Finances

ShowJumpingRabbit wrote:An aesthetic function, does it count?

In theory it could. But, in practice, rarely.

I feel like it's important to reward oneself for having been disciplined.

I tend to approach it more as an antidote to stress than as a reward. Discipline that doesn't yield its own benefits is not sustainable. "Rewarding myself" would just be an excuse. It won't get me to do whatever needs to be done, and in all likelihood it will just make me feel bad for spending money on nonessential things when they actually make the most difference.

In the US, they really are. But in Europe, you can find excellent education for free or cheap.

Unless you can make them work for you for free as soon as they're physically capable of it (like in the "good" old days), by my standards they are expensive any and everywhere. Forget about schooling. I'm taking food and shelter and time and patience. Maybe stress in general above all else. If you really want to control your finances, then I think you need to keep in mind that stress has a very real and substantial cost. Besides making you sick both in the short and in the long run, it's basically what makes nonessential things become sort-of-essential.

Where do you invest?

I wouldn't know how to even begin to explain it in US-relevant terms, but anyway, nothing fancy. Low risk, long term.

I hate when the board crashes in the middle of posting.

So to sum up my post, I invest in index funds that track the whole US stock market and a stock/bond mix. Current mix is 80% stock, 20% bonds. They both have distributions so my shares slowly climb. It's basically a set it and forget it thing unless the mix becomes unbalanced or I need to reduce my risk. Since I am unemployed, I don't add anymore but I project to have $500k by retirement age. It's way more then I'd ever need but peace of mind is priceless.

As for kids, when you just go with the flow and do what you think you are supposed to, it's fairly easy to keep popping them out. I think my wife thought I was in agreement but it was more of a "Why not?".

emillionth wrote:

ShowJumpingRabbit wrote:An aesthetic function, does it count?

In theory it could. But, in practice, rarely.

This is something where I take a middle-road. I think necessities have to take first priority and be ruthlessly economized. I don't think they can serve as ultimate values though ("man shall not live by bread alone"); past the basics, if you aren't putting any slack resources towards personal purposes, whether aesthetic, spiritual, strategic, or just simple pleasures, you're essentially hoarding.

emillionth wrote:

ShowJumpingRabbit wrote:

emillionth wrote:Also: Never have kids. They're expensive.

In the US, they really are. But in Europe, you can find excellent education for free or cheap.

Unless you can make them work for you for free as soon as they're physically capable of it (like in the "good" old days), by my standards they are expensive any and everywhere. Forget about schooling. I'm taking food and shelter and time and patience.

Ah, see, this is somewhere I don't really see kids as a problem. I actually think it's unnatural for kids not to spend some time everyday doing age-appropriate work around the house. IIUC part of the Montessori school philosophy is that children typically want to learn some by "playing" their way through productive work with real resources and tools. I suspect if it seems backwards nowadays, it's because we conflate it with the "old-school" tyrannical style of Western parenting.

I also feel like we've reached peak education in ways. More generally, I suspect half of the stress kids cause adults is just from adults projecting their own worries and assumptions onto their kids. But yes, I'd still like to have a decent-sized family so I'm biased.

emillionth wrote:... keep in mind that stress has a very real and substantial cost. Besides making you sick both in the short and in the long run, it's basically what makes nonessential things become sort-of-essential.

Oh yeah, this is spot on. I know one bad habit a lot of Americans my age (myself included) have is eating out too darn much. But what people forget to account for is that when you're juggling a crappy job, an education you really don't even want, and all sorts of forced socialization, you reach a point where the thought of cooking depresses you. There were points where scarfing down $5 of Taco Bell and going to bed by 9 PM was the best night of my week.

ShowJumpingRabbit wrote:

muaddib wrote:Now, I have a couple other thoughts that I don't think anyone else has brought up, but this post is already getting long. If you're interested, I can discuss those.

Of course, go ahead! I'm all ears.

I have two in particular, one I feel is actually pretty mainstream (once you know to look for it) while the other is much more speculative and stranger (it's something I still haven't entirely tried myself).

So my first bit of advice is for budgeting. If you don't have stable income (like me right now), I think you just have to economize and be scrappy, like a raccoon. However, if you have reliable income and want to budget, I think the trick is to budget like an actual capitalist. Think about it. If you trace the advice to focus on your expenses and scrimp, it almost always comes from financial advice shows and self-help books. These people aren't actual industrialists; they're salespeople and motivational speakers, and their whole shtick caters to middle-class preconceptions.

Look at any major enterprise though, and while they're always making incremental improvements to their outflows, they're usually pretty lackadaisical about how departments use their funds so long as they stay within budget. Instead, the focus is on allocating your inflows to various projects and departments. So long story short, I feel like it's more important to look at your personal goals, then allocate your income to different funds before tracking even a single receipt.

In the end, does it really even matter if you spend a $100 more on food and $100 less on clothes one month? Now compare that to if you spend $100 more on food and $100 less to pay down debts. If you setup walls between those accounts and split up your paychecks the moments they come in though, you can budget yourself without obsessing over tiny expense details. I also think it's more psychologically rewarding; you see your money going towards things you care about instead of just depriving yourself of things for a vague, Puritan notion of "saving."

Now the weirder idea, which is more of just a thought-experiment, is that in theory (several major economists actually flirted with one version of it or another) you can run the identity "time = money" in reverse. Since time is actually more consistent in human life than money, it's arguably (for an individual at least) a more objective measure of economic activity. It's tricky and theoretical for most things, since you have to start bringing in ideas like opportunity costs, fixed costs, autarky, etc.

Within your own home though, it can be a very fruitful way of thinking about your possessions. For example, you can start thinking of labor-saving devices as investments in time-savings. Besides letting you prioritize your home purchases, I think it naturally leads you to divert some of your spending from short-lived consumables towards durable goods that improve your quality of life for long periods.

ShowJumpingRabbit wrote:By the way, I've read On Civil Disobedience, but I intend to finish Walden before answering the Thoreau thread (I'm also moving soon)

Oh, there's no pressure. I'm not sure I have much more to say there, but if you had any other thoughts, I'd be interested in hearing them.

I wrote a kinda-lengthy response but the site ate it. Bleh.

I guess the TL;DR (too long; don't remember) would be:

- Spending money on things with no value other than aesthetics is complicated because I get bored of things quickly. Nothing against it in theory, it's just problematic for me.

- I don't keep track of my expenses in detail. I barely keep track of how much money I make. I work with rough estimates, look at things in retrospect, and then try to prioritize one potential improvement at a time in my head. If I have more money than I had last month and I reasonably expect to have more money a year from now than I have right now (based on fuzzy extrapolation), then it's all good and I can forget about it.

emillionth wrote:I tend to approach it more as an antidote to stress than as a reward. Discipline that doesn't yield its own benefits is not sustainable. "Rewarding myself" would just be an excuse. It won't get me to do whatever needs to be done, and in all likelihood it will just make me feel bad for spending money on nonessential things when they actually make the most difference.

Point taken (the bolded part). Could you elaborate on how you approach discipline? You mentioned your TV, if I'm not mistaken, some times ago. How did it function as an antidote?

Well I do reward myself a bit too much, that's a fact (an excuse). I reward myself a bit indiscriminately if you will. And I know some of it is helpful, and at other times, I just "reward" myself out of stress. So I'm trying to discriminate when it is helpful and when it is not.

emillionth wrote:Unless you can make them work for you for free as soon as they're physically capable of it (like in the "good" old days), by my standards they are expensive any and everywhere. Forget about schooling. I'm taking food and shelter and time and patience.

I see what you mean, that time you invest in them is time you don't invest in doing what you enjoy doing, that's why I've been delaying having kids. But I want my work to be what I enjoy doing so that I will have time left for something else. That's what I'm working on.

iabsurdlyexist wrote:So to sum up my post, I invest in index funds that track the whole US stock market and a stock/bond mix. Current mix is 80% stock, 20% bonds. They both have distributions so my shares slowly climb. It's basically a set it and forget it thing unless the mix becomes unbalanced or I need to reduce my risk.

Do you use an app of some sort? ... Or do you go to the bank? I mean practically speaking ...

iabsurdlyexist wrote:As for kids, when you just go with the flow and do what you think you are supposed to, it's fairly easy to keep popping them out. I think my wife thought I was in agreement but it was more of a "Why not?".

Ok.

muaddib wrote:This is something where I take a middle-road. I think necessities have to take first priority and be ruthlessly economized. I don't think they can serve as ultimate values though

That works for me.

muaddib wrote:I actually think it's unnatural for kids not to spend some time everyday doing age-appropriate work around the house. IIUC part of the Montessori school philosophy is that children typically want to learn some by "playing" their way through productive work with real resources and tools. I suspect if it seems backwards nowadays, it's because we conflate it with the "old-school" tyrannical style of Western parenting.

Absolutely. In my country of origin, children absolutely participate to the common tasks, and the parent is the "boss". Sometimes it can make the child feel like a satellite of the parent, so insecure and undeserving. But when done right it's excellent for socialization and responsabilisation (against individualism if you will).

But in the US, parents hover around the child, the child grows up thinking he/she is the center of universe. It is conducive of unhealthy narcissism but when done right, the child grows up confidently knowing he deserves as much as his/her neighbors.

muaddib wrote:More generally, I suspect half of the stress kids cause adults is just from adults projecting their own worries and assumptions onto their kids.

It's definitely possible, but also sometimes your resources are scarce (talking from experience).

muaddib wrote:If you don't have stable income (like me right now), I think you just have to economize and be scrappy, like a raccoon.

Alternatively you can steal from those bourgeois cats:

https://www.youtube.com/watch?v=FTcjzaqL0pE

muaddib wrote:Look at any major enterprise though, and while they're always making incremental improvements to their outflows, they're usually pretty lackadaisical about how departments use their funds so long as they stay within budget. Instead, the focus is on allocating your inflows to various projects and departments. So long story short, I feel like it's more important to look at your personal goals, then allocate your income to different funds before tracking even a single receipt.

In the end, does it really even matter if you spend a $100 more on food and $100 less on clothes one month? Now compare that to if you spend $100 more on food and $100 less to pay down debts. If you setup walls between those accounts and split up your paychecks the moments they come in though, you can budget yourself without obsessing over tiny expense details. I also think it's more psychologically rewarding; you see your money going towards things you care about instead of just depriving yourself of things for a vague, Puritan notion of "saving."

I feel like this is the same point the European politic of austerity is missing. Of course repaying debts is important, but you still have to spend money at the same time in order for countries to keep projects going.

muaddib wrote:Since time is actually more consistent in human life than money, it's arguably (for an individual at least) a more objective measure of economic activity. It's tricky and theoretical for most things, since you have to start bringing in ideas like opportunity costs, fixed costs, autarky, etc.

Within your own home though, it can be a very fruitful way of thinking about your possessions. For example, you can start thinking of labor-saving devices as investments in time-savings. Besides letting you prioritize your home purchases, I think it naturally leads you to divert some of your spending from short-lived consumables towards durable goods that improve your quality of life for long periods.

Long range thinking, I agree.

muaddib wrote:Oh, there's no pressure. I'm not sure I have much more to say there, but if you had any other thoughts, I'd be interested in hearing them.

I'm in vacation in July, so hopefully I can finish Walden!

I use Vanguard for my 401k but it could be Etrade, Charles Schwab, etc. They usually have all the tools you need. However, a 401k is sort of a set it and leave it whereas stock trading is more in the moment.

ShowJumpingRabbit wrote:Could you elaborate on how you approach discipline?

Mostly by keeping in mind that I'm lazy and that any active motivations that I may have are unreliable. If I understand or predict a certain undesirable course of action to be the path of least resistance at some point in the future (mostly the near future) while it's indifferent to me right now, then it often makes sense to go out of my way right now to make it inconvenient in the future. It's a little bit of effort right now that saves a lot of effort in the future. Also, I approach habit-building / habit-breaking / habit-maintenance actions or activities as having value of their own, even when they don't have any of the final intended effects.

The bottom line is that just reminding myself that I need to do something (or to do it a certain way) does very little to actually get me to do it. It has to feel natural, or at least less unnatural than all other alternatives that I can think of, and that's what I have to be proactive about. Simply planning things is no good. I don't need to actually do everything as soon as possible (and it's usually a bad idea anyway), but I do need to set up the environment and the circumstances so that I will be in the right frame of mind when it matters.

I guess another way to put it is that it's a good idea to not only make choices, but to also eliminate ruled-out alternatives once you've made a choice/decision.

You mentioned your TV, if I'm not mistaken, some times ago. How did it function as an antidote?

That's just part of the baseline environment that I've built for myself. My sense of "home", basically. It's not about spending resources (material/financial or not). It's kind of the opposite. It's part of my "lowest-maintenance / lowest-consequence mode of existence".