Marvelous Money: Why do we spend so much?

20 October 2014

I read an interesting piece the other day that I wanted to share with y’all. It was from one of my favorite writers on personal finance, Megan McArdle, and in it, she laid out seven reasons why most of us spend more than we should. Go take a peek!


Another money guy, Dave Ramsey, likes to say that the root of our money problems is almost always ourselves, and I think it’s true! It’s not just the things that we do, but the ways that we think and the logical fallacies that we believe (as Megan points out) that undo us. If what we’re doing is not working (i.e. we’re not saving enough/we’re spending too much), then understanding why we’re doing what we’re doing is a great step toward changing our habits.

I’d love to know: which reason Megan laid out resonated most for you? I identified most with numbers 1 and 7. And I loved her final two (succinct) pieces of advice!

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October 20, 2014 11:06 am

I think I’m a number 7 as well. And a few years ago, I identified with number 2. In my early 20s, right out of college, I’d say that I didn’t always see the trade offs that people had to make to do certain things, or the fact that a friend of mine had bought a house at 23yo with down-payment money from her parents. All I saw was that she bought a house! For number 2, McArdle says people try to justify purchases by saying “I just wanted to buy the things that normal people have.” Now that I’m older and wiser–and better at math!–I’ve learned that we all just have to find what’s “normal” for us and our budgets.

October 21, 2014 10:40 am

This is a fantastic article. I can definitely relate to #4 and #5. I never thought of HGTV as a way that could make me feel inadequate about our home, but subconsciously it totally does. Also, we previously lived in a “sucking-hole neighborhood” and it was pretty hard on the budget at times. Our neighbors were doctors and professors in their 40’s/50’s (much more advanced in their careers than us in our 20’s) and we started to compare ourselves to them and their lifestyle all of the time. It was so unhealthy.

October 22, 2014 10:00 am

1 and 6 REALLY clicked with me. My Dad lives in a beautiful 3000 square foot home, in a great school district. However, this was the house he bought when he was in his mid-fifties, not the one he first bought fresh out of college. It’s good to be reminded that it took him 30 years to get there. I currently share a 1500 square foot house with 4 other roommates, and the “downgrade” has certainly been felt. But! I know the money I’m saving on rent, will get me to my dream house a lot faster. (Not to mention the patience I’m learning!) #6 also resonated with me. I see my colleagues who buy breakfast and lunch out while I bring my own lunch. But when the layers start to be peeled back, they share that they are paying the minimum on student loans, have car loans and do not contribute to their 401(k). I have to remind myself of this truth when it SEEMS like they’re living the life,and I’m not.

Many of the other points in the article (about housing) are covered in Thomas Stanley’s book The Millionaire Next Door.

October 22, 2014 1:55 pm

Number 1 makes me laugh a little, because it’s a bit true for me. I seem to foget sometimes that we actually lived in a 2 bedroom apartment for a year or so when I was 5 or 6. I even shared a bed with my brother. (God forbid a child not have his own room these days!!) I always try to remind myself of that, though, because it’s always easy to remember the better homes we lived in, and especially the one where my parents currently reside–which isn’t even very big. It’s just really nice! They finally got to do a big kitchen reno 15 years ago and I want one NOW…or sooner rather than later! :) And HGTV! You’ve got to take that and Pinterest or magazines with a grain of salt. I’m living in the world of kitchen renos b/c it’s what I do now-and it can be done on a reasonable budget…and still look great and function, but it’s not going to be quite as spectacular as what you see on HGTV! Most folks don’t have a Sarah Richardson budget. My mom and dad have always just stressed that it’s better not to be “house poor.” They’ve always had a wonderful home, furnished and decorated to the gills, but we didn’t travel much at all. They regret that travel wasn’t a huge aspect of our family life. So I’ve learned from that. There will always be some sort of give and take and as you grow up. You start to realize you can make those decisions and priorities for yourself, but it’s also smart to realize you can change those priorities, too, based on circumstances. When we lived in Texas we got a house below the bottom of our budget, which was wise- we have no kids, we needed extra $ for traveling back and forth to NC, and we wanted to explore the midwest. We also saved a lot. Coming back to the Carolinas, our priorities are a little different and we’re going to adjust accordingly (invest more in a bigger house & decorating (yay!!) & less on travel, still save!) because we’ll eventually start a family here.

I have to also laugh about the school districts thing- she clearly hasn’t been to good ole Columbia. It’s definitely the most important thing around here when finding a house! Especially for resale. Luckily it’s a somewhat mixed bag of house levels in the better districts, so mayyybe we won’t run into little Sierra’s parents’ problems! We’ll proudly be driving my old Honda, Stiv the Civ, down our street full of BMWs for as long as he’ll last.
ok. Longest comment ever. I could discuss over coffee!! :) Miss you!! Loved this post.