Why We Should Not Do the "Cool" Things
On the reasons to live below your means
Some people are the most financially savvy when they are in college.
It is crazy the lengths people will go to make money work for them and stretch the whole semester. So many people have a degree of savviness to make the final $100 to their name last the final month of college. It is almost Parkinson’s law at play. We are efficient enough to walk out of our last exam and only have $5 to our name. It doesn’t matter as we are heading home for the summer. We have survived the semester by barely scraping by and being saved by the bell.
For me, I can vividly remember a time when I needed Virginia to win the NCAA championship in 2019 to make it to the end of the semester and somehow I had the wherewithal to win a few bracket challenges and make it happen. The nice thing about college is this is almost the norm. Jokes about eating only ramen for dinner for the rest of the week were completely normal and completely real.
Yes, I would be remiss if I didn’t mention that higher education is way too expensive. After adjusting for inflation, college tuition has increased 747.8% since 1963. Since 2000, tuition and fees have jumped 69%. Not good and unfortunately, it doesn’t look to be changing anytime soon. The ridiculous costs aside, college teaches you how to live well below your means. The nice thing is no one is ostracized for how they live because everyone is trying their hardest to make it work somehow.
Living well below our means is an intangible benefit that college provides. It exposes us to life being a lot more than the material goods we have. No one cares about the car you drive, the clothes you wear, or the meals you eat. Everyone is so wrapped up in figuring it out themselves that they don’t have time to worry about others. The craziest thing about this? This is not how college is, it is how life is too.
You buy the fancy new car or the expensive, new shoes and no one wonders, “Wow, I want to be just like him. I wonder what he does?” No, they think, “How would I look in that new car or those new shoes?” Life is a game that is already hard enough on its own, people don’t have time to worry about others when they barely have enough time to worry about themselves. Provided is why one of the greatest financial assets is not needing to impress anyone.
The only real reason why we live well above our means is to impress others. It is a way to show others, “Hey, look at me and all the money I got!” There is really no other reason. I would like to think there is no reason why we need a house that is big enough to be a hotel. Harvey Firestone says,
“Why is it that a man, just as soon as he gets enough money, builds a house much bigger than he needs?
I have a house in Akron many times larger than I have the least use for; I have another house at Miami Beach which is also much larger than I need. I suppose that before I die I shall buy or build other houses which also will be larger than I need.
I do not know why I do it-the houses are only a burden. But I have done it, friends who have acquired wealth have big houses.
Perhaps it is some foolish survival of the ancient feudal idea when a big house meant a strong house in which one might keep a small army for protection. In a few cases, a big house is built just as an advertisement that one is rich, sometimes a big house is built so that great entertainments may be given. But in most cases, and especially with men who have earned their own money, the house is just built, and when it is done, no one quite knows why it was ever started. No end of men build their houses so large that they might as well live in a hotel.”
Humans can survive in a house that is much smaller than a hotel. So why do we humans feel the need to continue to upgrade our lifestyles? Perhaps, it is part of our past that we have yet to discard. In our past we needed to have a small army to protect ourselves but ultimately, there is now no need. Upgrading your lifestyle with each successive raise or promotion is an endless loop of self-indulgence that is meant to impress others and truly not fulfill yourself. We all do it.
Those who can live below their means and not sacrifice a long-term gain at the expense of a short-term action enjoy a freedom that others can’t comprehend. Those living below their means enjoy a freedom that people caught in the endless loop of upgrading their lifestyle can’t comprehend. It is really about spending life, and your money for that matter, as you please. For you and not for others. Most of the expensive items we buy are to play status games.
“We often forget where we should be spending our time. We try to impress those who don’t matter with things we don’t own. We work on things we don’t want so we may earn to spend on things we don’t need. I doubt if this is how you dreamed your life would unfold when you were a child.”
-Om Swami
Time is perhaps the scarcest, most finite resource around. We spend all this time working to provide for ourselves only to spend it on things we don’t own and things we don’t need.
In September, auto loan delinquency rates hit a 30-year high of 6.11%. It doesn’t help that the federal reserve has hiked rates but it is also a product of people locking in absurd rates on cars they clearly don’t need. It doesn’t need to be this way. Human technology continues to evolve but the cars we had years ago are sufficient modes of transportation. There truly is no need to drive a 2023 car, except if you maybe look at it as at least a ten-year investment, when you can get a 2019 or even a 2013 on a much more economical deal.
It is more money being thrown at an investment that only serves to try and impress others. Those cars with the do-it-all touchscreens, do we really need all that? Not to mention, once you drive a car off the lot it immediately depreciates. The more money you allocate to things like this the less you have for the things that matter. Money is a scarce resource and money determines a large part of what you can do in life. It is the driver of everything.
“There is no way to learn the value of money without feeling the power of its scarcity. It teaches you the difference between necessary and desirable… Learn to be poor with dignity and you will handle the inevitable ups and downs of life with ease. Learning how to live with less is one of the most powerful financial levers that exists.”
- Morgan Housel
Poor may be a word with a strong connotation and maybe we don’t want to seek to be poor, maybe we should just seek to be independent. Independent from the fake scripts of success that society lays forth and leads us to believe that we must have. Put simply, I think a lot of people would be happier if they could ride in a $5,000 car and work one month a year rather than ride in a $50,000 car and work all year. The former gives you time and independence and the latter gives you restrictions and rules to which you must comply. The only way to do this is to make your wants few and to learn to live with less.
Human needs at an elementary level are very basic. We can live with less. We don’t actually need heated floors or a car with a backup camera. Sure, we all have guilty pleasures on which we splurge but it is important to keep those reasonable. At the end of the day, everything is relative to us when it comes to our money. Oftentimes, luxuries just help you stay ahead in the mental game of what you have versus what other people may have. A game of just trying to impress and outdo each other. It is like the neighbors who duel with each other to have the best Christmas light setup or the people who continue to upgrade their houses to stay up with the Joneses.
Evander Holyfield once owned a 109-room, mega-mansion, but the home was repossessed by the bank after he failed to make payments on his $10 million home loan.
The house was later listed for $8.5 million but sold for less than $5.9 million to Rick Ross. 109-rooms is rather ridiculous and unless he was hosting the biggest house party the world may have ever seen, it is hard to believe the 109-rooms had a real purpose. He wanted 109 rooms but what it brought was a house payment that he couldn’t afford. It brought about debt. Debt that he owed took away a piece of his future that was now owned by someone else. This is the last thing people want. Each piece of debt you owe is a piece of your future that someone else owns.
On the flip, I think what most people want in life is freedom and independence. There is a reason why wars are fought. People want to be liberated.
Living a life below your means is the quickest way to get that. It will eventually allow you to get the freedom that allows you to control what you work on. And if you control what you work on, you will work on things you love. If you work on things you love, you will do it for a long time. If you do something for a long time, you will get really good at it. And if you get really good at it, money will come.
Live below your means and how you choose. Don’t worry about upgrading your lifestyle. The money will come.
Appreciate you reading.
-Scantron
Scantron’s Selections - A few things I loved this week.
Kyla Scanlon is writing a great book on the stuff you really need to know about how the economy works. Highly suggest preordering it.
Thanks. I get the point which is precisely why a fifth wheel or an apartment/condominium is fine by me, as long as it comes with a vaping cabinet and hot enough sister to warm it up.