1 More Reason You Should Spend More Than You Earn
On Monday, I posted an article titled “8 Reasons You Should Spend More Than You Earn“. It has gotten quite a bit of traffic, as numerous people have linked to it (thank you!). It has also attracted quite a number of comments, both here and elsewhere.
The overwhelming response has been negative. For example, Ground Zero’s comment on spending more than you earn is:
Yeah, sure! How else are we going to make the Chinese the masters of the universe!!
Apparently Ground Zero, along with many many others, don’t think that going into debt spending more than you earn is a smart idea.
Good. Me either.
That wasn’t what I wrote, at least, that’s not what I intended to write. I’m afraid I didn’t do a very good job of explaining myself. I introduced the post by saying:
But if you break it down by year, or month, or by paycheck, then almost everyone, at some point in their lives, spends more than they make. Does that make you feel guilty? It shouldn’t.
By this, I simply meant that if you look at small periods of time, everyone will spend more than they make. Even if you saved up for it, even if you have money in the bank, you’re still spending more than you made during that period of time. Spending more than you earn does not necessarily (in this frame) mean that you’re using credit or going into debt to do it. Unfortunately, that’s where Gordon Powers at Everydaymoney.ca got it wrong when he linked to me.
All of which is why, despite the grim headlines and admonitions about debt free living from bloggers like Bank Nerd, you should go all out from time to time, says Alan Schram, who blogs at Saving for Serenity. Not on another car or a bigger television, of course, but on those unique opportunities – weddings, birthdays, vacations, higher education – that only come around once and awhile. (emphasis mine)
Re-reading my post, I can understand where he came from when he said that. I am, and will continue to, advocate feeling free to spend more money on certain areas of life. Experiences. Opportunities. Education. I will not, and cannot, say that you ought to go into debt to do it though (except for Education, I can understand & agree with that debt).
1 More Reason
So here’s one more reason that you should spend more than you’ve earned, and while it was the driving force behind all 8 reasons, I never clearly said it.
Because you’ve saved for it.
Save, then spend.
I apologize for the confusion, I apologize for not writing more clearly. Thanks for the feedback and for giving me the opportunity to clarify my intentions.
Clay
Amy @ JobCred CV Builder
Keith Penny
Penn
Comments (3 )
I still don’t believe in spending big for weddings, birthdays or vacations..
But it depends on priorities for those matters. I go on vacation to see the city, be like a local and absorb the atmosphere, plus take picts (my only souvenirs, most of the time)… but other people go to "get away" and "relax"…
As a result, I spend about $1000 per city I visit in the States (searching for deals, etc) and I save the "relaxing and getting away" for my everyday life, when I bike to relieve stress or cook to eat better food instead of travelling to the Caribbean for that.
But still, I see your point
A wedding day is one day in the life, and I’d spend a bit more on that, but nothing to the tune of $20,000+.
[Reply]
I definitely can understand that.
I think a lot of our response depends on our experiences. When I think "spending big" on a birthday gift, it is in the $40 range. For others, that is a small gift. They would consider a $40 gift "cutting back". Likewise for a wedding. When I say go ahead and spend money that you’ve saved on a wedding, I’m thinking something similar to what my wedding is going to cost – around $6000. For me, that’s big. That’s a lot. $20k on a wedding is ridiculous.
[Reply]
I agree with the introduction you gave for that last post: That at some point, you’ll spend more than you earn, assuming a certain time frame. When I see my net worth every month, either manually calculated or on a site like Mint, there are times when it doesn’t grow the way it should, or I have negative cash flow for the month. That happened last month with a trip to Las Vegas for a reunion. But I think it’s worth it for things like that, and, looking at the long run, I’m still spending less than I earn. Just if you lump all my expenses into the one month, I look like a crazy spender.Even looking at that, I did freak out a bit. I don’t like seeing red. But I had to remind myself that I’ve saved up the money for it (like you said) and that I’m not actually going into debt to do it. My net worth still grew, just not at the rate it usually did. And now I’m back to saving a lot and spending only on necessities again. So I think it works out.
Glad I happened on to your site!
[Reply]