Poverty is a wormhole that can be impossible to crawl out from; its walls are tinted with anxiety and its days can bleed you dry, leaving nothing left at the end but a question of worthiness. I’ve been thinking about precisely that these past few weeks, but what got me there, and thinking about my own economic situation, was an unlikely source: the book The Millionaire Next Door. This economics book (not a self-help book) tracks the patterns of millionaires in America and tries to find what makes them so financially successful. My goal was to take those patterns (of a sub-group called PAW, or prodigious accumulators of wealth) and see what could be applicable for those below the poverty line.
And honestly, I had a lengthy article written for this, but the more I read about what some people go through and how the system is almost collectively designed to make poor people spiral further down the economic ladder, I just got the sense that anything I could say would be reductionist and might even be insulting. Way down into that wormhole called poverty, one can see a lack of empathy at almost every turn, prejudices and frustration abound, and the phrase “It’s expensive to be poor” is encoded into the perception of reality itself.
So I can’t offer much – I can’t change the world, I can barely change my clothes – but I can offer a list I’ve been creating for the past few years to tackle the economic drains of mindless consumption. I come at it from a variety of angles: behavioral economics, propaganda studies, philosophy, and probably a good bit of the everyday skepticism that drives my family nuts. I call this “a filter for your wallet and mind,” and the point is to create a framework of thinking instead of looking for single instances of where you can save money. The main takeaways are: 1) Seemingly insignificant financial choices are always significant in the long run, and 2) If you don’t keep track of where all of your money goes, you’ll end up wondering where it went.
Defense Filter for Your Wallet and Mind
1) Start a budget. Make a spreadsheet or get out the pen and paper and start tracking where ALL of your money goes, e.g. housing, utilities, gas, food, entertainment, child expenses, car repairs, medical bills, student loans from that ventriloquism degree, etc.. How much would you save if you did things differently? This is one of those activities you can undertake that’ll give you the benefit of doing so, but as you’re doing so you’ll also improve the behavior of why you were doing so in the first place.
a) You might say, “I don’t have time for that!” Recognize that saying this about budgeting is a consistent predecessor to saying “I don’t have money for that!” So what do you do then? You spend more time trying to generate money, of course. Small sacrifices now lead to benefits later.
b) I have to add this point because of the sad state of the world – maybe you know the world I’m talking about. From TV preachers to seminar leaders, there are those out there who prey on the vulnerable who simply want hope, and those people in positions of power will exploit this idea of “sacrifices now lead to benefits later” by saying if you give money to ME, then some OTHER force will reward you. These other forces are often mystical or the deeply abstract and mistaken for concrete. Life is not a karma-fueled vending machine.
2) Find out why you’re broke by a thousand cuts. I tried to research the psychology of why subscription-based models work so well, but all I got was subscription offers. To boil down this concept, this rampant $10 per month subscription model of life, the universe, and everything is extremely successful at getting people to pay for services they’d hardly ever agree to if phrased as a yearly model. Here’s a sample package of what some “cord cutters” use:
a) Basic home internet and TV – $90 per month, or $1,080 per year. (But you know it’ll increase bit by bit as the year goes on. Another tactic exploiting perceived insignificance.)
b) Netflix – $11 per month, or $132 per year.
c) Amazon Prime – $11 per month, or $132 per year. (Plus you get the added benefit of spending more money on impulse buys every month. “I have Prime, and so I might as well. If I don’t buy something I’m basically wasting my Prime membership!”)
d) HBO Now – $15 per month, or $180 per year.
e) Spotify – $10 per month, or $100 per year.
Total yearly cost = $1,624. Five-year cost = $8,120.
3) “Free” is hardly ever free. For $132, I’ll ship this to your door for free in two days.
4) Don’t pay others for services you can do yourself. Make your own damn coffee. Do simple maintenance and car repairs with the power of YouTube. The same goes for your home. The tenants before me at my old apartment left the washer because it didn’t work anymore. I fixed it with YouTube and $2 plastic clips that went into the… turny thing.
5) Center your diet on cheap and healthy foods. There are a ton of websites discussing this very bullet point. You might find that being frugal has an unintended consequence of becoming healthier. Healthier is cheaper over the long run.
a) Fast food, pizza places, most restaurants – these are places of temptation. Why do most of them exist directly on the side of the highway? Because they’ll fail on back roads. People don’t truly care for them like they do for grandma. The restaurants have to constantly be shoving themselves into people’s minds to stay afloat.
b) Now is a good time to emphasize that this isn’t an all-or-nothing endeavor. Whether saving money or trying to lose weight, it’s important to realize that eating or sharing your favorite foods every once in a while is one of the joys in life – and that has real value that can’t be measured by your wallet.
6) Find the redundancies of modern living. See my articles about the benefits of getting rid of home internet and cable. This is a huge cost that gets absorbed as a borderline necessity. If you can, get on the internet once a week at the library or wherever else it’s already offered. If your job necessitates home internet, start factoring that cost into prospective salaries. Write it off on taxes if you can.
The library is a place that keeps on giving. A couple books, free library movies, and going home to homemade soup can last for days and cost only a few dollars for ingredients and transportation, but in one night, even someone who considers their self cheap can spend $20 at the cinema, $30 at a restaurant, $5 for gas money, and $20 for a few drinks at the bar – because the night is still young. Once a month doesn’t seem too bad. Everyone deserves to get out once in a while, right? Twelve months later, those $75 nights you totally deserved have turned into $900. Or maybe it’s that once per week trip for less than twenty dollars? (Ever wonder why the TV commercials say something like “For less than (this amount) per day you can adopt a child you’ll never see after we take out our overhead fees”?) Five years later, you need a new used car and you’re wishing you had $4,500. Maybe if you paired it with your five-year cost of internet and saved it before you spent it, you’d have over $12,600! In a savings account, you’d probably have around $13,000. But instead, you just have worry because you don’t know how you’re going to get to work or pick up your kids. Maybe you take out a car loan or start using credit cards. The interest adds up the other way – that is, not in your favor and at a far greater rate, which is how the world feels when you’re poor – not in your favor.
7) Fight Club has this quote: “The things you own end up owning you.” That fancy suit is dry cleaned only. That smart TV needs a constant connection to utilize all the features. The size of your house and your heating bill are intertwined. And on and on…
8) Try to find others who have the same frugal-based values as you. In The Millionaire Next Door, the authors explain how the clash of money values between couples doesn’t bode well, and if you’re saving money, the consumption-based lifestyle will usually find a need for it. But it doesn’t even have to be in your home life; your friends can also have a drastic influence on the type of lifestyle you develop and stick with.
9) Focus on efficiency.
a) Find ways to reduce your energy bill (but don’t spend money to save a lesser amount of money). This includes wasting more money in gas driving across town than what the amount saved is worth.
b) Find ways to better utilize your time.
c) Don’t take shortcuts – do stuff better! That has value in the long run.
10) Be honest about your addictions. If you smoke, drink, gamble, etc., your expenses sheet isn’t going to judge you for it, but it might help show you the true cost of continuing on your current path. If you’re trying to save money so you have more to spend on your addictions, or if you find the money you do save ends us going to an addiction, as an ordinary fellow human, I recommend help.
11) If you have student loans, use your saved money to pay off the highest interest loans first. If you’re on IBR, find out how much interest accumulates per year and try to at least beat that pace. Budgeting primer:
a) (Your loan amount * your interest rate = interest per year). For example, $4,210 * .068 = $286.28.
b) Now do that with all of your loans and add together.
c) Realize that sum will accumulate every year and then come to terms with the fact that it will not vanish. The more you pay in excess of that base interest rate, the less interest you will ultimately have to pay, likely thousands of dollars, and the sooner you can start putting it all behind you… If you’re in college now or thinking about going to college, save this article. Come back to it. I thought I was OK at math, too, but even I was shocked when I poured money into student loans the first year after graduation and ended up in the same place as I started.
d) Realize that if you buy a new computer with student loan money under the header “school supplies,” that computer is going to cost you money probably long after you no longer have it.
e) Realize degrees that pay less in the job market often end up costing a lot more because of the longevity of accumulating interest.
f) Yes, people who have their education paid for beforehand will end up getting the same education for thousands of dollars less, but the consequence of having student loans for a decade of more will then lead into a spiral of missed opportunities.
Putting up a defense for specific consumption-based decisions:
1) Do you have a functional one already? People say, “But I want a red toaster. It looks better than my old toaster.” “That car suits my personality better.” “But the newer one has a 1” bigger screen.” “But the newer one has a smaller screen.” A billion different reasons.
2) Is the purchase imperative to ongoing life? Hey, maybe you will end up deciding to buy that stripper pole for your living room. That’s all right – we live in a glorious society where if you really want a stripper pole, you could probably get one by the end of the afternoon. But think about it for at least a few days and see the effect this has on what you actually end up buying. Let the decision sit for two weeks and you might find you’ve moved on.
3) Is your quality of life and experience significantly affected? I wanted a ladle. Used a spoon instead. I wanted a better example. Got this instead. Good enough.
4) Is it a “what if” item. “I might need this. What if…” Guess what’s still going to be at the store if you actually need it? …However, buying food and supplies before a hurricane might be a worthy exception. Just thought I’d throw that in there so no one dies.
5) Will a more expensive version be cheaper over the long run? Items designed for planned obsolescence are everywhere, but within it all still exists examples where longevity and durability is a designed factor. You’ll have to find out what the peak efficiency of the item is you’re buying. This point particularly is where I notice many people get hung up on the idea of “frugal.” They save on one item, but then end up losing sight of where that saved money goes.
a) This is a tough topic for the poor, I know firsthand, because the main concern always looming is what to do about vehicles. If one loses their vehicle, life has the potential to fall apart in a hurry; it’s the scotch tape holding all the pieces together. We buy what we can afford to hold our life together now, but in a few years the car ends up costing more than that other, nicer vehicle we could have bought, if we could have gotten to the next price point. Consider how much stress this brings, and then consider all the other areas in this article.
b) A specific example: If you don’t care about color print, I highly suggest getting a laser printer. I’ve seen them as low as $60. They’ll print 1,200 to 1,800 pages per ink roll, and you can buy generic ink for about $15, whereas ink jet printers – I’m sure you already know about those demon spawn.
c) Always look at the cost per unit of measurement when at the grocery store. Come to understand that those minor price differences between sizes and brands are working the same way on your psyche as anything else that doesn’t seem so significant right now. It all adds up to be very significant, and you end up living the consequences in a big way down the line. You’re making dozens of these decisions every time you go grocery shopping.
d) Even after eating generic brand food most of my life, I still tend to think, “It’s not as good as the name brand, though.” But what does this usually amount to? We often associate perceived quality with a particular taste and not with any objective standard. For example, in the TV show Roseanne, the mom would always empty the generic brand cereal into the same name brand cereal box and her kids never knew. They thought they were living the name brand cereal lifestyle for years.
6) Is it intellectual consumerism? You might be saying, “I didn’t know intellectual consumerism was a thing.” I had to make it a thing – it’s an appeal to the intellectual ego, like a growing book collection far outpacing your reading pace, or even knowledge that goes unused.
Some students bring a the-customer-is-always-right mentality to education, and this started happening more when universities shifted to operating with the values of large corporations instead of with the values of education for the sake of education. In a way, the university is becoming lost in its own symbol as it gets subverted by the consumption-based zeitgeist – a cultured child of American in its own right. Tied to that, many people are going through the motions of learning. Technology has enabled droves of students to become proficient at Google while sacrificing independent thought and creativity. Students have become the symbols of students, paying with the symbols of wealth, to earn a symbol of education, in hopes they can graduate and obtain all the symbols of a well-adjusted life. Maybe you don’t see it that way. That’s all right.
7) Is it trying to placate negative emotions? This is a big one. Buying to fill a void that’ll never be filled with stuff. Going to the store because you’re bored, lonely, depressed, upset, etc.. Let it go long enough and you’ll find yourself in a George Carlin segment – you’ll need to get a new house to fit all of that new stuff, but then that new house will seem spacey…
“It was mostly junk,” a child of a UAW said in The Millionaire Next Door, remembering all that his father bought and filled the house with before he passed away.
8) Are you trying to tie a purchase to an unrelated narrative? “I deserve this because…” I remember seeing a young woman on the news who said this as she rationalized the purchase of a $150+ belt. Did she have enough money in her wallet for the belt? Yes. Could she afford it? No. Two different things.
Edward Bernays, as talked about in the documentary The Century of the Self, was largely responsible for recognizing that consumers’ irrational behaviors could be manipulated by presenting a narrative that had nothing to do with the product being sold. Cigarettes were called “Torches of freedom,” clothes and cars were tied not to functionality or quality but to the modern individual – a marketing concept for “who you really are deep inside and how you want to be represented,” and just about everything else under the sun and moon was tied to sex so they could steal your sexuality and sell it back to you. Sexy car.
9) Are you buying more because you’re being fooled into using more?
a) Toothpaste started selling more when the commercials showed an excess amount on the brush.
b) Alka-Seltzer started selling twice as much when the commercials showed two pills dropping into the glass instead of the dosage of one.
c) People eat less when they have less before them. People eat and drink more when they have bigger plates or bowls or cups, because not only do they want to make the meal appear complete – often on a level they’re not aware of – but also simply because that’s what’s within their reach. It’s like we’re all still programmed to take down wild animals in the forest. The next meal is uncertain, and so we better eat it while we have it.
10) Are you going purposeless into stores?
a) As soon as you’re in there, the social obligation to buy something arises. “Going shopping” with no greater purpose than the shopping itself must be somewhere in the consumption handbook for indoctrinating children to repeat the patterns of their parents.
b) “Because I’m hungry” is a surefire way to assault your budget at the grocery store. Make a list. Check it twice. Find out the cost-per-ounce and final price.
This may sound like an end-of-an-entry ploy, but if anyone else has tips on what they can do to take control of and be more mindful of their own consumption behaviors, I would truly like to hear them. I’d like to use them for my own life.
When this whole topic is brought together, it forms the basis for understanding personal momentum, because one thing that was abundantly clear in The Millionaire Next Door was the PAW’s constant awareness for how momentum could work for them. Unfortunately though, when you’re poor it’s the momentum that often works against you, and it’s tough, and decades can go by without an end in sight. But hopefully a list such as this one can help, if even a little bit.