Why do delusional people think their spending will be different than other people’s?

It is an indisputable fact that anyone who drives a BMW 2-door coupe is an asshole. They talk on their phone loudly, drive recklessly, and wear extremely large sunglasses. In fact, an even better litmus test is observing how these drivers park: If they back into a parking spot instead of parking nose-first like normal people do, you can be ...

Is frugality about saving money or making you feel less guilty?

In the fascinating article, "The Green Bubble: Why environmentalism keeps imploding," Nordhaus and Shellenberger cite this provocative study that has close parallels to frugality: "It's easy enough to point out the insignificance of planting a garden, buying fewer clothes, or using fluorescent bulbs...But the ecological irrelevance of these practices was beside the point. What downscalers offered was not a ...

Mental Accounting: Why Smart People Make Big Money Mistakes

A lot of you have asked for more posts on investor psychology (articles, links, books), including mental accounting, anchoring, and cognitive biases that affect our investing. Today's post on mental accounting is by Claire, who holds an MBA and other degrees from Stanford and Oxford. Belsky and Gilovich have a big job ahead of them. In only 215 pages, they ...

5 things to ask your friends who think “this time is different”

I love to make fun of economists and engineers, who get really mad when you point how humans act irrationally and how their "models" are therefore wildly off-base because they never deign to talk to psychologists in all their infinite wisdom. In fact, here are some of my favorite links on investor psychology and psychology book recommendations. To show you ...

My Free Insider's Kit will show you how to earn more money

Personal finance is not about more willpower

Note: The bottom of this post includes a link to the most detailed public description of my own personal-finance system that I've ever done. How often have you heard this? "If I just try harder, I should be able to save more money..." "Yeah, I know I should max out my 401(k)..." "I know, I spent way too much ...

Why your friends don’t save money, eat healthier, or clean their garages

I just wrote a monster guest post at Get Rich Slowly. Here's an excerpt: "...This is a common phenomenon: As Laura Levine of the Jump$tart Coalition told me, and I paraphrase, 'Bob doesn't want to attend his 401(k) seminar because he's afraid he'll see his neighbor there...and that would be equivalent to admitting he didn't know about ...