Sadly it’s probably one of those rear-view mirror tools, something that seems to be a recurrent theme in investing, but Lam Thuy Vo – Quantified Breakup has a great way of summing up the continuum between the wants and needs axis and the associated costs.
Lam Thuy Vo did pretty well, really, in fact she did better than I did some years ago under similar circumstances. I bought a fine pair of Leica binoculars for about £700, a secondhand Naim CD player for £1500 and other baubles . I’m still a crap birdwatcher and should have spent the money on getting places to see odd birds with my existing gear, and I bought the CD player just as I was about to switch to streaming 😉 But it helped get it out of my system a bit, so it was probably a good investment of the non-financial kind. What I like about her approach is the graduated scale of useless to useful – there is a continuum between Wants and Needs. When I first had to tackle excess spending to tackle saving massively into a pension, I went digital about this – the aim was to shoot all Wants and tighten up on the Needs, to get where I wanted to be – free of The Man.
I use a copy of Quicken to track my spending and income, such as it is, and it would be great if it had a ‘how useful is this to me’ axis and could summarise spending in this sort of way. Quicken is a decade-old program and people now entrust this sort of thing to Mint but even on Mint I still don’t think there’s a feature to enter – ‘how well did this spending serve me’.
It’s a funny old game really – as Martin Lewis said, time is a fossil resource, they ain’t making any more of it in your lifetime. Every day that passes your lifetime shortens by exactly 24 hours, so a fleeting selling some of those hours for a cup of coffee should deliver some utility. Ideally more utility than you surrendered to earn the money to buy it…
This is now a hard calculus for me – after all, I am now a rentier. The fires that burned to raise my career have how faded, I am running on the accumulated capital. How do I qualify this? I spend more than I earn, though the trajectory will not fall to earth before I draw my pension. When I was working I could qualify it easily – it would take me a year and a half to earn this car, 20 years of paying a mortgage to buy this house[ref]it never looks that way at the start, always far worse. I thought I would still be paying off the mortgage on the first house for another 10 years. The power of inflation to save debtors’ asses should never be misunderstood – it’s why governments love it and why savers in cash assets are being ruined now. However, what you must never do while you have that mortgage is take on any other debt, particularly consumer debt! Paying interest on that kills you faster than inflation helps you.[/ref]
Nevertheless, everyone should have a chart like Lam Thuy Vo’s. I salute her – she will do well. She reined it in, acknowledged what’s up, and got on with life. If I look back over the last year or so, I don’t have too much in the Useless Shit category, but by no way is everything a Need. On the useless side is perhaps the Raspberry Pi, and a load of electronic components – but then I use them to turn over the brain a bit, learn about new things. Possibly break out into a different piece of engineering, though I must be careful not to call it work 😉 I still maintain my C.Eng, though it is an ultimate piece of frivolity. I haven’t used it and probably won’t ever use it, unless Britain’s retiring engineers cause a surge in demand matched by a cull of management stupidity 😉
A quick scull through her purchases show that Lam Thuy Vo was probably still more disciplined through her breakup and faced with the world’s #1 consumer society[ref]she’s a reporter with Al-Jazeera in the States[/ref] than I was. I shares some of her excesses – I also have a fine Waterman fountain pen, though I would shift it well past the halfway mark on the usefulness scale, My writing is still revolting with it, but I can actually read it, and that was worth paying £50 a few years ago for the capability.
I didn’t go into musical instruments, but I bought a Kindle, though I need to illuminate the bastard with the light of a thousand suns, whereas I can read a real book in the half-light perfectly well – the e-ink display has low contrast and poor sharpness, with a laggy fuzz to lines.However, I have probably recouped the capital cost in freebie books, and it is a great way to hold PDFs of datasheets, though the Kindle’s library management functions are disgracefully crap. Amortisation of the capital costs through utility drifts a purchase from the useless into the useful over time as you win utility from them, as long as you don’t churn your gadgets!
Some useful things come for free – even if they aren’t practically useful.
Maybe this kind of charting is the ultimate nemesis of capitalism – the Avenging Angel that rocks up at the end of the month, taps on your shoulder regarding spending, and asks you, on a scale of 1-10, how much did that purchase enhance your quality of life? And then serves you a nice infographic that shows you are trending towards the Useless Shit axis. It’s the ultimate neutron bomb to capitalism – it will destroy the activity while leaving the superstructure standing, when consumers start to live intentionally and ask themselves these questions about how much their spending actually delivers enhanced quality of life for them. Mint.com – your users need you. But how would you get paid – it would reduce your advertising revenue to dust in a month.