Fruitfulista » Consumerism

It’s All About Your Priorities

Cassie — Tue, 07 Sep 2010 17:40:18 +0000

We often get asked “How do you do what you do”? Meaning, how do we have investments like ours at our age. And how are we able to have enough money to do it? Well, the answer is not that hard. We have priorities that (these) others apparently don’t.

We know people who earn much more money than we do, but who have virtually nothing to show for it. Their priorities went into buying concert tickets, new brand name clothing, coffee shop lattes every morning, a new car with car payments (maybe 2 or 3), the largest house in the “best” neighborhood, going out to the movies, going out to the bars, going out to dinner, new shoes, new furniture, pay day loans (?!), vacations, kitchen gadgets, hobby supplies, subscriptions to various things (cable tv, special cell phone, internet, magazines). And the list of things you can spend your money on goes on and on… and on.

So what do we do? How do we do it? Well, we prioritize. We say, I would rather have a rental property paid off earning us income more than I want a new DROID or iPhone. I would rather have a large sum of savings than to go out to the movies every weekend. I would rather have a small side business than go out to lunch with co-workers 3 days a week.

These priorities are hard if you don’t have any goals. If you don’t know what you are saving for, then it seems like “what’s the point, you only live once, life is too hectic to plan” etc. We’ve heard these things over and over again from people. But if you only live once, wouldn’t you want to be able to achieve the goals you set for yourself? Wouldn’t you like to see your dreams come true? Wouldn’t you at least want to try?

So our overriding goal is to be “of independent means”. Which I guess you’d say would be that we don’t have to work for someone else. We are basically there. Within that, we would like to live in Puerto Rico, and we have a few goals for what we would like to do there. We may want to live elsewhere on the planet -or take an extended world tour- and that would be within our reaches as well once we achieve these overarching goals.

So we’ve prioritized our life. We don’t want more material things, we want less. We want to be free from the “junk” that clutters our lives and our abilities. The things we buy we try to make “income-producing” assets. We try to eliminate liabilities, we try to moderate on the things that are necessary but not income producing. We try to bring in more income and cut out spending.

Because we have these larger priorities in mind, this has become basic, standard operating mode for our household. If we want something, first we prioritze it, and if we would like it but don’t need it, we look to see if there is an inexpensive or free version of it. If we absolutely need it or it would in one way or another enhance our life, we consciously decide we will splurge on it. But this is after careful thought and usually quite a bit of time in consideration (the pros and cons). If we can turn these things or events into income producers as well, all the better!

I think most people don’t prioritize what they want in their lives. Things just fly in and out and at a whim they make most of their decisions. So is it any wonder when they look at people like us that they say “now how did they do that?”, or “where did all of that SAVED money come from?” like in the classic Saturday Night Live skit.

Most people think “they (we) must be rich”. That’s the easiest explanation. But that is not the case. It really doesn’t matter how much you make, it is how much you save. Sure, making more can help you to save more, but not if you just spend more the way many high-earners do. We try to live as we did when we first entered the job force making $10/hour. Even then, we saved up thousands of dollars and I paid for college and two master’s degrees with no student loans and with no financial help from my parents AND we bought our first house, albeit with a mortgage. Now that we are making more than that, we have a whole lot more to save -and now invest to help us save more! It’s an upward cycle!

Many people have just the opposite: a downward cycle of debt, bills, late fees, and consumption that only causes more and more problems. But you can turn it around if you are just cognizant. If you are in the negative pattern, set your priorities: get out of debt, don’t get late fees, have a moritorium on anything that does not keep you alive and start saving. Think of your dollars as freedom fighters, or whatever metaphor will motivate you to keep them. Make them “sticky”. Make it hard to let them go. The more that you have, the more they will fight for your freedom.

There may be things in your life that you just seemingly cannot live without. That is fine. Just prioritize. It is like eating dessert. Do you want the chocolate cake OR the mousse OR the pie OR the ice cream? These are all fine in moderation, but you should not have all of them at once! Many people think they can have anything and everything without fully comprehending that this thinking, this lack of priorities, is what’s causing their problems. You want the DROID? Well, you might have to cut the weekly movie outing. You want the lifestyle of living in the expensive, trendy town? Well, you might have to cut out your monthly shoe habit. There is an opportunity cost one way or another. Do you want it now or later? Many people pick later by delaying this fact (through buying things on credit, borrowing, ignoring bills, etc) but eventually it WILL catch up to you. So it is better to prioritize now -pay the piper- than to delay it and have it all come crashing down later with you wondering…now how do THOSE people do it?

Remember that whatever life you have created now came about through a series of actions and events, most of them your own. And even if they weren’t your own, you have a choice on how to respond. You can prioritze and set goals on how you want your life to look. Think long and hard about this and write these goals and dreams down. Prioritize them. And this will set you on a path to success.

Insurance is a Reverse Gamble

Cassie — Tue, 03 Aug 2010 21:14:06 +0000

I remember a Simpsons show a while back where Ned Flanders did not have insurance for his house I think and a horrible natural disaster occurred, wiping it out. When everyone else was relieved that they had insurance, Ned explained that he did not because it was gambling. Of course, everyone thinks Ned is a little strange, but if you think about it, insurance IS gambling. It’s just a reverse gamble.

With regular gambling, you are putting money toward something in the hopes that some random event (a flip of a coin, the toss of dice, the turn of cards) will bring good fortune to you. With insurance gambling, you are putting money toward something in the hopes that some random event (a natural disaster, fire, car accident) will not spell utter misfortune. Basically, it comes down to fear and greed , or rather greed and fear, once again.

So why is it that gambing is considered so financially imprudent, but insurance seems to be a requirement? Probably because fear is considered an appropriate emotion and greed is not -in most cases. (There are some cultures such as the Amish and Muslims who do not believe in insurance because it is considered gambling.) People are much more frightened to lose money than they are willing to risk it for a much larger prize. Even if the bet is irrational, people still fear losing more than they are hopeful of winning.

Most insurance companies know this bit of behavioral economics and want to take advantage of this by overcharging and underinsuring- because they can. And they are big business! They are the casinos that slide through as “good neighbors” that plaster our TVs with ads and who routinely turn people down for true claims. They want to scare you into insuring anything and everything, even if it may already be insured elsewhere under another policy. Double insurance is a huge drain on people’s finances because most people do not even know what their policies cover! We have selective attention when it comes to insurance.

Insurance takes advantage of so many people, but we are not looking at this gorilla in the room…we are looking elsewhere. We’ve been told to pay attention to what could go wrong -to be fearful- instead of seeing the guaranteed loss when you pay too much for insurance.

I’m not necessarily saying that you should go out and cancel all of your insurance policies, but I am saying that more than likely you have fluff in there that you really don’t need, but that they charge you a lot more for.

For instance, I found in our home’s insurance policy that they had a calculated figure of over $100,000 for just our “stuff” our things inside the house like furniture, jewelry, etc. Well, we try to live pretty minimally and avoid collecting too many things so we have nowhere near this amount. But by using their standard formula, we are losing out.

They also have not adjusted any of our properties for the downturn in the economy, and most people should not have comprehensive coverage on their car. To remember this, tell yourself over and over again: cars are liabilities, cars are liabilities, cars are liabilities -all these old reliables (not new shinies) need is liability insurance.

And nobody should get universal/whole life insurance -that is a waste of money. It is only for people who do not have the discipline to save their own money (which admittedly is a lot of people, but still!). And term life or disability should only be used if you would not be able to take care of your family if either of these random events (death or disability) should occur. It should not be used for people who are already retired with plenty of money -what do you have to fear? Not much will change in their lives. Why are you gambling away all that money on the premiums instead of just saving that for when you depart?

And health insurance? How much more corrupt can we get?

When I think of the insurance gamble, it is so very pessimistic. In a small way we hope something goes wrong so that we can at least get something for all the money we put in over time. At least with Las Vegas Reno, Atlantic City and Monaco there is a certain hope for the best -optimism. With insurance, really the only time you get paid out is if something bad happens. Insurance is a reverse gamble in an industry that is often corrupt and overlooked. Next time you watch TV, pay attention to the number of insurance ads. I think you will be surprised! And go do a full review of your insurance -cut out the junk. You will likely save hundreds if not thousands in premiums as long as you don’t let them scare you into spending more.

Beholden to Beauty

Cassie — Wed, 21 Jul 2010 16:18:33 +0000

Who decides what is beautiful? Is the old saying that “Beauty is in the eye of the beholder” true? It certainly seems that at least in America, the standard of beauty is white, female, white-blonde hair, large breasts, pouty lips, and a thin, tanned body. But is that what beauty truly is or is that just what has been packaged and sold to us?

It seems to me that beauty is whatever is most difficult to achieve, and therefore most profitable to push by the beauty industry. When most lay people worked outside in the sun, having tanned skin was a sign of poverty. Nowadays with most people having office jobs, keeping a tan is a signal of wealth and luxury to either be able to travel to warm places or go to tanning salons.

Being thin is the same way. It used to be that skinny people were that way because they didn’t have much money to be able to eat. Plump was the “in” thing -just look at all the masters’ oil paintings. Now it is the opposite: the less money people have, the more they weigh in developed nations. So now there is a premium on thinness. And then to make it just a little harder for the naturally thin women to easily slide through the societal beauty contest, they need to have huge breasts -something most naturally thin women lack.

And while white women are at an advantage over other races in terms of what society has deemed beautiful, most white women don’t have large pouty lips, so this becomes the next hard-to-get beauty feature.

This Playboy Bunny has to do a lot to maintain America’s beauty standard. Even in the “before” photo she has dyed her hair from brown to blonde and only goes blonder as time goes by. In the “after” photo, she has an orange tan glow, thicker lips, thicker hair, a more refined nose, and dark eye-defining makeup.

So, in order to achieve this standard, you have to diet, dye your hair, use all sorts of lotions and potions, wear makeup, wear “slimming” and “boosting” clothing, go tanning and maybe even have plastic surgery -especially if you are going to be a model of what beauty is -like in the example of the Playboy Bunny. All of these are huge money makers.

And then, if that weren’t enough, not even the very few people who have what society deems to be the right stuff, are left alone. No one is perfect unless they have been “photoshopped”.

This video shows some of this process. I find it ironic that Dove sponsored the “Real Beauty” Campaign because they are in the very business that their ad campaign seems to condemn. However, it is still a good video of some of what goes on to make even the models “presentable” as models of American beauty.

And after all this is done and you have the perfect photoshopped image what becomes of you? Well, for women over about 30 -MAYBE 40, that’s the end of the line. You are tossed out as not even a contestant in the pagent and a new group of girls are indoctrinated into the male-dominated world of beauty.

Even in magazines for older women with good jobs and a family, there is still this unattainable beauty standard. They may put more “real world” celebrities on the cover, but they are dramatically photoshopped as well as in this example of Faith Hill.

I was thinking about this topic because I recently saw a quote by make-up magnate Helena Rubenstein that said “There’s no such thing as ugly women, only lazy ones”. Which on the surface sounds reasonable -all people are born beautiful and stay that way if they work at it, right? Well, there are so many things this quote assumes.

For instance, why is this only limited to women? Why shouldn’t men have to work to be seen as beautiful? Why are women automatically judged first based on prettiness, second on anything else (their job, their wealth, their family, their personality) whereas for men it seems to be the other way? And is this limited to external beauty or should we work to be internally beautiful as well? I don’t think compassion, kindness, generosity and other “beautiful” personality traits usually just appear, but take some time to work on too.

I do think that with both external and interal beauty there are things a person can do to be more beautiful. For external beauty, you shouldn’t stop caring completely in order to rebel from society’s mandate. Taking care of your health, having good posture, keeping hygeinic, and sprucing up extra nice every now and then all can help with confidence and keep you happier and healthier -and may even help with your internal beauty if you feel good about yourself. Attractive people are also at an advantage in society: They’re more likely to be hired, earn more money, have better grades, have more polished social skills, and even commit fewer crimes. And other people are more likely to help them.

But overall, beauty should not be purely dictated by outside forces where the standard for beauty changes based on how easy it is to achieve and dangles like a carrot on a stick, never to be truly reached. You should not feel beholden to beauty.

On Dieting and Budgeting

Cassie — Wed, 09 Jun 2010 22:20:40 +0000

Dieting and Budgeting. Two words no one wants to hear. And yet, interestingly enough, the end results of both are almost always praised: a thin, healthy body and a hearty savings of money. What’s the saying? There’s no such thing as too thin or too rich.

But it is no surprise really that these two things are so related. They both require discipline, it is much easier and more fun to not think about what you are doing (eating or spending) and you pay the consequences later rather than now if you continue with the bad habits.

Here are some more similarities: With dieting you have to conserve how many calories you consume. With budgeting you need to conserve the dollars you use consuming stuff (including food!).

And what is the best way to have a healthy savings and weight? To not think of it as dieting or budgeting! When people believe they are being starved or denied what they want, they are more likely to binge later (or sooner). But people who make healthy food choices and money choices a way of life do not really have to think about these things. Splurges are truly splurges and are not a constant way of life. And sometimes you have to compensate for overindulgances in either one. This might be accomplished by exercising more than usual or maybe looking for another income stream.

In fact, there is another similarity here: to lose weight you can either exercise more and/or eat less. To save money you can either earn more or spend less! The most effective and easier choice is to eat less when dieting and to spend less when budgeting. Why are these easier?

Both of them require you to do nothing, basically. With food DON’T eat so much. With money DON’T spend so much. Unlike starting an exercise routine or starting a part time job (the compensation for overindulgances), with basic healthy, light eating and budgeting and frugal living, you just don’t buy as much. You don’t eat as much and you don’t spend as much. Easier said than done though right?

Another similarity is that the base words -diet and budget- are in and of themselves completely neutral. Your diet is simply what you eat. Your budget is simply what money you bring in and money that goes out. However because most people need some work on both of these, they have become bad words when turned into verbs (action). Most people need to work on their diet by eating less and their budget by spending less.

However, doing less of these things does not seem to be the norm in our culture. Most people still have pathetic savings (sometimes less than $1000 in cash!) and many have stored up plenty of extra pounds. Two out of every three Americans are overweight or obese! And Americans’ personal savings rate is still less than 4% (of net income after taxes)!

So there is certainly work to do!

However, just like anything, even these good habits of dieting and budgeting can go too far and veer far away from healthy. It might be good to obsess over numbers (pounds, calories, bank statements and receipts) in the beginning to get you on track, but you need to make sure that you have not gone so far that you are truly starving or living without basic things (turning off the heat completley in the winter instead of just turning it down to save money would be an obvious example).

Overall though, I think the message is that we need to think of budgeting and dieting -or saving and living healthier if the words diet and budget scare you off- less in the terms of deprivation and more along the lines of our health and wealth. And maybe we’ll be a little more wise for it, too.

The Oil Addicts’ Shot at Redemption

Cassie — Mon, 07 Jun 2010 16:05:30 +0000

There is really no getting around it anymore. We (in all industrialized countries and now many, many developing nations) are addicts. Oil addicts. And like most addicts, we try and deny and lie and say there is no problem. It feels too good. It is too easy. We don’t want to work hard to do the right thing.

Well if there is one good thing that has come out of the BP Disaster, it’s that we can no longer play ostrich and pretend there is not a problem. In the Stages of Change model, it says people go through various stages before finally making a permanent change (or relapsing).

These are the stages of change.

The Stages of Change

Precontemplation (Not yet acknowledging that there is a problem behavior that needs to be changed)
Contemplation (Acknowledging that there is a problem but not yet ready or sure of wanting to make a change)
Preparation/Determination (Getting ready to change)
Action/Willpower (Changing behavior)
Maintenance (Maintaining the behavior change) and
Relapse (Returning to older behaviors and abandoning the new changes)

Before the British Petroleum disaster I think the majority of people were in precontemplation. Not even thinking about it. Not even aware, or wanting to be aware. I would say, at the very least after this disaster we have moved to comtemplation, but hopefully further into preparing to change.

And what would it take to fully change and break our addiction to oil? A lot. It is not just in our vehicles which are slowly moving away from awful gas mileage. It is about everything that is made out of oil. And I don’t think we will ever be 100% off oil, but we could at least use it for things that we don’t automatically throw away 2 minutes after we buy it. The big idea? Get off plastics.

If we did just these two things (limit vehicular oil/gas and stop using disposable plastics), we could break our addiction to oil, or at least manage it.

The oil industry has done a great job of throwing doubt on global warming/climate change and BP is trying to manage public perception of this whole debacle. They’ve tried to greenwash and confuse, but I think finally, like tobacco, there is going to be a tipping point where enough is enough and we see through all the blood money.

It is much easier said than done, but the answer really lies in NOT BUYING SO MUCH STUFF. Especially junk you just throw away. And we need to hold policy makers and businesses accountable for making reusable things again. This is both an individual’s responsibility (in voting with what they buy) as well as the industry’s responsibility to stop making all this crap. And it’s the policy-maker’s job to make the better choices easier than the worst ones.

To limit oil consumption, we should:
Give incentives to people who walk or bicycle to work, or telecommute
Give cash-back incentives/deposit returns for reusable items like glass bottles
Increase the price of gas dramatically to fully capture the true extranalities, decrease shipping things in and out, and create local economies and encourage new, clean technologies
Institute policies that discourage driving in general and go back to mass transit, bicycling, walking, and better-planned communities -”active community environments”
Stop using plastic bags and plastic water bottles! -Stores should charge for (cloth) bags that they provide and then give a larger discount for people who bring their own. Disposable plastic water bottles should not be sold. Period.

There are probably many, many more, but this is a start. We need to look to what we can do individually, how industry needs to adapt, and what policy makers can influence. It will not take any one answer, but the biggest help would be to STOP BUYING SO MUCH! When you do buy, buy with care. Think about what you are buying, where it comes from, who you support by buying it, what it is made from (anything with plastic is oil) and what you will do with it -or the packaging- when you are done.

I just hope our contemplation of these things leads to some serious changes on the part of individuals, but more importantly society in general. Addiction doesn’t seem so bad until you see the consequences of it – in this case on the environment, on our health, on our bank accounts, on our future - on us all.