This is a guest post by Dave, who is also looking to retire no later than 45, but unlike Tim has no kids and doesn’t want any. Dave is from Ontario and is working towards his CGA certification.
My wife and I are currently car shopping or at least eliminating cars that we aren’t interested in owning. So far, we have decided on a price (around $15,000 after taxes) and a few models that we are interested in test-driving (Nissan Versa, Honda Civic, Honda Fit, and Mazda 3) as well as the features we would like in the cars. Before narrowing our choices we realized that we could “afford” almost any vehicle (meaning we could pay the monthly payments dictated by financing deals) but we don’t really value a new car or a fancier car enough to pay the premium cost of a basic, small used car.
Similar to my car decision, I could have chosen a larger house when I was shopping around a couple of years ago, but I did not need a large house and would not have used the extra square footage even if I would have bought a larger home (hence the reason I was campaigning for a tiny house).
I’m not sure how other people decide that they want or need the possessions they end up with, but from observation it seems that there is a lot of consumption without thought. Instead of going through a decision process where alternative spending/not spending decisions are examined or what the long-term use of the particular “thing” will be once it is owned – people seem to just buy now and figure it out later. I think that this unconscious spending is how everyone ends up with junk that they don’t really need because there really wasn’t a spot for in the first place.
I know that I have been, and am still guilty of making purchases like this for myself. Two months ago I bought a video game thinking I would really like to play it, but I have spent a total of 10 minutes with it since the time of purchase – it has turned into a $20 wasted purchase. I don’t make as many wasteful purchases as I used to, as I try to be more conscious of how I spend my money.
My spending decisions generally take a long time (it drives my spouse crazy), sometimes on the littlest things (less than $20) but by being “hyper” aware of my spending decisions I ensure that my consumption follows what I actually want to spend money on. Usually, it turns out that what I think I really need and can’t do without is something that would probably end up sitting in the corner of my basement where all my “stuff” goes to die before I list it on Kijiji or Freecycle or throw it out.
So, when I buy my “new” small car in a few months it will (hopefully) be a vehicle that my wife and I will be satisfied with for 6-8 years and that the $15,000 spent is “worth” the decrease in resources that it caused (a significant amount of money for us to save right now while we are paying down our mortgage).
How do you decide where to spend your money? How do you make sure that you are not wasting the money you make?