Let’s start the week off right: with me getting really angry and threatening to throw heavy things at people.
Guys, I am so tired of hearing about young people sabotaging themselves by being cheap. Not frugal, cheap. (There’s a difference.) Let me tell you why using an example from the recent IWillTeachYouToBeRich chat I recently held.
During the chat, someone asked me what I was going to do with the site in the future, and I mentioned how I was interested in using different types of media like podcasts, videos, etc. There was a lot of enthusiasm: “Yeah, Ramit!” they said, “you should do it!”
Then I decided to test the lovey-dovey emotions that we were all feeling. See, I’ve been getting lots of requests to do a regular podcast, but it’s a lot of work to do a really good one. That’s why I’ve been playing with the idea of charging for them.
Oh, man. When I mentioned this in the chat room, people went apeshit. They were dead set against it, and I watched the mood go from Kumbaya-happiness to dark indignation. Curious, I thought. Actually, I thought it was completely stupid, and here’s why:
Before I went nuts, I asked people, why not charge? And the reasons I got back were so breathtakingly absurd that I actually stripped out people’s names.
person1: don’t charge though
person2: yeah, please don’t charge
person3: I have universtiy debts to pay for… =… O(
person4: It feels punitive
person5: your good karma will come back to you muliplied if you do not charge
person6: because people dont want to pay lol my guess is you will lose many readers if they have to pay
person7: No charge….comeon! you cant ask us to pay to learn saving 🙂
person8: one thing that would concern me if you charged is that the quality of material would need to match the fee
person9: i think you should charge. you weed out the ppl who aren’t willing to make basic investments in their investments
person10: dont charge
person11: frankly your latest work hasn’t been great ;(
person12: we cheap 😛 don’t charge. we hear to save money here XD
person13: suze orman does not charge for her show
person14: Dude, there are people who CAN’T pay. (Me, for example, here in Bangladesh, I don’t have a way to pay for stuff in the web.)
person15: you’ve been giving out quality information for free, i think i’ve gotten used to it…
person16: Charging is not a succesful business model for editorial content on the web, currently
person17: people dont know what the advice is worth before getting it but you have to pay first
person18: you will NOT attract new audience members by charging….existing ones, maybe
person19: Payment is a barrier between the reader and the important information; I would think you of all people would understand how dangerous it is to erect even minor barriers for people.
Seeing this really pissed me off. In fact, these reasons are so ridiculous that I almost took out a sledgehammer and smashed my monitor, Hollywood-style.
Listen, if I decide to charge for podcasts–which I haven’t decided yet–then you can decide if they’re valuable enough to pay for. But please don’t use dumb excuses like “How can you expect me to pay when I’m trying to save?” and “I’m used to free stuff.”
The truth is that most young people don’t understand the value of money. Ooh, yeah, I said it. We don’t differentiate between cost and value. We’ll happily spend money eating out, drinking, or going to movies, but when it comes to paying for content or other valuable items–things you consider an investment–we balk. We’ve gotten used to everything being free, and when things start costing money, the result is a panicked “no way!” reaction. How do I know? Because I’m a young guy, and a few years ago I was saying stupid stuff like the above quotes, too.
When I was younger, I tried to save money on everything, whether it was a Coke or a major purchase like an iPod. I understand being on that end of the gradient. Now that I’m earning money, though, I see the value in spending money on things beyond eating out. Person9’s comment spoke to me:
“person9: i think you should charge. you weed out the ppl who aren’t willing to make basic investments in their investments”
Frankly, if you’d told me to spend more money on certain things back then, I would have ignored you. But hopefully you’re smarter than my past self. Also, you might have read enough on this site to know that spending on the things you love is perfectly ok.
Ben Casnocha put it well when he wrote this:
“What are the best corners to cut? In the Google cafeteria, the food is awesome, and the chairs and tables are pieces of shit. That’s a great example of cutting the right corners.”
Right on. Today, I see young people sabotaging themselves all the time by being cheap about the wrong things. “I’m not going to buy that book! It costs $27.95!” they say, not realizing that the book could inspire them to do something that would make them $10,000. That’s a 357x return. Or, “I’m not going to spend $15.00 on the more expensive cellphone plan–that’s ridiculous!” No, what’s ridiculous is you then not monitoring your usage and ending up spending $58.00 in overage fees in one month.
“But Ramit,” you might say, hiding behind a wall because of the mallet I am holding on this angry Tuesday, “how do I know that $30 book will pay off? What if I don’t get anything from it?” Jesus Christ, you don’t know! That’s called taking a risk! Unfortunately, I see a lot of people nickel-and-diming the really important things that could pay off explosively.
Instead of being guided by the invisible hand of stupidity, take some conscious control of your spending. Are you just spending on eating out? When was the last time you spent money strategically to try to gain something useful? Yes, it’s actually good to spend money on things you value. Yes, it’s important to spend money on things that will benefit you financially, intellectually, whatever. Yes, I’m encouraging you to spend money on certain things! In fact, here are some of the subscriptions and things I’ve spent money on:
- A subscription to Before & After Magazine, to improve my design skills
- A subscription to the Rhapsody music service, because I like finding new music without having to wait
- A Rowenta iron, because I love ironing
This point of this isn’t to brag about how much I spend on stuff. Heh, frankly, it’s not that much in the grand scheme. And it’s a little different than my posts on Irrational But Good Things To Buy and Cost vs. Value. The point is to differentiate between spending on fun, and spending on things you consider investments.
In the quotes from the chat above, one guy said something like, ‘How can I spend money on a podcast when you expect me to save?’ Let’s get real here: Assuming the podcast (or whatever) is worth paying for, then you need to think more about whether it’s an investment or a simple cost. Does it have the potential to make you happy? Beyond that, could it give you the potential to make more than the cost of the podcast? Is there a trial or a refund policy? Is there some magical way of of judging if you think the content will be good (like maybe 2 YEARS OF POSTS?!?)?
This post isn’t just about my hypothetical podcasts, and it’s not about going to buy that iPod/coat/car you’ve really been wanting. It’s about not being cheap. It’s about using your money strategically by realizing what’s an investment and what’s not. So here’s what I want you to do. This week, go find something valuable you want to spend money on–and then go buy it. Yes, I’m telling you to go spend money on something you love and something that will benefit you in some way. Do me a favor and add a comment here telling us what you bought. Bonus points if you spend money on something that will turn your money into 10x what you spent (e.g., a good business book or buying lunch for your mentor to get his advice). Remember: You control your spending.