http://www.newworldeconomics.com/archiv ... 61613.html
Thus, the process of reducing your "needs," should begin with the process of
choosing new aspirations and expectations.
I don't think you should start with the idea of "spending less." Penny-pinching. Belt-tightening. Taking the cheaper alternative. No.
For example, let's say you have an aspiration or expectation to drive an Aston Martin V12 Vantage, at $180,000.
Whoops -- not enough money.
OK, now we downgrade to a Porsche 911 Turbo, at $138,000.
Errrr ... still not enough money.
Drat. Now we downgrade still further to a lowly Nissan Skyline GT-R, at $100,000. Ugh. A Japanese car? Gimme a break.
Hmmm ... still not enough money.
OK, now we are scraping the bottom of the barrel, with the Chevrolet Camaro ZL1, at $54,000.
Not even a Corvette! A Camaro. A car for people who drink Budweiser.
This he can swing -- barely. It's a sacrifice, but it is worth it. It has a 6.2 liter V8, at 580hp, which helps make up for the Made-In-Detroit lameness of it all. If you squint, you can still see a sort of Steve McQueen manly man aura around it, although maybe only if you are over fifty.
This is the process of penny-pinching and belt-tightening. The aspiration and expectation didn't change. The person still wants to (or expects to, which is not quite the same thing) drive an Aston Martin. Now he drives a Chevy, and is depressed. He wants to upgrade, at least to the Porsche, as soon as he is able.
Plus, in the process of downgrading, a funny thing happened: he spent all his money! He spent $54,000 on a car. The reason he spent $54,000 on a car, instead of $180,000 or $100,000, is because that was all the money he had. Somehow, in the process of spending less, he spent everything. And still he is disappointed. First, he experiences "scarcity" because he doesn't have the dough to drive an Aston Martin. Then, he experiences "scarcity" because, having spent all of his money on the Chevy (estimated cost-to-own of $75,671 over five years), he has no money left, and lives in fear of the briefest interruption in his monthly paycheck. Plus, he is fat and out of shape, and spends his evenings watching movies on Netflix.
So, let's embrace a new aspiration. Let's say the person wants to play squash at a competitive level. He gets a membership at a nice squash club for $225 a quarter, and plays there six days a week, after work.
He is having a great time playing squash. He gets better and better, and rises in the rankings. Pretty soon he is the league champion. He fully attained his aspiration and expectations. He is happy and satisfied. Along the way, he also got into great shape, is in awesome health, and looks super. Plus, he met lots of other neat people, who are also squash enthusiasts. He has no time for Netflix, so he sold his television on Craigslist.
There was no penny-pinching and no belt-tightening.
By the way, he only spent $900, on annual club dues, plus $400 on equipment, for a total of $1300. He has $53,000 still in the bank, which he invests in income-producing property. This is another aspiration and expectation of his -- to acquire income-producing assets. He studies the real estate market closely, and educates himself on the details of property investment. This also takes a lot of time and effort, and is a lot of fun, and introduces him to a lot of other interesting, like-minded people, but costs almost nothing: $300 for books. So, in the process of not-belt-tightening and not-penny-pinching, he actually achieved two aspirations. Plus, the income from his property pays for his squash enthusiasms, so his net cost is zero.
He doesn't even think about what kind of car he drives. He drives a Subaru Impreza that's six years old and has 90,000 miles, which is good enough not to offend anyone. His car is largely irrelevant to him, because his attention is focused on playing squash and real estate investing. We can only focus on so many things, and if you focus on something like squash and investing, then you will naturally not focus on all the other things. He also doesn't worry about an interruption in his income. He doesn't live paycheck-to-paycheck. He is happy and satisfied with this lifestyle.
In fact, his aspirations and expectations -- playing squash and real-estate investing -- are actually much more worthwhile on an absolute basis than spending money on cars. The fact that they also don't cost much is just another plus.
August 30, 2009: Summer Slack-Off 3: How To Have Fun
He enjoys a life of abundance.
