Retirement, Money, Pleasure

Here’s a few things that feel vaguely related to me. The first is Garrick van Buren’s response to me about retirement and money. He picks two points he disagrees with me on, neither one of which I think is actually related to what I think. I don’t even quite understand #1, where he points out that we have the capacity to do our lines of work even as our bodies get old. He thinks retirement as we know it will not exist in a decade. Umm, ok. I think my retirement will be a lot like what I do today, except that there is no requirement that any of it make any money. Retirement will give me the luxury of spending my time in unmarketable pursuits. I imagine there will be blogging and podcasting and open source, but also lots of reading of books and watching of movies. It’s not that I can’t work into my 70s, it’s that I don’t want to.

His second point is kind of with the straw man, not me. He argues against this statement: “Sacrifice today inherently creates opportunity tomorrow.” Umm, ok. In particular, I have been talking about not spending money on luxury items or where the price far exceeds the utility value. I’m not against buying things in general, particularly when you need them to accomplish something. It makes little sense to me to pay $40,000 for a car when the $12,000 one I have does everything I need but I know people that do it. I won’t pay $4,000 for a TV set, regardless how good it looks, when the $200 one is serving my needs. I did pay $600 for a Marantz PMD 670 and I’ve used the living hell out of it and got my money’s worth. In the latter case, the utility value was higher than the price and I’m happy.

In this vein, Uncle Warren distressed me a little in this comment about how he didn’t purchase some DVDs because of me. Again, I don’t want to be the poster boy for not spending money per se. If you are going to get the value out of it, you should buy it. This assumes you have money to buy it, though. If it’s a charge you are going to be carrying, you should probably skip it until your consumer debt is paid down.

However I do think this is why it helps to get your debt paid off and a savings plan going. Once you have that set up, you don’t have to sweat every nickel. My 401K and IRAs are fully funded and we have savings happening every check. The money we have we can spend and the only real issue is about getting full value out of it. I opted not to buy the new computer because I’m still fine with my old one and the longer I can wait to upgrade the better value I’ll get.

Lastly, Joi Ito posts about the difference between happiness and pleasure. That’s what it is all about to me. Everything I’m talking about is trying to create happiness, which sometimes is at the cost of some pleasure. I can live with that, and I like the way he thinks about them explicitly. We make these tradeoffs all the time, and I’ve never really thought about it in these terms until today. It’s worth some introspection to examine what we do and whether that is ultimately creating happiness for or others.

3 Replies to “Retirement, Money, Pleasure”

  1. Interesting post Dave.
    I try to do my best to live by the buy what you need ethos, but sometimes miss out.
    When possible, I avoid the expensive branded stuff as i know the smaller brands are just as good. As I saw on dl.tv the other day, a $15 HDMI cable is just as good as a $150 hdmi cable, only a hell of a lot cheaper.
    I’m curious to know what your general financial status is? Do you own your house? Cos thats often the biggest drain on finances. It is for me, and the second biggest now is a new car.
    The issue of cars, as you mention is a bit different I think. I recently (Sunday) got a new used car. We had the option of a cheaper, slightly older car, or the one we got. In this case, we went for the newer, more expensive (only slightly more. Can’t afford anything more than £8k) and our decision in this case was that we thought that in the long run, it would save us money. A newer car theoretically means less repair work when it gets its MOT, whereas an older one might need more work.
    And having recently spent £600 to get a £1000 valued car through its MOT, only for it to then get written off, this was a concern.
    I grew up knowing the value of money, and have always done what I can to save money over the years. I bought this car on finance, and didn’t want to, but sometimes needs must.
    Only hope I can manage to retire at 50 too. I don’t need an expensive car, or a new laptop every year (still running my 3 year old powerbook despite a dodgy display). I hate the “Spend now, worry later” mindset a lot of people have. Especially when the average debt in the UK is something like £30,000!

  2. We own our house and have a mortgage, and at the moment we have a used car loan that will be paid off in 2 months. It was a 4 year note, but we will have paid it off in about 20 months. Other than that, we have no consumer debt. Our credit cards are there for convenience and never carry a balance from month to month.

    The car we bought was not super cheap, but good value. I think the best deal in cars is a 2-3 year old one. It’s still pretty new and has a good shot at being reliable, but a lot of the initial value depreciation has already happened. You lose 10-30% of the value in the first year, and I’m happy to let someone else take that hit. The other thing is that I tend to drive Honda Civics, which have very good reliability, low maintenance costs, and high mileage. That all adds up to low cost of ownership.

    In this finance stuff, it is worth noting that we had most of our cash savings wiped out in a bad house deal 3 years ago. That big cushion we have built up has happened recently, so it can be done. We’ve been debt free for some time though, and the best thing about that is that it gives you options. When you are already stretched out, you have nowhere to go and no flexibility if something bad happens. When all your free cash goes to debt service, any tiny unexpected expense is devastating.

    The figure I see is that American households have an average of $8,000 in credit card debt alone. That’s AVERAGE, and it is accelerating because the average household is adding to it each year. At some point this bubble bursts, people are ruined left and right and we have the 1930s all over again.

  3. I remember you saying before you had some back luck on a house deal. To get to the stage you’re at in 3 years is quite an accomplishment tho.
    I’ve just got a Toyota which seem to be decent enough so should keep costs down.
    Thats quite a surprising comparison for average debt. Thats about £4040 over here, which is very different to the £30000 average in the UK. Even taking into account other debts (mortgages are a specialty debt you can disregard often) thats not too bad. The thing that I hate about loans is the fact you’re always paying more than something is worth. Unless its a necessity, I would say you should save for it. Like you said with your laptop, wait a while, save some, and you can get something even better for the same price.

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