Asymmetrical Information

Jane,

Have you actually been to the suburbs? Benihana or Olive Garden as the apex of fine dining in the suburbs? Many of the finest restaurants are located in suburban areas and conversely, there's plenty of mediocre chain restaurants in the metropolis. (Think Tad's Steaks, for example) In NYC, they have Olive Garden, Red Lobster, Applebees, Tad's, Fridays, and many other mediocrities too. There might not be as much choice of great restaurants in the suburbs, but there are many excellent restaurants there and many mediocre ones here.

John, I did not mean to tar all suburbs with the same brush. Many do indeed have excellent restaurants, but many others don't. The problem is especially acute in the mid-range, which is where most people spend their money. A lot of suburbs have great burger joints, and a couple of exquisite French restaurants, but nothing particularly interesting in between. If you're like the majority of us, and can't afford to frequent the top of the line places too often, then it is generally better for both your palate and your waistline to eat in.

All of us, including me, fritter away money on things we don't need. The trick is to figure out which ones aren't worth the money.

Or find a blogger arrogant enough to make the call for you. Feh.

I am curious about how much of Jane's "Don't Eat Out" advice is based on the fact that she lives in NYC. Out here in the Midwest, food out isn't that expensive. I'm guessing that markup is higher than elsewhere, even including the markup for groceries...

Still, just as she says, you can make dinner better at home a lot cheaper. But sometimes, you'd just like that CJ's burger...

Spend money on things you like. Don't spend money on things you don't like.

I kinda, sorta agree...but food and eating out can be very cheap. For instance, this past weekend I spent $11 on lunch at a local chinese food place, 2 lunch specials fed the entire family of four. not bad. And it was take out, so no tip. And $8 got a couple of meatball subs at Subway, which fed the wife and I. I guess that's really not "eating out"...but things change with kids and marriage!!!

Jane,

Re; "...one of the main keys to financial health is not to worry so much about what other people are thinking of you."

Absolutely agreed. The cost of living hasn't gone up much at all - the cost of keeping up with the Jones' has gone up enormously.

Um yes, wasn't it Churchill who said - when you find yourself spending too much, the key isn't to spend less - it's to make more.

Many people are discovering that living in cities like New York is a big part of the problem. I love New York. My biggest client is at 222 Broadway. I go there at least 10 times per year, and I always book a few extra days to just soak in the city, take in a play, hit the Met, etc.

But live there? No way. For what I would pay for a well-situated two bedroom in Manhattan I can have a place here in Nova Scotia (which could be Iowa, Maine, Scottsdale, Clearwater, Juno--take your pick) can handle not only a large family (working on it) plus multiple house guests, but also my dogs and horses. New York is a little over an hour away. London is less than half a work day away.

I accomplish all this because I can and do work remotely 90% of the time. Five years ago this was far less common (hence I had to live in Boston). Doing contract work (in my case devloping "enterprise" financial analysis applications) can be very remunerative as long as you are not averse to some risk. Granted this applies to only certain professions, but the list is growing (e.g., radiology, certain types of law practice, accounting, etc.).

My only real complaint about this is that the Canadian government will take a severe bite out of your income (though there are legal ways around the worst of it). Otherwise, I don't worry about the cost of lunch these days nearly as much as I did when I lived in Boston or Toronto.

I agree with Smoov. Living in NYC or San Francisco is the greatest financial indulgence there is. There is no way a person can financially justify living in those two cities.

I am astonished how low a standard of living that $100,000 buys you in NYC compared to what it buys you in Minnesota.

Anybody who has a debt to pay off, their first step should be to move out of those two cities.

Much as I enjoy Jane's writing, I'm afraid Paul Zrimsek hit the nail on the head. Jane's initial attempt to give good advice is slowly morphing into "It's okay to spend money on the things *I* like (travel, pets, parties, the gym, living in NYC) but not on the things I don't like (flat-screen TVs, cars, Starbucks, big houses)." There was a good message in there somewhere but it's starting to get lost.

I find it hard to imagine that the extra joy from a flat-panel vs. a CRT is really worth the tradeoff, but I am not against flat-panel televisions or big houses. Rather, I'm trying to point out that everyone, including me, likes to buy shiny new objects because of the temporary boost we get from owning something. Over time, however, for most of the objects we own, that excitement fades, but the bills are still with us.

Everyone has some things that give them sustained pleasure, and those things are different for everyone. But I would bet that for most people, owning a 5K square foot house doesn't really offer that much sustained pleasure over having one that is 4k square feet, or even 3K square feet. Likewise, most people who get a flat panel will take it for granted after a few months. I have a friend who *really, really* loves his BMW, but most people I know who have one have it because they think it goes with the status they've earned. The marginal benefit to them of the actual performance improvement is not worth what they pay for it; they wouldn't by the exact same car if it were made by Kia.

But the most important things, I would venture, in almost everyone's life are family, friends, and a meaningful purpose to commit themselves to. These things don't cost any money at all. (I mean, enjoying them. Kids obviously cost a lot of money.) The point is not to make judgements about consumption--I am not one of those New York yuppies who thinks it's vulgar to spend $10,000 on a home entertainment system, but simply good taste to drop twice that on an artisanal slate shower. It is, rather, to point out that most people consume a great deal for reasons that leave them ultimately unsatisfied, and that if you weed out that sort of spending--for you, it may be your gym membership and dog--you'll ultimately be happier and more financially secure.

I just don't get NYC, or any other big city for that matter, unless it's for the things you can spend good money on: great restaurants, the theater and museums, top shopping. Without(maybe even with)the money, you have noise and congestion, rude attitudes, crime, nasty taxi drivers, insistent beggars, corrupt pols. striking municipal workers. The skyscrapers, etc. are fine but you don't have to live there to appreciate them. So why not live somewhere quieter, more private - like the Shenandoah Valley for instance - and ocassionally
visit NYC, San Francisco and all the other places where the middle class struggle if they choose to live there?

I've rearranged my budget to emphasize those priorities... I've also recognized that... by cutting out the tempting inessentials, I have more time and energy to devote to the things I care about, as well as the peace of mind that comes from putting money in the bank.

Jeez, lady. You sound like the student loan people. Or like a professor talking about, economics or opportunity costs or something.

When I was a student, I thought that Cilantro and Mahi-Mahi were staples of the American diet, and that paying twenty bucks for greasy Chinese take-out was "slummin' it." I wasn't an outlier, either. I knew some people who thought it was gauche to ask for change.

Irony of ironies, I was studying economics at the time. If anyone had asked me, I would've called my spending habits rational and well thought-out.

So I think the real challenge with money matters is to adapt your lifestyle to follow your own rational thinking about what you want out of life --and to take up such thinking if you haven't already-- rather than letting your behavior be dictated by whim or environment.

I actually think that knowing how to spend money is just as important as knowing how to save money, where gettting into better financial shape is concerned.

I follow most of Jane's advice. We saved 25% of our income last year, drive cheap cars, only eat out at cheap resteraunts on weekends, etc. And we just don't spend much. I buy some books from Amazon every couple of months, and got an ipod six months ago, but that's about it. My wife is the same way.

But when it comes time to spend money, we spend a lot and buy really nice stuff. I think this is actually a financially sensible thing to do.

For example, I have to wear dress shoes to work. I first tried the cheap $50 shoes. They hurt my feet and wore out within six months. Next stop was the $150 shoes. Didn't hurt, but only lasted about a year. Finally I sprung for the $300 shoes. Best money I ever spent. They feel great right out of the box -- no "breaking in" period necessary -- and last forever. The pair I am wearing right now is six years old and has been resoled goodness knows how many times.

Sometimes spending a little extra to get the good stuff will actually save you money in the long run. It will also be much, much more enjoyable to use and own.

But this idea still holds true for leisure purchases. If you like French resteraunts, go to a nice one. Don't go to the cheap one; as Jane said, you can probably do just as well at home for less money, and you will not have enjoyed the experience.

If you want a nice car, buy a nice car, and drive it for a long time. Go into it with your eyes wide open -- a Hyundai will get you to work and to the grocery store just as well as a BMW, and for a whole lot less money. A luxury car isn't an "investment," and no, you probably don't "need" to drive one even if you are a professional. A nice car is a luxury purchase, an indulgence. But if you like cars, get the BMW. You'll enjoy it every single day. The hum of the engine, the feeling of being completley connected to the road, the precise steering, etc. If you buy the Hyundai, you'll be stuck driving it for the next 5-10 years but will not get nearly as much pleasure out of it. Nothing against Hyundais, if I wanted a minivan or a family sedan they would be near the top of my list, but if you are a car person, it is not the car for you.

Spending a lot on leisure purchases is worth it becuase (a) you will enjoy them for years and years and years; (b) you will not have any second thoughts; and (c) when you consider how long you will own many of these leisure purhcases, it really isn't that expensive in the long run.

On an totally unrelated note, my wife taught me to only buy things on sale. It works! You save a ton of money and get much nicer stuff to boot. The biggest savings can be found on clothes; for example, Bananna Republic has a sale on socks every year after Christmas (it's coming!) Their socks are nice, good for casual wear. They are normally like $7.00 or $8.00/pair, but after Christmas can go as low as $1.00/pair, and are usually just $2.00. You can literally get eight pairs of socks for the price of one. Buying stuff on sale is a great way to save money.

Apropos of nothing, Wednesday can't come fast enough so I can go back to reading TPM and AI at work without MSNBC's pink neon boobs flashing my coworkers.

As I have become more enthused about cooking, my wife and I are realizing that I can cook better food than 95% of the places we can afford to eat. And my pizza is better than I can buy, and even takes less time. The one advantage that eating out can have is time/convience. Particularly if we are already out.

But your point is well taken: luxuries and enjoyable things are not to be foresworn. We need not live as Spartans or Ascetics to have a heatlhy financial future. But we need to be aware of the cost, and to be frugal. Note that frugal does not mean cheap or miserly, but rather that we get good value for out money. Of course people have different definitions for value, so Tyler's desire to eat out may be a frugal use of his money to him but an un-needed luxury for others.

The value of making your own lunches can't be stated enough. I've been eating out every day for lunch until very recently, to the tune of $8/day on average. Meaning that with 22 or so work days a month I'm spending about $176 a month, or ~$2100 a year. On the other hand, I can buy a week's worth of sanwhich fixings for about $5. Factor in $0.55 a day for chips, maybe less if I buy in bulk, and that my office provides sodas and water, well, a day's lunch suddenly costs $1.55. Which is a pretty sizable savings, from something really, really, really easy to do.

Hmm...I was interrupted in reading this by a 9-year-old, home from ouchful orthodontia, who wanted me to read the next chapter of "A Christmas Carol"; somehow that seems relevant. One must not Scroogefully neglect the present, in which family and friends and food (except when it hurts too much to chew) are central. But it's also relevant that she was in NYC over the weekend and bought an expensive doll at FAO Schwarz, using money she'd saved up for quite a while, and I'm pleased with her ability to save. One must not neglect the future, Dickens' "solemn Phantom" pointing into haze. (And Scrooge could not have kept Christmas so generously at the end of the book, if he hadn't squeezed pennies in earlier life.)

But I would like to say that this post ended better than it began; at first it hardly seemed like a Jane Galt post at all. You say that it's "silly" to eat out often at an Olive Garden --- that sounds like you think you are in a position to know that an Olive Garden doesn't (in repetition) really make customers happy, and that strikes me as a very non-libertarian point of view. My daughter likes to eat often at Pizza Hut; we may say "no", but we're not going to say that it doesn't really make her happy to do so. It just plain does, and that's just the way things are. Her pleasure in Pizza Hut right now may actually be greater than her pleasure in one of the restaurants Tyler likes, ten or thirty years hence. (Okay, P.H. is not expensive, but it's certainly more money for worse pizza than we can have fun making at home.)

Why not stick with the tradeoff issues? Your life will have been a worldline, a squiggle in four dimensions. If there were no uncertainties, I could say things along the lines of "I can spend $100 over here in 1975 as a graduate student, or $800 over yonder in 2005 with four grown-up kids and one at home." Then I add in the uncertainties -- I might be dead in 30 years, or my portfolio might disappear instead of constant-dollar doubling very roughly once per decade. Some uncertainties make you more inclined to spend, others make you more inclined to save. No need for a closed-form equational solution, you just keep swapping back and forth between present and future until you find you have better things to do, like contemplate Christmas past.

Oh, sure, and inexpensive pleasures are Good. I guess. Use it up, wear it out, make it do or do without -- sure, I had Puritan ancestors. But I like my big house, especially when my older kids come home for Christmas, and my wife likes the two flat-screen TVs she chose (one plasma, one LCD). Is my view distorted by having more money than you seem to? Probably, but I don't think that's it.

Sometimes silly/stupid things do make people happier than sensible/intelligent things; rationality is a means, a very important means, but not an end. I usually feel more, umm, comfortable with your posts than I did with this one.

Spend money on travel when you're young. The longer you live the more chance of acquiring an injury or illness that means you can't backpack, or can't even travel at all. And then of course there is the risk of dying which completely wipes out all your travel plans.

Here are some tips, based mostly on experience, for saving money at restaurants while still eating well:

1. Skip the appetizers. They tend to be pricey for what you get, especially the fried items that predominate at most casual-dining places. Not to mention the fact that they're often overloaded with calories and fat. An alternative is to share one appetizer, most being large enough to satisfy two or even three people.
2. Most Asian places offer lunch specials, and they quite often are terrific bargains. I particularly like the bento boxes at Japanese restaurants.
3. If you're a wine drinker, stick with a carafe or half-carafe of the house wine. It's usually quite drinkable and you'll avoid the horrendous markups on bottled wines.
4. While we're on the subject of drinks, if you're into soft drinks (like me) look for places that offer free refills.
5. Buffet-style restaurants seem as if they're good bargains, but keep in mind that the food often leaves a lot to be desired and you have to be careful not to stuff yourself.
6. As with appetizers, desserts are usually better skipped or at least shared. Except at the very highest-end places they're often mediocre or worse, and chances are you're already pretty full.
7. If you take leftovers home, try to eat them within 24 hours. For some reason, restaurant leftovers seem to deteriorate much more quickly than home-cooked leftovers.

"[The point is] that most people consume a great deal for reasons that leave them ultimately unsatisfied, and that if you weed out that sort of spending--for you, it may be your gym membership and dog--you'll ultimately be happier..."

Jane, I guess for me the point is that people do all kinds of things that leave them ultimately unsatisfied -- many unrelated to money -- and having you weigh in on the merits of someone else's utility function strikes me as incredibly arrogant.

You chose to avoid investment banking or consulting in order to find a more meaningful purpose as a journalist -- and we've listened to you piss and moan about your money problems ever since. If you'd gone back into consulting, I somehow doubt you'd be lecturing us today about how flat-screen TVs won't really make us happy. Who are you trying to convince: us or you?

I'm glad that the decisions you've made in your life (forget consulting, go into journalism, live in a tiny apartment in NYC, no flat-screens, focus on family, eat steamed vegetables & brown bag lunches) are decisions that make you happy. But maybe, just maybe, you should give other people credit that the decisions they make in their life will make them happy too. And that maybe, just maybe, you don't have any particularly useful advice to give them in this area.

Over the years our eating out habits have cycled through periods where we do it a lot, and times when we don't go out much at all. My kids love to eat out, because kids' meals typically don't come with vegetables that they have to eat, I think, but also because they just enjoy the change of scenery.

We're working with them to understand how expensive it is for a family of 5 to eat out, versus having something at home. Our main compromise is take out, which of course saves us a bundle on drinks, desserts, and gratuity. But now we reserve take out for things I don't make at home, like Chinese food or pizza -- and we'll only go to the local mom & pop pizza joint that just opened recently, as opposed to ordering cardboard (chain restaurant) pizza. Life is too short to eat bad food.

Aside: Brittain33: me too!

Also: I don't understand why people are picking up a nagging tone from Jane's original post. She's talking about what's important to her, and her own decision-making process. As usual, she emphasizes that each of us needs to make his own choice. So why the "feh" response? I know when I was single, earning good money, and living in Boston, eating out at fantastic restaurants was my favorite leisure activity, and I still have great memories of meals shared. Now I'm married, at home with the kids, and there's no way I'd drop $400 on a dinner for two. But I'm not going to tell someone else not to do it, if that's what makes them happy. Back in the day, it really did make me happy (and I feel happy now just remembering), but now it would stress me out. It's all OK.

"What are the things that give me joy? Family. Friends. Travel. Writing. Reading. My dog. Eating good food. Being healthy"

But those are *your* joys. Your original advice was that everyone should forgo the same expenses that you deem unimportant.

Want to talk about unnecessary spending? How about the two years you spent attending a (probably very expensive) professional school when you weren't entirely sure about what you wanted to do?

You are now forced to "downsize" your lifestyle because of an incredibly foolish financial choice you made, chosing to invest a considerable sume of money in a career you didn't really want.

Yet nowhere in your little morality play about spending do you warn others about ways to avoid such a poor financial decision.

"sume "

I probably meant "sum".

Benihana, P.F. Chang's, Timberlodge Steak House. Good stuff. It's absolutely legitimate that people might not care for these restaurants, but to categorically put them down as some kind of gaudy and tasteless artifact of the suburbs... that just reeks of elitism and snobbishness. Which maybe that's what people are all about that put them down. I hope it makes you feel superior and better about yourselves.

I'm not putting them down; I'm justing saying that cooking better than Olive Garden or Benihana is within reach of the average cook. It's not the fact that they're chains, or ubiquitous; I buy most of my clothes at chains, because they make clothes better than I do.

Look, this post was addressed to people who aren't saving enough. Yes, I think you should put savings before big-screen televisions, or travel, or restaurant meals, or anything else. The reason I urge people to forgoe restaurant meals and big screen televisions rather than travel is that home cooking and CRTs are a much better substitute for them than mowing your lawn is for seeing the Champs Elysees, not because I think that travel is somehow a better or more elevated way to live. And travel has been largely cut out of my budget, precisely because it, like eating out and having a flat panel tv, is not necessary.

DRB, would I be saying this if I made 200K a year? Probably not. But I think I'd be wrong. One of the nice things that being downwardly mobile taught me was just how little the things I used to spend money on actually added to my happiness.

As for pissing and moaning, I'm sorry if you feel that way. Aside from the annual amazonathon, I generally only mention my income in the context of explaining that I am not some rich bitch lecturing to the poor from her Lexus. It seems I can't win.

"Look, this post was addressed to people who aren't saving enough. "

Which post? This last one? It certainly was not. It was a lecture on what you think should make everyone else happy.

Your first post wasn't addressed to people who weren't saving enough, but to the "downwardly mobile". And given that objective, you should have included tips like "don't spend money on an MBA if you aren't going to use it", "don't live in the most expensive city in the US", and "continually reconsider your choice to live on less money".

Chain restaurants offer consistency. You're unlikely to get an outstanding meal at one, but you're also unlikely to get a truly bad meal. Non-chains tend to have higher potential rewards at the cost of higher potential risks.

Thanks, Jane! I agree that we're wandering afield with the food discussions. As it happens, my wife and I are very much not in to cooking. (Unfortunately! I'd rather enjoy it as a hobby and source of good cooking, but neither one of us wants to spend the time, I guess.) I just reflexively get riled when I perceive people turning up their noses at chain restaurants. (Again, there's plenty to not like there, but I'm a fan, generally.)

I agree very much with most of your financial points. We're fairly well off and live simply. Our cars are paid-for compacts and we don't have flat panel TVs, HD, or surround sound. I don't think you're pissing and moaning at all -- I'm enjoying the discussion that has been provoked!

After your restaurant remarks in the "Saving is more important than lattes" post, one of the first places I thought of was the Olive Garden on Times Square, which may well be the cheapest sit-down restaurant in NYC (see this http://www.madtv.com/html/classics/theatre_int_8.html ). The Belmorah Pizza at 57th & Lexington has better food but it's just counter service. Still, I have to disagree with your statement about the low quality of mid-grade restaurants in the burbs. I spend a lot of time in Manhattan, and there's no way that area has better mid grade restaurants than the Atlanta suburb I live in, though they lead the way in the 5 star category. Still, the vast majority of people going out to eat do so because making dinner at home and cleaning up afterward (even if it's just throwing paper plates and such in the garbage) are either time consuming irritants they don't want to be bothered with, or excessively inconvenient due to other family activities.

While I agree with the "pay yourself first mantra", I also have to agree with Jake and DRB that a lot of this seems to boil down to criticism of expenditures you disapprove of. I love Manhattan, but living in an area that astronomically expensive when you don't have to just strikes me as lunacy (financially speaking). Are you going to start lecturing us about urban sprawl next?

Cal, I wrote the post. It was directed to people who aren't saving enough. If that was unclear, well, that's what I'm trying to correct now.

If you have enough money for a healthy retirement, emergency financial needs, and your current lifestyle, buy whatever you want. If you don't, well, then I think you should think hard before you spend money on eating out or travelling or anything else. I don't think that's some sort of crazy moralistic lecture. I'm not trying to tell people what they should consume; I'm trying to offer where I've found it's easiest to cut consumption. Food is far and away the easiest place in the budget to cut for most people.

Moreover, it's important precisely because many people who see their income cut back aren't saving enough. They slash their savings rate in order to maintain their old lifestyle, when their reduced income makes it more imperative than ever that they save, because they have a lot less wiggle room in their budget if something goes wrong.

"It was directed to people who aren't saving enough."

Your first post on the subject explicitly said "I've actually contemplated the possibility of writing a book on being downwardly mobile for people who, like me, found themselves in a career track that caused them to downshift their income expectations.....So here's the collected Jane Galt wisdom for people who are living on a tight budget."

Your second post said explicitly: "Rather, my point was that many of the things we consume don't make us that happy."

Is there a post or comment in between that I'm missing? Forgive me for hammering on this, but I want to be sure I'm not missing an extra post. If so, I do apologize. But if those are the two posts in question, I submit you aren't clarifying, but backpedaling.

Even using your current words, what exactly do you mean, "people who aren't saving enough"? "Enough" for you and your limited expectations is quite different from "enough" for a doctor with four kids he'd like to put through college. You can't decide what "enough" is. You were, at best, exhorting everyone to save *more*, and your reasons appear to be that you don't approve of what others choose to do instead of save at a rate you approve of.

To reiterate my previous point, shouldn't you also acknowledge that you are making and have made several very poor financial choices of your own that go well beyond $1400/year in Starbuck lattes? That would be far more honest than sneering at people who made better choices and don't mind Olive Garden.

I find it hard to imagine that the extra joy from a flat-panel vs. a CRT is really worth the tradeoff, but I am not against flat-panel televisions or big houses.

In the TV department, what we've found worth it is a $1000 DLP projector and a $100 120" screen. Much cheaper than a flat panel, much closer to the big screen movie experience, and the projector packs up into a little briefcase so you can throw it in the car and take it with you up to the...ahem...cottage ;)

Jane,

I think you're points are perfectly clear. I found nothing confusing or moralistic about them. If I could suggest one thing, however, I think we should all take a portion of our disposable income and chip in to buy Cal a life. Sheesh!

Just wanted to weigh in on Jane's Rorschach of a post. What I got from Jane was a reflection on how spending can make you happy and how it can be a consumerist trap, and it behooves us to examine ourselves and make adjustments to maximize our utility functions. I found her conclusions to be sound, and her illustrations to be just that - illustrations, not advice. In fact, I found it especially amusing because my wife and I genreally are much more frugal than we need to be, but we go out to eat, w/ and w/o the kids, A LOT. If things ever got tight, that would be the first thing to go (and when we were less well off, it was).

Personally, I recommend not having the biggest house you can afford, because (1) you'll spend even more money filling it up (or it'll look ridiculous), (2) being the biggest expense you have, not maxing it out allows for a lot of smaller indiscretions (or not), and (3) it's the most common, and most crippling, manner in which people buy into the "keeping up with the Joneses" mentality. It just is. So go ahead and do it if you want to, just examine your desires carefully.

And Jane, one place where people have you is that you choose to live in NYC. I don't begrudge you that, and I know it seves on subway time, but damn, girl. $$$$$.

Where ever you chose to live, live beneath your means. Retirement will get here for most of us and you will need to have planned for it. Yes, there are always some 35 or 47 year olds that die unexpectedly. But if you live for today, you'll be working when you are 75.

It worked for me, your mileage may vary. :-)

I find all of the vitriol that is being directed at Jane to be extremely bizzare. DRB? Cal? Why are your knickers in such a twist?

Stop it. You're being obnoxious. If you don't like to hear other people's opinions, then don't read blogs.

Sheila, if you don't like to hear people *respond* to other people's opinions, then don't read blogs that have a comments section.

Re: living in NYC -- my wife (a native of Queens) and I lived in a nice, affordable apartment (1,100 sq. ft., well-kept, in an elevator building close to the subway) in Astoria for several years in the '80s and early '90s. We had a friend, a very bright woman, who lived in a small (400 sq. ft.) 4th floor walkup in Chelsea, whose rent was almost exactly the same as ours. We would extol the virtues of our Astoria neighborhood and its proximity to Manhattan, but her response was always the same: "I didn't move from Coeur d'Alene, Idaho, to live in Queens." No, apparently she moved from Coeur d'Alene, Idaho, to live in a very small box up three flights of stairs with her bed in her kitchen.

Which is okay! To her, the important thing was to be in Manhattan. Her utility was location, not living space. Ours was different. She wouldn't have traded with us, we wouldn't have traded with her. My takeaway from the original post isn't that Grande Half-Caf Skim Milk Lattes with Extra Foam are intrinsically bad, but that one should focus his or her expenditures on what provides truly lasting personal satisfaction, not ephemeral, keeping-up-with-the-Joneses instant gratification.

I may be overstepping, but it appears that some commenters may not be seeing the forest for the trees.

Just wanted to weigh in on Jane's Rorschach of a post.

THERE is the word I was looking for. (The next best thing was a suggestion that some of Jane's more hostile interloctuers consume a ten-pound bag of dried fruit and then spend the next week on the can, and see if life improves thereafter.)

Frankly, Jane has posted good advice. And it is only advice. If the shoe truly does not fit, the solution is to not wear it, and go elsewhere to find one that fits better -- as opposed to complaining about the potential for aching feet and implying that the cobbler is trying to impinge upon your legitimate lifestyle choices.

"The reason I urge people to forgoe restaurant meals and big screen televisions rather than travel is that home cooking and CRTs are a much better substitute for them than mowing your lawn is for seeing the Champs Elysees, not because I think that travel is somehow a better or more elevated way to live."

Jane, many people would much rather slash travel than give up the flat-screen. Your dismissal of other people's utility functions is what is so obnoxious about your post and follow-up comments. What makes it even worse is that you try to present your personal preferences as if they are backed up by cold, impersonal logic (e.g. substitutability) that everyone should recognize as truth. Supporters of centralized economic planning everywhere dream that the world would be so, but alas it's not.

If you want some bogus impersonal logic around going with the flat-screen, fine: if they buy the flat screen instead of the CRT, city dwellers who live in tiny apartments can hang it on the wall, thereby freeing up space previously taken by the CRT. This effectively increases the usable square footage of the apartment. How are you going to increase the usable size of your apartment through travel?

Whoops, I forgot that people can't achieve any sustainable happiness through additional square footage. Never mind.

In all seriousness, the fact is that some people would prefer to get the flat screen and give up their planned trip to Cancun *just because that's what they prefer*. I don't know why, and you don't know why, but that's what they prefer.

On a different note, I do apologize about the "pissing and moaning" comment, that was over the top and uncalled for.

"If the shoe truly does not fit, the solution is to not wear it, and go elsewhere to find one that fits better."

Although your concession wasn't exactly gracious, I do accept that you concede the point to Jane's hostile interlocutors.

DRB:

Yes, point taken. I had the same thought seconds after I hit "Post". It was a stupid thing to say. I maintain, however, that the tone of your previous posts, and some others, seemed unnecessarily nasty ... which I see you have acknowledged.

I am just taken aback by the violent reaction to what is really pretty moderate, uncontroversial, though certainly good and sound, advice -- especially considering the fact that she addressed it to people "on a tight budget." I am surprised and confused by the offense that some have taken.

It seems to me as though you and others are attacking not merely the specifics of the opinions Jane expressed, but the fact that she gave voice to them at all. Which, I guess, is what prompted my ill-advised remark.

But perhaps I have taken the fact that some people are taking all of this too personally ... too personally!

"Don't buy a car, or a house, because you like what people will think of you for owning it. Do you really care about the opinions of people who judge you based on your material possessions?"

I still think this way, but have modified my views somewhat after getting a free upgrade on a rental car, and then discovering the effect it had on a B-school classmate who would barely talk to me previously. If you are in a high-end profession, you have to keep up appearances, it's sad to say. I say employ those status symbols as a tactic, and sparingly, but don't believe the hype yourself.

I think living in NYC or going to a high end school are worth it, in that both can help your career via the contacts you make.

A book I only mildly recommend is The Millionaire Next Door. The authors distinguish between finanical offense (earnings) and defense (frugality). They tend to be dismissive of the former, but you need both, in some sort of balance.

"Chicken Marsala"; faced with that, I'd eat at home too.

Jane, I tried cooking like Benihana at home. I nearly poked my girlfriend's eye out, and there's raw chicken all over the ceiling fan.

Andrew Ford;

"If I could suggest one thing, however, I think we should all take a portion of our disposable income and chip in to buy Cal a life. Sheesh!"

Where should I send the cheque??

Cheers,

RGT

PS- Jane; What do you think of the 'Silver Palate' cookbooks? I think they cover a range of skill levels, and are good fun as well.

RGT

The best advice I'd offer is to learn how to find the 'sweet spot' in the price/performance curve of the products you buy.

If you plot a curve of cost vs capability for any product, you'll find that it follows an exponential curve. A $20,000 car may be twice as 'good' as a $10,000 car, but a $40,000 car is probably not twice as good as the $20,000 one. And $80,000 doesn't get you all that much more.

This is especially true with electronics. If you stick with a computer that is one or two generations behind the 'state of the art', you'll spend maybe a third as much as the guy who has to have the best, and for 99% of the purposes most of us use a computer for, you'll barely notice the difference. A $5,000 stereo system can reproduce sound so well that the limiting factors are undoubtedly the room acoustics and your ears. But I know lots of people with modest incomes who have put themselves into debt to buy stereos worth ten times that amount. The difference in picture quality between a $2000 projector and a $20,000 projector is pretty small.

By carefully deciding how much you are willing to settle with, and choosing to stop when the price/value curve starts to slope dramatically up, you can live in comparative luxury on a middle class salary. But if you have to have the absolute best, you'll either have to shortchange yourself on something else or go into debt. And the best just isn't all that much better in absolute terms.

Avoid conspicuous consumption. A Prada handbag is not built 100 times better than a generic leather handbag.

Sheila, Jane is already up to her third front-page post on this subject and she's still earnestly insisting that her "advice" to cut flat-screen TVs before travel is based on something other than personal preference. Her obnoxious insistence that there's something fundamentally better about her personal utility function (at least on this issue) brings to mind a Soviet functionary defending the central plan. I can almost see her now at GUM, berating the peasants who want expensive, soft, cottony toilet paper. After all, the scratchy stuff with the occasional wood chip is cheaper and it gets the job done just fine.

Her insistence that people start cooking for themselves is also perplexing, especially from someone who continues to pay for a gym membership. Last time I checked, using the streets, sidewalks, stairwells and parks of NYC for cardio was absolutely free. Every playground had a chinup bar, and the marginal cost of doing pushups, situps, and deep knee bends on your apartment floor was exactly zero. But hey, Jane Galt likes to cook, so anyone who wants to save money needs to start by not eating out so much. I guess you shouldn't start working out for free until you're really desperate.

I'm sorry, but the whole thing struck me as very holier-than-thou and it rubbed me the wrong way. Jane's advice to only spend on the things you really value was very good. Her decision to start lecturing folks on what exactly they should really value was, well, not so good.

It wasn't even the belittlement of other people's specific choices that set me off, so much as the pat assumption that those choices are motivated mainly by a desire for status display. Why are so many people so quick to assume this?

I'm guessing Jane's too tall for those playground chin-up bars.

I took Jane's advice to be "save money, then pick what really matters to you."

Not that it's all that applicable to my situation - for me, saving is kind of pointless. My income goes a long way, in China. In dollars, it's a pittance. But I did make my choice - I live in an interesting place, I do something reasonably useful, and I get to see China without having to fly for sixteen hours.

Rather, my point was that many of the things we consume don't make us that happy.

That really is a great point. Save your money for the things that give you *real* pleasure. A lot of money is wasted on convenience rather than true pleasure. There's nothing wrong with saving time and effort, and I guess the discipline required takes a deeper understanding of the self to really achieve. It's something that I'm working on, but it's not as simple as pinching pennies and denying the self. It's about honestly analyzing the return in happiness that our purchases recieve, instead of living mindlessly.

What playground are you going to? Jane may be tall, but she's not that tall.

If Jane had limited her advice to "save money, then pick what really matters to you" there would have been no issue. Instead, her advice was "save money, then pick what really matters to you so long as it isn't flat screen TVs, cars, eating out, or more living space."

No, DRB, that wasn't what I was saying. I was just pointing out that these things have costs, and for many people may not net them extra long term happiness. I'm not judging anyone's decision to buy, or not to buy, a flat panel television or a huge house. I'm just inviting them to think hard before they buy it about whether the purchase is something that will bring them long term pleasure, or is simply something they're buying for the temporary high of owning a new toy. I'm afraid I don't understand your dogged insistence in putting the nastiest possible interpretation on my writing, when I know you're a long-term reader, and I don't think you could fairly say that I generally display the snobbish New York "my purchases are better than your purchases" mentality. Indeed, with things like my posts on smart growth, I've actively fought against it, as I try to in my every day life, where I piss off my friends to no end arguing that SUVs and new houses in the suburbs are not actually the work of the devil.

I'm offering advice on how I find it easy to save money. No one is under any obligation to follow that advice, nor am I planning to push into their homes, tut-tutting over their budget choices. Obviously this is somewhat subjective, but I'm not offering my choices as morally superior; only saying that this is where I've found it to be easiest.

Why do I assume that most of people's choices are motivated mainly by status display? Well, I don't; we buy things for all sorts of reasons. But status is high among them. Would you buy a car that drove like a new BMW, and was furnished like a new BMW, but looked on the outside like a 1986 Nissan Sentra? I might, but not at BMW prices. I know that there are labels of clothes that I have shunned not because I don't like the clothes, but because they were prominently labeled with a brand not generally consumed by my demographic. I'm not proud of this, but there you are. We are primates, and we do buy our houses, cars, clothes, and other things very much with the thought of how we will look to others consuming them.

Then there are other items that I consume without any regard to what others will think, such as computers and telephones. But there I often find myself tempted by the lure of owning an expensive new toy, independant of the added utility that buying a higher-end model will actually bring me. That fades quickly, and there are often other things I'd rather be able use the money on after it does. It takes mental discipline to avoid falling into either trap; I'm certainly not perfect in this regard, but I'm working on it, precisely because I recognize that I'd be happier if I did.

Would you buy a car that drove like a new BMW, and was furnished like a new BMW, but looked on the outside like a 1986 Nissan Sentra?

Suppose I answer "No"; how do you know it's because the BMW badge impresses the neighbors, and not because I simply enjoy having something that looks better than an '86 Sentra? [Prof. Kirke]It's all there in Postrel. Dear me, what do they teach them in these schools?[/Prof. Kirke]

When Megan McArdle dared blog about spendin',
Comments were rude, an' the debates neverendin'.
An' e'en with her mind and might,
She couldna win the fight.
Aye, some posters are beyond comprehendin'.

I dimly remember being 6'2", and IIRC the chinup bars were too low. I could be mistaken, of course, and to answer your question, Chinese playgrounds.

I'm not sure where your hostility comes from on this. I'd buy a big-ass flat-screen TV in a heartbeat, if I were working in the US (I'd certainly more than I'd enjoy a mixer, or a BMW). I'm not about to start cooking my own food from scratch, and I like Benihana. It's advice, not orders, and it's pretty clear that it's not for everyone.

I love these neverending dustups. Keep me from working too hard, and getting promoted, making more money and buying stuff I don't need. Thanks to you all.

Jane, I am indeed a long time reader, I usually agree with what you write, and I have no desire to put the nastiest possible interpretation on what you are saying. But in my opinion, your advice in the 3 posts on this topic plus the follow-ups you made in the comments have not been as free of moralizing about people's utility functions as you believe (though I suspect this is unintentional). And because you normally don't get into judging people's utility functions, I was surprised and it rubbed me the wrong way. I don't mean to fuss at you and I apologize for being ungracious.

a propos of nothing, the reason that I belong to a gym is that I have hip and shoulder injuries which preclude free-lifting, chinups, or running; I can only work out on a low-impact machine like an elliptical glider, or with controlled weight machines that don't stress my joints the way free weights do. I'm well aware that I could save money by dropping it, but it's the only way I can get my heart rate up to an acceptable level.

Good explanation about the gym. One lesson we can all take away from this is that substitutes tend to look closer to each other when viewed from a distance. I wouldn't be at all surprised to learn that the difference between having a zester and making do with whatever the hell you use instead of a zester is bigger than I think it is. For others, the difference between a smaller house and a bigger house is closer and looms larger accordingly. Second-guess them at your peril!

Wow. I'm new to this site, but have enjoyed it quite a bit. I was a bit surprised by the venom regarding Jane's alleged moralism. Yes, she was using examples from her life and yes, she was strongly stating her preferences. Her examples don't make sense otherwise. The food example, which irritated some, struck a cord with me because I learned to cook when I realized that there's a lot of mediocre mid-priced food out there. Maybe she didn't say it, but the idea is that you should find the things in your own life that meeting the following criteria: there is a large price difference between purchased good (restaurants) and its closest substitute (home cookin') and (utils(substitute) - utils(purchased) is positive or close to zero). Relax: no one's telling you to go to Italy or to stop drinking coffee.

Jane -
Who told you that your injuries preclude the use of free weights and require you to use weight machines? I am rather skeptical, as except in unusual cases weight machines can be *harder* on the joints. They force you to move in a fixed plane of motion, unlike free weights which allow you to move in a more natural manner.
If a physician told you, a second opinion might be in order. If a gym trainer told you, a second opinion would **definitely** be in order. It is ridiculously easy to get certified as a personal trainer and many of them know next to nothing.

Sigh. Okay d-t, one last time.

You said this: "No one's telling you to go to Italy or to stop drinking coffee."

Jane said this: "If someone proposed to give you a Starbucks a day for a year if you paid them $1400 on January 1st, would you take them up on this offer? I don't know about you, but that's a sizeable chunk of my income to be devoting to coffee. Yet that's what you'll spend over a year's time, if you buy an average Starbucks once a day, at least in my neck of the woods. Might be better to drink the free stuff your office provides, and put that money into something that really will give you joy, like a trip to Italy, or a great restaurant meal, or making yourself more financially secure." Emphasis mine.

Now, *in my opinion* that sounds like someone telling me I should stop drinking Starbuck's coffee and go to Italy instead.

But that's just my opinion of what it sounds like. If you don't agree with it, relax, it's just my opinion. Go eat some prunes if you feel like arguing about it.

Which part of "I don't know about you" is perplexing?

Okay, my last reponse was lazy and wrong. (Sorry, I'm at work.) The real point is that Jane says, as you point out, "put that money into something that really will give you joy, like a trip to Italy, or a great restaurant meal, or making yourself more financially secure." That will really give YOU joy. Then she gives her examples. The only reason she even gives examples is to show that what will give you joy might include something some see as frivolous (going our for a greta meal) or somethind doesn't involve spending (saving for security).

And please don't do that *sigh* thing unless you're a 12 year old, in which case you have one more year of it.

Although your concession wasn't exactly gracious, I do accept that you concede the point to Jane's hostile interlocutors.

I conceded nothing, so unless you were, by means of irony, trying to imply something about Jane's more hostile interlocutors, well, then apparently one of the shoes *I* put forth found a perfect match.

Frankly, your tone was...well, it almost defies description, but the closest I can attempt is to a high school sophomore who stumbles upon his secret crush french-kissing his mortal enemy, the school's a/v club president, behind the gym mats. (The mixed disbelief and anger, the wounded pride, the morality lecturing...) I mean, come on now -- it's the Internet. Unless you and our hostess have some sort of offline relationship to which the rest of us are not yet privy, you possibly need to spend LESS time on the Internet.

But that's only advice, you realize.

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