Buying Stupid Things

A few weeks ago my wife and I watched our neighbor's boys, aged 8 & 11, while they spent the day car shopping. I didn't think much of the event until they proudly showed me their new Ford F150 Lariat truck.

CONTEX

Prior to buying a new car, I recall more than one conversation with the dad regarding cash flow and savings. He's an accountant and I'm a financial planner, so this topic was inevitable. I specifically remember complaints about being in debt from all the home remodeling they've done (unnecessary IMO) as well as a lack of any retirement or college education savings.

When my wife mentioned the mom had just inherited $100,000 from her grandmother's estate, I knew what was really going on.

OPPORTUNITY COST

A soccer mom spending $40,000 in cash on a new truck they don't need is more than laughable. It's straight up stupid.

They didn't just throw away $40,000. They actually blew $293,607. That's the difference between investing $100,000 for 25 years and earning 8% versus investing the $60,000 leftovers after the truck purchase.

That assumes they actually invested the remaining $60,000 in a sensible, growth oriented portfolio designed for the long term. Decision making skills already being in question, I'm going with no, no they didn't.

They even could've taken $15,000 and dumped it into 529 college education savings plans. Doing so would've paid for the first year at CU Boulder for each kid. Again, let's apply the assumption they're capable of at least moderately sensible decision making.

WARNING: RANT INCOMING

If you believe you've squandered away cash in the past and take offense to someone calling you out, stop reading now.

A new truck for driving boys to school and picking up groceries is impractical. Not only that, the blatant sabotage a financial future is reckless and irresponsible. It's one thing to spend money on material stuff when your emergency fund is solid, you owe nothing but mortgage debt, and you're on track for all your other financial goals. It's another thing to throw all that out the window just because you tell yourself you deserve a few weeks of that new car smell.

You deserve exactly what your prior savings habits and your current cash flow dictate. So get over yourself.

I know. Hard pill to swallow.

To make you feel better the next time you want to buy some stupid new vehicle, TV, iPhone, kitchen remodel, exotic vacation, or whatever, remember this story.

My wife and I just celebrated 10 years of marriage (to each other). We wanted to spend our anniversary in Hawaii with the kids. After adding up the cost of airfare, a condo, food, rental car, and activities, the total hit on our savings would have made me uncomfortable.

Instead, we found a pop up camper on Craigslist and renovated it over the winter for under $2,000.

It's totally pimp.

We spent an additional $200 on campground reservation fees at various national parks around southwest Colorado and Utah. We have had so much fun planning our upcoming trip, our excitement has spilled over to friends and family deciding to join us at different points on our journey.

In the end, our trip will be almost as good as Hawaii yet it will clock in at a fraction of the price.

FINAL MESSAGE

No one cares how much money you make or how much shiny shit you have. The most important people in your life only care about spending time with you and your general well being. Get over buying crap to impress others or to make yourself happy. It won't accomplish either.

Save your money and invest it wisely. You'll be 100x happier enjoying your non working years as well as being able to send your kids to college versus blowing money you currently don't have.

If you want help with these types of big ticket purchase considerations, hit us up for an analysis. We'll be happy to explain how cash flow fits into your long term financial plan. Just don't call the first week of June.

I'll be sipping a beer under the stars around a campfire, enjoying the company of my family and friends.

This, I absolutely deserve.

:)