Tuesday, August 10, 2021

Might as Well Spend It All?

People want excuses to indulge themselves.  We all do it.  I did it.  Yes, I regret it.  You can indulge yourself on a budget!  Time to make the donuts!

If you google "Living Stingy" you get a lot of hits from text farms which put up sound-alike websites and blogs that are little more than clickbait platforms to generate clicks so they can get ad revenue.  And some of them even take the content of my blog, remove all the formatting, and present snippets of text!  How odd.

Others cater to their audience by denouncing Living Stingy and saying you should just spend it all now.  Saving money has a downside, it seems.  You end up getting rich and becoming one of those evil 1% bastards.  Well, at least a mean 3% asshole anyway.  1% worldwide, easily.  And let me tell you, it's awful having to swim in money!  Just awful. So don't do it. Just spend it all now!  (Yes, I am being sarcastic).

I also get trolls - lots of trolls, automated and otherwise.  I have had several try to convince me that saving money is for chumps, because you should "enjoy your money".  In response to my Bling Rims posting, one young fellow from the suburbs posited that since a "gangsta" like him would be dead or in jail by age 30, why not blow all his pimpin' money on bling rims?  Of course, he's white as a sheet and his "pimpin' money" is from his summer job at the ice cream stand.  And by age 30, he'll be in grad school, if he isn't living in Mom's basement playing video games.

Another troll tries to convince me that spending it all is a better bet because you could invest in the wrong thing and end up not making any money at all!  This is harder to parse.  I am guessing he is arguing that we should all be buying Bitcoin and Robinhood and AMC and Gamestop and Gold and placing our bets in the casino of the stock market and hoping we win big!  In the meantime, take that money you would have put in your 401(k) and buy a jet ski!  Minutes of endless fun!

Again, this is harder to parse.  Yes, if you put all your savings into Enron stock, you would have ended up screwed (unless you knew to sell just when).  And indeed, everyone should expect to lose money on investments from time to time.  I bought $5000 of GM stock, figuring my old Alma Mater could never go out of business (and IBM would dominate computers forever!).   Well, I was wrong about that - the company went bankrupt and the stock went down to zero.

But that is exactly why I say - and most responsible financial advisers would say - to invest in a panoply of things.  It is why people like mutual funds - they invest in more than one stock.  Putting all your eggs in one basket isn't a wise move, no matter what Warren Buffet says (and say, he has a lot of baskets, don't he?).

Yes, it is possible that the value of your portfolio may go down as well as up.  In the nadir of the 2009 crash, my portfolio went down by at least a third.  It was still worth more than what I put into it.  And within a year, it was back up to where it was.  While your investments may go down in value, at least you are still left with something, as opposed to nothing.

On the other hand, if I had "spent it all" on Jet skis and toys (and if you read my blog, I did enough of that - six cars two boats, a tractor, a jeep, a vacation home - is that enough?) all I would have is a bundle of receipts and some rusty junk laying in my side-yard.  And judging from the side-yards of America, apparently that is a popular option.

But yes, of course, our troll is "right" in that you can invest in all the wrong things - put all your eggs in rotted baskets - and end up destitute.  But you really have to work at that.  And oddly enough, that is what these trolls are advocating - because they work for the people who want to take your money, or at best are useful idiots.

If you throw money at trendy investments, gambling (and that is the key word, gambling) that they will pay off, the odds are, you will end up broke.  Most speculative investments are just that, hence the name, speculative.  People don't understand what that means.  Speculative investments might pay off 1 time in 100, but amazingly so.  The other 99 times?  You lose it all.   Sure, some folks - insiders mostly - clean up on these deals.  The stuff advertised to the plebes isn't that.   In fact, it is the opposite.

As I have noted time and time again, the modern IPO is set up by these insiders (venture capitalists) who come up with (i.e., find) some hair-brained invention or business plan, go big with huge capital investments, and then sell off 5% of the company in an IPO to dorks like our troll friend.  Now that the stock is listed, they can sell off their own shares and make a pile - $50 million in fact, just for an appetizer.  And if you are really ballsy, the stock you sell in the IPO doesn't even have the same voting rights as the stock you keep!  Smart folks, those venture capitalists.  Dumb folks those dorks thinking they can score big with a few thousand bucks of IPO stock.

The problem for the small investor is that they are small.  They have one shot at this - one and one only - and can't afford to screw it up.  And living on retirement island, I see how people screw this up.  Friends who got sucked into day-trading schemes, or "lived large" on their salary and didn't bother to save.  It gets awkward.  It gets ugly.

But what about all those toys?  I mean, that is the mantra of the salary slave - "live for the weekend" and "treat yourself!"   But you can do those things without spending a ton of money.  Yes, we had a swimming pool.  It was nice.  If I ever did another one, it would be the smallest size they make.   I could have had a nice pool with a lot less maintenance (and expense) for half as much money - and enjoyed it more, not less.

THAT is what this blog is all about - living better on less, not "scrimping and saving."  You can live large by eschewing status symbols (which provide no real pleasure and mostly pain) and looking for real value.  When we bought our last boat, we bought one fairly new - still under warranty - because we thought it would be "more reliable" than the previous one.  So we spent three times as much ($60,000!) on it, and it was expensive and unreliable as crap.  Meanwhile, the previous boat continued to do yeoman duty - I had replaced the engine and gas tank, and it was quite reliable as a result.  But even with a brand-new motor, the total cost was a third of the last boat.

Lesson learned:  Spending more doesn't mean you get more.  And I have learned this again and again in life.  It is a hard lesson to learn, too!  You buy a BMW and pay twice (or three times) as much as you would for a Camry. Do you get twice as much car?  Not really.  Not even 1.5 times as much.  Particularly today, when even plebeian sedans handle almost as well as "The Ultimate Driving Machine" (with its wonky magnetic steering) and can be optioned up to have all the luxury goodies that were once reserved for only prestige cars.  My KIA Soul has heated seats - in the back as well as the front.   Time was, you just couldn't get that in an "economy" car.

That's the good news.  Even with inflation - maybe especially with inflation - you can still get low-cost goods in this country for a lot less than "status" items.  Sure, you can spent $1300 on a new iPhone (and no, it isn't "free" with your plan) and pay $100 a month for service, but what are you doing with it that is any different that the last generation Galaxy you can buy all day long for $149 on eBay?  Turns out, not much.   But the bonus is, I don't weep when I drop mine in the toilet.  I just buy a new one.  And no, I don't buy "phone insurance" either.

Maybe you could call that "scrimping" but I call it being smart.  Making better choices with your money.  In the RV park where we are, I just watched our neighbors return this morning.  They woke me up nearly an hour ago, starting their car.  Where were they going at such an ungodly hour?  They came back with designer coffee drinks and breakfast sandwiches (nice and cold!) from Dunkin' Donuts.   Was that a smart economic move?  Getting up half-asleep to drive to breakfast?  They are living in a 40-foot 5th wheel.  It probably has a Keurig!  In the time it took them to drive to the park entrance, I made a pot of coffee in my 99-cent thrift-shop perker. (In the campground "book exchange" someone dropped off a nearly-new "Mr. Coffee" with a sign on it saying "free".  I was tempted!).

"It's not a lot of money" people say.  Is it?  Because in addition to the $12.99 they spent at the Dunkin-D, they used up $5 to $10 in car expenses.  Plus an hour of their life gone ("never seem to have enough time to get things done!" - also the mantra of the salary slave).  They spend so much time saving time, it isn't funny.  Ever feel like a total chump waiting for the pizza guy?  You could have made a three-course meal in the time it took to order the food and wait for it.   Time is a valuable asset as well!

I digress, but what is up with Dunkin' Donuts?  They are building all these new stores - shiny new - way out in the country in the middle of nowhere.  Unlike Starbucks, which is usually in some godforsaken strip-mall, these are free-standing stores not in an "outparcel" but off some two-lane road.  Is this a new retail strategy?   I notice too, they seem to be busy.  Watch out Starbucks! That the Dunkin' Donuts man in your rear-view mirror!

Not that I like Dunkin' Donuts.  I only like a cake (traditional) donut every once in a while, for... dunking.  Hence the name.  All that sugary crap you can leave on the shelf.  And since they ditched the "Fresh every four hours!" theme song (because the donuts are all made in a factory somewhere, not in the store) it really isn't all that appealing.  When we lived in Virginia, my brief love-affair with Krispy-Kreme was fueled by the fact it was an actual factory making donuts before you eyes.  When the "Hot Donuts" light went on, we swerved across three lanes of Route 1 to get a box.  I am still working off that excess weight.   But of course, all that has changed, and K-K was turned into yet another IPO ripoff story. Probably the result of a drunken bet between to venture capitalists.  "Hey, I betcha I can buy this donut chain and take it public and get the plebes all worked up over donuts! Ha-Ha!"  And the rest is history.

This is not to say that you should never, ever go out to eat.  Only that when going to a restaurant becomes your default mode of operation, something isn't right in your life.  Maybe you think you can afford it, but only a few dollars a day, put into that 401(k) can end up being a real pile of money.  Again, maybe you call this "scrimping", I call it making better life choices.

Sadly, today, people want to make poor life choices and be insulated from the consequences.  They want to squander their precious capital and then have the government bail them out. Free money!  Free College! Student loan forgiveness!  Gimme! Gimme! Gimme! I did nothing wrong, only what the television told me to.  Get the door, it's Domino's!

Personal responsibility - an odd thing to hear from a Democrat.  But these days, it seems the GOP is pandering to the "bail me out!" mentality as well.  Nothing is ever anyone's fault. You don't get elected by even suggesting such a thing.  The plebe voters are all programmed to think that all their troubles were caused by other people - probably China or maybe Nancy Pelosi.  Being introspective, being realistic, making hard choices, living with the consequences - once the foundation of America, is long lost.

All I can say is, my only regret in life isn't spending more money, but having more fun with less.  And I did have a lot of fun, often on a budget, and oftentimes, the cheapest (or even free) things in life are often the most fun.  Having financial security is one of the greatest happiness you can have, too.  Maybe you can't show it off like a new car or a jet ski, but it gives you that feeling of comfort and relaxation that all the "kickin' back" can't match.

Blowing money on toys?  It gives you a short rush of pleasure, but then followed by a hangover of payments.  It just isn't the same thing!