have a designer wardrobe, a nice car, some nice vintage furniture or maybe you can point to key moments in your life- lavish vacations, a big wedding.

But if you subdivide it into $750-$1000 month, it’s very easy for that money to disappear rapidly. You find that you can piddle your money away on Kardashian-endorsed clothing, a Hyundai, and overpriced West Elm furniture (I don’t have anything against the Kardashians or Hyundais but I’ve heard West Elm isn’t very good). Instead of memorable meals, you’ve spent way too many weeknights at the not-so-good pub or the meh takeout place.

Why 30% “wants” can be a bad idea

Budgets are often thought of as ways to restrain our spending but, if used incorrectly, they can be the impetus to increase spending. Say this person is 23 and never made any real money before and now has license to use $750 with no real purpose every month. How is this person going to spend that $750? Probably not in a malicious way but likely in an easy way. Someone suggests a trip somewhere and you go.

Then, you have a rough day at work so you go out to a fancy dinner to treat yourself. Upgrade your electronics and your cars. Upgrade your furniture. You have kids and buy your kids stuff. At the end of 10 years, you have the latest versions of things you used to have when you were 23, your closets are filled with stuff, you have a fair number of frequent flyer miles and you wonder, why am I still in debt? Why don’t I have the career I want?  Why don’t I have the relationships I want? Why isn’t my life fulfilling?

 All this regret and you’ve been sticking to a budget. You did everything the financial gurus told you to do, but you might not be getting ahead of your finances.

A Possible Solution

The regrets people have in their 20s were not traveling more, not building close relationships, not exercising, not trying new things. Instead of putting an indiscriminate “wants” category, perhaps you could subdivide your “wants” budget to address these possible regrets.

Chinese billionaire Li Ka-shing offered some interesting budget advice. Some background on Li, after his dad passed away, he was forced to start working 16-hour days at age 15. He did not come from wealth but is worth an estimated $31 billion today.

Anyway, Li’s advice is to divide one’s budget according to the following categories:

50% live. 20% save. 15% grow. 10% build. 5% play.

Here’s How It Would Work

Here’s an example of what this looks like on the same $30k posttax salary:


Live (the basics)

$800 rent/utilities
$150 food
$200 other necessary spending (insurance, phone etc.)
$100 transportation

Total = $1250=50%

Grow (learn and experience)

$50 building your network/dating (building new relationships)
$50 books/classes (structured learning)
$200 travel/trying new things/starting a new business (independent learning)
$75 charity

Total =$375 =15%

Build (acquire the things you will need in your life)

$100 furnishing your home/home needs
$100 furnishing your wardrobe/personal needs
$50 exercise (classes, building your own at-home gym)
Total = $250 = 10%

Save

$500 savings/debt repayment
Total = $500 = 20%

Play (whatever you want)

$125 entertainment/eating out
Total = $125 = 5%

$2500 total

You get $50 to spend on networking this month. Who do you want to meet and treat to coffee? A cute dating prospect? Your coworkers? People with your potential dream job?

You get $200 to travel this month. Where do you want to go? What do you want to see? Paris? Polynesia? Pittsburgh?

You have $100 to spend on classes. What do you want to learn? Java? Italian? How to bake a cake? How to play the piano?

Even you can’t make these percentages, that’s fine. It’s something to work towards. The point of a budget is structure, not perfection. The beauty of this budget is that if you follow it perfectly, you will grow and you won’t squander too much of your money away on activities and products that you won’t remember.

I’ve heard some people say that the 20s don’t matter. Those people probably think life doesn’t matter. In your 20s you may (finally!) be out of school, and you can make your 20s can be all about growth. Even if all you learn is how to tread water, that’s a great skill

Some people enter their 30s in hundreds of thousands of dollars in debt. Why can’t you use these 10 years to build a foundation for your career growth?

What do you think of this alternative budget?

Expert budgeting financial advice I don't follow

Photo by Fabian Blank on Unsplash

Cheapness – Can Stop Please Stop

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A friend was telling me how he could get any drink he wanted for free at a certain Starbucks because of a deal with his company. He was telling me about how he chose his drink (yes, this was an incredibly long and boring conversation) and I interjected, you don’t drink coffee so why does any of this matter?

I know, he said, but it was free.

He would make an excellent personal finance blogger. =D

When I was younger, I tried to figure out everything I could get for free. But as you get older, you become a little warier about free stuff. Sometimes the furniture is free because it has bed bugs embedded in it. Sometimes the food is free because you’re getting a sales pitch. And sometimes it is a good product without strings attached but it is still too much of a hassle to pick it up or upkeep, or sometimes you just don’t want it.

Free only means it doesn’t cost money; it doesn’t mean it comes without any costs at all.

As I’ve aged, I’ve learned to appreciate the other costs in life. Costs in time, mental energy, space in my apartment, convenience. It makes sense that the more money I have, the less I use money as my only lens with which to view the costs of things, particularly as those other costs have become more precious.

If you have no money, then it may make sense to base your decisions on money. But I’m exceedingly wary of people who have money who base all their decisions solely on money. There are personal finance bloggers who make much more money than I do and who put up all these constraints on how they can spend their money. No vacations. The cheapest food.

I understand dipping one’s toes into austerity. I think it makes sense for everyone to go through no-spend months and to live like they were college students again. It’s important not to forget that feeling. But living your life based on what saves the most money – that’s cheap.

People think lifestyle inflation is the only thing you need to look out for but cheapness is also a pervasive and somewhat easy trap to fall into. What’s the problem, you may say. You’re saving money.

I mean the problem is you’re a jerk. How do you know you’re a jerk? Because you don’t have a code. Everyone needs to have a code. What do I mean by a code?

Imagine your parents assembled the perfect toolbox. They read up on Consumer Reports and spent their time figuring out what was needed for the best toolbox, and then got to work assembling the best hammers, screwdrivers, pliers, you name it. Then one day you ask for advice on a project and you learn that they have never used any of these tools. They don’t even know how to use them.

You ask to borrow a tool. They won’t give it to you. You ask, what are the tools for. Emergencies. The future. It makes them feel safer knowing they’re there. Even though they don’t use them. And then they leave you behind and amass more tools.

Money is a tool.  If you have no projects, then why are you accumulating so many tools?

I’ve had former friends who invited people over for food and then told us how much the food they were providing would cost us (it was something like $10/person and they were serving us cabbage soup. I felt like I was getting fleeced. Also I don’t know when I had to agree to eat and pay for cabbage soup).

There are things that will cost money and you will have to decide what is more important to you. Your reputation. Your children. Your parents. Fun. Charity.

You have to set out the tenets you want to live by. Because if you don’t value anything at all, then why do you and how can you value money?

Why My Next Car Will Be a Luxury Car

pexels-photo-724495.jpegDespite being happily car free for two years, I already know what car I will get in the future –  a 2015 white Acura ILX with approximately 50,000 miles.

I think the frugalest among us would gripe – DON’T GET A LUXURY CAR!!! YOU’RE FALLING INTO CON-SOOOOOOOM-ERRRRR-ISM-ism-ism (imagine that with a ghost voice echoing).

I’m not choosing this car because it’s a luxury car or even a car I particularly like. I’m choosing it because it’s my mom’s car, she doesn’t like it, and it has a poor trade-in value. She wants to get a new car, and I don’t have a car, so when she decides on a new car, I’ll purchase her old one.

I guess some people would think, well that’s your mom’s mistake and you shouldn’t have to pay for it. I mean, I don’t really understand that way of thinking but let me explain what our way of thinking is.

So our family is Chinese and my parents left China because they’re not big fans of communism. The basic problem with communism is you can’t trust others to keep working if they can get everything for free. Ironically, our family operates like a quasi-Communist unit. If someone needs money, money flows to that person freely. The plus side is that there’s a lot of trust and we also know everyone’s finances. We are lucky in that everyone is a self-sustaining ship.

The benefits include a sense of unity. We are very Asian in that we never split the cost of anything if we are out together. We pay for each others’ groceries if we’re shopping together. We never ask to be repaid for anything. If anyone were to ask for money from everyone else, it would be considered a gift – there is never mention of paying someone back. To us, that’s how one would treat strangers, not family. It also just makes life easier, making it seem like we have extra emergency funds (though we keep our own personal emergency funds as well).

It also helps our peace of mind to have others that you can depend on to help you out. Or even that demand to help you out. My parents get pretty annoyed if I buy something that they could give to me for free. I’m afraid to buy new dishes or towels because my family will see them and wonder why I thought their 10 year old towels weren’t good enough anymore. In fact, I never throw anything out without first considering if someone else in my family would want it. Waste not.

I’m pretty sure this is normal among the immigrant community. My friend drove a really fancy Mercedes that wasn’t his style for years. He said his brother needed to sell it to get a minivan for his growing family. It didn’t matter that he could have and may have wanted a cheaper or different car. Money is more than thinking about oneself – it always involves thinking about the family unit.

I remember rolling up to CampFi in a black dress, black cashmere sweater, designer shoes and driving a Lexus. I thought, I hope no one sees me. I had just come from work and, because I didn’t have a car, I borrowed my dad’s car, while he was on vacation. My whole outfit cost $100 and I had worn it for years. This was the cheapest car I could get. It didn’t look like I was frugal. And I guess it’s good that I didn’t care how I looked.

It’s funny because so much about “being frugal” seems to be “looking frugal.” People brag about their rusty cars and the holes in their pants. But just as everyone knows that having expensive stuff doesn’t mean you’re rich, having  expensive stuff also doesn’t mean you’re spending too much or that you’re not wealthy. In the future, I may drive around in a fancy car but it’s not because I view the car as a sign of monetary wealth. The car would be a sign of the wealth that I have accrued based on the strength of my family.

Yes, Frugality is Only for the Rich

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Let’s imagine two families that each spend $46,000 a year. If that family makes $46k/year, they are a cautionary tale. But if that family makes, say $250k/year, they are paraded around as frugal experts.

This is basically how I read the uproar about the Frugalwoods, i.e. the latter couple. There was an article critiquing them because their situation is unrealistic to most people. Then there were critiques of that critique, stating that frugality was for everyone.

These latter articles made it seem like the lower and middle class should aspire to the “extreme frugal” habits of the Frugalwoods.  One article even says the Frugalwoods should be applauded because “they’ve exhibited a level of self-restraint and stick-to-itiveness that the rest of us can only dream of.” I mean, I guess the rich can only dream of it. The lower income and middle class live this reality every single day.

Consider that 50% of U.S. households earn $50k or less, representing 70% of the population. Captain Obvious says, that’s the vast majority of people in this country. Some of these households are going into debt, sure, but if we assume 50% of this group is living below or at their means, that’s 44 million households (34% of all U.S. households) living on less than what the Frugalwoods spend per year (assuming $50k after taxes is around $40k. Some commenters have stated the Frugalwoods are living on a bit less than $46k but it’s still around this figure).

If frugality were actually about living on less, then these 44 million households should be as equally vaunted as those making more. But living off <$46k when you’re making <$46k is stressful. No one wants to follow advice on how to be struggling, even if the actual budget would be the same. What’s better is living a bucolic Instagrammable lifestyle where one can talk about minimalism and having “more time for the things that matter” on $46k. The only people who can live that life are the rich.  


I love love love this comment by Dr. McFrugal:
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On Reddit, this sentiment is echoed:
Being frugal really starts to apply when you make enough money that you could afford luxuries, but you turn them down to save money. That’s frugality. The college kid who is eating Ramen every day because he doesn’t have a choice – that’s not frugality, that’s survival mode.

Frugality is only for the rich because the poor and middle class are just surviving.

I have nothing against the Frugalwoods. It’s not their fault that they’re celebrated for something that millions of other people are forced to do. It’s like a couple that’s celebrated by living on $12/day traveling to another part of the world, even though the general populace lives on $2/day. It’s like an able-bodied person using a wheelchair for a day, and being average at it, and everyone saying, hey people in wheelchairs, look and learn from this guy.

It’s not the couple’s fault that they’re feted. The problem lies in the lack of understanding of what is normal for the majority. There are millions of families with even lower than “extreme frugality” budgets, but it’s the rich people with higher budgets who are getting celebrated. That means it’s not the budget that is celebrated but the income and the percentage. Lower and middle incomes may win on absolute spending but if you define frugality as percentage saved, the rich will always win. 

This is not to say that the lower or middle class should give up hope and spend willy-nilly.  Saving money is obviously good and should be encouraged even if you don’t get a book deal. What I’m really critiquing is the critiques of the critique.  If “extremely frugal” people like the Frugalwoods are spending more in absolute terms than lower and middle income people, then the lower and middle income people are just as frugal. At some point,  you hit the threshold for how little money one can spend. If well-educated, book-selling, rich “extreme frugal” people are spending more than you, even with all the advantages that the rich have for saving money (like better rates because they can pay for their house in cash) than maybe the 44 million households making it work on less have hit the absolute limit. Let’s not chastise them regarding “learning frugal habits” just because their savings percentages are low. The savings are low because of lack of income, not lack of frugality.

We also need to question why we inexplicably praise rich people for doing the same thing as the middle class as if that’s a huge hardship for them. We have impossible, standards for the lower and middle class and very low standards for the rich. This is unfair. There are a few takeaways I get from this situation.

1. Let’s stop pretending rich people have all the answers.
I know someone might say, well saving a lot of money on a high income is more difficult than living paycheck to paycheck on that same income. I don’t even know if I need to explain this but here are 4 reasons why being rich is easier than being poor:
  • There’s a lot of comfort from the idea that you can just solve problems with money if you want to/have to. You can’t do that if you are lower income.
  • There’s comfort in knowing that saving money can produce tangible results soon. If you’re rich, you can live like a pauper and possibly retire in a few years. If you’re poor, living like a pauper means you can retire in 45 years. It’s the difference between sprinting for 500m and sprinting a marathon.
  • Being rich makes saving money easier. I got a coupon in the mail for a free meal at a new fast casual place that opened up. That would never happen if I didn’t live in a fancy area where people can be expected to come back for paying meals in the future. Living in a rich area means you’re treated better and have better perks. And don’t tell me “avoiding lifestyle inflation is hard.” No, figuring out if you can afford rent next month is hard. Not buying new things when your old things are getting faded is easy.
  • Being rich means you can screw the poor. My friend told me that when he was a kid, his mom paid way too much for a beater because she had bad credit. If I wanted that beater (this never would have happened because I was 10 at the time, but let’s say this happened today), the dealer would have offered it to me for less because I have excellent credit and could pay cash. Not only would I have gotten a better deal on that car, but if I had gotten that car, which was just one option for me, she would have been screwed. That was the only car available for her. Being rich means you have all the options that the poor have and also the options of the middle and upper classes. Being poor means you hope the rich don’t take your options in their quest for frugality.

So yes, being rich makes everything easier. Don’t let anyone tell you differently. It’s more impressive to live on a lower income if you’re lower income. It’s easy being rich.

2. Everyone should first seek to understand.

I’m weirded out by bloggers who talk about “nonfrugal” people as if they are some single entity that is obsessed with conspicuous consumption. Some people are like that, for sure. But others are making all the right choices and are constrained by their circumstances. Others are making most of the right choices. Others are recovering from some of the wrong choices. Some people just make different choices.

And most people suffer from the simple malady of not being rich.

The middle and lower class have tips and tricks that the rich can’t even comprehend and it’s a bit sad that they’re underrepresented in personal finance blogs.  Poorerthanyou started a group highlighting articles geared for lower or middle income folks but it shouldn’t just be people with lower incomes that read it. Everyone should read this. Personal finance shouldn’t be about lower income people needing to learn from higher income people –  everyone should be learning from everyone else.

 

Don’t Let Anyone Shame You For Your Financial Journey

pexels-photo.jpgDuring a tough time, a friend asked me how I was doing  and I deflected with my usual disclaimer. I said it was tough but I acknowledged that people were suffering much more than me. There was hunger and there was death and disease.

I wasn’t saying this just to be polite. In fact, I was incredibly embarrassed by how difficult things were for me. I shamed myself often, telling myself, c’mon Lisa, get over yourself. People are fighting wars and running for their lives and you have stupid X, Y, Z problems. Anyone would be happy to have your silly problems.

My friend, though, saw right through me. He said, that’s a terrible way to look at it. Acknowledging that I have problems is not the same as discounting other people’s problems. We are not in a competition for who has it worst.

His message has stuck with me. In fact, after I started letting myself wallow in a carefully regulated amount of self-pity, I finally got over it. I think discounting my  emotions as silliness held me back. I spent all this time shaming myself and not enough time figuring stuff out.

Sometimes I follow the same pattern when I talk about my financial journey.

I have a high income. I have quite a bit of savings. So when I feel inadequate that people younger than me have saved so much more, have higher incomes or have already bought multiple houses, I tell myself, well there are people who are worried about losing their house or their job or their kids. My worries are inconsequential, I think. But that’s the wrong approach.

It’s ok if your problems are really hard for you.

I don’t have to have the biggest problems in the world for them to be valid. I don’t have to have the best story in the world to own my story. Being honest about my floofy problems and my true story might be helpful to someone else. But nothing good is going to come from me tamping down my problems and my story.

I don’t have the biggest problems but they are my problems and I’m figuring out how to deal with them. I don’t have to compete on problems with anyone else.

But won’t treating my small potato problems like big problems indicate a lack of self-awareness? Isn’t that the kind of thing that should be ridiculed? Look, if someone is trying to diminish or one-up you on your problems, then let them diminish or one-up you and then find some other people to talk to. If someone is telling you your problems don’t matter, then they don’t care about you. My friends, who are all saints in my opinion, still care about what problems I’m going through even when they have their own setbacks. And I care about their problems so why can’t I care about mine?

This will sound very unproductive, but I hereby give you all permission to wallow in your problems. Don’t be obnoxious about it but don’t be dismissive either.

Shame isn’t the answer.

I heard this story on a podcast. This woman slept around quite a bit and she was ashamed of herself for doing so. But, she figured, at least she felt the shame. If she didn’t feel the shame, then she knew she was really far gone. Later, however, when she learned to accept herself and her actions without the shame, she found she didn’t want to sleep around anymore. So paradoxically it was the shame over doing the things that she didn’t want to do that kept her doing them. In fact, rather than preventing her from doing something worse, it was the shame that was the instigator of it all.

It’s a bit funny that all of us can feel ashamed of our finances, of where we’ve come from, of where we are or where we’re going. And maybe we justify all of it by stating that at least we know we’re wrong or privileged or a spendthrift and we feel badly about it. Maybe that’s not the right approach at all. Maybe the first step in everyone’s financial journey is saying, this is how I feel and that’s ok. I’m ok for feeling these things.

And maybe what follows is that we need to forgive the past and everyone that played a role in the mistakes that were made. Of course, forgiving everyone includes forgiving ourselves.

Forgive yourself for having privileges that others didn’t have. Forgive yourself for not having the privileges that others had. Forgive yourself for not saving as much as you wanted, making investment mistakes, not making a high enough salary, making too high a salary for what you do, for anything unethical you’ve done, for anything unethical done to you, for any jealousy that you’ve harbored against anyone else.

Forgive yourself for having problems. Then wallow. Then fix it or get over it and then go help someone else.

The Unexpected Reason Why It’s Easier for the Rich to Save and Harder for the Poor

unexpected reason easier for the rich to save and harder for the poor to save

That feeling when you see a low-income person with nicer stuff than you

My mother had heard that some kids at our church couldn’t afford new clothes. She asked me to help her pick out some clothes to give to them. This was the 90s so we went to the typical teenager stores of the time – Old Navy, Guess, Calvin Klein, Ralph Lauren, Tommy Hilfiger.

When she gave them the clothes, I noticed that they discarded the Old Navy duds but were quite excited about the name-brand items. The name brand items weren’t better looking but they were emblazoned with the brand name (this was the 90s when that was the style). I thought this was peculiar because new clothes are new clothes. I proudly wore (and still wear) clothing from Walmart and would have been grateful for the gift.

Similarly, when I visited a child for whom I was performing pro bono services, I couldn’t help but notice that she was wearing a Helly Hansen coat. That coat was probably more expensive than the one I was wearing, as her attorney.

Something similar happened when I was talking to a woman I mentor at an event for our mentees. Nearby was a child of another mentee decked out in a shiny rose gold shirt with matching rose gold accessories, including cat ears, hair trinkets and shoes. I definitely never had such nice things when I was a kid, and I’m sure my parents earned at least quadruple the income that hers did.

The Confidence of the Middle Class

When I was younger, I didn’t quite understand the dichotomy. When you don’t have anything shouldn’t you be grateful for anything? Why spend a lot on clothes, particularly children’s clothes, when you are worried about the rent, the electric, the car, etc.? Shouldn’t these families learn to be minimalist and frugal?

But sometime after seeing my mom donate those clothes, something clicked for me. Yes, I was wearing cheap hand-me-down clothes. But I also never had to worry about where I was sleeping for the night. I never had to worry about where my next meal would come from.

Most importantly, I never had to worry about someone accusing me of being poor.

My family wasn’t rich, in absolute terms or in comparison with the people in my middle-class public school, but we were safe – both in terms of living in a safe neighborhood but also in terms of social status. I could “afford” to wear cheap clothes because I had confidence that if someone even joked about me being poor, my classmates could vouch for my living in their neighborhood in a suitably sized house.

Why the Poor Have Nice Stuff

If I were poor, I’m sure being called poor would be absolutely terrifying. I wouldn’t have the self-confidence of a middle-income person. I wouldn’t have people who could vouch for the size of my house or the white collar-ness of my parents’ jobs.  Because of this anxiety, I’m sure I would change my lifestyle so I would never fear being accused of being poor. I would wear nicer clothes, eat fancier meals, drive a nice car. I would do these things not because it made mathematical sense, but because, I would want to avoid anyone second-guessing my social class, and thus, subtly second-guessing my worth. (I’m not saying a person’s worth is dependent on their social class, or that it should be that way – I’m just saying that many people feel this way).

You try to keep up appearances to bolster your own self esteem. Maybe you can barely afford rent but no one needs to know that. The very last straw isn’t homelessness or even when others stop believing in you. The last straw is when you can’t believe in yourself. And if you can’t have the stable life, you can at least look the part, to others and to yourself.

A Poverty Mindset

This mindset isn’t only held by the poor. You can grow up at any income level and still have a chip on your shoulder. There are people who grew up far richer than me that might identify with it. But it’s a mindset that is easier to overcome as a rich person than as a poor person. It’s a simple matter of looking around and being grateful for having the roof over your head. It’s much easier to be confident when you have some constants in your life.

When a rich person says that he could pull himself up by his bootstraps if he had a reduced income, he may be right. To be more specific, he is right that he may have the skills, health, education, connections and confidence that if he were put in a situation with low income, he could lift himself up by his very own bootstraps. He could visualize where he was before and say, well I got there once and I believe in myself to get there again.

But the poor aren’t “rich people pretending to be poor.” The poor are the way they are.

When people point at the poor and say, why do you have the newest iPhone or the big SUV when I, as a rich person, have a flip phone and take the bus, this is part of the reason why. It’s not that the poor are secretly not poor. They very much are. In fact, they are acting in ways that very much show that they’re poor, though perhaps not monetarily. They are poor of mindset. And that can be harder to fix than a cash flow problem. They may very well not believe that they can get out of their situation so the thinking may go, I might as well have my fun now. You may not have hope, but at least you have an Xbox.

The Unexpected Reason Why I’ts Harder for The Poor to Save

When people say, the poor shouldn’t care what other people think, that’s a fallacy too. The rich don’t need to care what people think of them. The rich can insulate themselves from people they don’t want to have around; the poor cannot. The poor have to see social workers, teachers, school administrators, government workers, neighbors and family because they rely on all these people to survive. So the poor have more people judging them than the rich. Thus, the poor have more people they want to and need to view them positively. In fact, the poor likely get a lot more bang for their buck by spending extravagantly on appearances.

Additionally, being rich drastically changes how you’re viewed even without spending any money. For instance, I can be frugal because I have so many indicators to show that I’m wealthy. When people come to visit, they don’t care that my furniture is secondhand Ikea because my apartment is in a neighborhood where the median home values are $1 million.  They don’t notice the lack of TV, because I have a laptop laying around that costs over $1000. When I say I don’t have a car, the understanding is that I choose not to, not because I can’t – because everyone knows I’m a lawyer and I make bank.

Similarly, when I say my clothes are several years old, low-priced and sourced from ignoble locales like Payless and Walmart, it doesn’t affect others’ views of me because I’m young, thin, pretty and rich so my humble clothes seem more expensive when I wear them. Everything seems more expensive in my life because of me. It’s actually a waste for me to spend on more expensive things because I will get compliments whether my dress is from Target or Gucci.

The Dirty Secrets of the Rich

No one wants to wear Mark Zuckerberg’s clothes, but they want to be as rich as Zuckerberg and then be free to wear whatever they want. The people who get away with wearing junky things are the rich.

The purpose of expensive things is so people will think you’re rich. If you’re already rich, you don’t need people to think anything of you. People will come to you if you’re rich. If you’re poor, you still need to prove yourself to get a job, friends, connections, business partners, etc. The irony is that the Gucci works best for those that can’t afford it.

The dirty secret to being frugal is not caring what people think. The secret to not caring what people think is being rich.

If you don’t have these indicators of wealth, it’s a lot less likely that being frugal seems like a worthy goal. Having the junky items I have just makes you look poor, and no one wants to look poor without secretly being rich.

A Noncomprehensive List of items I Buy on eBay to Save Money

eBay used to be the place where I would buy expensive items on the cheap. But eBay has grown to sell basically everything for cheap. I use it to buy anything and everything these days.

1. Items that I lose all the time. 

I’ve lost the right hand for six pairs of gloves. SIX!  Continuing to spend tons of money on buying gloves is almost literally throwing them away  So I buy gloves in bulk on eBay. Also socks, because the people who can keep their socks from disappearing are tough task masters.

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Help! My Lifestyle is DEflating!

Placeholder ImageFinancial experts say one should continue to live like a grad student even after starting work to avoid lifestyle inflation. I took this advice to heart when I graduated from law school. I maintained my 18-year old car and rented a one-bedroom apartment in the ‘burbs in a 1970s-era building.  Much of my income was spent killing my student loans, nesting and building a corporate wardrobe.

Fast forward six years to today and I’m car-free and in a cheaper apartment. I still wear the corporate wardrobe I bought at the start of my career. I am typing this on the couch I bought off Craigslist for $40 when I moved into my first apartment. The money I spent on loans is largely moved toward investments.

All the while, my income has increased by 25%.

 Turns out, lifestyle deflation can creep up as easily as lifestyle inflation.

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Do you Shame Yourself for Spending Money?

I am addicted to my Fitbit. In fact, when I don’t wear my Fitbit, I will honestly sit on my butt all day. Thus, when I’m without my Fitbit, I get a little frantic.

I’ve lost my Fitbit three times. The last time I lost my Fitbit, I thought, “No! You don’t deserve another one.” Like I was speaking to a young child. Fortunately, I found my Fitbit after scolding myself. But I had the same reaction when I lost my Fitbit charger. Sorry, me, you’ll have to do without.

Let’s consider the following pros/cons:

  • The Fitbit is an undisputed good in my life. Increasing my steps, increasing my exercise are good for my health.
  • I don’t struggle for money. Further, the charger is only $5 off eBay.
  • I can’t use my Fitbit without the charger.

So there are no really cons, and some pretty strong pros. Of course, I finally did buy the charger. I still had to ask myself why did I even question paying $5 for this?

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