Sunday, July 27, 2014

Why Aren't We Getting Better With Money?

Why Aren't We Getting Better With Money
Cry for help: a few months ago, I noticed a lot of my comments weren't showing up on my favorite blogs. Apparently, WordPress thinks I am a spam bot. (This likely says something about the quality of my comments.) So, if you think I've stopped reading and commenting on your blog, it's likely that my comments are getting caught in a spam filter. If someone can fix this for me, I will write a post (on my blog or yours) on any subject you want. Want an in-depth analysis on Miley Cyrus' cover of "Jolene"? You got it. Want me to wax poetic about "In Living Color" and the sad, slow death of live sketch comedy? No problem. Just help me fix my computer problems and I'll gladly whore out my writing. And...back to the post.

America has a dire need for better financial habits. We don't take advantage of our 401ks and, if we do manage to save a something in our work-sponsored plans, we often borrow against them. Our national savings rate is at its second lowest level since 2008. Household debt is near record highs relative to disposable income. So whatever lessons we were supposed to learn from the last recession, it seems we need to learn them again.

Still, if necessity is the mother of invention, why haven't we invented a way to properly address these financial needs? The need is obviously there. So where's the stinking innovation? Here are a few ideas on why we're not getting better:

Financial Literacy Education Is Not Working
We typically look to education as the answer to our widespread financial problems. We posit that people are bad with money because they haven't ever been taught much about money. After all, we collectively share a poor financial history: our parents' finances were often a mess, and they never had frank discussions with us about debt, or investing, or, well, anything. We were thrown in the deep end of the money pit, and picked up the bad habits of our parents. So lack of knowledge, or bad knowledge, has to be a root cause, right?

So, if we teach teenagers and adults how compound interest and debt works, then they'll be good (or at least better) with money. Improve knowledge, and the behavior will improve, too. Unfortunately, that is not what is happening. Those who receive financial literacy education are no more likely to exhibit better financial behavior, like saving more or avoiding crazy amounts of consumer debt, than people who didn't receive that education. While our intentions are good with financial literacy education, the results simply are not there. Whatever lessons gained by this education are lost before they can have a material impact. Financial education is no silver bullet -- if anything, it seems to be a blank.

Financial Goals are Long Term Goals
Many financial goals are a long way off: saving up for a big down-payment, a comfortable retirement, debt freedom, or financial independence are all fantastic goals, but they take years or decades to achieve. The problem is that long term goals are easy for us to scrap. Procrastination is easier with long term goals, because there are a lot of mañanas between now and the goal. When retirement is thirty years away, it's easy to start saving more...next month.

As Jason Hull tells us, Monkey Brain is concerned with the here and now. Our limbic system is willing to sacrifice a big payoff in the future for a small reward now. So, being debt free in five years only sounds so attractive, especially when I can have a fancy dinner out with my wife tonight, and my new surround sound can be at my door in just two days when I buy it from stackingbenjamins.com/amazon. On an intellectual level, I might know that being debt free is going to be incredible. But, the payoff is so far in the future that I have a hard time resisting the temptation to spend the extra $100 I was going to put towards my student loan debt. All the financial knowledge in the world isn't going to change the fact that we're bad at sacrificing daily for many years straight.

We May Need to Improve with Money...But We Have a Lot of Needs
The rub with addressing our need for better financial behavior is that we have so many other competing needs. If I'm really struggling financially, the need to keep myself housed and fed is going to dwarf my need to pay off credit card debt. But even for those of us with sufficiently high incomes, we have a bunch of complex psychological needs that compete with the need for improved finances. My steady paycheck might already address my basic necessities and even my need for stability. Once those are met, our minds turn to a need for status and esteem. And marketers are all too happy to point out products that give you both.

To combat this, we bloggers who champion frugality are quick to explain why it's foolish to lease a new Audi, for example. And we'll often try to persuade you with a financial analysis that show it's better to buy a used hatchback, or to ride a bike. (If the blogger is especially bright, he might argue the financial merits of a scooter.) The problem with this approach, this singular focus on cost, is that it disregards our psychological needs for status and respect. My Toyota might save me thousands over the Audi, but it does not impress anyone. It is not cool. It doesn't make me feel respected by my coworkers. An Audi might actually address that need...until the new model comes out.

While material goods are poor salves for our inner needs long term, it is folly to disregard these psychological needs entirely. They may lead us to poor financial decisions, sure. But the need to fit into a certain social group, or to feel like you're respected by your peers, is valid. Unless our attempts at improved finances are constructed in a way that acknowledges our need for respect, status, and reputation, then success will be elusive. The ever growing army of savvy marketers are tapping into these needs -- the personal finance community ought to as well.

*Photo is from Tax Credits at Flickr Creative Commons.

74 comments:

  1. I think you hit the nail on the head - the problem isn't an intellectual one, it's an emotional one. I think that we need better PR for good decisions. People always paint frugality sorta like dieting. You're suffering now for a benefit later - but to me that's just not the way it works, or has ever worked.

    Perhaps it's because the work now/retire later model is soooo deeply ingrained in this culture that people literally don't know there are other options. I mean, I got to retire at age 40 (39 actually) and the closest I ever came to a "real job" was running a non-profit music school! For me, frugality was the ticket to the "have fun now, have more fun later" lifestyle.

    I dunno... maybe I'm not making any sense. I just think that if frugality's message was less about suffering and self control and more about enjoying your life and stickin' it to the man, people would be much more eager to join us.

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    1. No, I get it. Frugality is marketed like a sacrifice (and I'm guilty of this, too). But not only is that not exactly accurate, it's a terrible pitch that's doomed for failure. You can't sell 'suffering'.

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  2. Oh... and your commenting issue has to do with the Akismet plugin, which, I believe comes installed as a default with all Wordpress blogs. The plugin "learns" who is a spammer by the comments that you leave on blogs. Usually when you get accidentally flagged it's because someone either marked one of your comments as spam or because you left a few comments with multiple links in them.

    I believe some people have had success fixing the problem by "teaching" Akismet that they are not spammers - ie. by posting a bunch of comments that get flagged by the blog author as not spam. You can also contact them directly and ask to be removed from their spam list by filling out this little form:
    http://akismet.com/contact/
    (you might have to type something like "I'm not a spammer" into the little box to get the form to come up, but once it does there's a button choice that says "I think Akismet is catching my comments by mistake."

    I anxiously await your dissertation on the Miley Cirus version of Joleen, because, dude, that is just WRONG! :-)

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    1. Okay, I've reached out to Akismet to get this changed. I'm still getting caught in spam on some sites, but maybe the change isn't real time. I'll keep checking.

      But in preparation of eventual success, I've already started writing my Miley cover post. Thank you so much!

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    2. Just an FYI - you're not getting caught by Akismet on my site

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    3. Thanks! It looks like it's fairly random. Maybe Akismet is not the culprit, and Miley may be off the hook...

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  3. DB40, I"m starting to feel the same way. There is a small percentage of people who truly want better financial lives, but it seems as if most simply want to live by the YOLO attitude. Whaddya do?

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    1. This is the one thing I hate about the YOLO attitude. I get that you only live once, but it really isn't about doing everything at this very moment. You can still save and embrace the YOLO attitude.

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    2. YOLO is tough, because it's a mixture of a great attitude towards life combined with a really irresponsible one.

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  4. Agreed. I actually prefer to embrace the non-mainstream nature of my frugality. I know that I'll never be able to compete or compare materially with my spendy peers (not something I care about anyway) and so I'm happy to acknowledge that I'm a frugal weirdo.

    I completely agree with your thoughts on financial education--it's not working. And, anecdotally, my personal experience confirms your theory that people don't want to plan for and pursue long-term financial goals. When Mr. Frugalwoods and I share our FIRE plans with people, I think they don't actually believe us...

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    1. We're frugal weirdos, too. I think we get a unique sense of pride in our subculture, too: it's cool in a way to be very efficient and to avoid waste. But that mindset doesn't have mass appeal.

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  5. You can also directly email akismet and ask them directly to be taken off the "blacklist." I had that happen. I feel like my article is directly aimed at me this month. While I had the slowest month this year for work, I still spent money on the occasional latte here, kombucha there. Certainly not needs. Why did I think that was OK? I have no idea, but sometimes are willpower is not firing on all cylinders. I think the same can be true with trying to lose weight, exercise, etc. We "know" what to do, but can't always find it within ourselves to do it.

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    1. I hear you, Tonya. So much of our spending is contrary to our goals. I eat out too much, and eat the wrong kind of food. And when it comes to going out, I basically will just toss out the budget if it means I'll get to spend more time with my friends. I definitely think the latter is addressing my psychological needs for inclusion.

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  6. It's just like the obesity epidemic. Everyone knows for the most part what they SHOULD be doing, but they don't follow through.

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    1. Right! Knowledge is cheap. If it doesn't lead to action, it isn't worth much.

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  7. This year has been hard for us. I find we are spending a lot more on the little purchases at grocery stores or eating out more often. Trying to bring our budget back under control but sometimes the lifestyle inflation feels a tad nice :) I would like to cut our budget by $500. I'm trying to find savings in car insurance, fuel, electricity bill. We spend a lot on food, but that's what e splurge on. We don;t really go out or have drinks, we eat! :)

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    1. Food is our weakness, too! I'm terrible at controlling that part of our budget.

      And yeah, a little lifestyle inflation definitely gives our emotions a boost. It's short lived, but the feeling is definitely legitimate and real.

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  8. A big fan of your topics as usual. It's true that when you run the math and think logically...financial decisions are easy...but humans are emotional creatures and emotions often trumps logic. As Stefanie said...people know what they SHOULD be doing...they often just don't do it.

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    1. Thanks, Andrew. I like the way you put it - our emotions often trump logic.

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    2. I agree. I think a large part of those emotional decisions are based on what we collectively as a culture perceive to bring us happiness. Consume more, earn more, we're always an elusive step away from being satisfied. Learning to be appreciative and happy with what we have, in conjunction with focusing more on community relationships rather than material goods, is key IMHO.

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  9. While I don't focus primarily on financial success on my own blog, I run into the same barrier. We're all insecure social creatures and the "it" group seems like the group we should want to belong to. Unfortunately, just like in high school, this group of untouchables is really just an illusion built by Maybelline and Lucky jeans.

    I appreciate your summary point - if we are to sway anyone besides the already devout, we need to start by addressing that innate desire to be accepted by the it crowd. I believe my first initiation came from listening to the pain of callers to the Dave Ramsey show and realizing that the the popular ways of money led to misery (and that I was on the same path).

    Your theory also explains why Dave Ramsey has had such success with the baby step model. That first credit card that got paid off only took a month, so I had quick reinforcement, rather than a long-term goal, to keep me going.

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    1. Dave Ramsey does a great job of that. The long term goals are broken down into seven small ones.

      You know who does a good job of marketing frugality? Mr. Money Mustache. I hadn't realized why his blog is so popular until now: Early Retirement Through Badassity is a brilliant idea. Instead of characterizing the approach as scrimping and sacrificing, he packages the lifestyle as being hardcore and awesome.

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    2. That's exactly it. Frugality isn't sexy. Saving in general isn't sexy. It all goes back to your recent post about trickle down consumption. It is pervasive in our culture to be the ones that have. The have-nots are fairly uniformly looked down upon. So, even if you have the means, when someone sees that you don't have certain status items (i.e. car, appliances, neighborhood, etc.) you're judged. That's not something to take lightly. All too often I want to say, "Psh! Pish posh! Who cares what others think? Do this, and you'll save the environment, and YEARS of your working life!" However, all too recently, I was there. I felt the pressure from my friends as they were buying homes, cars, golf clubs, furniture, etc. Not only did I want those things as well because I thought they were cool, but most importantly, I felt I needed those things so I could still fit into my social network. Our social relationships and social capitol is the MOST important thing any of us has in our lives when it comes right down to it. So, in order to protect those relationships, we make certain spending decisions. Lastly, along this line of thought, I'd like to counter what a few people have said about emotion trumping logic. I'd say, based on what I've just said, that those spending decisions are rational and logical. The equation is simple: I like these friends, to keep them I need to buy X, so I definitely buy X. Sure, from our perspective that's nonsense. However, we cannot discredit their perspective simply because we feel we're enlightened. My two cents. Thanks for yet another fantastic and thought-provoking post, DBF.

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    3. See, I believe frugality can be kind of cool or sexy. Mr. Money Mustache is doing a great job of re-packaging the lifestyle. But we frugality bloggers, as a whole, do a crummy job of marketing the approach. (And I include myself in that criticism -- I do a crap job of pitching the lifestyle.) Too many of our posts are about saving money by doing X -- too few are about the benefits of a life that's a little free-er from the constraints of consumerism.

      And I agree about there being a logic to the spending decisions, too. They're certainly valid, at least.

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  10. I'm still susceptible to indulging in wants (though lately it can be reasoned as a need since they are maternity clothes), as I do agree learning about theory is always easier than putting it into practice. I also think it can become a challenge to unlearn bad practices, especially after decades of learning and becoming used to it, though not impossible. Just have to be more conscientious towards it. Great post, Mr. DbF!

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    1. You're right: our financial behavior lives like a habit. I wish I'd thought of that point when writing my post! That's probably the #1 reason why we're not getting better with money.

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  11. I read a lot of personal finance blogs (and forums) and think you have touched on something here that is important and explains how we make economic choices.

    An example -- I hope to take somewhat early retirement or semi-retirement in 6-7 years when my husband can take early retirement. Quite honestly, though, I struggle a bit with how I will pull the trigger. By then we certainly will have saved enough, and given our modest lifestyle would probably be okay. I think with some effort I could find meaningful part time work.

    But honestly, what holds me back is fear. Fear of how I'll define myself when I'm not going into an office each day. Fear of having a reversal of fortune and not having options to go back to work in mid-life. Fear of being out of the mainstream.

    Intellectually, I know what's possible because I'm a numbers person and have worked the numbers. Others who look at the objective facts might say, "What are you worried about?" Well, there are facts and objective reality... but our emotions are another reality that we can't ignore when making important decisions and major life transitions. Frankly, this is where I think some bloggers (and the people who comment on them) can be brusque and miss the point.

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    1. You've summed up so many of my feelings on early retirement, Christy. I've tried expressing some of my anxieties about retiring early to friends, and they've been dismissive about them. I've come to accept that people aren't usually that good at understanding the emotional aspects of others' situations.

      I, too, have a lot of fear about my identity when I leave the workforce. It's a real issue -- the problem may be in between my ears, but it's still real.

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  12. I think we certainly get caught up in what society thinks about us. If you work a certain job, you are expected to look a certain way and drive a certain type car. I know I've been guilty of that and it's hard just to shrug it off like you don't care, but retiring early is much more important to me at this stage than a new car or designer shoes. I'm sad it took so long to learn that.

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    1. That's awesome that you've made peace with that, Kim. Early retirement is definitely important to me, too. Luckily, working from home has shielded me from some of the pressures inherent with a corporate environment. But I still care about what my coworkers think of me. I don't share with them that we rent out a room in our house, for example, because I'm convinced they'll think that's only appropriate for 20 somethings.

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  13. I think how you spin your lifestyle (to yourself and others) has a much bigger psychological/emotional impact than people think.
    When I told my friends about biking to work and eventually when we sold the Jeep, it was all about how great biking made me feel and how happy I was to be a little more eco-friendly. I didn't even bring up the cost savings until someone else did and I agreed that we saved a bit on gas since the Jeep was such a guzzler.
    When I gush about my small house it's all about how I hate cleaning and want as little space as possible to clean. And that's true... but I also really enjoy the smaller property taxes and utility bills, too!
    I guess I just try and frame our relatively frugal lives in ways that people can relate to - and in some ways the green movement as well as recession/retro-inspired DIY and thrift are easy because they're popular at the moment. Even those people who don't "plant their pennies" can understand those sentiments, especially if I follow up with a silly statement like, "I also occasionally hug trees."

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    1. That's great, Mrs. Pop! You're spinning those choices in a way that gives you a great deal of respect & esteem, too. Biking to work is now a way to show how healthy you are to your coworkers. Living in a small home shows you're green & smart about housework.

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  14. A frugal lifestyle can't just be about money. You have to be interested in simplifying and de-cluttering your life. I don't feel like I'm depriving myself at all. Every time I save, I'm effectively buying the most important commodity there is - time.

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    1. That's a common sentiment among us frugal folks: we don't feel like it's a sacrifice. But it's hard to relay that in a convincing manner. We need better branding. You might be on to something with the time idea. The downside is that it's a payoff way off in the future.

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    2. I agree with you CC. I grew up with collectors and my husband grew up with a mild hoarder. There is a huge burden that gets lifted when I sell or donate stuff I don't need. We still have too much and our house is still too big, but the square footage issue is one we plan to address when we retire.

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    3. I'm with you Christy. We have to constantly fight the urge to just keep things indefinitely because "we might need them someday".

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  15. "...we have a bunch of complex psychological needs that compete with the need for improved finances..." I consider my financial situation to be very stable. We've beaten all the debt, have saved a ton for the kid's college, and are ahead of the game on building up retirement. We are basically in the building wealth stage of life. And that sentence you wrote which I highlighted still tries to beat me up all the time. When I look around our house and see boxes sitting in corners and clothes jammed into closets because we don't have enough storage...or when I can't get enough distance between myself and the lovable, but noisy kids...or when I want to entertain a crowd but don't really have the kitchen and dining room space to do so...I'm ready to go buy a house with double the square footage. What an insane thought! But that's the psychology you are talking about that plays with our mind everyday.

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    1. I'm glad I'm not the only one, Brian. I feel the pull to impress other people all the flipping time. I want them to know how well we're doing, and possessions are a good way of doing that. Heck, a part of the reason we like traveling is to brag about it. It's not a great trait, but hey, I can be honest about it.

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  16. I can kind of speak to the 20-somethings. There is a lot of pressure to "have it all" right away: the house, the car, the job, the lifestyle, etc. It can get expensive and really isn't sustainable unless you have a huge salary right away (which very few do). I think it's even worse for single people in their 20s and 30s, because you always feel a little bit of a need to be impressive to others.

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    1. Right: being single changes things quite a bit. Maybe more for men (?) -- not trying to be sexist, just speaking my mind. I think single guys feel pressure to illustrate they're successful (or, at least firmly on the road to success), to potential mates.

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  17. Hopefully we will all be proven right. After saving and compounding for many years, it better not be taken away and distributed to people that spent everything as soon as they received it.

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    1. I voted for Obama, twice, specifically hoping for a mass redistribution of wealth. These capitalist pigs need to give back what they have stolen!

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    2. Anyone making more than $50K would be considered rich by many.

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  18. Education isn't enough because if the consumer culture. It's ok to be in debt as everyone does it so we all enable each other. In other cultures they spend but it's shameful to be in huge debt that you can't pay back. Until it becomes a Scarlett letter to live beyond your means this will never get resolved. Look at online someone cuts back by a few hundred dollars owes six figures in debt yet everyone tells them what a great job they're doing

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    1. I fear you may be right, Charles. We have not done a good job of stigmatizing bad economic behavior. In a lot of cases (401k loans, consumer debt, being house poor), we've normalized it.

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  19. Insightful post, DB40!
    I've never had this many browser tabs open from reading a single article. :)

    In a marketing class in college we had an entire lecture on this phenomenon. It's actually quite interesting that people have these visceral needs that demand instant satisfaction. The long term advantages of not giving in to these 'needs' are often forgotten. Marketeers are specifically taught to play on instant gratification, which a lot of consumers fall for.

    In the end, human beings are social creatures and that makes us highly irrational in a lot of situations.

    Thanks for sharing,
    NMW

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    1. Ha! I may have gone overboard with the linking in this article. I researched a lot though, so I wanted to make sure to note where the ideas were coming from.

      That class you took sounds really interesting. I've never learned much about marketing, except to fear it. :)

      Thanks so much for stopping by -- and great blog name.

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  20. This is one of my favourite posts from you DB40! And an inspiring 'call to arms' for the personal finance blogging community - it would be a beautiful thing to see a personal finance movement on the same scale as what the consumer marketing world has achieved!

    The long-term aspect really does make it hard for me to sustain my financial habits sometimes. Despite having developed some pretty good habits with long term goals in mind, I find it so easy to have lapses of 'oh what the hell, just go have some fun and spend some money! It's not going to make a big difference!'. Creating a more tangible version of 'future me' to weigh up these decisions with would be a big help :)

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    1. Man, thanks for those kind words, Jason. That's really great to hear.

      I think we all fall into lapses of behavior, financial or otherwise. It's tricky because part of that is just being human. But there's an acceptable range. If our bad behavior becomes routine and we start doing it all the time, we need to examine why we're acting out of concert with our values and goals.

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  21. My wife does not get it when I say, "let's be frugal in cheap in a bunch of areas and then spend money on the few things that are really important". I know she gets it. I hate spending money on clothing. But I have no trouble buying a good 6 pack of quality beer. Be frugal/simple/cheap so you don't have to be with what "counts" for you. Great topic.

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    1. My wife has a bad habit of shopping for clothes, too, and it really eats into my beer budget. I keep telling her, you have a closet full of beautiful stuff, but there is no alcohol in the fridge!

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  22. Until we can change the status symbol of "making it" from cars or houses or boats to your 401k account or a PAID OFF house or a brokerage account worth a few $100k, I don't think much progress will be made when it comes to satisfying those psychological needs of status. All the education in the world means nothing if it's not applied in the real world.

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    1. Preach, brother. Our status symbols are contrived to support consumerism. The clothes make the man. Luxury = luxury car. A home is what the folks on HGTV say it is.

      Unfortunately, wishing things were different isn't going to do anything at all. We have a unique position as bloggers to promote a different set of values, a different idea of what is "cool", or what real success means.

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  23. DB40,

    I kind of have a 'live and let live' attitude on all of this. I find solace and comfort in living frugally. Many others don't. But who's to say I'm any more right than they are? If they want to jam out in debt and work till 70, then that's their choice.

    I simply aim to inspire others who want out of the cave...the Matrix..the rat race..whatever. Ignorance is bliss, however. And logic isn't always the primary force driving people's decisions. I may think of it as unfortunate, but people have to want to change before change will occur.

    Great topic!

    Best wishes.

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    1. That's a healthy attitude: live and let live. I am not really trying to judge anyone for different choices. But, rather, I think people are using their money in a way that really is not consistent with their own values or goals. I think the advertising field is a root cause for this (along with our own desires to do better than our neighbors).

      Yes, people have to want to change. Our wants are what drive almost everything. But what if your wants are easily manipulated, and are being changed via a savvy, organized field with huge financial backing? A solution ought to involve other means of persuasion of those wants for better, or at least more authentic, behavior.

      I think the fact that we both blog on these alternate approaches to life and money, illustrates that we have a shared interest in behavior change.

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    2. DB40,

      Oh, I didn't mean to say you or anyone else was judging. I think it's less about judging, and rather more about making generalizations as to how or why people live a certain way.

      I believe marketing and advertising is probably part of the problem. You could argue cheap credit that started a few decades ago didn't help either.

      But I think people are really the problem. You give most people the choice of a cheeseburger or tofu and 9 out of 10 are going to pick the cheeseburger. You can spend two hours telling them why that's a bad choice, and how the cheeseburger can lead to a heart attack, etc., and they're still going to pick that cheeseburger. Why? Because it tastes better.

      Same goes for finance. Someone earlier was comparing weight loss to saving money, and I wrote a post on that a while back. It works the same way. There's plenty of education out there for those interested, but the simple fact is that people just don't want the early retirement, delayed gratification, and saving money. They want what they want.

      I compare it to my own life. And the lives of many bloggers out there with friends and family. I can talk until I'm blue in the face about all of this stuff to my friends and family. And it does little good. I think that's a common experience across the spectrum. I was just as exposed to marketing as they were, but I'm different.

      Just my thoughts on it!

      Best wishes.

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    3. I think we're in agreement on the problem: many people aren't going to want to change their eating habits or spending habits, based on the fact that they want to keep the status quo.

      We just disagree on next steps.

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  24. Great post! I certainly have psychological needs and spend more than I need to in some cases. My house is a good example. I grew up in tight quarters and always wanted a relatively nice house I could be proud of. I have that now and it's worth it to me.

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    1. Thank you for the kind words, Holly!

      There are worse things in the world to splurge a little on, than a home. It's a real asset that you use for most of your waking hours.

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  25. Lots of great discussion here as usual. (Before I forget, I don't think you've ever been caught in my spam filter before!)

    I had a post on this recently about how I've become much happier with less. It was a progression, but I do think it's a lot more freeing than buying new toys left and right. It's true that marketing efforts have us believe that we'll be happy with more, but that happiness tends to be temporary. Thus, people go off on spending sprees for temporary highs.

    I've never been one to do that, mostly because I grew up fearing debt and not having enough money. I've saved and saved, and through many bloggers, realized that having less stuff will make savings go further in the end. Not needing much in retirement means needing less saved up. So it's my hope we'll continue living frugally for a long time.

    I think it comes down to what really makes us happy? And for some people, they genuinely believe they'll be happier with that Audi. And maybe they are. Or maybe we should all go away on a retreat, unplug, and re-discover our values and beliefs (highly unlikely to happen). I am definitely trying to show, through my blog, that a life with less isn't necessarily a life of deprivation or a boring one. It's just about finding joy in the simple things.

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    1. Right! I am actually much happier now than I was before I started paying attention with money. But it's hard to explain.

      I think you're kind of the exception in that you've never really fallen prey to the consumer mentality. That's incredible, of course. But, for most people, having a balanced approach to spending and saving requires some serious changes in thinking and behavior.

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  26. Great post! Reminds me of Ramit Sethi and his focus on the psychological side of finance, not the intellectual. We need to break through our own psychological barriers if we want to make any progress with our goals - financial or otherwise.

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    1. That's way too kind of a comparison, Lisa, but thank you! I linked to Ramit in this post, and he, as always, says it better than I can.

      I like how you put it, too. We need to really focus on our psychological barriers if we're ever going to make progress.

      Delete
  27. Financial education is almost non-existant here in the UK. It's no wonder that young people get stuck in debt circles with compounding interest. I think more needs to be done during the highschool years to properly explain compound interest, APR, Pensions, Taxes etc.

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    1. But the benefits of that financial education are paltry. The data show that financial literacy education does not work.

      We want education to be the answer; but it's not a lack of knowledge that drives poor financial behavior.

      Delete
  28. I just got my spam thing fixed too. All my comments went to Spam. I contacted Askismet and got it fixed. They have a contact form to fill out. It was less than a day.

    Contact me on my site/email if you want the email of the person.

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    1. Thanks, No Nonsense Landlord! I was able to contact Akismet and I think it's all fixed now. Thank you for the offer!

      Delete
  29. Very interesting post. I agree with a lot of what you said, especially about bloggers needing to do a better job of marketing frugality. I disagree with your assertion that people need to feel status. I think want more is a more appropriate word in this context. It all boils does to ego. But luckily ego can be defeated when we recognize it and have a desire to change.

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    1. Thanks Bmore Bungalow -- love the shot of that house, too.

      I can't really take credit for the assertion that people need to feel status. That was Maslow's idea (and I really should have called that out rather than just linking to it), hence the use of the word "need" rather than a want. Maybe it's a bit of semantics.

      This is an honest question, and not meant to be insulting at all: have you been able to defeat your ego?

      Delete
  30. I started saving about 15% at 25 and about 30%-40% at 35 and what really motivated me was financial security thru the ups and downs of our economy and the possibility of early retirement/financial freedom. If living below my means was just for a pot of gold when I'm 65 then I would have had a hard time being motivated as well but sleeping well at night when economy goes south and financial freedom at 50 was very motivating.

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  31. I've been learning a lot lately about myself and about my finances, including the tough lesson that so much of personal finance is tied to our emotions. Just knowing this is a huge step in the right direction, but now I have to figure out how to combat emotional spending.

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  32. My motto on personal finance, paying off debt, becoming financially independent, retiring early is "If it were easy, everyone would do it." I really liked the article, first read back from vacation so thank you.

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  33. It seems gettting a hold on finances is harder than many media outlets claim. I understand the premise of the article as much as emotions play into finances, If you can't afford a lifestyle you can't afford it. If a new graduate is under tons of debt, and buys the Audi you mention, as much respect as you can get, it still is not financially smart. The ultimate goal is to stay in line with what your goals are, and find ways to get respect in other ways. If your goal is to always be under debt, no amount of income or respect will help you with the financially wrong mindset.

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  34. Do you have any idea what made them think you were a spammer?

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