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Optimal Finance Daily - Financial Independence and Money Advice
3347: [Part 1] Spend Less - Live More by Leif of Physician On Fire on Intentional Spending and Lifestyle Design
00:10:22
Leif challenges the common belief that spending more equals living better
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Learn more@capella.edu this is Optimal Finance Daily Spend Less, Live More Part 1 by Leif a physicianonfire.com Spend Less, Live more Are these commands compatible or does one suggestion negate the other? Alexander Hamilton was famously taught to talk less and smile more. It worked for him. I think my ideas could work for you. The YOLO or you only live once crowd mistakenly equates spending to living and living to spending as if they were one and the same. I'm here to tell you that they're not the same at all. When you dial down the spending, you'll be able to live more. It's true that you only live once and you want to make the most of the one life you've been granted. That's all the more reason to spend wisely and get the most for your hard earned dollars, allowing for time freedom all the more quickly. No one likes to be told to spend less. It can feel like an assault on one's current lifestyle. If lifestyle is important to you, though, this may be the message you need to hear. Ideally, this message of relative frugality gets to you before you've ramped up your standard of living to one that requires spending the vast majority of your income. It's much easier to stay off the hedonic treadmill or keep it going at a slow speed than it is to hop off once it's hit a ludicrous speed. My version of relative frugality for the high income professional does not have to look like living like a student or a resident. You can trade top ramen, rice and beans for arugula, steak and potatoes, or sushi, or whatever you fancy most physicians can afford to live on half their take home pay and still spend quite a bit more than the average US household. The majority can both save and spend six figures annually. It is tougher when you earn less, but we've learned that even a single primary care physician with a salary below $200,000 a year can build real wealth in short order. Think about some of the best parts of your day. How much does it cost to enjoy a leisurely cup of coffee? Play a game with your children or nieces and nephews? To take a hike through the mountains or a stroll along the beach? The Good Life I've had the opportunity to taste that good life that most people, including a younger me, often daydream about. The pampered life with all of the finer things. Yes, I've drunk Dom Perign from the bottle like a boss sipped Opus One with one pinky raised and I've stayed at my share of four and five star hotels and resorts. I'm not going to pretend that these things aren't any better than the three star experiences and more modestly priced inebriants. However, I'm not convinced that staying atop the Four Seasons for $1,000 a night gives you 10 times the value of the hundred dollar a night. 3.5 star Hilton the wine value is far more questionable. There is fascinating research that our perceived experience with the Cabernets and Chardonnays is flavored far more by what we're told it cost than the actual quality of the wine. Even better, when a white wine is dyed red wine experts will describe the taste as having all the characteristics of a true red wine. I'm not saying we can't have nice things. If you cut back anywhere and everywhere possible, you could find yourself not enjoying life. No matter how much progress you're making financially, Ramit Sethi recommends you spend extravagantly on the things you love and cut costs mercilessly on the things you don't. End quote. Similarly, the physician philosopher's backward budget looks like 1. Define your big picture financial goals. 2. Pay your future self first. 3. Automate your financial goals and then number four spend lavishly on the money that's left. Dine at the French Laundry. Take that trip to Tahoe with the ski in, ski out townhome. Upgrade to the VIP tent at the Beer Fest. Just don't take the most expensive option at every turn in your life. Make it a treat and you can still meet your money goals. The loose correlation between spending and happiness don't take my word for it. Like a good scientist look at the data. We'll start with an examination of the 2020 World Happiness Index. Check an annual survey that measures the reported happiness of the people in different nations based on a variety of variables. On the whole, there's a trend for wealthier countries to have happier people and impoverished nations to have fewer contented people. However, the richest nations and cities are not the happiest, and some places where people earn far less have much happier people than the most developed nations. For example, people in Mexico City reported a higher Current Life Evaluation score than people in places like Paris, Dubai and Barcelona in the 2020 World Happiness Report. Here in the US we don't seem to be getting any happier, despite substantial wealth gains over the past decade. The decline is most pronounced in children and adolescents, and the role of social media has been questioned as a driver of this unfortunate trend. To be continued. You just listened to part one of the post titled Spend Less, Live More by leif a physicianonfire.com if you're paying rent every month without earning anything in return, let me introduce you to bilt, the rewards program designed for renters who want to earn something for their largest monthly expense. Let me explain. By paying rent through bilt, you earn flexible points that you can actually use. I'm talking about points that can be redeemed towards hundreds of hotels and airlines, a future rent payment, your next Lyft ride, and more. Now here's the part that really makes sense from a financial perspective. It doesn't stop with your monthly check. You can earn additional points just by dining out at your favorite local spots, get VIP treatment at certain fitness studios, and enjoy exclusive experiences only available to BILT members. This is a great financial hack. It's about time your rent started working for you. Earn points on rent and around your neighborhood, wherever you call home by going to joinbuilt.com ofd that's J-O-I-N-B-I-L-T.com ofd make sure to use our URL so they know we sent you Introducing your new Dell PC. Powered by the Intel Core Ultra processor, it helps you handle a lot. Even when your holiday to do list gets to be a little a lot because it's built with all day battery plus powerful AI features that help you do it all with ease. From editing images to drafting emails to summarizing large documents to multitasking. So you can organize your holiday shopping and make custom holiday decor and search for great holiday deals and respond to holiday requests and customer questions and customers requesting custom things and plan the perfect holiday dinner for vegans, vegetarians, pescatarians and Uncle Mike's carnivore diet. Luckily, you can get a PC that helps you do it all faster so you can get it all done. That's the power of a Dell PC with Intel inside, backed by Dell's Price match guarantee. Get yours today@dell.com holiday terms and conditions apply. See dell.com for details. I think our consumerist culture conditions us to believe that spending more will lead to more enjoyment. We have a lot of assumptions about how certain purchases will make us feel. Many believe that once they buy that bigger house, the new Tesla, and the luxury brand name clothes, it'll lead to a feeling of fulfillment. But once you understand and experience the concept of hedonic adaptation firsthand, you might just start to question this. Hedonic adaptation is our tendency to return to a set point of happiness after positive or negative events. So if I buy the new shiny thing, it's going to feel good for a little bit and then it just becomes part of my new normal and has diminishing returns on my happiness. I believe money has the power to buy freedom. But freedom isn't about buying material possessions. It's about having full autonomy over your time to spend it with the people you love and creating what you want to see in the world. If you're creative enough, you might even find that the less expensive option for getting your needs met is actually the superior option. So, for example, I very rarely buy clothing. Instead, I like to host clothing exchanges. This is where a group of friends all clean out their closets and bring their unwanted stuff to my place. Then we spend an afternoon of music and mimosas, trying on each other's clothes and taking what we please. Every time I've done this, it's resulted in a closet full of nicer clothes than I would have bought for myself. And it's way more fun than shopping. Well, that should do it for today. Have a happy rest of your day and a great weekend and I'll see you in tomorrow's show, where we'll finish up this post and where your optimal life awaits.