Financial Compromise = Long Lasting Happiness

Due to the weather being pretty warm and humid last Sunday, my wife and I decided to go for a swim.( To be brutally honest, all we did was soak.) On past occasions that these soakings occurred, we always  got to talking about our future and also our financial plans and goals and this time was no different.

Sometimes, we would disagree and more often than not, irritation would get the better of us. Thankfully this time, this was not the case and I found this discussion to be extremely insightful. The main topic revolved around what we valued more and what we valued less. I found that we had very, I repeat very different views on money and material items. I realized that the reason why I prefer to save and invest is because I value money and freedom high above any material items I could purchase.

That being the case, why would any normal person want to trade something he/she loves more for something he/she loves less. I would not want to trade money to buy new clothes but I would trade money to invest to earn more money to give myself financial freedom.

My wife on the other hand stated that she would want to work till the normal retirement age of 65 as she wants to be able to continue buying anything she wants....which is practically everything. I felt that is was fair as she would be trading something she loves less(money)   for something she loves more (bags, shoes, clothes..and the list goes on..)

In the end, soaked and wrinkled like raisins soaked in rum, we came to a compromise which would invlove 2 step.The 1st step was that we would, together, work towards reaching an investment portfolio value which would give us enough passive income to cover all our basic needs. This would include stuff that we could not live without like utility, mobile phone charges, food and stuff like that.

The 2nd step would proceed after we have achieved step one. It would be that whatever else we earned after step one would be used to do whatever we wanted, or more likely, whatever she wanted. The 1st priority will no longer be to save but to spend. Although this goes heavily against my nature, I felt that it was only right since she went along with me for part one.

That said, the important thing was to have no more debts and enough investment income to last till the end.

What kinds of compromise have you made with your spouse or even yourself? Are you happy with the compromise? We must always seek balance and try to provide happiness for our significant other. If one party is not happy in a relationship, it will be extremely hard for it to blossom.

As always, save more, spend less and invest wisely.
P.

DUOS/U - Decreasing Units of Satisfaction/Usefulness

More is always better. The saying, while true to a certain extent does not apply to everything. The usefulness and the satisfaction an item brings diminishes as the quantity of that item increases.

Take for example your clothes. Say you are currently naked and you go to the store to buy a set of clothes. The set of clothes would be extremely useful because it keeps you covered and protects you from the cold. If you bought 2 set of clothes, it would still be mightily useful because it allows you to remained clothed while you are washing the 1st set of clothes. Now fast forward to the 100th set of clothing. How useful would that set be? I highly doubt it would bring about much more use or satisfaction then the 99th set.

This applies to everything else, even money. ( Yes, that's right, I said money..so shoot me.) Only we ourselves would know what is enough. Spending $1000 might allow you 100% satisfaction, however, spending $5,000 might not get you 500% satisfaction. Most likely, it will be along the range of 101% to 200%.

If we stop and make the decision to cut out spending on things that brings us little value, we would be able to save the money and use it for things which will bring us maximum satisfaction. Rather than spending on the new tablet with a larger screen size, why not spend it to see a loved one smile. A nice dinner or a short getaway perhaps.

What are the things you continue spending on or doing that are producing diminishing satisfaction and usefulness? Are you ready to take the next step towards life by cutting down on these? Please do share your experiences.

As always, save more, spend less and invest wisely.
P.

Emmotional Spending - A.K.A Retail Therapy

How often have you succumbed to this? What the hell is retail therapy? I feel that it is just another term coined by marketers and advertisers to make us feel as if we can reduce stress and be happier just by spending more money.

I know that most of us work 8 to 10 hours a day, 5 to 6 days a week and all the workload can cause a lot of stress and unhappy feelings. After a hard week at work, we all feel as if we need to reward ourselves. And what better way to do that than to spend, spend and spend. But hold on. Is that you thinking or is that what advertisers and marketers want you to think? We get fed with a whole lot of garbage advertising day in day out. They know best how to lure you in. Words such as pamper yourself, you deserve this, only the best for you etc etc...

Even the best of us are guilty of having done this at least once in their lives. I'm not saying that this is necessarily bad, but please don't overkill and go on a therapy rampage. All you will get is buyers remorse after. It's the guilt after the shopping blood lust wears off. So why substitute one bad feeling for another?

How does your emotions affect the way you spend? Do you spend more or less when you experience certain emotions? Everyone has a different emotional spending habit. As for myself, it goes something like this:

• Sad - Don't Feel like spending a single cent, I kinda retreat into myself and stone.
• Happy - Feel like spending on something nice for someone to let them share my happiness.
• Stressed - Spend on drinks and food.

Before you ask, no, I do not only have those 3 emotions or feelings but those are the most general ones. Once again, don't let your emotions take a toll on your budgeting. Counter this by setting up a bad mood fund - Read more about it here. It is basically a fund set up in a separate saving account to spend without guilt when you are in a mood. The emotion attached is called bad because I assume that most people spend more when they are in a bad mood, hence the need of "therapy".

So, how does your spending habits change in light of different moods and situation? Please share so we can give and receive advice on how to better manage excessive spending. We are all here to help each other out.

As always, save more, spend less and invest wisely.
P.

When Was The Last Time You Felt Happy?

Dear readers, what is the first thing that comes to mind when you think of the words happy and satisfied? Take a few moments to think about it. I'm pretty sure that many things come to mind, but there is something missing in most of the images and you cannot put a finger to it. Could it be that in most of those things do not bring about true happiness and satisfaction?

Now, narrow those thoughts down to just experiences with friends and family, take away material purchases. Think upon for example, finally getting on the plane to for your honeymoon, gazing into the eyes of your better half, when your child was born or when you were on that beautiful beach with your friends, Malibu Orange in one hand, a cigar in the other. What do you feel now? If you are like me, you will sense that longing in your heart to feel that feeling again, you will feel that at that moment, you were truly happy and satisfied. No? er... maybe you have different priorities and needs in life. For me, these are the kind of moments that I truly treasure and savor.

What I'm trying to say in this post is what many other bloggers have said before, I just want to add a more mental picture so you can feel what I'm trying to say. Most things that you buy, say hand phones, new clothes, new car, new laptops and all other consumer products will only bring about a very short lived happiness. After a while, you wont even remember that tiny spike in happiness that occurred when you made that purchase. If that is the case, why not invest your money on providing yourselves and your loved ones with experiences instead?

Experiences don't have to cost a lot, but even if they do, in my opinion, I think they are worth it if it's with the people you love. Instead of buying that new phone, bring your parents or family on short trip, take many photos, laugh and have senseless fun. I'm sure everyone will remember the occasion for years to come.

So this week, think of how you can create experiences which will provide lasting happiness instead of buying another product that will only present you momentary satisfaction.

As always, save more, spend less on material stuff and invest wisely.
P.