One of the standard tricks for saving money is to calculate how many hours of work it takes to pay for the luxury you’re thinking of spending. If eating lunch out is equivalent to two hours of work at the call center, you might decide to brown-bag it instead. (I never understood why so many of my coworkers ate out while on break at our minimum wage job when I was in high school.) Here’s becoming minimalist explaining how we don’t buy things with money, we buy them with time. A related technique is to translate those dollars into something tangible, here’s us talking about the candy bar exchange rate, though as grownups you’ll probably want to use something like cars or computers or weeks of groceries.
Another standard trick is to add up how much your latte factor (which could be any small regular luxury expense, not just lattes) is costing you over the course of a year. At $5/day for 5 days/week for 50 weeks/year, a latte factor could be $1250/year. Here’s the frugal girl discussing this technique in more detail.
The problem with these techniques when you’re making obnoxious amounts of money is that they lead to more spending. If the cost eating out can be measured in minutes of work instead of hours, then it seems silly to not eat out. The cost of DH’s recent rabies scare hit home with him when I told him that two emergency room visits = 1 new car, but if we were making more money, even that cost wouldn’t be a big deal– the comparison might be a small fraction of a nicer car or yacht or single private airplane ride. At a certain point $1250/year seems like nothing– why wouldn’t one spend that on small luxuries?
… so… should we be spending more? Laura Vanderkam from a few years ago would certainly say yes. (I don’t know what she’s selling now.) Use that hourly wage calculation to loosen up on spending, especially if it increases productivity or diminishes stress or saves time.
Indeed, recently I got a glasses exam out-of-network (probably)… $130 for the exam. The insurance company didn’t make things easy for LensCrafters, so after trying to login to the stupid BC/BS page and being stymied by changing my password and then finally finding my benefits on the university website I discovered I’d only be reimbursed 50% anyway, I decided SCREW IT it’s not worth it. Even if they should have reimbursed me $65, even for the principal of the thing (which was more important to me back when I had more time), I wasn’t willing to put more time and mental energy into it.
Here’s a tweet from an econ professor:
Susan Dynarski makes $270,000.00 according to the UMichigan website (not as much as many of their other star professors!) and is in the 98% percentile of income for the US. (I am again reminded of talking with professional colleagues whose families make about 2x Dr. Dynarski’s and how their view of what a vacation is or cleaning person’s duties are is so different from most of the upper middle class’s… when you make over 500K/year and it isn’t going to your mortgage, you have a personal assistant and you rent a chef to go with your Caribbean vacation and your cleaning person will put things away instead of refusing to clean if the house isn’t already uncluttered. We’re not there.) (In fairness to Prof. Dynarski, she’s a first-gen college student whose family was in the bottom income quartile growing up. She’s not out-of-touch. Even if the comments on that thread… economists, man.)
Is this rational? Is this necessary? Should people with higher wages be spending more based on these tricks? Should we instead find our “enough” as recommended in YMoYL?
I don’t know.
What do you think? And how do you feel about these kinds of spending tricks?
Grumpy Rumblings (of the formerly untenured) 