Your Mental Approach to Spending

['Chair]

I think about every purchase. The time I spend thinking about every purchase is the differentiating factor. Its a slightly exponential curve that unfortunately shifts right as I move from lower to middle class (i like that wording...moving from lower to middle class...saw it somewhere on 2p2).

I have some bad habits (at least I consider bad in retrospect). Good example: being loose with money won and tighter w/ money earned (yes, all money is earned, but you get my point).

Good Habits
- Rarely will I not splurge on the ppl I care about in my life.
- I've worked fairly hard at paying myself first and educating financial perspective which likely stems from growing up in a struggling lower-middle family of 5 while being surrounded by the thriving upper in my highschool years.


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Adsman - not really surprised with your habits given your famous post. sorry if I missed it somewhere, but do you have wife/kids? If yes, would you say they play a [small/medium/large] role in your financial decisions.

Zee - are you planning on retiring off your investments of poker monies?

[fish2plus2]

"The other day, i bought a new set of poker chips, they were $430 dollars."

Link? Thats alot of money...

[adsman]

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Adsman - not really surprised with your habits given your famous post. sorry if I missed it somewhere, but do you have wife/kids? If yes, would you say they play a [small/medium/large] role in your financial decisions.



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No, I haven't got a wife or kids. I'm sure that I would have to re-evaluate in that situation.

[PITTM]

[ QUOTE ]
"The other day, i bought a new set of poker chips, they were $430 dollars."

Link? Thats alot of money...

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its a set of 600 wsop replica chips. i saw a ton of horrible looking ones and these ones look awesome.

[riverrchic]

I def do the "mental accounting" thing, but in a different way. If I think about buying something, but then choose not to, I'll mentally file it away for future use. Then, when I'm thinking of buying something else, I can recall the amount that I *would* have spent before, but didn't spend, and then use that to justify this new purchase.

It's rather perverse, but this works on many levels: for example, if a friend buys me dinner, I can file away that $10-20 (or whatever) amount as "$ I would have spent on dinner"... Then, next time I want to buy something somewhat frivilous, such as $10 for a book that I don't need & could get from the library, I can think "Well, I didn't spend $10 last night for dinner, so I can spend it here."

However, while I did a lot of this growing up & in college, I'm doing it a lot less now that I make more then enough money to live off of.

I also am very financially sound otherwise - I always "pay myself first", don't spend a ton of money on not-needed items, etc. So, if this is the best way for me to treat myself, I'm going to continue doing it...

[DarrenX]

Just a few thoughts...

Money for poker- I've used a large portion of my winnings to invest in our (fiancee and my) business. If I need to reload, it's an investment towards the next big win.

Money for nice dinners- If we don't go out once a weekend for a nice dinner, she'll have a mental meltdown. $150/week well spent!

Volleyball- $1200 for nationals? It comes out of my poker winnings, which is 'found money'- plus, it keeps me from MY mental meltdown!

Car- why spend money on a car, even though I drive an 'on it's last leg' 1996 Maxima? Who am I trying to impress?

[prohornblower]

Utility-depreciate: Clothes, food, cars, computers, lawnmowers,
refrigerators, washer/dryer. The main goal here is to purchase these in a
manner that is cheap enough to get done what is needed to get done.
Spending extra $ on these things is usually really stupid as they have
almost no resale value.

Utility-appreciate: Real Estate/House: This is something that you use, and
that also appreciates in value, typically.
Buying "too much" house isn't going to be as big of a mistake as buying "too
much" of a refrigerator, etc. Of course too much house would be thousands
extra, whereas too much refrigerator would be hundreds extra. Still,
relatively speaking, it isn't as big a mistake.

Pleasure-depreciate: Waverunners, boats, skis, guitars, stereos, DVD
players, TV's, designer clothes, gourmet food, "fun" cars like a Corvette
convertible, etc. You should basically never buy most of these things until
you've done a lot of other things, such as contribute substantially to a
retirement account, own your own home, be debt-free,
have kids college substantially paid for, etc. DVD's and
TV's are minor mistakes but waverunners and boats are mistakes with an extra
"0" on the end.

Pleasure-appreciate: Vintage cars, hobbies (certain collectibles like
buying rare coins), nice home. These are good things to do again when
you've taken care of all your other business and responsibilities. A lot of
super rich people get into things like restoring cars, restoring boats,
purchasing a dream home, etc. These are basically hobbies that are good
financially as well.

[NajdorfDefense]

[ QUOTE ]

Utility-appreciate: Real Estate/House: This is something that you use, and
that also appreciates in value, typically.

Pleasure-depreciate: Waverunners, boats, skis, guitars, stereos, DVD
players, TV's, designer clothes, gourmet food, "fun" cars like a Corvette convertible, etc. You should basically never buy most of these things until
you've done a lot of other things, such as contribute substantially to a retirement account, own your own home, be debt-free,
have kids college substantially paid for, etc. DVD's and
TV's are minor mistakes but w

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I think a lot of this is bad advice. First off, over time your home typically doesn't appreciate more than the rate of inflation, certainly it can be a lot less after taxes, insurance, upkeep, broker's fees. Housing typically appreciates by 5.1% over time before inflation. People generally ignore inflation and taxes and all other costs and think they've doubled their money on a house, 90% of the time it's not true. Many people in today's market have found out that RE goes down as well as up.

Secondly, to not tell people to have a gourmet meal, DVD player or a nice car while they have a mortgage on their house is just insane. The gov't subsidizes you to own a home, if you can make more than say 4.5% on your investments [6% rate - 1.5% deduct] than you should keep your mortgage as long as you can.

You can't take it with you, nobody on their death bed says "I should have paid off that final Chase balance instead of eating at Nobu or seeing Florence." Moderation in all things, as usual, is key.

Paying off your mortgage before buying a DVD player sounds like bizarro world advice.

[Big Poppa Smurf]

Easy come easy go is a great attitude to have. If you're smart or just willing to work hard and do a good job, you will never be broke broke since you can always start over and rebuild again. Obviously this doesn't apply as much or at all if you have a family.

[jzpiano]

[ QUOTE ]
Easy come easy go is a great attitude to have. If you're smart or just willing to work hard and do a good job, you will never be broke broke since you can always start over and rebuild again. Obviously this doesn't apply as much or at all if you have a family.

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This sounds like the theory of a true gambler [img]/images/graemlins/smile.gif[/img]