On Choosing and Defending Your Luxuries

Philip Brewer — Thu, 14 May 2009 19:58:22 +0000

Spend any time reading personal finance blogs and you'll come across a particular kind of equal-and-opposite post: lists of luxuries. Half the posts will advocate giving up a few specific luxuries to live more cheaply. The other half have titles like "Three things I won't give up" or "Five luxuries that are worth the money." Both kinds of articles miss the point of luxuries — they're indefensible (and I mean that in a good way).

This came up when I was being interviewed by a reporter from the local paper who was doing a feature on me and my writing for Wise Bread. She asked "What do you do without," in order to live cheaply? I was quickly able to tell her a couple of things — we only have one car, we live in a small apartment instead of a house — but then I got stuck. I really don't think of myself as doing without. Rather, I've given a lot of thought to exactly what I want and have arranged my life so that I get all of it. (See also: Choosing a Luxury Eccentricity)

It was kind of embarrassing. I'm sure she thought it was an easy question, but I was simply at a loss. After a minute, though, I thought of another way to approach the question. I could tell her all about the luxuries that we don't go without. People could then assume that we had all the necessities plus our short list of luxuries — and know that we "went without" whatever it was that wasn't on the list.

The first things I came up with — NetFlix subscription and fitness center membership — I immediately spotted as classics from lists other people had made of the "things you can do without," and at the same time also classics from the lists of "luxuries I think are worth the money." (Other classics of both kinds of list: cable subscriptions and fancy coffee drinks.)

It goes without saying that you don't need any particular luxury — it's kind of the defining characteristic of a luxury. You could go so far as to go through your budget and line out every non-necessity. It's worth noting, though (and it kind of goes to my point here), that it's a lot easier to do that to someone else's budget than to do it to your own.

That's why you see articles of this sort. It's easy to tell other people to go without stuff. (Especially stuff that you've decided to go without!) And, at the same time, people feel a certain impulse to defend their own luxuries.

I don't want to dis articles of this kind too strongly, because they do provide a useful service, as long as you don't pay much attention to the specifics: They model the correct way to think about the issue.

It's a worthwhile exercise to go through your budget as if it were the budget of someone else — someone who's short on money and whom you don't really like very much. What would you mark out if that guy had to cut his spending by 20% (or 50%)?

What would that guy say when you suggested that he could get by with orange juice from concentrate and store-brand coffee, that his kids didn't really need Tai Kwon Do lessons, that he could get by with one less car, move to a cheaper apartment, and cancel his vacation?

Well, what could he say? He'd say that he really liked the premium orange juice and all that other stuff. Does that cut any ice with you? You knew that to begin with — that's what a luxury is.

So, then, how do you defend your luxuries? Easy: You defend them to yourself, not to some other guy. You defend them by figuring out how much you can afford and only buying that much. You defend them by making tradeoffs between having things now and having more and better things later. Most important, you defend them by thinking deeply about what you really want and figuring out that you can happily leave all that other stuff out of your budget.

If you do it right, you may find yourself in my situation: Someone will ask you what you give up to live so cheaply, and nothing will come to mind.

This article is from Philip Brewer of Wise Bread, an award-winning personal finance and credit card comparison website. Read more great articles from Wise Bread:

living luxuriously on less money

On Choosing and Defending Your Luxuries