Selling My Future, One Dollar At A Time

wiiEven though I have myself on a very healthy financial track, I’m still prone to the weakness of buying material goods. I think of things that I want and over time, I tend to talk myself into buying them, spending money that I really shouldn’t be spending.

Many readers ask why I shouldn’t be spending that money. It’s my hard-earned money, and I’m currently in at least a reasonably decent financial position. Besides, you only live once, right?

Let’s use this philosophy when evaluating the purchase of a game for my Wii. Let’s say I want to buy a new game that costs $50, even though I have three Wii games at home that I enjoy playing and still am nowhere close to mastering. This is a common temptation for me, actually.

Let’s look at the scenario where I buy the game. I take the $50, go buy the game, and enjoy playing it for, let’s say, thirty hours, all told. In a few years, it winds up either being sold or in the closet. Now, there are exceptional games that I’ve played much more than thirty hours, but there are many more games that I didn’t play anywhere close to that.

Let’s also look at the scenario where I don’t buy the game and instead put that $50 into my investment portfolio. Let’s give it a hypothetical 10% return each year. I’m 29, and I plan on cracking that portfolio when I’m 45. So, $50, at 10% annual return a year, is $230.

Having that Wii game would cost me $230 towards my dream. Maybe that’s a sacrifice I might make once or twice because I will deeply enjoy the game, but on a regular basis? All I would be doing is selling my future, one game at a time.

Think about the unnecessary purchases you make and what they cost you. Here are a few to chew on from my own life recently, given the same scenario of a 10% portfolio return over 16 years.

A fast food meal at Taco John’s costs $10. Poof, there goes $46 towards my dream. Eat that meal twice a week for a month? $368 of my dream vanishes down the ol’ pie hole. How about I just go home and eat something simple instead that costs just a dollar or less?

A new game for my Nintendo DS costs $30. Poof, there goes $138 worth of my dream. How about I just play one of my older games again, especially since I haven’t mastered some of them?

A subscription to HBO costs $15 a month. Over a year, I’ll sacrifice $827 worth of my dreams. Why not just watch a good movie on another channel instead or, better yet, turn off the television and find something better to do with my time?

A single latte costs $4. Just that one latte, quickly swallowed and forgotten about, removes $18.37 from my dream.

Every time you spend money unnecessarily, you’re making an active decision to sacrifice a piece of your bigger dream. Think about that the next time you buy a DVD or a coffee or anything else. Sometimes, that thought isn’t enough to prevent me from making the purchase, but more often than not, I close my eyes and realize that, indeed, I am sacrificing a piece of that dream for this little piece of consumerism in my hand. And I put the item back on the shelf and walk away.

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52 thoughts on “Selling My Future, One Dollar At A Time

  1. jasonn says:

    I understand the philosophy behind that, but some things I’d rather not apply it to. For example, I consider video games to be a hobby that I enjoy. I’m not going to view the $30 I payed for Phantom Hourglass for my DS as costing me hundreds of dollars in the long run. That $30 has already brought me dozens of hours of fun, and I’ve only had the game a little more than a week.

    On the other hand, I can do without a latte every day, or an HBO subscription, or even a fancy cell phone (I pay only $12.50-$15 a month for my service and the phone itself was free). The bottom line is that some people value some material goods over others. Every person is different, but it is smart to apply that philosophy to at least some things.

  2. Kat says:

    We are going through the same thing with our games and the Wii.
    Design/build our own home or Wii game. I think I need to tattoo it on his wallet.
    What do you think about game rentals in the scheme of things?
    We are trying to set up a game swap among our friends who have Wiis.
    Also what is Taco Johns?

  3. Sean says:

    Thank you Trent. This article hit me hard; this is definitely a perspective I will consider before every temptation of a frivolous purchase. “indeed, I am sacrificing a piece of that dream for this little piece of consumerism in my hand”. Awesome.

  4. Johanna says:

    You can take the calculation a step further, if the goal you’re saving for is something that costs a fixed amount of money. Suppose at age 45 you’ll be saving at a rate of $50 a day. Then spending the $50 now means you’ll have to put off your goal for about 4 1/2 days to make up for the missing $230 in your portfolio.

    This works especially well if the goal you’re saving for is early retirement. How many more hours of your “life energy” will you have to devote to your job 20-30 years down the line to make up the money you spend today, and is it worth it?

  5. Laura says:

    We have both the Wii and the DS. We haven’t bought a game in awhile. Still, the temptation to get another is strong. Thanks for reminding me what we should be doing.

  6. George says:

    This article really highlights the value of money, especially early on in your career.

    One thing to bear in mind is that the compounded value of present dollars gets less and less with every passing year. Sure, right now that $4 latte might be worth ~$18 from your “dream fund”, but as you get older, you’re taking less and less money away from your dream with each dollar you spend – When you’re 39 years old, a $6 latte (because that’s what it’ll cost by then) will only be taking around $8 away from your “dream fund”.

    Bottom line, save a lot now so you don’t have to save as much later, and can enjoy the “good life” more as you get closer to your goals.

  7. Joe Richars says:

    I think what a lot of people forget (especially the PF bloggers) is that life is as much about the journey as the destination. Sure you could give up everything that provides momentary pleasure, or live on 12k/year, or never eat out, but by the time you get to that elusive dream 10-20 years down the road, what if you realize that the dream was not worth the sacrifices you made along the way. Americans have a tendency to mortgage the future for the present, but I see a tendency here of mortgaging the present for the future, which, I believe is also not ideal. Moderation I believe is the key here, and not going overboard in either direction…

    Reminds of me an old joke –
    A man goes to a doctor and says that he wants to live as long as possible. The doctor says give up alcohol, women and meat. The man realizes what would be the point of living long, if he couldn’t do these things…

  8. Emily says:

    That is way too extreme for me. I mean I believe in sacrificing now for a better life in retirement but you also have to enjoy your life as you live it. If you like your WII and it brings you entertainment and happiness than keep it and enjoy it. My husband and I save a lot but we definitly buy things when we need/want them (within reason).

  9. Carrie says:

    I thought I should pop in and let you know that I found you blog about 3 days ago when googling “Why I should buy a wii” or something along those lines :) Now I suppose I should only buy 1 game or wait until the Wii Fit board comes out to really get my $’s worth out of it.

  10. Trent says:

    Carrie, Wii Sports will entertain you a lot, especially if you have someone around to play it with. My wife and I play Wii Bowling several times a week.

  11. dong says:

    I don’t think all joys today need to be deferred to the future. It’s more a question of having a plan, and spending money on the things that are really worth spending on.

  12. Nadine says:

    I don’t think that Trent is trying to say that he should never buy another game. He is just trying to be conscious of the fact that he already has games that he has not fully utilized. He can enjoy his life without buying more games than he has time to play. A few years ago my husband and I made a conscious choice to eat at home most of the time and refrain from buying expensive “toys”. As a result, we were able to tour Italy, with no credit card debt upon our return. There is something to be said for delayed gratification.

  13. Moneymonk says:

    What about the happiness factor? Everyone have to have a guilty pleasure

  14. Francis says:

    Smart way to look at things. It’s the reason I no longer buy books and have become the world’s biggest fan of the public library.

  15. Should we consider the opportunity cost of the 30 hours playing the game too, or is that too far overboard?

  16. Kat says:

    I second the Wii Sports. We play tennis everyday and I do the bowling and boxing. It is fun and a workout. Plus it comes with the Wii, so no need to run out and spend extra money on the game.

  17. Johanna says:

    I agree with Nadine. When you calculate the true cost of an item and ask yourself “Is it worth it?” sometimes the answer is “yes.” It’s about being conscious of the consequences of your actions and making informed choices, not denying yourself absolutely everything.

  18. m- says:

    Taco Johns =) I moved to South Florida from Montana. I miss Taco John something bad… Last time we where in Montana on Vacation we treated ourselves to Taco John…. Warm Memories

    Thanks for making me smile……

  19. SavingDiva says:

    Wow! I will really start reconsidering all of the little add-ons in my life!

  20. Madd Hatter says:

    Agree with the above comments. I’m the insanely frugal one in my group, and even I don’t break every little thing down like this, for the reasons mentioned. Well actually I do go at least as far as “how much work do I have to perform to pay for this?”, and awareness is most of the battle; if I still make the purchase so be it. As long as I’m not making it worse by paying interest on a depreciating asset, I figure that’s good enough while weighted against “I might get hit by a bus next week or go senile before 62″.

    Could I live without Zelda and Metroid Prime 3? Well, yeah, but why would I want to?

  21. icup says:

    But you can usually sell the game on ebay for a good amount. I paid $50 for super paper mario wii and sold it soon after buying it for $35. If you finish the game and sell it one or two months later and then invest that $35, you are missing out on significantly less money.

  22. acwang says:

    Hmmm… never really thought about it this way. I like it. I think that this would work for me to help control my spending.

    Right now, My wife and I each get a “hobby allowance” per month to finance our various hobbies. Mine is mainly spent on Wii, PSP and computer stuff. I can buy whatever I want using this allowance and no objections from my wife (and vice versa).

  23. plonkee says:

    I think this train of thought works well for things that you only sort of enjoy. If it gives you actual pleasure, then it can be ok to spend the money or, as everyone has said, what’s the point.

  24. doit says:

    Everything needs balance. We live now but also have to think about tomorrow. It’s important to save for the future but at the same time enjoying the moment too. Who knows how long we live. You might die tomorrow and can not enjoy the money you have saved. There is nothing worng in spending money for something you enjoy now. But spend it wisely.

  25. Vin says:

    Sometimes you just need to enjoy life… time to time you need to spend money unnecessarily to live the moment.

  26. Teri Pittman says:

    When you think about it, folks spend their discretionary funds on things made primarily from paper and plastic. I love my Zire71. I’ve used it daily for the three years I’ve owned it. And now the battery is dying. It will become a useless piece of plastic without a replacement. There are a lot of things that I could have bought and would have enjoyed that would have lasted longer. And I guess the other question I would have for the gamers: doesn’t this take time away from your relationships with others? Aren’t there things that you could be doing with the people in your life that would bring you as much happiness and cost a lot less money?

  27. Mariette says:

    “Moderation I believe is the key here, and not going overboard in either direction…”

    I’m on board with that – moderation, definitely. It is important though to “keep your eye on the ball” as my dad would say. Often purchases that we make do just eat away at our long term goals and aren’t things we really want all that much, much less need, we are just scratching a temporary itch that arises from boredom or unhappiness. Those purchases I know I need to discipline myself against and posts such as this one are good reminders to me.

  28. rstlne says:

    Here’s how I maintain balance: I spend as little as possible on mundane items such as groceries but I relax my frugal attitude a bit on hobby-related spending. This way, I enjoy a little along the way while saving for retirement.

  29. js says:

    You would have spent the time in relationships with others but your friend wanted to meet over a LATTE. So, you had no choice but to decline! Ok, ok, I’m just kidding around a bit :)

    But there’s a dangerous trend in my thinking sometimes to just be obsessed with watching money pile up or something. This is wrong. This is wishing your life away (it shows that you are already not “in the present” mentally). And what will you have in the future? A lot more money (good you don’t want to eat catfood), but a lot less time to live. Really our thoughts need to be brought back to the present or very near future. I’m not sure it takes spending money to do this, but it might (on an activity or vacation perhaps).

  30. Chris says:

    Trent, what exactly is this “dream” you keep referring to in this post that you’re sacrificing every time you make a purchase instead of investing it?

  31. Imelda says:

    What if you die tomorrow?

    I mean that in all earnestness. You could die tomorrow, Trent. You can’t live your whole life in the future, can’t live a life with nothing but dreams.

  32. icup says:

    Also, doesn’t refraining from buying the occasional game for the wii dramatically increase the cost of the wii per unit time?

    That is the problem with thinking too hard about these things. There are probably a million ways you can justify the cost of the occasional videogame.

    Here’s another one: The thirty hours you spent playing that $50 video game you might have been out drinking $4 lattes. If you consider one latte per hour, that’s $120. So buying the game actually saves you $70. Imagine how much that $70 would amount to if you invested it over 15 years at 10%.

    Also, did you actually invest that money you would have spent on the game? Because if you didn’t…man, you should have bought the game.

  33. trb says:

    I think the important thing to ask about this post is, if I didn’t spend the money on this game, is there somewhere else I could spend my time and money that would be just as fulfilling. Trent’s not talking about sacrificing his happiness by not buying the game, he’s talking about using those resources somewhere else that might have a greater payback in personal happiness & growth.

    We easily forget what REALLY makes us happy or fulfilled, and spend our money as a way of introducing novelty or killing time. It works for a while, but not as well as learning to enjoy and really use what you have.

  34. Mrs. Micah says:

    I think it makes sense. After all, you’ve bought yourself a Wii, you enjoy it you have fun with the games you already have. Maybe once you’ve really mastered one, you could look into buying another, stretching the pleasure.

    Dong has it right (and I think he’s echoing you on this, Trent). Some joys should happen here and now…like the Wii you bought. And some things are not as high priorities…like having a dozen Wii games.

  35. Hibryd says:

    Imedla –

    Speaking from the perspective of a saver, yes, I *could* die tomorrow, but I most likely won’t. I will most likely live into retirement age. And in the life I’ve lived so far I’ve seen *many* people – friends, bosses, relatives – who are totally unprepared when they get to that age because they spent too much and saved too little. For me, missing out on sodas at lunch or a game every now and then is worth it if I can sleep better at night knowing I have a nest egg to take care of me later.

  36. kristin says:

    We have a Wii and like to rent games instead of buy them. I think it actually saves us money as one $7 game rental will provide us an entire weekend’s worth of entertainment. Then if we find a game we can’t live without we put it on our Christmas/birthday list.

  37. Imelda says:

    Hibryd–

    I think (or hope) that Trent will understand my perspective a bit better than you did, because he’s seen all of my other comments on this blog.

    I speak “from the perspective of a saver” too. I’m ridiculously frugal; actually, I’m cheap. But even I can admit that Trent’s position here is a bit extreme. To say “Every time you spend money unnecessarily, you’re making an active decision to sacrifice a piece of your bigger dream” is excessive.

    What’s the old saying–If you have 2 yen, use one for bread and the other for a flower. Many of the things that brighten our lives cost money (oh look, it’s capitalism), and I don’t think we should agonize over what we might be losing in the future every time we want to brighten the present.

    Moreover, life is ironic. Someone can scrimp and save for retirement for 30 years, and then die the day before they retire. Yes, as you say, Trent will most likely live until retirement. And the bigger issue in this country certainly is people being under-prepared for old age, rather than over-prepared. But for someone like Trent, who already is securing himself financially, and rejecting a spendthrift lifestyle, it saddens me to see him forsaking all present joys that cost money.

    At what age does he tell himself it’s alright to spend money? At what age does he stop living for a far-off goal? By the time he reaches that age, will the habit of self-denial be so ingrained that he can’t change?

    I do agree with the spirit of Trent’s article, and philosophy. From one tightwad to another, his advice about frugality and resisting commercialism resonates with me. But reading an article like this, as I said, makes me worry that he’s taking it too far, to a point where he is makng needless sacrifices.

    And btw, Hibryd, I also agree with your statement “Missing out on sodas at lunch or a game every now and then is worth it.” I think my disagreement stems from the impression that this article encourages us to miss *every* game, and to *never* drink anything but water.

  38. Hibryd says:

    Sorry, I guess I’m a little knee-jerky on the subject (for the above reasons) and since I don’t follow the comments, so I didn’t know where you were coming from.

  39. Susy says:

    We forget that just because we have the ability to buy things means that we need to or should in order to “enjoy life”. The majority of the worlds population will never even be able to afford a Wii game or even a $2 frivolous item. Maybe we should take the $50 and donate it to help educate a child in another country so someday they will actually have the chance of having a brighter future.

  40. Sam says:

    I’ve been reading now for several months, and I think this post is the best advice I’ve read. It really helps put purchases into perspective.

    Thanks for that.

  41. CBus says:

    It seems to me a lot of people view frugal people and savers as miserable dejectites who cry about how “I can’t afford that” despite enough money in the bank. We don’t buy an appetizer, a meal and dessert at restaurants (unless we are taking two of those items home with us). We don’t feel obliged to buy at least something when we go to the mall. How can we live without HD/TiVo/Cable TV?

    The excitment you get from newest video game, pair of shoes, 357 lattes is almost as rewarding as the feeling of security and success we get from watching our net worth reach its monthly goal. Its very much about making a commitment to ourselves and our family…and following through.

    I find food and money have many parallels, and its often you find both on many a pf blogger web site. The principles to lose weight are similar to losing debt. Eat (spend) less than you intake (make). I don’t think you’d go to someone attempting to lose weight as say “You know, you are doing it all wrong. This piece of cake is going to have little if any impact on your weight loss goal. Its just a bag of potato chips, just when there is a football game on.” The satisfaction that person will feel when he or she reaches his or her weight loss goal is immeasurable by food standards. He or She will look back and realize that that piece of cake or bag of chips really wasn’t worth it, if they can even remember being tempted by them at all.

    Or do you still look back and say “Wow, my DVD collection af several hundred dollars has really served its purpose and has left me fulfilled? That was well worth the investment? I sure benefitted more from that than, say, the $200 per DVD my future self could have enjoyed?”

  42. Sunshine says:

    Trent, have you looked into gamefly? My asst at work is a game FANATIC and finally figured out that Gamefly was the way to go. It’s similar to netflix and the service he has is approx $25 per month. He gets 2 games at a time and he can keep the games as long as he wants. They have games for all playing systems. HE used to buy 2 games a month (anywhere from $80 – $120). Now he only buys games that he really, really likes or that will have a super long wait time, like Halo3.

  43. Mark says:

    I saw an interesting article several years ago on saving for retirement.

    Saving for retirement has to be balanced against enjoying the future. One may die tomorrow, but probably will not. So they had better save.

    Another factor not generally discussed is, will the economic structures in place as you save survive as long as you do?

    Just look at the decline of the dollar in the last few years. What if you never ate out, etc. only to see a currency crisis a few years before you retired that wiped out all of your savings or rendered them worth a fraction of what you had planned.

    Can’t happen here. Think again. History is full of examples

  44. Danny says:

    Trent – Check out half.com. You can use your ebay account and buy games, shipping is very cheap and a lot of Wii games are around $30, some even less. I buy almost all my games from half.com. Plus, you can sell for what you paid for it or a little less when you are done with the game.

    Keep up the good work on the blog.

  45. Prateek says:

    Like many others have said, the goal of managing finances is so you can spend your time making the best use of money, not wasting the present so you can look forward to a pot of gold when you retire.

  46. Michael says:

    If a man is poor today only to be rich tomorrow, he gambles. If he dies young, he loses his money with nothing to show for it. What a sad story!

    If a man is poor today for poverty’s sake, or to give to those even poorer, or for the sake of his children, or to obey his god, he does not gamble. The money cannot be lost because he did not live for the money. It is a sure bet and a happy story.

  47. Victoria says:

    I’ve cut out a lot of frivolous spending, i.e. DVD’s, Books, Mochas, etc. I go to the movie theatre at the most once a year. I use the local library; it’s free (it really is, they run on donations and fund raisers — 0% town/state/fed tax dollars). If they don’t have what I want they buy it and put it on hold for me. Any shop I need to go to I pass during my work commute, if I don’t get what I need while commuting I don’t go out.

    I love gaming. I don’t drink much and gaming relaxes me much more then a beer does, less calories too. No matter how much I am into a game I eventually fall asleep (I play lying on my couch under a comforter in flannel pj’s). Video games are my release from the stress of work.

    I’ve been pretty thrifty when it comes to shopping for video games. I wait till games are at least at or under $20. I dig through the bargain bin at walmart, much to the dismay of the employees (you’d be surprised what hard to find pieces of gold you can find at the bottom). Or if it’s a game I really want I buy it used.

    I max out my roth ira, I’m building a nest egg, and I’m saving more on top of that. I don’t plan on buying a fancy car so I figure it’s ok to have some fun even if it means spending some money. I’ve got to live too.

  48. Andre says:

    Rather than a purchasing a game console that’s incomplete in itself, I’d recommend cultivating an interest in classical board games, like chess or Go. They’re less visceral, but better for developing cognitive skills. They’re durable goods that don’t obsolesce every 18 months. You’re not compelled to buy more “content” for each game. There’s a library full of strategy to study. And they’re easier to have conversations over.

  49. JP says:

    I agree with many of the thoughts above. I think you have to live for today while preparing for tomorrow. I have my set savings amounts – max out the roth – put enough in 401k for the match (due to my thinking of taxes being higher in the future) and then saving 10% in investments over that. After that I figure the money is mine to spend. I am just wondering as was mentioned earlier – when do you stop saving and start spending? I have seen elderly people who will not spend the money they have saved due to it being ingrained in them that they need to save – save – save.

  50. Cory says:

    You need to adjust that return for inflation if you want it to really give you an accurate feel for $$ spend =)

  51. Troy says:

    Here is an fairly easy general rule.

    ADD A ZERO.

    Whatever you are buying, spending, saving, investing, etc, add a zero to the end of the amount, and that is a “rough” estimate of it’s actual opportunity cost approximately 35 years from today in a retirement/investment account.

    It is an easy way to mentally compare/contrast choices and reasoning.

    $50…that will be $500 in 30 years
    $10,000 car now is $100,000 in 30 years.

    It opens up your eyes.

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