You can have anything you want — but you can’t have everything you want. That’s the lesson I learned from a recent conversation with my cousin. And that’s the lesson photographer Ken Rockwell imparts in an essay that explains how to afford anything.
Our ability to buy expensive toys has nothing to do with how much money we do or don’t earn. Like everything in life, it has everything to do with how well you use what you have.
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What I’ll describe has always worked for me. I hope it helps you. Everyone’s situations are different, but hopefully my skinflint lifestyle will give you the idea. This is all about prioritization and not wasting what you do have, so if you prioritize differently or enjoy spending money on something I consider wasteful, go right ahead.
Rockwell says that it’s important to understand the difference between cheap and frugal. As we’ve discussed at Get Rich Slowly before, the cheapest option isn’t always the best. Sometimes the most expensive choice actually costs less in the long run. Cheap means focusing on price above all else; frugality means seeking value for your dollar.
In his essay, Rockwell provides real-life examples of how he’s made choices to save money so that he can afford anything he wants (especially cameras). Some of his anecdotes are funny. Some are inspiring. They’re all great examples of how to get rich slowly. Here are a few of his tips:
- It’s important to prioritize. Half of being able to afford what you want is to spend your money on what you really want.
- As Elizabeth Warren emphasizes in All Your Worth [my review], one of the best ways to be able to afford small expenses is to economize on large expenses. Rockwell says that this means never buying a new car. It also means buying less house than you can afford.
- Learn to practice patience and diligence. “When I buy a used car or camera,” Rockwell writes, “I may spend months looking until the perfect sample appears. When it does, I jump all over it, but if it doesn’t, I don’t worry.”
- Don’t get sucked into new luxuries. Luxuries have a tendency of becoming necessities.
- Don’t worry about what you own. “How rich you are is determined by how much money you have, not by what you own. What you own is how much you’ve given away to others!”
- Don’t be afraid to ask for a deal, says Rockwell. Last spring I shared tips from a reader who uses haggling to save big bucks. Another GRS reader e-mailed me yesterday with a similar story.
- Avoid addiction, including addictions to caffeine, nicotine, and television. “Watching television makes you stupid,” Rockwell says. I wouldn’t go that far, but I do know that since I’ve given it up, I’ve accomplished things I never dreamed possible — such as building this site.
- “If you really want something, buy it, or wait until you can. Don’t buy something that isn’t what you really want.”
“Most people are too stupid to be poor,” says Rockwell’s brother. He means that most of us are unwilling to make sacrifices now in order to have the things we really want in the future. Instead, we fritter our money away on stuff that doesn’t even matter, stuff that brings us little or no value. We settle.
To be able to afford the important things, you must be willing to give up others. Or, as Dave Ramsey puts it, “If you will live like no one else, later you can live like no one else.”
[Ken Rockwell: How to afford anything, submitted via e-mail by Dan K.]
This article is about Choices, Frugality, Hints and Tips
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I am always being called cheap by my family members because I hold off on buying little, meaningless things. I’d rather save so that I can afford things that I really want. Growing up, I would forgo buying video games, CDs, and movies, just making do with what I received as gifts. I used that money to buy a brand new car when I was 22. Looking back, I wish I had even used less money for a car and saved it instead for a larger home down payment.
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Slowth, thank you for the clarification of your comments – very kind of you to respond.
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…one of the best ways to be able to afford small expenses is to economize on large expenses. Rockwell says that this means never buying a new car.
Well, I did buy a new car, back in December 1994. But I paid cash for it, and I’m still driving it, and probably will continue to drive it for at least another two to five years, or until repairs start to get too frequent and too expensive to justify hanging on to it.
And when that time comes, I’ll buy another new car, and pay cash, and start the cycle all over (only this time with a smaller, less expensive, more fuel-efficient car than the one I have now).
Avoid addiction, including addictions to caffeine…
[laughs] Well I’m doomed, aren’t I?
I suggest amending that to “Avoid addiction to expensive foo-foo coffee drinks purchased at Starbucks, for they will make your butt large and your bank balance small.”
My insulated stainless-steel travel mug is this caffeine junkie’s best friend (and I’ve been using the same one for 13 years, so I think it’s paid for itself).
Shara @ 11: As an aside, I changed my terminology from “I’m poor” or “I can’t afford that” to “that isn’t in my budget”…. I am NOT poor and I CAN afford it, but I am making a choice.
I’ve done the same thing. I lived with a “poor” mindset for most of my adult life, even as my income rose, my debts disappeared, and I slowly managed to set saved money.
And the funny thing was, frugality was much harder when I had a poverty mindset. When I identified as poor, I wanted more of the stuff I was sure I couldn’t afford. I was focused on what I didn’t have, or couldn’t have, instead of what I actually did have. And I tended to make a lot of small impulse purchases, despite being a miser–it was my release valve, I guess.
Once I realized that I actually had everything I really needed, and wasn’t poor at all, frugality became much easier–it became a choice, rather than a grim necessity. By the time I realized I had plenty of money to buy things I’d wanted, I no longer wanted them; it was more satisfying to put the money toward my long-term financial goals and watch it grow. It also became easier to spend money on big things I genuinely enjoy–such as travel–while at the same time no longer nickel-and-diming myself with small, cheap impulse buys.
I went with a friend to help her buy a flat-screen TV last week. She was excited beacause she was getting “such a great deal.” And I thought about my old 19″ TV, and considered replacing it–I had the money, after all; I could have paid cash, and maybe negotiated a lower price. But as I stood there I thought, “I don’t need this. And I can do much better things with the money.” So instead, I came home and earmarked that money toward an upcoming stock purchase.
When I was “poor,” I wanted to be able to buy expensive consumer goods–that was how I defined wealth. But these days I’m indifferent to those things; I get a lot more satisfaction out of watching my net worth–my real wealth–grow.
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I agree about addictions and thank my lucky stars I’ve never been addicted to anything (except maybe chocolate but even that, not now).
The latest thing I’m thinking of quitting is television. I mean, the thing hasn’t even had an aerial put into it since April and I only watch DVDs on it – which I can also do on my computer – so I’m seriously thinking of selling it and making more space in my rather small lounge.
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Everybody says that buying a new car is a waste of money, but a car is something that’s important to me. I bought a new car (actually, I’m leasing, which I know is even more appalling to the personal finance community), and I love it. It’s a pretty sweet car, and my coworkers (who have a pretty good idea how much money I make) often express surprise/envy that I can afford such a great car.
They probably think I’m one of those people who spend like there’s no tomorrow, live paycheck-to-paycheck, and are in a ton of credit card debt. The truth, though, is that I put 20% of my income into my 401(k), max out my Roth IRA every year, pay off my credit cards every month, and still put enough in savings to have a 6-month emergency fund even after I put 20% down on my house earlier this year. Sure, I spend a lot of money on my car, but I bring my lunch to work every day (peanut butter and jelly for less than $1/day) and never eat out, I pay $5/month for my Virgin Mobile cell phone service (supplementing my paid airtime with free minutes from Sugar Mama), I don’t own a TV, and I keep my house at 56 degrees all winter. I choose to be able to afford my car, by sacrificing the things that aren’t that important to me.
Even though I live “poor” in many areas of my life, I feel rich because I can afford just about anything I want (like my car) — even if I can’t afford everything I want.
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As a woman who is currently the sole wage-earner supporting my partner, I’m rather irritated by his assumptions about gender roles. I’m not all the way up to “offended” (though I sympathize with those who are), but I am irritated.
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You know, the last two times I bought a car I set out assuming that I would buy a used one, because I had always heard what a waste of money the new car is. In reality I was very unimpressed with the savings that was apparently available to me as a buyer. Unless I wanted to shop around a *lot*, meet with private sellers and get independent mechanical inspections, I was going to save only 10-20% of the purchase price by buying used and take on additional risk at the same time. So I bought new and never regretted it. I’ll take a fresh look each time I do this, but my bias has now changed… I need to be convinced of the value proposition of the used car. Part of this is about getting a good price for a new car, of course. There’s no reason to may more than $100 or so over invoice, if you are over invoice at all.
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I rarely comment here, but Dana’s comments (#41) struck me as rather harsh, and misleading.
Because of the manufacturing and cleaning processes for cloth diapers, there is minimal difference in the environmental impact between using cloth or disposable diapers. And the net environmental effect of either one is relatively small to start with (as a 2005 British Environment Agency report said, “For one child, over two and a half years, these impacts are roughly comparable with driving a car between 1,300 and 2,200 miles.”).
It is also unfair say that if you buy 5 or 6 baby bottles (or 5 or 6 hundred, for that matter) you caused the deaths of
“a bunch of people in Iraq.”
I don’t this sort of judgmentalism is helpful. You don’t get people to change by attacking them, particularly when your attacks are unfounded. Also, when you make these unsolicited judgments on relatively small points, you need to be prepared for the responsive attack on your own actions. For example, anyone who has taken one airplane flight has caused more environmental harm than one baby’s disposable diapers or plastic bottles.
Let’s quit being so self-righteous. Let’s quit demonizing people who didn’t take the exact same path that one of us chose to take. We don’t know the reasons behind their actions, or indeed what else they do that we can’t see, that may very well be far more “righteous” than our own actions.
We tend to judge other people by one-off actions that we observe, and so we judge them harshly; while we judge ourselves by our intentions, and so we judge ourselves lightly. Can’t we try to cut others the same slack that we cut ourselves?
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Very sound advice! Going back to the basics (e.g., spend less than you make, avoiding impulse purchases, researching planned purchases) is an important component of a healthy financial life.
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Lots of good comments in both articles and many of the responses. I agree with Melissa @53 – when you can’t afford things you are more likely to covet them, even if they’re not what you really want.
And the stores make it so easy for you to get into debt for that ‘must-have’ celebrity endorsed item that you don’t get much use out of.
I agree with Ken Rothwell’s suggestion to buy less house than you can afford. Here in Greece so many incomers build houses big enough to put up guests, which means that for most of the year they’ve got more real estate than they need, but they had to put in the plumbing and furnishing, and pay the taxes on the bigger floor space.
It would actually be much cheaper to rent an apartment for visitors rather than build a personal hotel.
But as others have commented, each to his own.
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Employ the power of CASH.
You will find that spending frivolously is a lot harder to do when you are physically handling cash.
1. Cash is Emotional
2. Cash is Visual
Credit cards often desensitize your psychological concept of the actual $$ that you part with– making it easier to make trivial purchases.
Great post– very insightful and useful content! I jotted down a few notes.
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