This article is by staff writer Adam Baker, whose own blog featured a real life negotiation example in the huge post Negotiation Tips for Beginners.

Each of us have specific items or activities for which we are more than willing to pay a premium. In fact, deciding what we are and aren’t willing to spend money on is one of the core issues in personal finance.

A willingness to pay extra for everything would quickly bury most of us in debt. At the same time, willingness to pay for nothing will burn out even the most frugal among us. When allocating our spending, we will likely each have a couple of financial vices that surface.

What is a “financial vice”?
Wikipedia defines a vice as “a practice or a habit considered immoral, depraved, and/or degrading in the associated society.” This definition may be a little intense for our own purposes. However, if we equate the “associated society” with the personal finance community, an interesting concept emerges.

My definition of financial vice is, therefore, “any regular expense we willing include in our budgets that may appear extreme, bizarre, or down-right ignorant to many members in the personal finance community.” Most of us have one or two financial vices that are inconsistent with the other patterns in our budget. These are the expenses that would make our friends and family cry, “What in the world are you thinking?”

Sometimes these are healthy vices — expenses that we passionately choose and that bring benefit into our lives. Other times, our friends and family may be onto something: Unhealthy financial vices have the potential to do some serious damage (often to more than just our budgets).

I won’t speak for J.D., but he’s written about several of his own financial vices both when he was fumbling in the dark and since entering the third phase of his personal finance journey. I will, however, speak for myself. [J.D.’s note: Comic books have historically been my biggest financial vice. You all know that, right?]

My primary financial vice

There are several financial vices that tend to consistently surface in my own budget. The primary one in my life right now would have to be Brazilian jiu-jitsu training.

I love training in martial arts. I’m far from a professional — just the opposite. I’m unmistakably new to the sport. Nevertheless, I love how I feel when consistently training. I love the physical workout, the mental benefits, and the instructors/students.

There’s a gym close to me that offers Brazilian jiu-jitsu (with an authentic teacher), Muay Thai, and Boxing classes six days a week. It’s close, it’s convenient, and it’s fun. The price I pay? $168 per month! Outrageous? Understandable?

To put it in perspective, Courtney and I share one car to save money. Just yesterday we had a 30-minute conversation about whether or not to spend an extra $15/month to get a DVR with our cable/internet package. The furniture we need for our temporary rental is coming from a combination of Goodwill and 4th-level family hand-me-downs.

Despite the efforts we go through to save money in some areas of our life, we are both okay with this oddball expense. Why? Because it passes the ground rules we’ve established for managing the financial vices in our own life.

4 questions to help control your financial vices
Here in the Baker family, we try to ask ourselves four questions when face to face with an expense of this nature:

  1. Is it impulsive? Courtney and I usually act as each other’s impulse alert. If one of us comes up with a wacky, impulsive idea, it’s the others responsibility to sound the alarm. In the martial arts example, it’s been a consistent desire of mine for 2-3 years now. I trained before our recent overseas trip and even spent a couple months training while we were in New Zealand.
  2. Is it consistent with our other goals? This is tough because many of these expenses will work against our financial goals by nature. However, we try to consider any ancillary benefits that are generated from the financial vice. Martial arts helps my fitness goals, provides me with a fun community of people, and helps me to stay mentally calm while under intense pressure (trust me).
  3. Can we control it? This rule is primarily focused at me. I have an extremely addictive personality, so I struggle consistently to maintain balance and control. In general, I try to avoid anything even remotely related to “collectible” or “massively multiplayer online” (long story). We both try to avoid expenses that are destructively addictive by nature, such as gambling, alcohol, and tobacco. (Note: I’m a proud coffee drinker!)
  4. Are we both on-board? For us, the last condition is that both parties are fully supportive of the expense. Even though the training expenses is for only me, I have Courtney’s full support. Without this type of support from a spouse or significant other, vices of this nature can stir up a ton of resentment.

If an expense seems to be of an excessive amount, we run it through these four questions. Most of the time, it fails to pass one of the questions. In rare cases, we find ourselves with a true financial vice that emerges.

Limiting your financial vices
Allowing yourself a financial vice can be a huge blessing (even directly to your finances). However, if you aren’t careful, over time your definition of vice may expand to be synonymous with anything I want. To help control this, Courtney and I try to limit ourselves to only one major vice at any time.

Courtney supports my martial arts training and I do everything I can to support her journey to improve her photography skills (her primary financial vice). If we choose to pursue something else, it means either eliminated or drastically reducing our current vice. Of course, sticking to only one financial vice each is easy for us…we can’t afford any more!

Joking aside, I’m interested in hearing your own insight into this issue. Have you found your own way of keeping your vices in check? Share your financial vices in the comments below!

J.D.’s note: I’d argue that what Baker has described isn’t a vice; it’s too controlled. I’d say it’s more of an indulgence. Conscious spending like this is great because it can lead to improved happiness. A true vice is something that you can’t control, and isn’t really conscious. Right? Tune in tomorrow when my wife reveals one of our household’s financial indulgences! Photo by dlcampos.

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