Updated on 10.19.08

The Other Choice

Trent Hamm

Choice by anyjazz65 on Flickr!Whenever you make the choice to spend money on something, you’re actually making other choices as well.

I choose to “dress for success” by buying this expensive suit.
I also choose to have large credit card bills.

I choose to eat out for dinner every night.
I also choose to be stuck in a high-paying job that I hate with every fiber of my being.

I choose to have a beautiful house.
I also choose to have a back-breaking mortgage payment that eats half of my monthly take-home.

I choose to lease a shiny new car.
I also choose to squeeze out $300 a month and wind up with no asset in a few years.

In short, when you choose to buy, you eventually have to deal with the consequences of it. When you whip out the plastic or fill out an application for a loan, you might get the item you want right away, but eventually the bill is going to come due. Even worse, that bill is going to come due with some interest tacked onto it.

The reason many people wind up in financial trouble is that they adopt a series of choices that can be summarized as “get it now, pay for it later.” Many people choose to use credit to pass along those consequences to the future – a “deal with it later” attitude. This ends up putting a lot of financial requirements on your future self, locking you into a sequence of large bills and makes a strong-paying job a requirement. You choose to buy now in exchange for restricting your choices later.

Of course, it’s also possible to go completely in the opposite direction.

I choose to only buy the minimal clothes I need for work and to shop carefully for them.
I also choose to put that saved money away into an emergency fund.

I choose to never eat out for dinner and instead prepare all my meals at home.
I also choose to take that saved money and invest it in my startup business.

I choose to live in a small fixer-upper that’s just the right size for me and my family.
I also choose to work at a low-paying job that fulfills me, brings me happiness, and doesn’t stress me out.

I choose to drive an old car.
I also choose to invest those saved car payments right into the stock market.

This set of choices can be summarized as “never get it, never pay for it.” One simply chooses not to buy much unnecessary stuff – a “cheapskate” attitude. You don’t have the joy of having that desired item now or later, but instead you focus on other things that bring you joy. This attitude might keep you from some material items that would bring you happiness, but brings happiness in the form of freedom: you’re not chained to your job, for example, and you don’t have a pile of bills. You’re also setting a strong path towards complete financial independence, where you can simply walk away from work at an early age.

Let’s look at another set of choices.

I choose to buy one suit now, then build my work wardrobe later.
I also choose to start socking away money for that wardrobe every week, starting today.

I choose to eat out for dinner when I can pay for it in cash.
I also choose to put some cash away for those nice dinners in the back part of my wallet.

I choose to have an amazing house someday.
I also choose to live in a smaller house now and start socking away money for that dream house.

I choose to drive a shiny new car.
I also choose to drive my old car for a while longer as I save up for that shiny new car.

This set of choices is somewhere in the middle – it can be summarized as “pay for it now, get it later.” You’re choosing to sacrifice a bit of fun in the present (by socking away money) for quite a bit of fun in the future. You’re restricting your choices now in exchange for greater freedom later on. And, since you’re socking away that money right now, you aren’t met with disaster and an avalanche of bills you can’t pay if you lose your job or something else happens.

I spent much of my life making the first set of choices – and I’m still paying the price for it. I have a huge mortgage sitting in front of me along with the remaining bits of a hefty student loan. If I had subscribed to either of the other two philosophies, I would be in substantially better financial shape.

It took me a long time to come around to realizing that I was painfully subscribed to the wrong set of choices, and it took me even longer to settle into a new set of choices. Now, if I don’t have the cash to pay for something, I don’t buy it – and often I have the willpower to not buy things I want, even if I do have the money to buy them. The end result? I’m no longer scared of the amount I have to pay each month for debt repayment. I’m no longer worried about losing my source of income, because I’m secure enough that I’ll have time to find a new one if I need to. If an emergency strikes (like a wrecked car), I can deal with it almost without blinking. And, if I do decide I want something, I know I can easily save up for most things.

It’s the power of the choice – and the consequences of that choice.

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  1. DrFunZ says:

    “If you do not have the money, don’t buy it.” is probably the best advice anyone can follow. I grew up in home with parents who didn’t use a credit card very much. When they did, they paid it in off in full. The first credit card they let me have was not even a credit card – it was the original American Express charge card – it had to be paid in full each month. It had a hefty annual fee at the time, but thankfully, Dad took care of that. Eventually, I got a regular credit card. Since my 20s, I have had to paid credit finance charges exactly twice – in 35 years. I guess Dad realized that the lesson learned from having the charge card first justified his helping me with the annual fee.

    Another lesson learned early was that money is easily wasted on things that you do not really need. I had a beat-up, but servicable, 1968 Dodge Dart as my first car (a slant-6 engine can run forever)and the person who had it before me put in an 8-track tape deck (Ha!!) But eventually the tape deck broke. Of course, I asked my dad if I could get it fixed. He asked, “Does the tape deck make the car work any better?” “No”. “Then the car doesn’t need a new tape deck. But here is what I’ll do for you. I’ll put the money we could spend for the tape deck into a savings account, and when you get your next car, I’ll give you that money + interest toward it.” Five years later, my dad handed me a tidy little sum to help pay for my second car!

    When in doubt, do without!

  2. Moretta says:

    This is so true — we always, always have a choice in financial decisions. This can be a consolation of sorts. The other night I was griping to myself that my dog was going to need knee surgery. Then I reminded myself that I was choosing to get him that surgery because I love him — a lot of people wouldn’t have — and that I was therefore choosing to forego some luxuries. The feeling that we don’t have any choice or that we are trapped comes when we don’t examine our own values and mindset.

  3. Kristine says:

    Yes, it is all about choices. Our economy was built on instant gratification, and like a child, had to eventually grow up! A painful coming of age.

    One thing you did not mention is that your financial choices make an indeilble mprnt on your children. Letting them live without the latest widget is not only character building, but it insures that you wil be able to help them later, should they ever really need it.

    Your choices also speak very loudly about what you value, and kids will pick up on it: things, convenience, or long lazy afternoons with the kids where nothing is stressing you out.

    You can tell what a person values most by how they spend their time and money. Values change as we get older, and you need the financial leighway to let your lifestyle follow your values.

  4. Dan says:

    I really enjoyed reading this article. It makes perfect sense to me to do the latter two choices of spending. I have always thought the same way.

    How would you suggest getting this information out there into the mainstream media so that it can be absorbed?

  5. kellykelly says:

    Or how about this choice: the way I live?

    Leave the “slavery” of a good-paying corporate job that had benefits, paid time off and predictible income for the “freedom” of being self-employed. There are pros and cons to each — I would never sugarcoat the stress and slavery of owning a business. I’ve been at this a long time and the honeymoon is long over.

    Now I am afraid to spend money on much of anything (yet I do eat out at least once a week! I paid $13 for a pasta dinner last night that I used as leftovers today, so that’s $6.50 each meal for something I wuld NEVER have made myself and was craving. I guess I could have eaten an apple instead last night or made 99 cent pasta, true. But the joy of denying myself AGAIN just could not outweigh the hunger I felt after having nothing to eat for 9 hours and volunteering all afternoon at a nonprofit and helping my elderly mother with something after that. That was enough “joy” in self-sacrifice for one Saturday, I suppose.)

    And because I am so obsessed with saving money in general (still wearing clothes I bought 10 years ago, driving a 12-year-old car, etc.) I am trapped at home on a gorgeous weekend AGAIN because all I can think about is work and chores, about how anything other than work and chores is “squandering” time and time=money, so there you go.

    I understand that this sounds cranky and unbalanced but I am so sick of living like this.

    So don’t forget there is a point of diminishing returns with the “joy” of self-deprivation. There is something to be said for instant gratification. Humans are not machines. Except that we both break.


  6. jreed says:

    KellyKelly…take a deep breath and go for a walk. Regroup and figure out how you are going to reward yourself each week. Be specific and commit to that reward. You deserve it. Self employment isn’t easy but if you can make it for someone else, you can make it for yourself.

  7. Shanel Yang says:

    Hear! Hear! For most of my teen to adult life, so far, I chose to believe that name brands and luxury items could make me happy AND that I could somehow afford it all — since everybody else around me was likewise getting into humongous credit card debt, student loans, car loans, and eventually mortgages. None of us could have been more wrong! : ( The good news is I learned this lesson early enough to still enjoy a long, full, yet abundant, life! : )

  8. Donny Gamble says:

    I probably would put myself in the second scenario. Every where that I choose to go I don’t need to have the flashes of clothes, but I always present myself in a professional manage. I currently have two retirement accounts set up because I know the value of investing in your future. I also pride myself of being a tight woad on money because I rather save money than to spend it on something that I really don’t need.

  9. Don says:

    Trent, I’m referring to the ending bit of your post today (see below). Congratulations on having finally be able to have so much composure and character to make this choice.

    If I have followed your blog correctly over the past few months, I think you were then still struggling with controlling yourself with certain types of impulsive purchases.

    Please keep up your good work. Your blog keeps me inspired.

    “Now, if I don’t have the cash to pay for something, I don’t buy it – and often I have the willpower to not buy things I want, even if I do have the money to buy them.”

  10. Trent Hamm Trent says:

    Thanks for the thumbs up, Don, but the key word there is “often.” I usually do the right thing, but not always.

  11. Caleb Nelson says:

    Yes. I think that if you really want something, you can save for it. If you really do want something, you won’t mind completing the time and effort it’ll take to get it. Our society has unfortunately taught us the “get it now” complex. If I want a TV, I can finance it at Best Buy. If I want some food right now, the choices are limitless. If I want to buy a house, I could probably find someone to finance me, regardless of my situation. I think that it is good to point out this very important financial philosophy.


  12. Anna says:

    DrFunZ #1, your father was brilliant!

    Parents take note.

  13. Lin says:

    Excellent job Trent. In many homes across the U.S., parents are dealing with the onslaught of adult, grown children living at home with their parents because of having made very poor choices with their own money, frivolous spending habits etc.

    The “get it now, pay for it later” buying habit has gotten a lot of people into financial trouble, and many people (including myself) refer to this as “A Sense of Entitlement”, and others call it an “Entitlement Epidemic”, where young people and older people (who ought to know better) are languishing in credit card debt and some are even expecting their parents to “help” pay their grown children’s bills because of having made poor choices.

    Like Anna said, parents take note. The repercussions of the personal choices adult children are making with their money, spending their money on wants instead of true needs, could mean your kids are planning on moving back into your house so you can “help” them with their bills. That brings a whole other set of problems.

  14. After 15 years of slaving in a business I felt stuck in I created my new job at home, at the computer, with my family around me instead of being left behind everyday. Choose what can make you happy. You don’t have to do anything!

    Thanks for a great post!

  15. Bill R. says:

    I continually counsel customers who have constantly used the “Get it now, pay for it later” approach. Thankfully, if they’re speaking with me it usually means that they have come to recognize the problem ( hopefully without it being too late).

  16. Lisa says:

    Kelly, when my husband survived cancer, I began to loosen up. I then spent money for experiences, and family time, and sometimes just a fun day. I still save, cut coupons, go to the thrift store, and work so hard that people tell me to lighten up. But, I spend on life, now. That cancer woke me up to enjoying each day, in the moment. Including sometimes, spending the money I have, if the experience makes our loved ones, and maybe me, smile.

  17. PJ says:

    So the other side of this is definitely: learn when you *can* enjoy yourself a bit. Yes, use your willpower to save up for something, but then *reward yourself by getting that something*. Once you get into the ‘save uber alles’ mentality, it’s very easy for some people to get ‘stuck’ there and never let themselves enjoy the fruits of their labors. I say this as one of those people, and it’s actually hurt me some professionally at work: I’ve been working at startups with limited budgets for so long that when I was finally at a place that had plenty of money, I was so hesitant to spend it (hesitant isn’t really the word – it just never occurred to me to ‘hire it done’ instead of doing it in-house b/c it was so much more expensive) that my boss had to prod me some before I saw paying for the pricey fully integrated vendor as a valid solution.

  18. Kevin says:

    I for one really hope this latest market downturn will help change the “entitlement mentality” that exists in this country. Not only is it unhealthy for the household economies involved, I think it is representative of some underlying personal/emotional problems as well.

    I’m also glad that my household has gotten our act together in the last 5 years to put us in position to have options if something does go wrong and not feel like we’re living on the edge like so many others.

  19. DivaJean says:


    I was exactly where you are about a week ago. I was just so mad at how others have squandered our economy to where it is- and then claiming it’s all the economy’s fault for their lot in life.

    Last weekend, I was taking my daughter for a quick SuperCuts haircut and getting my wonky bangs trimmed up. You see, I cut my own rather than pony up the $5 for bangs trimming every month. Sometimes, I don’t do as well. So there we sat, waiting patiently for our turns, watching suburbia go in and out of the coffee shop next door at the strip mall. I got so fed up at “them”- for their $7 lattes, eating out all the time, fancy new clothes all the time, etc- when here I am struggling and keeping our family afloat.

    Then over the course of the week- I started thinking more about my frustration. My freedom from worry- from knowing I can make it work for my family of 6 on my lone income- made me get thru it. We have a 15 year mortgage on our home- that will likely be paid off in 2 or 3 years (7 or 8 years early!) versus those who are losing their homes. We know we have no debt- credit is nearly never used- so we have no fears of creditors. It does still get me really mad thinking about the hit my 401K took– since I’m a gen Xer who will never see a pension and likely no Social Security or Medicare.

    My choices really do buy me some level of freedoms.

  20. melissa says:

    Lin, you told only half the truth in your response.
    “Like Anna said, parents take note. The repercussions of the personal choices adult children are making with their money, spending their money on wants instead of true needs, could mean your kids are planning on moving back into your house so you can “help” them with their bills. That brings a whole other set of problems.”

    The same thing can turn around and bite from the other end. Case in Point: My mother-in-law. Love her, but get mad as hell over her stupidity about 5 years ago. She had been the self-sacrificing type, and tight with a penny. At one point she owned several homes (w/o mortgages) that she rented out. These weren’t fancy homes in fancy neighborhoods, but still good assents. She also still worked a “regular” job.
    Then she lost her boyfriend to a sudden death, and it shook her hard. She suddenly went into “Why have anything if you can’t enjoy it.” mode. She did the dumbest thing anyone can do, she started gambling. Of course it was a little, then more, then I can make up…..
    Now, she has no homes, not even one for herself. She’d gone several years w/o a job. A few months aog, rather than loan her money we gave her the option of moving here (1100 miles from home) to stay in one of our apartments w/o mo. payment. She accepted, and since getting here as found a job that pays $10/hr and sticks her Social Sec. in the bank. I’ve already told her that if I see her start gambling again, I’ll put my foot down. (and if that doesn’t work I’ll go to court to have her assests put into my husband’s custody)
    I hate to say it, but when she looks back and moans over her past – I don’t give her any sympathy, and tell her she made bad choices then and she’s changing that now.

  21. Wonderful post and so inspiring! It’s pretty crazy that we all have to remind ourselves of the simple rule that you shouldn’t buy something if you can’t afford it, but it’s always necessary. I’ve pretty much abandoned the idea of using a credit card to make any purchase, making “if you can’t pay cash, you can’t afford it” my motto.

  22. Bill in NC says:

    Housing and vehicles are the biggest discretionary consumption items for a household.

    Control spending in those and you free up a lot of cash for little rewards.

  23. This attitude of “choices” goes so beyond finance. I’ll not only use it for “Do I want another pair of black boots or do I want to get rid of my credit card debt?” but also for “Do I want to spend a night seeing a friend’s show or do I want to give sit in a bubble bath for an hour?” It’s hard sometimes to distinguish the want from the need (especially when your black boots have grown legs and walked away), or it won’t be so cut & dry (the friend sat through your show). But I think if I start phrasing my choices this way it’ll lead to very different decisions than I’m making now.

  24. This goes so beyond finances. I’ll not only use it for “Do I want another pair of black boots or do I want to get rid of my credit card debt?” but also for “Do I want to spend a night seeing a friend’s show or do I want to give sit in a bubble bath for an hour?” It’s hard sometimes to distinguish the want from the need (especially when your black boots have grown legs and walked away), or it won’t be so cut & dry (the friend sat through your show). But I think if I start phrasing my choices this way it’ll lead to very different decisions than I’m making now.

  25. Jennifer says:

    Thanks for the great post! Very inspiring!

  26. Nick says:

    At my wise old age of 22, I’ve learned a lot. In high school, I’d always need those name brand clothes, and preferred brand name food. I didn’t have to pay for rent, or anything like that. Once going off to college, and living ‘on my own’ for a bit, things have changed. I’m the most frugal person I know. I buy all generic brands, shop at thrift stores, and I don’t live in the biggest apartment, but it suits me well and it doesn’t smell.

  27. Suzanne says:

    One thing I do now (I’m 52) is don’t buy on the spot. I go home and think about it. If it’s an outfit and there’s only one, I ask the clerk to hold it and they usually will for 24 hours. I go through my closet about every 3 mos. too. When I was donating $ (hundreds) of brand new or worn once or twice clothes, shoes, or purses it made me take a hard look at my frivolous spending. Just yesterday I went shopping with a friend and felt good about saying “I don’t really need it”. I am saving money for a vacation that I haven’t had in years. I even buy the reduced portions at restaurants. It’s plenty and I don’t enjoy eating the same thing 2 days in a row. I found out too that I was spending $ when I was feeling depressed or lonesome, which is making me look at some other issues as well. Keep a journal of what you spend for a month. I was shocked to see how much I was just throwing away. I went back with a highlighter each day and the total for the month was $350. Now when I stop for a coke or a burger it’s because I’m hungry!

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