An Argument Against Living Below Your Means?


Blogger Jared Dillian posted an unusual take on living below your means. He's not really a fan. More specifically he says it makes sense when you're younger but as you get older and accumulate more money you should be spending some of it. He says he has a "moral problem" with people who sit on a big pile of money without spending it. He cites those stories that popup every now and then about someone dying alone, having lived a miserly life with a huge pile of money than no one knew about. While that does trigger a sad for them reaction, we have no idea what motivated those people or what made them happy or why they ended up in that situation of a lot of unspent money living in very modest digs.

While anyone can agree or disagree with living below ones means the idea of having a "moral problem" with what someone else does with their money in this context (we're not talking about using money for child slavery or trafficking in heroin) is something I don't understand.

To the main point of living below your means or not, this is something I write about often, something I believe in wholeheartedly and something my wife and I have done for a very long time. We don't do this in extreme like making $500,000/year (I make nowhere near that much) and living in a $10,000 manufactured home (some are that cheap here) but being happy with a lifestyle that allows you to save plenty of money (relative to your income) and have lots of fun even if you're living in a little less house than you can afford and driving a little less car than you can afford means you're very unlikely to be perpetually stressed about money and will make you more robust in the face of some sort of adverse financial situation.

One idea that has come into vogue in recent years is to spend money on experiences as opposed to things. We just got back a week ago from a trip to Great Basin National Park. We love the national parks; we love hiking in them, we love taking pictures of the scenery, we (ahem, I) love visiting the fire/EMS station to take pictures of the rigs (below is a picture from Zion which we drove through on the way), seeing the wildlife and anything else associated with the parks and this is a very cheap vacation. We took a similar trip in March to Saguaro National Park (pretty but there are a lot of spots on the highways of AZ that have a similar amount of cacti) and Chiricahua National Monument (picture further down in the post) which was fantastic.

Every couple of years we take big trips, we're not sitting on it in a miserly fashion, the point here is about balance and what you enjoy doing. Las Vegas is a four hour drive from here and there are all sorts of sports events to go to ranging from free like the Mint 400 Desert Race, fairly cheap with the four or five college basketball tournaments every March to the somewhat expensive when the Raiders come to town in a couple of years and there are others like NASCAR and minor league baseball.

Everyone's particulars in term of what they like and what they can afford are different, the above are some of the cheaper things I'm interested in, you have things you're interested in. With limited resources or for people who are behind on their retirement savings and now able to start saving, there is plenty to do that is fun and inexpensive.

I've gone through this before but with less mortgage than you can afford, even with a 15-year, you quickly get to a point where you can be mortgage free. The technology and innovation in cars makes driving them for 20 years (you still have to be good about scheduled maintenance) very plausible. The benefit of going 15 years without making that $500, $700, $more payment should be obvious, multiplied by two for a couple. My 2006 Tundra just crossed the 100,000 mile mark and earlier this month I went in for an oil change and there was about $350 worth of other scheduled/recommended work that was due. I cringed of course but that's probably less than half of what a payment would be on a new Tundra.

Jared is right about needing to spend money on certain things, his example is dress shirts, for me that would be hiking shoes. We hike a lot and the idea that it is important to take care of your feet resonates with me. If you live below your means there are still probably items that you spend money on without worrying because it is essential to your life. Living below your means might make that spending (your dress shirt/hiking shoe equivalency) easier to do.

Someone at 55 could easily find themselves mortgage free with no car which would be a comfortable spot to be in and perhaps a crucial spot for a couple that age who is behind on their retirement savings, I wrote a piece a couple of weeks ago about about it never being too late to start that crunches some numbers.

My position is pretty simple, every aspect of your life will be easier when you have something of a financial buffer between your income and your expenses. As possibly put forth in Jared's post it is not a binary spend everything/spend nothing proposition. I can get on board with his idea of saving more aggressively when you're younger if possible. I've made that point numerous times, framing it as giving the future you more optionality. I would also wish for anyone that while they would have fun with big trips/experiences like Europe or the like, that they could also have a lot of fun with small experiences too in case they can't go to the Caribbean or Hawaii as often as they'd like.