10 Ways to Decelerate Spending & Consumption

 

SPINNING ON THE HEDONIC TREADMILL

A big theme here at The Money Vikings is to shift our thinking in terms of money or “capital”. We are constantly shifting our behavior to be less of consumers and more oriented towards value production, investment and wealth creation. If a person is only a worker and consumer, they will have a hard time building wealth. Ever notice the effect of time and habits on stuff in life? Ever notice that something might start out small or minor, then one day you wake up like Rip Van Winkle and the whole world has changed. In the military people call it “mission creep”. The mission shifting and growing into something it was never meant to be because it happens so incrementally over time. Our consumption habits can make a similar evolution into some big out of control situations! We will not be able to satiate the last hedonistic purchase unless the next one is greater and greater, until we are in debt and broke! For example, if someone goes out to a fancy restaurant each night, after a while it is not a special treat like it once was. So in other words, our financial mission creeps until the mission becomes massive consumption, debt and no wealth. In this post I want to address the “mission creep” of our consumption and suggest 10 ways to tame it.  

There are two basic equations to the whole financial independence success formula: Increasing income & reducing consumption. They must be working together to create the conditions and environment for investment and eventual financial independence.

  Sometime we are spinning out of control in terms of consumption. There are dozens of things my grandparents just 40-50 years ago were somehow able to live without. For better or worse, we live in a hyper consumption environment. Now with Amazon, anything we could ever imagine can be delivered to our door in a matter of hours. On one hand a wonderful marvel of technology and commerce, on the other hand an environment that encourages instant gratification and very high consumption. Here are some things we did not have 40 years ago and life went on: diaper genies, huge flat screen TVs, fidget spinners, tablets, Netflix binge watching, Tickle me Elmo, Nintendo, Play Station, X Box, fancy strollers, DVD players, Crocs, …Life was actually simpler 50 years ago. Going out to eat was for special occasions. People spent more time socializing in their homes. I am not one to overly romanticize the past, but I am saying that for better or worse my grandparents lived in an environment with far fewer demand signals and opportunities to “BUY! BUY! BUY!” and “SPEND! SPEND! SPEND!” There were not even widespread credit cards back then, people actually could only buy things that they had cash for. I understand and marvel at the world we have all created with fantastic products and inventions, but need to balance the consumption of these items with our own budgets and investment goals. All the convenience actually comes at a cost. There is a cost to being so capable of impulsive spending. It’s almost too easy by design (Amazon I am talking about you!). It clutters our lives and dulls our ability to think more creatively. Sometimes when something is not readily available at a seconds notice, we need to get more creative in terms of how we solve some kind of material issue in our lives. I am not against the modern world or technology, but I do think it needs to be managed in a way that aligns with those seeking financial independence. So along those lines we thought of 10 ways to ramp down consumption in order to free up more capital/money for investments:  

1. Clothing

We need good clean clothes. And fashion is a way to express ourselves that serves some important human psychological needs. But the “fast fashion” disposable way we are turning over clothes is bad for our finances and bad for the environment. One trick I recently deployed was simply reorganizing and ironing all my shirts. The process of this made me realize I had more clothes than I remembered and allowed me to re use some clothes I had not been utilizing. I have also committed to buying more quality staples that will last a long time if I take good care of them. SAVED A $100-300  

2. Paper towels vs regular cloth towels

Do you ever notice how quickly now we reach for a paper disposable towel vs. a cloth towel? I understand there are times when a paper towel is the best choice, but if something is a simple spill of some water on a counter, a disposable towel is a waste. These are expensive and a waste of trees! This is just one example of the “disposable” world we unfortunately live in. Folks are throwing things out left and right, which pollutes our environment and wastes money. Last week Jerry showed how he could fix his vacuum cleaner and save $200 and save the environment! SAVED $12 http://oracle.davidkanter.com/2018/10/20/how-i-made-208-82-on-my-day-off-in-less-than-30-minutes/  

3. Meatless Mondays (or Tuesdays or Wednesdays…)

I like quality meat in moderation. Too much is bad for our health and meat is expensive. A person can reduce their food bill by having a meatless day. Not to mention eating a little less meat is one of the biggest things a person can do to reduce greenhouse gas emissions. Beef has an especially high price both in terms of dollars and the impact to the environment. I am not saying I don’t like a good burger, because I do, but only having red meat once a week could help health, finances and the planet (space ship human).  

4. Use electronics longer

We are jumping too quickly for the latest gadget or flat screen TV. Can’t the older model last a little longer? We do not need a new flat screen TV each Black Friday. I’m thinking that Black Friday is the opposite of a good deal and actually encourages over consumption! Remember it’s the day that retailers go into the “black” on their accounting and make a ton of money off you.  

5. Keep the car longer

The longer we can keep a car going the better financially. Cars and vehicles are huge wealth destroyers. They are expensive to buy, finance, maintain, gas, insure, etc. Just think of them as machines that burn money. You are working hard to funnel money into them for the machine to burn up. This is a big reason I am very excited about the coming disruption to the automobile industry. I believe consumers will have much better options finally, from electric like Jerry to ride sharing self driving vehicles. These new platforms will save consumers billions, thank goodness for technology and our economy!   http://oracle.davidkanter.com/2018/07/19/the-advantages-of-an-electric-car/  

6. Limit the little “made in China” stuff

Some folks are buying all kinds of little things that clutter their homes and waste money. This is like little silly toys for the kids and what are known as “knick knacks” I think once someone has kids the prevelance of this stuff increases.  

7. Entertainment consumption

Have you looked around lately and taken stock of all the subscription services, magazines, movies, cds, new books, etc that you have accumulated? These kinds of little expenses can add up. More recently I am noticing how easy it is for people to press a few buttons to order an app, movie, kids show, etc. Some of these on demand shows through popular platforms are very expensive and the cost can add up fast. The average consumer is spending over $3,000/year on entertainment. That is a huge amount of money and could mean the difference in terms of building wealth. SAVED $2,000/year http://oracle.davidkanter.com/2018/07/25/idea-12-a-free-treasure-trove-right-in-front-of-you-the-library/

8. Limit restaurants

Restaurants are tricky in the world of personal finance. In my view the strategy is about limiting the events to only a couple times per week max and choosing the right places. I prefer the more downscale, local healthy fast casual or takeout. When a restaurant gets rid of the white table cloths, expensive paintings and wait staff, then the price can be reduced. If you are doing take out then you are saving a few bucks on tips. SAVED $2,000/year  

9. Utilize Library & Free Events in the Community

Along the lines of item 7 “entertainment”, there are so many free ways to educate and entertain ourselves. Have you checked out all the free events available in the community? Where we live for example, there are free “concerts in the park”. These events are sponsored by local businesses and churches and include a live band, free hot dogs, chips, drinks and cookies. A free Friday night out in the summer with the whole family. Check out your local library for free events, seminars, talks and classes. You might be surprised to see free yoga, meditation, professor lecture series, etc.  

10. Utilities

If we simply use less electricity, gas, water, etc., we will be able to save a lot of money. Solar panels seem to be an increasingly attractive option for people. Some high end systems can be installed for around $20k. This is a lot, but if a person has a $400-$500/month electric bill, it might make a lot of sense.

RAMPING DOWN!

The main concept here is to actually run your life like a good business. Good strong businesses are constantly thinking of ways to reduce costs and increase efficiencies. This tireless pursuit leads to unlocking amazing value. We can do the same thing with our own lives by finding every little way to trim expenses. It might shock you to see at the end of the year how much you can save and hopefully add to your wealth building efforts!

Leave a Reply

This site uses Akismet to reduce spam. Learn how your comment data is processed.

%d bloggers like this: