On Spending Less, Earning More

Sunday, June 14, 2015

I’ve been thinking lately about Ignatius J. Reilly, the generally repulsive yet oddly compelling protagonist of John Kennedy Toole’s great comic novel A Confederacy of Dunces.

I thought of him often over the winter, because one of the pairs of pants that I ended up wearing a lot was this pair of brown “loose fit” Gap cordurouys that had wide legs and very large, deep pockets. The word that came to mind when I put them on was “capacious.” I kept thinking of the introductory description of Ignatius on the first page of the book, when he’s waiting for his mother at the D.H. Holmes department store — “The voluminous tweed trousers were durable and permitted unusually free locomotion. Their pleats and nooks contained pockets of warm, stale air that soothed Ignatius.”

That’s what I felt like when I wore those pants. Soothing pleats and nooks, with unusually free locomotion.

Lately I’ve been thinking about Ignatius when it comes to reading things on the internet.

I think I may have mentioned previously that I don’t make a habit of reading good, useful information on the internet. Instead I tend to latch on to some thing that annoys me, something I read and pull my hair out and say, “Gaah!!! No! What are you thinking?!?!”

Like Ignatius, who liked to go to the movies so he could throw popcorn at the screen and complain loudly about everything that offended him about modern life (which was most everything). That is me.

I’ve realized that I don’t like reading blogs by people who have everything figured out — “here, look at how great my life is, look at how smart and successful I am.” Those feel boring and pointless to me.

I like a little bit of angst in my blogs. But it’s hard to find the right amount of angst — a little bit can feel real and useful but too much quickly becomes tiresome. But sometimes I’ll find one with just the right amount and it flips me into hate-reading mode. Which then sucks me down a rabbit hole of guilty pleasure. It’s like reading Valley of the Dolls, it’s so bad I can’t put it down.

And I’d gone months and months without any internet obsessions at all but I recently came across an intriguing lifestyle/personal finance blog that I’ve been reading and pulling my hair out over and which has helped crystallize some of my thoughts about personal finance and happiness and life in general.

(And note that I’m leaving off the object of my hate-reading, because it doesn’t seem nice to tell the internet that you hate-read someone who is trying to write a serious blog. So here I’ll just talk about what I’ve learned.)

The PF blogging world has basically two camps in their approach to advising people how to get ahead: those who focus on spending less and those who focus on earning more. Of course most bloggers acknowledge that both strategies play a role, but usually they come down on the side of one or the other as being more important.

The people who focus on earning more tend to be dismissive of the people who focus on spending less — they think you just can’t make very much progress by cutting back on spending, there’s just not enough to work with, and it’s silly to put energy into saving small amounts of money here and there. They think the only way to really get ahead is to make more money.

And on some level, I agree with that — if your income is very low or if your fixed expenses are very high, your options can be constrained.

On the other hand, people usually have more control over how they spend their money than they do over how they make it. So in that sense focusing on spending less can be better because it’s something you can do right now, that doesn’t depend on the actions of people over whom you have no control.

But until getting sucked into reading this blog, written by someone who managed to save over $300,000 in less than 10 years, starting with around $10K and a starting salary of $25K, I hadn’t really thought through the fact that there’s another important difference between getting ahead by making more or getting ahead by spending less.

I’ve realized in reading about someone who has been very successful in achieving financial goals by making more money that there is a huge nonfinancial element to focusing on spending.

If you follow the Your Money or Your Life model and reduce expenditures by tracking and analyzing your spending, you are by way of this process clarifying your values — you are thinking about what you care about, and whether or not the money you spend is being used to support things you care about. You reduce spending on the things you don’t care about and you end up spending much less without any decrease in your overall quality of life.

The process helps you figure out what you actually need and allows you to be happy on much less than you ever could have imagined, and much less than most people spend. It’s like you enter a parallel universe where you always have enough. It’s magical.

If instead you focus on making more, you’re not able to figure out how much is “enough” because you’re not really thinking about that, you can always use more, and more is always better. So there’s no end. (Or maybe you do think about what’s enough but it’s a really huge number — $10 million or something like that.)

Also focusing on making more requires you to keep on keeping on in the economic stew of modern life — as my friend Ann likes to say, you have to stay in the puddin’.

You have to constantly be networking, working on job skills, dealing with bosses and clients. You need to move up the ladder in your office, or find a new job, or take on side gigs.

You need to hustle.

There’s nothing wrong with that, and certainly that approach is the best way to increase your income. But it’s not necessarily the best way to improve your quality of life.

No matter how much money you make or save or spend — or don’t make or save or spend — at some point you have to figure out what makes you happy. The process of making more money generally does not help you figure this out. So you can make a lot more money than you used to while being no happier at all.

I feel like the YMOYL approach almost has an element of therapy to it.

It’s very structured — track what you spend, think about it, figure out how to spend less; track what you save, think about it, figure out how to make more. By focusing on these specific things, you are figuring out what you need and what you don’t need.

By needing less, you are able to let go of things, and in doing that, you gain freedom.

People in your life can’t control you with strings-attached gifts. Employers don’t have the same leverage because you can walk away at any time. Your life overall is less stressful if what you need to be happy is easily within your capacity to generate — if what you need to be happy is as much as you can possibly make by working as hard as you can all the time, you are always going to be behind the eight ball. Your life will always be stressful.

Making more money involves thinking about other people — bosses, clients, customers. Spending less money involves thinking about you (and possibly the people directly connected to you — spouse, children, other relatives).

Spending less allows you to disengage from many things that can cause anxiety — it lets you stop worrying about how what you are buying compares to what other people are buying, or what it says about you or what other people think about you. (Worrying about what other people think about you seems to be a major source of anxiety for many people.)

I truly believe that focusing on what you care about, what you want, what you value, can help get you out of that mindset. It can help free you.

Spending less gets you to this place where you are in control of your life, and where your world feels manageable.

It is the key to happiness.

Or one of them, at least.

(And while on the subject of being happy, I read The Happiness Project while on my trip and I may write about that at some point. I liked it.)

Go forth and be happy. And stay cool if you can.