consumerism, degrowth, financial independence, happiness, stoicism

The more you buy the happier you’ll be (or not) – Positional goods

There are two enormous pitfalls (among others) when trying to save money, one of them are positional goods, the other is lifestyle inflation.

Lifestyle inflation, is when, upon increasing our income, we increase our expenses “because now we can afford it” often, increase the expenses more than the income. So one buys a bigger car, or a bigger apartment, or goes on holidays to more exotic places. After a while, that becomes the norm, you get used to it, and then you need another slightly more expensive car, etc.

In this article I will discuss positional goods, we can leave lifestyle inflation for another day.

What are positional goods?

But today’s post will go deeper into positional goods, what are those so-called goods that are positional? It is basically, a good (or service) that is used to signal status among our peers. That can be any of the things mentioned in the above paragraph (houses, cars, holidays, suits, jewelry, etc.)

Most importantly, those are things that do not really give any value, only the satisfaction of researching about it, buying it and being happy about buying it. When one has got used to it, then the happiness level goes back to where it was before acquiring that object (or service).

For example, a drill, or a bicycle or a car, are not necessarily positional goods, but they can be as soon as you convince yourself that you need that drillmaster 2000 (or whatever fancy drills are called) or a sports car, that you are falling in the Consumerist trap buying shit you do not need and that will not make you happier.

A Little Story

It also happens to me, about 4 years ago, I bought a watch that I thought I would own and wear forever, nevertheless, after some time, I started to think it looked out of fashion, and that I was not so happy about it any more.

Therefore I have since started to think of buying a watch. I am perfectly aware that a new watch will not turn me into James Bond.

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Bond himself

But still, something in my unconscious mind, tells me that it will.

This is why, after realizing that, and reflecting on it. I am currently selling all the watches that I own, in order to buy one simple, low-maintenance utilitarian watch.

How can YOU avoid falling in the positional goods trap?

First of all, one needs to be honest with one self and be self-aware, otherwise that is nothing can possibly be done.

Second, realize that is not something you NEED, it is something that you convinced yourself that you need, but you will be equally happy without it. In many cases, we tell ourselves that we need a newer car, for example, or that we need a car, when many, many people can perfectly survive without a really expensive vehicle that is idle more than 90% of the time.

At that point, you will realize that you do not need that, but then you will say “I want it anyway, I can afford it”. Well, most likely, even though you think you can, you really can not. A VERY easy rule, is: If you need to borrow money for it, you most definitely can not afford it.

If you do have the cash for it, that you should make the exercise of thinking, how that fits in your budget and in your financial goals. Most of the time, it is still not worth it. Because you spend money now, and in 3 to 6 months, you will be exactly as happy (or unhappy) as you were before spending that money.

I rest my case.

 

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consumerism, degrowth, financial independence, happiness, housing, stoicism, travel

How to become financial independent by cutting your housing costs

Housing is probably the biggest expense most people have, it is my biggest expense at least, and there is high probability that it is also yours.

So, when choosing housing, one needs to carefully consider the wants and needs, as a small percentage in savings can represent a HUGE saving long term.

I owe this part, as many of my lifestyle philosophy to Mr. Fisker even though I have not managed to be as extreme as he is.

Most people in the western world, have a dream of what would the perfect house/apartment be, there is the typical cliché of a house in the suburbs with a garden and two cars parked in front. Maybe those are our true desires, or maybe it is something that the consumerist society has put in our minds. (most likely the latter).

Just as much as we cannot rely on pure emotions when choosing a place to dwell in (such as “the dream house” myth). We cannot rely purely on reason and logic, it needs to feel right as much as it needs to make economical and utilitarian sense.

Needs and Wants

Let’s then, take a look at how to choose housing, by looking at our needs as well as our wants and see if we are willing to sacrifice financial independence for those wants.

First, we need to consider, what is exactly what we really need when we consider housing, basically it is a place to sleep, not more. We can also include in there, secondary needs, which are not indispensable but most people would consider basic needs, toilet and bath and a place to to store and cook food.

Taking these basic needs into account, we need to be aware of all the different solutions that can solve that problem. When doing this exercise one cannot already assume that one needs three bedrooms or needs a garden, balcony etc. Because in reality none of it is really needed, it is just some luxury that we want and we tell ourselves that we need in order to justify our consumerist and hedonistic tendencies.

It is not that I am immune to nice places, I am currently living in an apartment and I could easily survive with a smaller place, we are all walking the way, and one has to start somewhere, what I think is most important is not to get blown out of proportion. That is, have a reasonable number of rooms, reasonably cheap location, reasonable number of bathrooms (that is max. 2 if you are 4 or more people in the house hold, for 1 year I lived in an apartment where we lived 8 adults with only bathroom), etc.

Your partner

When it comes to the housing, it is not like in other parts of the lifetime where you can just change it. In that case you will need a good agreement with your partner if you have one. That is, of course not easy, and sometimes a compromise can be reached. It is, obviously much better to share your life with someone that is at a similar level as yourself and is committed to financial independence, but that is not always possible and one has to compromise.

The truth of owning a home

You might have heard, as it is popular wisdom, that it is always worth it to invest in a house or apartment to life in. FALSE, that is plain and simply NOT TRUE, not always at least.

When you buy a house to live in, that is not an investment. It can be an investment, if you include ALL the costs of running a house compared to the price you might sell it for, that is financial costs, property taxes and maintenance costs mostly.

Rent cheap and buy property for renting out

First of all, as the smart reader will infer from what it has been in the article so far, one of the smartest things to do is to live cheaply in a rented apartment (that is at least true in most European cities), once that is accomplished, the next step is to save money and buy a rental property, that property does not need to be small or modest, it needs to give a good rent compared to the buying price.

The next step is let your tenants pay for the mortgage, and when that is finished you can move back to the apartment that the tenants paid for, or you can continue living in the modest place, covering your rent from the rental income as well as putting some money aside each month.

Alternative housing

It seems, from what we see in the news, movies, and the mainstream media in general that our only choices when it comes to housing are to buy either a house in the suburbs or an apartment in the city. I have already tackled the you-must-buy-a-house fallacy further up in this post, but aren’t there other forms of housing?

Tiny homes

Tiny homes are such a hipster trend right now, but it DOES make financial sense, you can relatively cheaply buy or lease land and park your mobile tiny home. You save on property taxes, maintenance cost, and purchase cost. As well as a tiny house giving a big advantage of not having space (yes, it is an advantage) That will keep you from buying too much stuff!

Houseboat

Houseboats have many of the advantages of tiny homes, such as being mobile and small. Boats generally require a lot of maintenance and can be REALLY expensive, so if you love sailing or boats, consider this option. One can find relatively cheap second hand sailing boats where one can easily live in. Alternatively, lifeboats can also be reconverted into house boats relatively cheap, but on the other side are not comfortable to sail on.

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A real mustachian lifeboat house. Source: Dailymail

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The super-luxury version. Source: Lancashire Life

Tube houses

I have recently read an article, mentioning that in Hong Kong, there are some projects of building micro-apartments from huge concrete pipes. In that case, it is of course used to further exploit people desperate for housing, but the fact is, that concrete pipes are cheap and relatively light structures that can be used to build a modular tiny house.

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Concrete pipe microliving. Source: The Jakarta Post

The concept is great, creativity is the limit.

Thevanlife

You can see all the people showing off in instagram.

in Many countries you can overnight in your van as long as you are legally parked and self contained.

That is a great option for people with nomadic tendencies, and may I add from places with great view.

My girlfriend and I almost always travel and live in a camper-van when on vacation, if one is willing to do that long term, it is possible to modify a cargo van into an almost self-sufficient camper-van for a very small cost compared to renting or buying property.

There is endless information online such as here, here and here.

Conclusion

  • Examine your needs
  • Do not fall into the “Buying the dream house” trap
  • Consider the long term cost of superfluous wants
  • Consider alternative housing concepts
  • Develop your skills

 

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consumerism, degrowth, financial independence, stoicism

What is Financial independence, and how to get started

It has been a few years since I discovered the current of people striving to become financial independent, the goal of many of these people is to not need to work any more in their life. If that sounds interesting to you, keep reading.

People who are financial independent, continue to work in one thing or the other, as working is an integral part of being a man and a human being and the obtain pleasure in doing so.

So it does not necessarily mean, that when you or me achieve financial independence, that we will be sitting on our couch watching TV and being on Facebook but instead, we can pursue other endeavors.

First, one might think, that for normal working people it is impossible to become financial independence, and it is NOT easy. It is very tempting to buy a new computer, a tv, a nice house with a garden etc. but unless you are rich, if you want to become financially independent you need to accept something, there are things that one cannot afford, that goes directly in sync with stoic principles.

So drop the Consumerism get acquainted with Mr Money Mustache and Jacob Fischer, and realize, that if you save, for example 50% of your salary, for every day, month or year that you work now, there is a day, month or year that will not have to work in the future.

If one factors in inflation and investments (we will talk about that in more detail in the future) the effects can multiply, and if one is as smart as Mr Money Mustache, there is the possibility to start smaller businesses that contribute to the income.

So, maybe you are not ready to save 80% of your salary (I can only save 60%) start by taking away a small percentage, and ask yourself if your next purchase will give you happiness in the long term, and if that is better than the feeling of going to work, knowing you can quit any second, that you do it because you like it and not because you have to.

 

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consumerism, degrowth, financial independence, happiness, stoicism

Is consumerism the way to go?

It is quite funny, or tragic, the way many people in the developed world choose to live their lives (me included).

We work, making a lot of money for the owners of both big and small companies, and also, some money for ourselves.

We exchange labour for capital.

We work a lot for some money, making other people rich in the process. We are essentially slaves, as we need to work to sustain ourselves. We can also free ourselves from slavery, but to do that, like in ancient Rome, we need to buy our freedom. To do that, we need to reevaluate our relationship with money.

Because, somehow, we are all convinced, that after a month of hard work we have to go out and spend ALL the money we earned, and a bit more. The philosophy of life of the whole western society, and probably others that I do not know, is based in consuming constantly, buy-use-throw.

We are actually convinced, that if we buy that new shiny smartphone or computer, that big house, that nice car. We actually BELIEVE that we are going to be happier than before. The paradox lies on that when we have bought something, and we realize that it does no make us as happy as we thought it would. But then, we forget all about it and focus on the NEXT thing, THIS time it will FOR SURE make me happy ever after.

It is something deeply wire in our primitive brain, but we need to realize that things will never make us happy, it is only simplicity, the way we choose to interact with people and how we decide to use our time that can make us happy. We need to reduce our material wealth and increase our spiritual and social wealth. This is the only way to be satisfied and to save our planet from a sure destruction

I am not saying consuming is bad in itself, what I am trying to say is that we reached a point that we consume without purpose.

And there other ways to live.

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consumerism, happiness, stoicism

Becoming a human being

When was the last time you exercised? Or made and effort that forced you to breath heavily and your heart rate increase? I hope it was recently, but you will have to agree that this is not the case in the great majority of people living in the western society. You probably know at someone who will think it is unthinkable to walk up the stairs for a few stories, or that would never conceive cycling for more than 5km, or that the thought of exercise provokes reactions similar to torture.

What do you think, fat bellies and thighs, inability to move or do simple gardening tasks independently without a gas or electrical powered machine say about us as individuals and society? I do not think is a good sign, or the right way to go by.

When was the last time you were in a forest and stopped to contemplate the beauty of the ecosystem? I, again, hope it was recently, but again, you will have to agree that this is not the case in the great majority of people living in the western society. We think reality is concrete and tarmac, tall buildings, big cars and houses with grass lawns.

Again, what do you think, the way we live says about us as individuals and society?

We have become completely decoupled to what it means to be a human being, we treat nature like a toy, we only care about it if we are going to drive through it on our weekend trip. Besides that, we live in our own little (and big) shells made of brick and mortar where we live in, and shells made of steel and rubber that we use to move around.

Do a favor to your health, your happiness, your well being, your community and your planet. Become a human being again. Move, does not matter what, do something, start by taking the stairs instead of the elevator, take your bicycle when your trip is not longer that 5km, then 10km, then 15km, lift weights, run, swim, switch from power to manual tools. Experience, again, the satisfaction of accomplishing something with your body and your skills.

Go out breath the clean air of the forest. And most importantly, respect our planet. We only have one, and it is dying.

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consumerism, financial independence, happiness, stoicism

Stoicisim

When we talk about financial independence, we are not talking about becoming a millionaire and be able to own big houses and fancy cars and not worry about money while spending as much as one wants. This for the most of us is impossible, and it does not necessarily bring happiness.

That is why I cultivate the stoic philosophy.

I have practised stoicism to a certain extent for a big part of my life. But I only put the label and seen the concepts in the book “A guide to the good life”  by William B. Irvine. Which I can only recommend. In this post, I refer often to the book and I also add my own thoughts to what it means to be a Stoic.

Now a days, people do not have a philosophy on how to live their life, they merely follow what TV and mainstream media tells to do, feel, consume. I, and many others, believe that this is not the path to happiness.

Stoic philosophy is not something that some old Romans and Greeks talked about that has no meaning today. Essentially, humans are exactly the same as 3000 years ago, our culture and technology has evolved, but our genes are the same. It is therefore that we can learn a lot from the old timers as they used a lot of time an energy to answer to the question on what does it mean to live a good life.

From the Financial Independence point of view, stoicism is specially helpful to fight Hedonic adaptation, this stems from living a live with Hedonism as a philosophy. For example, if a person is used to drive everyday to work, take the elevator or drink Coke on a daily basis. They will believe it is unthinkable or, cause great discomfort, to either take the public transport, take the stairs or drink water. When these things are taken for granted, then one starts thinking of the next thing: get a bigger car, use the car more often, etc.

We confuse good life, with owning things, or spending money. But there is great pleasure to be obtained by delaying gratification, knowing that by one’s day to day choices, you get one step closer to financial independence, while being more respectful to the environment. Stoic philosophy does not deny enjoying the “good” stuff. One can enjoy good things, but needs to be aware that if those things are not available anymore, one could as well live without them.

In any case, it is well known, that when the basic needs of humans (See Maslov´s hierarchy of needs) are covered, higher consumption does not increase happiness, but social relations are.

That said, there are 5 basic psychological techniques described in “A guide to the good life”

  • Negative visualization: What’s the worst it can happen?
    • As Stoic practitioners we should always keep in mind, what is the worst it can happen to us? The car might break down, the house might burn, my wife will divorce me, I will lose my job. All those things are terrible, but it might happen to all of us. It is therefore important to visualize and think how one would feel if that would happen to you.
    • This way, one really, I mean REALLY, appreciates the things and comforts that one has.
  • Dychotomy of control: On becoming invincible
    • ” We can want things that are up to us, or we can want things that are not up to us”
    • There are things that we cannot control, and it is therefore foolish to tie our happiness to those
  • Fatalism: Letting go of the past… And the present
    • We need to let go of the past, we for sure have to learn from it. But there is not point in wondering how the present would be if the past had been different. As when considering sunk costs in investment, we should not loose sleep about how the past has influenced our present, but think what we can learn for the future.
  • Self-denial: On dealing with the Dar side of pleasure
    • This practice, is one of the best for saving money, and it increases ones will power. We should periodically deny ourselves of life pleasures. Not having candy one one feels like it, saying no to a delicious cold craft beer in a warm day or fasting for different periods of time.
    • Besides saving money, we reverse the hedonistic adaptation that most of us have been going through in the consumerist society we live in. It is exactly its reverse, getting used to little and then be mind-blown when after a long period we eat a little piece of chocolate.
    • This kind of pleasure cannot be experience when we periodically fall for all the little pleasures that are on our daily life.
  • Meditation: Watching ourselves practice stoicism
    • To wrap it up, we should be aware on how and when we practise stoicism. What happened to us today, how did we respond to what happened, is that in accordance to stoic principles or not?

I have experience myself, how these techniques and Stoic philosophy have improved my life. The stoic philosophy comprises all areas of life, such as anger, luxurious living, frustration and consumerism but it all comes down to appreciate the small things of life, not let things out of your control influence you negatively and cultivate your will power to live the life you want to life, which is not necessarily the easiest.

 

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