This is a running conversation between us, so I thought I’d go back and answer some of your questions / comments. Here they are:
- After reading about my philosophy of money and the meaning of life, you responded by asking: Sometimes I wonder how (rich) people like you don’t just go out to eat ice cream all the time. What’s stopping you? … I wonder what it’s like to live like that, where you have no financial limitations on what you want or don’t want.
- When you saw my 2016 Review, you commented: You are not materialistic, but … it seems that you like to amass experiences (big, expensive experiences) the way other people like to amass material possessions. Still seems like a form of materialism ….
- In that same post: I didn’t see a category for charity. Please explain.
So basically you’re asking, are rich people a bunch of selfish materialistic hedonists?
Am I “rich”?
[Hold on, I just spilled caviar on my grass fed baby lamb’s wool persian rug — I need to fetch the butler … ok, I’m back. Not to worry, a dab of champagne cleaned it right up!]
Ahem, I’m not sure what to think of the “rich” label, but I’ll cede that my household income is high, around $260k annually from salaries. This doesn’t mean we have “no financial limitations,” like the creepy guy in the picture, but it does mean we have plenty of room to set our priorities. On to your questions.
Why don’t I eat ice cream every day?
First of all, Mrs. Rich is lactose intolerant and I don’t want to be a jerk by rubbing ice cream in her face every day. But seriously, I admit there is a great deal of freedom when $10 doesn’t mean much. Financially, I *could* eat ice cream daily, even your Cold Stone Creamery stuff.
To me, here’s a key point about money: It’s not about the money.
Let me unpack that.
With money comes the freedom to make choices without thinking about money. In other words, I ignore money when making a choice about ice cream. You see, your question about ice cream isn’t a financial question, it’s a food question. I don’t eat ice cream every day for the same reason you wouldn’t eat ice cream every day if it were free. It’s a bad choice. We’re not hedonists, i.e. people who consider pleasure as the proper aim of human life.
Besides, I have salty cravings and prefer Doritos.
You might be thinking, well it’s easy for this guy to say it’s not about the money — that’s because he has it! Yes, true. But my point is that it’s easy to assume rich people just want money because they’re greedy, they want to pile it up and then consume like hedonists. Maybe some people do this. What I’m saying is that for me, earning money isn’t about getting rich. It’s about earning the freedom to make choices. It’s a means to an end.
I remember being so broke while I was studying in France (spent my last dime to get there) and eating on $5 per day. I thought: I’m hungry, so how can I get the most calories for this $5? I literally bought a baguette and a bag of peanuts. Every day. Not what I wanted or what was healthy — it was all about budget + needs = survival. A lack of money meant limited choices.
As my income has grown over 15 years, I’ve had to learn about prioritization and balance.
These days, I can eat whatever I want, and I eat mostly healthy food, and I indulge in moderation. When money is not an issue, food choice is really about food, not money.
Incidentally, I can see why lottery winners often lose everything. They don’t learn how to use money over time, they go from having very little to having a lot, and they blow it on pleasures until they’re broke again.
Is amassing experiences (like travel and vacations) a form of materialism?
I see your point. Expensive experiences aren’t material possessions, but the same greedy, selfish, acquisitive mindset could apply.
Well, I’m not delusional, I realize my travel budget (especially while living overseas) has been huge. But as you said, it’s hard to travel with kids. Our 2 rugrats are loud sleepers and early risers, so if we want a good night’s sleep while traveling, they need their own room. That’s non-negotiable for us. So we pay up for that.
As with food, I’d argue that a good travel decision isn’t about money, it’s about travel. I don’t think travel needs to be expensive, but it often is. One needs money to have these options, sure, but money is just a means to an end.
The assertion of materialism, then, comes down to mindset and motivation. Am I having these experiences so I can collect them and show them off, like in a trophy case? Do I always choose the most expensive hotel or restaurant, as a matter of status?
Well, that’s easy. Nope.
The travel experiences I value are not in the same category as the amassing of possessions. Travel, for me, brings with it a whole host of benefits that possessions mostly can’t: education, exploration, culture, and so on. And traveling with people brings a relational bond that’s difficult to replicate at home. Consider these quotes:
Gustave Flaubert: Travel makes one modest, you see what a tiny place you occupy in the world.
Mark Twain: Travel is fatal to prejudice, bigotry, and narrow-mindedness.
Henry Miller: One’s destination is never a place, but always a new way of seeing things.
And, as my friend over at Max Your Freedom said:
Experiences are the key to happiness: You wouldn’t know it from our consumerist culture and watching people collect things, but it turns out that experiences actually have a higher happiness quotient than things.
Finally, there’s the context of my overall expenses. I’m already saving for other priorities, like retirement. So would it be less materialistic to keep the money and not travel?
What about Charity? Am I selfish for giving so little?
In my monthly money check, I broke out charity, which is at $400 per month. I admire — ADMIRE — your giving. You are very generous. More generous than I am, proportionally, in terms of giving to charity. But there are other ways of looking at it.
I mean no disrespect, but you are broke. Would it be weird if you gave money to someone who was in big debt, and they sent 6.375% of that money to their bank, and then gave the rest as charity to someone else? That’s kind of what you’re doing. There is no shame in receiving help, but why not use that money to get out of your situation more quickly, and then help others monetarily when you can afford it? You could give now in terms of service and time. With those loans, almost every dollar you have is losing 6.375% until they are paid.
I ran some numbers. Under your current plan, you pay $20,000 to loans and $3300 to charity per year. After 13 years, you’ll pay close to $260,000 for your loans and $42,900 to charity. BUT, if you add the charity money to your loan payments now ($23,300 per year to loans), you’d be done in 10 years and save a load on interest. Then, for those 3 years that you paid your loan off early (2026-2029), if you took that same $23,300 per year and gave it ALL to charity, you’d actually give MORE ($69,900) in the long run. Total, $233,000 to loans and $69,900 to charity. It’s just math.
It’s like a puzzle. Even though you are being generous now, your overall financial puzzle is holding you back from being more generous overall.
In my situation, it’s true I could give more to charity as a line item. But that’s just one piece of the huge puzzle that is money management. There are other factors that are connected to charity but not charity per se: Taxes, Self-sufficiency, and Generosity.
- Taxes: I pay tens of thousands in taxes, and some of that money goes to programs that help people in your situation. Rightfully so.
- Self-sufficiency: Life insurance, retirement, and college savings will ensure that my family will not need outside assistance. If I manage money so my kids won’t end up with a bunch of debt, then overall there is less money going to banks, and more money going to taxes, social programs, charities, etc.
- Generosity: It’s important to me to have a spirit of generosity. I love giving spontaneously to friends and family, like helping them to travel to see me if money is tight for them, buying meals, sending gifts, etc.
All that said, I take to heart the idea of charitable giving. I’ve given to a few child sponsorship programs since I was in high school, but I haven’t paid as much attention recently. It may be time to reconsider this piece of the puzzle.
In the end, spending is all about values and priorities, so thanks for making me think about this!