(Guest Post by Barbara “Babs” Wagner – author of last week’s “what old people know” post. I liked her stuff so much I thought I’d post up another one! And plus, I’m out at USAA’s headquarters today getting my learn on ;) Let me know if you wanna see more of her? Maybe she’ll get a weekly thing?)
I’m a bit confused by some news I heard lately. Although the economy remains in the tank, there’s a bright spot called “aspirational spending.” If you’ve never heard this term, it’s when you make expensive purchases to match the lifestyle you want to be living, instead of the life you’re actually living. (Thanks Katy at TheNonConsumerAdvocate.com for this definition.) Apparently, businesses like Tiffany’s, Coach, Movado, Sam Adams Beer, and Abercrombie & Fitch are raking in profits like drug dealers, despite general consumer disinterest in spending. Turns out, there are a lot of people that aspire to the good life even in the worst of circumstances. Or in the case of the cast of Jersey Shore, some people who just aspire to the worst of behavior and call it the good life. But I digress.
All I can say is, “you go girl/boy, spend that money and get the economy moving.” Woop Woop! I totally believe in the power of corporate greed to improve our lives. If Tiffany’s is selling more rocks, they’ll hire more non-union, minimum wage rocksellers, and everybody wins. I’m definitely not one to stand in judgment of the spending habits of others: when it comes to aspirational spenders, it’s not a choice – they were born that way. (Before I forget, I must point out that I’m neither endorsing nor hating any of the aforementioned brands. Wouldn’t dream of it; they all have high-dollar lawyers on retainer.)
But some folks aren’t on board with economic prosperity through aspirational spending. Google “photos of Bill and Melinda Gates” and take a look. Their clothes are pretty understated (I’m being kind, they’re just plain dull). They aren’t wearing current fashion; they might have bought their clothes this year or 10 years ago. They might have stolen them from their grandparents. Get out your magnifying glass—not a single recognizable label on anything. Melinda’s not rocking the Dolce and Gabana logo on her handbag, and Bill’s old-guy polo shirts are completely free of polo ponies. And you won’t find even a tiny bit of bling on either of them. Didn’t they get the memo on how rich people are supposed to look?
Here’s what their lack of conspicuous consumption is telling the world:
- They’ve decided to let their deeds do the talking, not their purchases. Risky move. No one will ever notice how rich they are if they keep dressing like the homeless and giving away billions.
- They’re not gracious enough to provide free advertising for other businesses by wearing their labels. I guess Bill figures nobody advertises Microsoft for free, why should he and Mel be stooges for Tommy Hilfiger?
- They’re unwilling to go along with the herd, and insist on defining “the good life” in their own way. Good luck with that. I seem to recall Bill left the herd at Harvard to start a little computer business. Look where that got him.
True story: several years ago in Vegas, a guy was teasing me about a souvenir t-shirt I purchased. I responded that it wasn’t just a cheesy souvenir, it was a nifty addition to my wardrobe. T-shirts are cheap, durable, and you can wear them with any ensemble ($5 bucks to any straight guy who can say ensemble with a straight face and really mean it. Pay the man J$). After a hard day of wear there’s no need to rush to the laundry, just throw them in your gym bag and “recycle” them as workout wear. They also double as sleepwear and they make excellent rags when you’re finally tired of them. That’s a lot for very little coin. He was unimpressed by my pitch. Then I mentioned I’d read The Millionaire Next Door, enjoying the part about millionaires not spending money on appearances, and I’d been inspired to go through life in cheap clothes while laughing to myself because I was a millionaire. Wishing to be honest, I explained I only had half of the million, but I still enjoyed this little joke with myself. Shut him right up.
I’m really not a braggart, but the conversation had started off stupidly. This guy had lost two grand at a casino the night before. He was bragging that he’d been doing so much high-stakes gambling, they comp’d his room and meals and he was living large. No kidding! Only the really wealthy pay two grand a night for a standard hotel room and a pass through the buffet. He was truly ass-pirational! I should have kept my mouth shut but I felt bad after hearing his tale, what with having to pay $79 for my room and the $500K thing.
Try it yourself: the next time you choose to do something economical, like buying your wedding dress at Goodwill, tell yourself it’s aspirational spending. You might find it mildly amusing. Even better, tell others you’re living like fellow millionaires B & M, and let them wonder. It’s no one’s business whether you actually have the million or not, what’s important is that your stuff looks the part.
Guest post by Barbara “Babs” Wagner – a former poster child for financial misadventure, who learned most of what she knows the hard way. She has a degree in business and has studied personal finance, most of which she now ignores. Her mission is to poke fun at conventional wisdom, keep money subservient to her values, and inspire others to learn from her mistakes.
(Photo by @Saigon)
Featured savings tip
You already know that banks pay $$$ for the privilege of holding your money…it’s called interest. But maybe you didn’t know this: that so-called interest can be as little as .01%. If your cash savings aren’t sitting in a high interest savings account that earns you at least 1%, you’re basically saying “no” to free $$$!
Now, obviously the 1% interest you get with a high interest savings account like the one at Discover bank won’t make you rich, but that extra 1% compounded over 30 years can grow into a *big* pile of cash. And if you wanna hit lofty $$$ goals, you should be looking for every edge possible.
Here’s another way to look at it: if you leave $50,000 in a regular savings account, that’s almost $500 you’re just throwing away, each and every year you don't setup a high yield savings account! Will you do 5-10 minutes of work right now to earn an extra $500/year for years to come?
If you said “heck yes”, then you can setup your high interest savings account here to start earning 1% on your cash savings.