IWT isn’t about guilt. I hate guilt and, also, I have no emotions so it’s difficult for me to relate.
Nonetheless, let me shed some light on this situation.
There’s a difference between people who consciously spend on things they love — even if they’re expensive — and people who simply buy whatever they want. Often it’s buying more and more of a similar item (you know people who have 12 kinds of the same color jeans? And yet they’re always shopping for new ones?) I used to be like this, only with SAT books…which explains a lot about my traumatic childhood.
This pattern of buying more and more of an item is particularly true of luxury goods, because (1) they’re expensive and (2) people who buy one luxury good tend to buy a lot of them.
Luxury goods have gotten a bad rap. Many personal-finance pundits reflexively say, “NO! You can’t spend THAT MUCH!” to any expensive purchases without understanding the context (e.g., you might have a lot of money in the bank and this is valuable to you). It’s OK to spend on expensive things if it’s done consciously and you’re saving/investing appropriately. But for expensive items, it’s also important to put framework around them so that it’s not all about willpower. The framework allows you to justify and manage paying for expensive things.
Deciding to pay for a personal trainer
A while back, I had decided to switch gyms, but I didn’t sign up for a new gym immediately, so there was a time lapse between my memberships. When I finally did, I stopped short for a minute.
In my book, I talk about one study that shows how gym go-ers dramatically overestimate how often they actually use their gym membership. So I knew a gym membership was rife with psychological motivators, and I decided to take advantage of that.
To start with, I knew a few things:
- I wanted to get a trainer
- I don’t mind paying for value
- I wanted to accelerate my growth by paying for someone who is experienced and could help me achieve my goals.
But even I’m not delusional enough to believe that I’m different than other people. Think about it: What’s the most common thing that happens with gym memberships? People pay for it, stop going after a month, then feel guilty for not going, and paying hundreds and hundreds of dollars in unnecessary gym fees.
So regardless of how much I really believed I’d be different, and how much I really wanted a trainer, I decided to force myself to beat the odds first.
So before I hired a trainer, I wanted to see if I could justify the expense by how often I was making it to the gym. That was the 85% Solution. I set a simple goal of going to the gym at least 3 times per week for 1 month, a gradual goal that would take sustained effort.
It’s important to not set a broad goal, but to be as specific as possible. So my goal was to go on Mondays, Wednesdays and Fridays. I kept track of the days I went in a notebook. Now, I didn’t stick to this plan 100%. Some days I didn’t feel like going, so I didn’t. When I didn’t go, I tried to go the next day, or an extra time the next week.Sometimes I was inspired to go on a day off, so I went. Other times I missed a day completely.
At the end of one month, I had averaged going to the gym 3 times a week — right on track. So having met the larger challenge of actually going to the gym, I decided to go forward with the trainer.
The point is this: By creating a small intentional barrier, you can force yourself to realize whether it’s really worth it or not.
Now, let’s figure out how to apply this to your life.
How to apply this to different areas of your life
Here are a few shortcuts to decide whether to spend money on something expensive.
- Use more. If you want to buy something, use more of what you have before you get something else. For example, use the cosmetics sitting in your bathroom drawer before buying anything new so that when you DO buy new stuff, it’s to replenish what you’ve already used. Or, like in my case, use the SAT book you already have and finish it before getting another one.
- Earn more. Earn more on the side to justify paying for something. This usually relates to time or selling an existing good to pay for something new.
- Spend more time. Spend more time doing something to justify the cost. For me, the time I spent going to the gym justified the cost of a personal trainer.
More Practical Applications:
Trip to _____: How can you justify this cost? Are you learning the language before you go? If so, set a specific goal. Take language classes for a year, or something. When you hit your goals, give yourself permission to spend the money on the trip.
Expensive makeup: How much unused makeup is sitting in your bathroom drawer right now? Don’t add more to the pile — before spending on expensive new make up, use up all of what you have first.
Virtual assistant: Same goal as with the cleaning service — if you earn an extra $100/month on the side for 3 months straight, you can justify hiring a virtual assistant.We’ve talked about ways to use VAs before. Having the support of a good assistant can increase your productivity,efficiency and therefore help you earn even more.
Web designer: Your site has reached 1,000 visitors/day. Remember, I hate bloggers who focus on stats and hardly anyone cares about your design, BUT if more people are visiting your site and its design or user interface is important to you, then go for it.
New TV: Can you sell your old one? Or donate it to a non-profit that will put it to good use.Or, what do you have that you’re not using that you could sell to pay for the new TV? Or maybe the new TV is your reward for accomplishing some other goal.You get the idea.
New desk chair: Sell your old one first and use the money toward buying a new one.
New mattress: Exhaust the potential quick wins first by using a mattress pad for extra cushion and protection, flipping the mattress or getting it cleaned.
Upgrading to business/first class: Set a certain percent you want to save. For example, “I want to get at least 40% off first class tickets by reading Chris Guillebeau’s Unconventional Guide to Discount Airfare or firstclassflyer.com.” Or simply fly often enough to pay for first class with your frequent flier miles.
Subscribing to a new service: I’ve written previously about how crazy people go when trying to save money on books, when they should really be trying to extract as much VALUE as possible. You can justify buying an expensive information product if you decide– ahead of time — what metrics it’s going to move the needle for. For example, “I can afford The Scrooge Strategy if I save $100 in the first month.” That’s eminently do-able and it gives you a concrete reason to pay for something, even something extremely expensive.
Cleaning service: Give yourself the goal to earn an extra $100/month on the side for 3 months straight. Once you meet the goal, you can justify paying for a cleaning service because it frees up your time to earn more.
Bottom line: Yes, there are smart ways to save.
How to make expensive purchases less stressful
If you liked the tips in this email and want to focus on saving, check out my Save $1,000 in 30 Days Challenge.
My readers have already used that plan to save a lot of money. BUT there’s a limit to how much they can save.
There’s NO limit on how much you can earn, however. And once you learn how — like Claire who used Craigslist to make $8,000 on the side — making expensive purchases gets a lot less stressful.
Do you know your actual earning potential?
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