On this week’s installment of The Personal Finance Hour, Jim and I spent the hour talking with nationally-syndicated financial columnist Greg Karp. Greg is the author of The 1-2-3 Money Plan, which I reviewed last week. We had a wide-ranging conversation about spending smart.

Spending Smart
One of Karp’s mottos is, “You can’t outearn dumb spending.” Some people believe they can always just earn more money to sustain their lifetyle — but their lifestyle often grows to match the income. By spending smart, it’s possible to make the most of your income — and to enjoy life too.

Karp notes that the goal of life is not to “live cheap and die loaded”. Yes, you want to save for the future and keep your eyes on things like cd rates, but you should also allow yourself to enjoy today. Karp makes room in his budget for golf and good cigars. Now that I’m out of debt, I allow myself to spend more money on comic books. It’s fine to spend on yourself, as long as you keep your spending reasonable.

We also discussed the relationship between money and happiness. Karp recently interviewed Gretchen Rubin from The Happiness Project. Karp says he’s learned that there are a number of ways you can “buy” happiness. For example, you can spend your money on experiences rather than things. Material goods depreciate. The day after you buy them, they’re worth less than what you paid. And they don’t bring a lot of happiness. Experiences, on the other hand, tend to appreciate. Our memories of the things we do become fonder with time because we tend to focus on the positives rather than the negatives.

Our conversation covered several other topics as well, including:

  • How to save money on insurance. Karp advises raising your deductibles. I’m an advocate of self-insuring whenever possible. And Aaron called in to remind us that an ounce of prevention is worth a pound of cure.
  • How prepaid cell phones can save you money. Jim noted that on his recent trip to Europe, everyone seemed to be using prepaid wireless.
  • How to save money on food. Tammy called to ask advice for saving at the grocery store. The three of us contributed our best advice.

During the show, Karp and I both ranted a bit. Karp complained about people who buy bottled water. (I confess that I’m guilty of this.) “This is stuff that falls from the sky for free,” he said. And I ranted about the new Joan Rivers show How’d You Get So Rich?, which is lowest common denominator television at its worst. It’s all about glitz and spending when it could have been so much more. (I’d like to see a Millionaire Next Door television show that profiles the rich and frugal.)

Be sure to join us next week when we speak with Michael Hampton from the Career Development Center at Western Oregon University. Hampton will be chatting with us about job hunting skills.

Note: Our guest last week was Flexo from Consumerism Commentary. Jim and I spoke with him about what it takes to make the leap from a secure job to working full-time for yourself. Though much of the conversation revolved around professional blogging, there’s plenty here for people looking to make any sort of career change. Here’s a detailed show summary.

The Personal Finance Hour
Jim and I host The Personal Finance Hour nearly every Monday at 3pm Pacific (6pm Eastern). For the next week, our conversation with Greg Karp will be available via this widget (after that it will be replaced by the next episode):

You can always find this show (and other episodes from the archive) by following this link, which will open in iTunes. Finally, please note that every week Brain from My Next Buck takes the time and effort to create detailed show summaries, which you can find at personalfinancehour.com.

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