I never benefit from those generic advice segments. You know the kind that say “Save $7000 in a year with our 10 simple tips” because I inevitably don’t spend money on the useless things they recommend cutting back on in the first place. Cut back my daily paper delivery, magazine subscriptions, maid service, ultimate cable subscriptions, expensive cell phone plans, third car and rampant credit card debt… uh, ok. My answer to most of these items is ‘not applicable’ except for one thing – I like to eat my lunch in a restaurant. And, in case anyone’s asking, no I won’t save for retirement by cutting back on eating out for lunch. I expect to earn less when I retire and there’s no way I’m going to stop working if I can’t even afford lunch now.
It’s easy to mock the concept that is sometimes dubbed the ‘latte factor’ which goes something like this – if you saved up that $5 a day you spent on fancy coffees every morning before work for the next 40 years, it would add up to a whole lot of money you could use to retire early. Of course,if you retire early, then you’re not working for the full 40 years and where are the savings supposed to come from?… ah well, I did promise I wasn’t going to mock the concept, right?
I know, I know. The whole idea of these things is to realize that small amounts of money add up over time, but I think that you need to get a grasp on the extent of your challenges before you start problem-solving . If you’ve got big crises looming over you, it’s ridiculous to only think in these David and Goliath terms. You can’t rely on consistently making a decision 14,600 times over the next 40 years in order to save for a vital economic transition. It’s a set up for failure. It’s like making diet plans to lose a hundred pounds by spitting out a single bite of your donut each day. Sure, sure, every bit helps. But you might want to look at the bigger problem because if you’re in a crisis then the odds are good that there are bigger problems out there. Crises are also immediate in nature, so if you need to make changes, they need to be big and fast. Don’t get bogged down with the cheap, quick fixes that won’t amount to a hill of coffee beans before your situation goes from bad to worse. Read the rest of this entry »