Comments on: The Mythology of Spending and Mental Anchors

By: Steve

Steve — Thu, 08 Apr 2010 16:42:39 +0000

A three week vacation for four would, for me, quite possibly be cheaper than a one week vacation for two.

That is, the former would (as I envision it in my own future) be a camping trip, and the latter would (based on my past choices) involve jetting off to London for the week.

By: Debbie M

Debbie M — Mon, 05 Apr 2010 18:54:52 +0000

On anchor prices – a lot of times these are based on what we know about. If you shop at malls, you have a different idea of what things cost than if you shop at thrift stores. And advertisers spend a lot of money make sure you know about what they want you to know about. So you’ll have to look around and think hard to find out your other options.

* Weddings – what’s the average price for a party? You could start there and then assume that a wedding might cost a bit more than the average party.

* Automobile – wrong question. This category should be called “transportation.”

* Home – look at your current rent. That’s a good starting price. Then remember that buying a house includes not only the purchase price (or principal + interest) but also property taxes, homeowners insurance instead of renter’s insurance plus an estimated 1-2% of the house value each year for repairs and upkeep, plus whatever extra you would spend on decorating, furniture, renovations, gardening, etc. that you wouldn’t be spending if you rented. Also note that a house can eventually be paid off, at which time you’ll only be paying for property taxes, insurance, repairs, and fun stuff.

* Vacations – I actually have a few different numbers for this. There are driving/camping vacations, flying/hotel vacations, and foreign vacations.

I agree with et that sales people start with the maximum you can afford as the lower end of what they show you. Maybe try telling them half that amount and see what happens.

@Someone – My real estate agent never showed me a house for below my “maximum” price. All I wanted was something centrally located (which she ignored many times, trying to show me things at my price point), something with a solid foundation (which she ignored once) and something with a big living room. She should have shown me cheaper things, too, even if they were crappy, broken-down shacks in the middle of nowhere. Showing people things at both the price they claim to want and that have the features they claim to want would be educational. Real estate agents know what is actually available and do need to educate us about that. (For example, I want few, small bedrooms but a big laundry room–I know there’s no such thing!).

By: littlepitcher

littlepitcher — Mon, 05 Apr 2010 17:44:46 +0000

Bless you, Gizmo! My wedding cost under $50, my dress was chosen to be usable for other occasions, and the marriage lasted almost ten years, compared to the enormous expenditures for those of others’.
Something about the entire concept of huge weddings seems so patriarchal and third-world to me–the “princess” role-playing prior to the haggard domestic actuality, and the conspicuous consumption to impress two sets of in-laws and their business connections. Isn’t there a civilized way to accomplish all of this?

By: Archirat

Archirat — Mon, 05 Apr 2010 17:08:35 +0000

I just had to respond to this.
When my husband and I got married, we “piggybacked” the event onto an already scheduled family reunion for my side, which was brilliant because his family lived on the west coast anyway. So while you could count travel, it was already planned. We are both LDS, which meant that the actual cost of the wedding itself was free and in a beautiful LDS temple. (Guest restrictions, but having been raised with that expectation, it was perfectly fine with us.) My wedding dress was barely $200. My husband’s suit was more expensive, but he wears it almost every Sunday. The reception was hosted in my grandmother’s backyard and my aunt loaned us the use of her condo for a very short honeymoon. It was perfect, I couldn’t have asked for more and my family wasn’t in an insane amount of debt for it.
I think our $2000 car was more expensive than our wedding.

By: asithi

asithi — Mon, 05 Apr 2010 16:55:31 +0000

I guess I am the only one that spend “the average $20k” for a wedding here so far. I have no regrets and we are not in debt. Even now, when I walk through my house and see the beautiful framed pictures, it still brings a smile to my face. But then, that is what frugality is about, spending your money where it matters and cutting back elsewhere.

By: Brent

Brent — Mon, 05 Apr 2010 16:42:16 +0000

Bought a house for 135K, but that is far below my snap price for a house. My snap price reflects what I think other people would spend, not what I would. The first real estate agent I worked with wanted to know what I qualified for, but not what I was willing to spend. Whenever I mentioned a negative about a house, she telling me about houses outside my range. I know that a house is a compromise. Can’t live without, can’t live with, and everything in between.

By: SoCalGal

SoCalGal — Mon, 05 Apr 2010 16:16:41 +0000

I think GIZMO & I were separated at birth! My wedding almost 30 years ago cost just under $100 out of pocket. We bartered for the flowers & my ring. We now live debt free in southern California and my answers for the main question are:
whatever you can afford & are comfortable with. Who cares what others are spending?

By: jj

jj — Mon, 05 Apr 2010 14:05:59 +0000

Great post, Trent! Thanks! Regarding the wedding part, we did it fairly frugally ($5,000 total) 9 years ago but would go even further if I had it to do over again today! My dress was $300, the in-laws paid for the cake, me and my girlfriends did the decorating (lots of tulle and wholesale roses and free ivy from the woods!), a friend made homemade wine in specially labled bottles with our engagement photo, the BIL made special Cd’s for every guest with our favorite songs on it. The bulk of the budget went to a catered sit-down dinner for our 40 guests. It was great, but the marriage has been even better!

By: Amanda

Amanda — Mon, 05 Apr 2010 13:36:06 +0000

I actually had 2 ‘weddings’ with my husband. The first was 8k, the second was $300. The first was everything I wanted (and 60 people) and the second was immediate family only (12 people) and a delightful day.

By: gizmo

gizmo — Mon, 05 Apr 2010 12:55:42 +0000

It really is *your* life, that is so very true, yet how hard it is to follow through when want you want is so very different from what everyone else seems to want. My wedding cost about $30 or so if I remember correctly. I never wanted what would be called a wedding (the whole church thing, lots of people, wedding band, or even honeymoon) but I did want to get married so my husband and I phoned the Justice of the Peace in our town, ordered a cake from the local Wholefoods, invited a few neighbors over, and played whiffle ball after the very brief ceremony (I believe our team won, btw). I spent many years agonizing over not having had a “real” wedding and dealing with comments and opinions from others (mostly my family) over what we “should” have done and were supposed to do. And now, 20 years later and still married and without any debt, I’m thrilled that we did what we did and we are who we are and we’re still rolling through life together and I wouldn’t have it any other way. But it is hard to go against the grain, no doubt about it.

By: Kat

Kat — Mon, 05 Apr 2010 12:40:46 +0000

I had to laugh at the 3 week vacation…never had one of those…wouldn’t know :) I think thrifty folks sometimes might not see the need to take off that long from work. I suppose ideally for me it would be
$1,000
$10,000
$75,000 (build it ourselves to pay off early)
no clue but 1 week maybe $400 or way less depending on if we camped or not?

By: Daniel

Daniel — Mon, 05 Apr 2010 12:21:28 +0000

An insightful post, and it highlights the fact that most people cannot help themselves but compare what they are doing to what everybody else is doing. To me, stepping back and emotionally disassociating yourself from the “herd” is the first step to curing oneself of comparisonitis. It’s the first step towards conquering money.

Dan
Casual Kitchen

By: Anne

Anne — Mon, 05 Apr 2010 03:09:14 +0000

Wow! I don’t know if I’m hopelessly out of date or just a genuine tightwad… My numbers were:

$2000
$10,000
$150,000
$2000

As I reflect on it, I see that those numbers ARE based on my personal experience, except for the house (less than $100,000). Seems like that says something about me…. but I’m not yet sure exactly what.

By: jgonzales

jgonzales — Mon, 05 Apr 2010 02:10:45 +0000

I looked at those numbers and always had 2 answers, my Midwest answer (where I grew up) and my Southern California number (where I live now). This was especially true for the house price. Talk about the price not matching the value!

As for weddings, my was around $1,500 overall. It was small but it had the most important things to me, a church and my husband. I made my own wedding dress from the pattern used to make my mom’s wedding dress. We had a sandwich style lunch right after the wedding. Guests actually sat at the tables for the ceremony. Our church scheduled a rummage sale in the front parking lot on the same day. Yet I still get comments on how much people enjoyed it and that was 5 years ago.

By: moom

moom — Mon, 05 Apr 2010 00:16:00 +0000

For three of these it is possible to spend very little or very much depending on preferences. But in any given city it is very hard to spend below some number on a house, which could be a very high number. It’s hard to spend below $300k for an apartment and $400k for a house where I live for example. We rent. We could spend 30% less perhaps by getting a smaller apartment and moving further out of the city (and spending more on commuting) but it is hard to go lower (except by say sharing with another couple). We spent about $3000 on our wedding and could have spent $500 in theory (you have to pay for a celebrant etc.). We paid $16,000 for our car second hand and obviously could have gone much lower. But we are both near the median and near the bottom in housing expenditures.

By: Todd

Todd — Sun, 04 Apr 2010 22:57:03 +0000

My numbers were

$5,000
$15,000
$150,000
$5,000

but I’ve never spent quite that much on any of the above. I never realized I was so low rent, although I’ve heard on television that the averages are $20,000, $25,000 $250,000, $10,000. Not many people I know spend those amounts.

By: Brenda

Brenda — Sun, 04 Apr 2010 22:44:37 +0000

Interesting. I’m trying to rework my own relationship with money. When I remember to apply it, the process that seems to work best for me is to convert the price into hours worked to earn the money the item will cost. (Not using a straight hourly wage, but a true wage ala “Your Money or Your Life” configuring.)

When I use this process, I find that a lot of items no longer interest me, no matter how low the price tag.

By: Vicky

Vicky — Sun, 04 Apr 2010 22:15:05 +0000

Love this post!

I had a TINY wedding that cost about $1500 total. We had it at my uncle’s house, my grandmother cooked, we had a local band from my uncle’s church, and my grandmother and aunt made all the decorations.

And I still rode to the alter on a horse. It was everything I wanted, and we didn’t have to spend $20K on it. I still look back on it fondly and I’m so glad we didn’t go into debt over it, or worry what everyone else thought.

You’re line about cost not representing value is spot on.

By: rosa rugosa

rosa rugosa — Sun, 04 Apr 2010 21:26:07 +0000

I think this was a good post; I especially liked the line: “Everything has a cost, but that doesn’t represent the value at all. The value is what you get out of it.” The message went beyond those old Joneses, and encourages us all to look at the true worth of something independent of the price tag.

By: RDT2

RDT2 — Sun, 04 Apr 2010 19:06:00 +0000

I’ve seen a few couples who seem to have gone crazy planning their extravagant wedding. So much effort for just one day of a hopefully life long marriage.

What my wife and I realized is that is too crazy and expensive to have a huge wedding not just for ourselves but for our family and friends that would have to fly in. Instead we had a small, private, immediate family only wedding on the Chicago lake shore (no permit needed for less than 50 people). Afterwords was a reception dinner with the same people.

That summer we had a family and friends BBQ/reception at my parents’ house and then across the country to my wife’s parents’ house. All in all it was fairly cheap for everyone involved as we were the only people traveling. Not to mention we were the guests of honor at both bbq’s and had to do no planning/worrying at all!