A new friend asked me how I save money for travel. I get this question a lot, in different forms: how did I buy a Ducati? How can I afford not to work (people assume that because I don't have a job that I don't work)? How do I travel constantly?
These questions stab at the situation, but don't quite skewer the meat of the issue. A more useful question would be: "How do you manage your finances such that you're able to do whatever you want?"
The reason this question is a lot more meaningful is because it takes into account both sides of the invisible see-saw. People notice the things that I spend money on, but it's easy to ignore the things I don't spend money on. Let's dig into a few:
- I don't buy clothes. I bought an $89 pair of pants last month, which replaced the single pair of pants I've owned since 2009. I have two t-shirts and two pairs of underwear. That's my wardrobe. Years ago I went clothes shopping almost weekly, rarely leaving without at least one hundred dollars worth of clothes (usually Cavalli jeans or shirts). Even if you're not a total idiot like I was, your bottomwear budget is probably higher than $44.50 per year.
- I don't buy alcohol. I'm told that most people spend hundreds of dollars per month on alcohol. I find that nearly impossible to comprehend, but so many people have corroborated it, that I'm resigned to take it as fact.
- I have no debt. Servicing debt makes no sense at all. If you can't afford to buy the car you want in cash, then you shouldn't buy it. It's a depreciating asset. I'd rough it on the bus for a couple months while saving money and then buy a motorcycle or crappy $1000 car.
- I have no TV. The purchase price of the TV is mostly irrelevant, but I understand that monthly cable/satellite costs can be upwards of one hundred dollars.
- Oh yeah, I don't pay (much) rent. I actually do pay for a parking spot for the RV now, but that costs me only $275 per month.
These apparent occurrences of thrift clash with other ways I spend money. I pay $110 a month to be a member of a spa in San Francisco, because RV showering leaves a lot to be desired. I travel nearly constantly (10 countries in the past month, for example). I'm seriously contemplating the purchase of $1000 headphones. I have a nice motorcycle.
In other words, I polarize my purchases. This is because I choose what to buy with value and utility in mind. Most people buy things-- subconsciously, at least-- in order to create a coherent image of status.
Think about it-- a middle class family generally has middle class everything. Middle class cars like Hondas or Fords. Middle class clothes like Gap and Abercrombie. Middle class houses. Middle class restaurants.
How can this possibly make sense? Is there some mysterious phenomenon that causes people to exclusively lap up middle class goodness as soon as they get their first taste of it? Of course not-- devoid of any serious thought on the subject, people slide into convenient socioeconomic molds.
If Middle Class Marvin wants a Ferrari, he won't figure out how to buy a Ferrari. He'll think he has to raise his ENTIRE living situation up to the level that would normally count a Ferrari amongst its trappings. That's a seriously heavy ball and chain to drag around.
Instead, it's better to ruthlessly cut away expenses that aren't important to you, and allow yourself to spend money on things that do matter to you. That means that, if necessary, you give up on the "nice-to-haves" in favor of the "desperately-wants".
My "desperately-wants" are mainly travel and technology. I consume in those categories far above average for my relatively-low income bracket. When faced with this, people assume that I must be rich. But they don't realize that I have one pair of pants and have never bought an alcoholic beverage. If you were to nix, as I have, all of the items that I listed above, you'd have an additional $1275 per month to spend on things that you actually care about (clothes: $50, alcohol: $300, debt interest: $100, TV: $100, rent: $725).
How you acquire these "desperately-wants" is important, too. Fellow passengers on a recent two-week cruise couldn't fathom how five youngsters could afford to pay, and I quote, "three thousand dollars for a cruise, plus drinks". We didn't; each of us paid less than seven hundred dollars and only one of us bought drinks.
We shop efficiently, trying to make our "desperately-wants" purchases the lowest possible price for the best possible item.
When I shopped for my first motorcycle, I ended up buying a 2003 Ducati Monster 620. Since Ducati is sometimes considered the Ferrari of the motorcycle world, people wondered out loud how I could afford such an expensive motorcycle. What they didn't realize, until I told them, is that I waited a month looking for the best deal on it, and paid only $2500. Most entry level bikes that couldn't keep up with the Ducati, and wouldn't turn a single head, cost more than that new OR used.
If Todd hadn't reduced my sweet motorcycle into a metal abstract-art sculpture, I could have sold it for at least a thousand more than I paid for it. That's the benefit of buying premium items at discount prices-- they actually end up being better than free because you pay under-market value and they end up holding their market value well, due to their quality. Six months ago I bought an $875 lens for my camera; yesterday I sold it for $885.
So, to get back to the initial question: how do I do a manage my finances to do whatever I want? I do it by making sure that my finances are only obligated to things that I REALLY want, and I give those purchases the consideration and patience they deserve.
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I may have to add an asterisk to the saying that buying things can't make you happy. I bought a motorcycle, and I'll be damned if it hasn't made me one percent happier than I used to be. Then again, we all know that spending money on experiences can make you happy. A motorcycle isn't just a vehicle to move you from place to place-- it's an experience every time you ride it.
My brother has loved motorcycles for as long as I can remember. So has my uncle. But despite "the disease" obviously mixed up in my blood, I never really thought twice about riding a motorcycle. It was sort of like stamp collecting to me-- something other people do, and obviously derive some sort of pleasure from, but I hadn't given it more than a passing thought.
Last December, for some reason or another, I thought that it would be novel for all of my vehicle registrations, inspections, licenses, etc. to be legal and up to date. I drove my RV back to Texas to renew the registration and get inspected, made sure the insurance was current, and paid off old tickets. The only remaining infraction I was guilty of was driving my folding scooter without a motorcycle license, which is required in California.
Two years ago this month (on January 28, specifically), I was held at gunpoint in east Nashville. Two young males held a revolver up towards me and managed to escape unscathed with my wallet. It is easily one of the most terrifying experiences of my life. I sometimes reflect on what happened, and hope it never happens again. (You can read the full story HERE.)
In light of both this and the horrific shootings at Sandy Hook Elementary School in Connecticut last month, I thought it would be a good opportunity to share my thoughts on the ongoing debate surrounding gun control.
I have to first say that in spite of my own experience with the barrel of a gun I am not opposed to the right of people to bare arms. In matters of self-defense against thieves, terrorists, rapists, and all sorts of perpetrators, I think that the mindful possession and minimal use of a gun is reasonable.
This is where I draw the line.