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Being a minimalist-minded man with money
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Seadog Offline

Posts: 487
Joined: Dec 2012
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Post: #9
RE: Being a minimalist-minded man with money
I firmly believe that financial management is a lot like game. Some people have to learn it, and to some it just comes naturally. Maybe it's the Scottish in me, but I've never bothered budgeting (think it's pointless), and I've always had more than enough money for everything I've needed, and basically anything I wanted (but because I don't act on those wants so much, is part of the reason I can).

Like when dealing with a particular girl, for things, don't fall in love with them and throw logic out the window. How many times do you hear a girl say she just *had* to have that coat or whatever, price be damned. I firmly believe that's one reason why women in general are so bad with money, their spending habits (like everything else) are governed by emotions and short term cost/benefit analysis.

Housing/Food/Transport. Those are the big three. Really, those are your only "needs". $300 a month room is probably the bottom of the barrel, and then it get's better from there. Food? While I respect the mantra of "Get a big serving for $10-15 and eat 3 meals from it" that's like explaining how to get better mileage on your Porsche. Far better to just cook all your own food. Get meat/veg that's about to expire, make a huge pot of chili, freeze stuff, You can do it for $100 a month. Transport, you can take public transit or use a bike or live close to work or hell just walk everywhere. Again should be less than $100 a month, possible to do borderline free.

Cell phone isn't a need(pay phone/skype/magic jack, get a room with net included), decent second hand clothes can be bought for 5% of new, eating out, booze, entertainment, trips, all these things are wants. I can point to many examples of ppl that get by without.

I firmly believe you can *survive* on $500 a month. Even at 25 hours a week at min wage, you could save a little something. These are your needs, and I've always had that in my head as a baseline. After that is where things get interesting, and most people stumble.

From this point on, you need to make decisions. The same rules apply for time and money. They are interchangeable, for each other, and for things. Where you need to concentrate, is on the rate of exchange, and whether or not something is a good deal.

You have so much time, and you have so much opportunity to convert that into money. Can you do it efficiently? How much flexibility is there in how many and which specific hours you work? Basically this is how good a job you have.

Now you have so much money, that money can be back converted into time (buy meals instead of preparing). Do you actually save time or are you just saving effort (being lazy).

Basically how much money you have or make is immaterial. Every situation you are presented with you have your resources (time, money) and your options. Smart financial management is being able to honestly look at, and cleverly evaluate them on the fly, as they are presented. This is why budgeting in my opinion is pointless. Because it basically divies up your wants, with the end goal of hitting 0.

A couple examples off the top of my head: If you walk somewhere in 2 hours and save a $20 taxi, is that worth it? You're essentially employing yourself at $10 an hour after tax to walk. Before you do this, what are the alternate options for those two hours? Whether you can afford it (budgeted for it) is immaterial. A good deal(which is purely cost vs benefits vs the alternatives) remains a good deal independent of anything else. If you have to get to work, or a doctor's appointment, than those two hours are likely far more valuable than the $20 you'll spend. If it's sit home and watch TV, it's likely less.

You know that occasionally chicken can be had for $3 a lb, yet for the last month it's been $8 a lb. Being good with money, you looked ahead 2 months back when it was $3 and bought tons and froze it. But wait, steak is on special this week, so you replenish your stores of that. If chicken has been expensive for months and you run out, you can either do without and wait, or pay the higher price. Decisions. The fact is if they can sell for $3 and make a profit, paying 2-3x because you 'feel like it' is a fools errand.

You drive to work, and you budget $100 a month for gas. Gas skyrockets and it will now cost you $150 to get to work. Do you simply not go to work for 10 days because you already exhausted your gas budget? No. Conversely if the price crashes to $75 for the money, would you go buy $25 of gas and just burn it in a field because it's in the budget? Again the pointlessness of a budget. You can budget whatever you want, but the fact is until gas gets to about $100 a liter it still makes sense to drive to work (barring any other reasonable alternatives).

Where you really get into problems however is how to evaluate the value of things like social status, pride, other intangibles. What's the social worth of showing up to the club in a limo? Of feeling like a king and having a brand new $2000 suit? You can't go through life purely viewing everything from the accountant's point of view.

Ultimately though those are your decisions to make. if I have $100, I can buy 1 really nice shirt, or 20 decent shirts at a second hand store which would be perfectly acceptable to work. To have the same new high end wardrobe would cost $2000. Is the increase in personal value of 20 designer shirts over 20 adequate shirts really worth $1900 after tax? Can you really justify that looking great for 1 day is as valuable as being adequate for an entire month or work days/ For many people that would be a months pay. you can live well for 2 months in Thailand on that, and still have more or less the same life at work in terms of dress shirts. But people overvalue what other people think of them (most ppl are thinking about themselves) and aren't competent enough to honestly evaluate the alternatives that amount of money could buy.
07-10-2013 04:41 AM
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RE: Being a minimalist-minded man with money - Seadog - 07-10-2013 04:41 AM

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