One problem I have with most existing personal finance blogs is the fascination with small stuff. Many of these blogs create top 5, 10, 20,100 lists by the truckload in order to rank highly on Digg, Reddit and other social bookmarking sites.
The problem is these blogs usually don’t have enough content to fill these lists. They almost always have a top 20 ways to save money that really should be a top 3 ways to save money. You see they run out of ideas so they start nitpicking the small stuff in order to fill out their lists.
I came across one example earlier this week that I wanted to share. On the blog dumblittleman.com, the author wrote what I thought would be a promising article on a ninety percent rule.
While I agree with the premise of the article the problem arises in his list of positive changes. Point number one is great, number three is great but number two is rather ridiculous. It’s called “Mind Your Utilities.” I’m sorry but if your problem involves your utility expenses you need to run not walk to the nearest employment office. If your having problems with your utilities then you are probably disabled, elderly or in some other condition that prevents you from earning a living. Believe me these people and these conditions exist, but if you’re able to operate a computer and read this site you can probably earn a living somewhere and somehow.
This latest example of “small stuff” is just one of many. Personal finance blogs can do so much to educate the browsing public it’s almost a disservice to list something as silly as utilities.
I’m a big believer in the philosophy: Worry about the big things, the small things will take care of themselves. What you tend to realize is that almost everything can be a small thing, IF you live your life right. What do I mean by that?
You should only purchase a home if you have enough capital (money) to afford a down payment and have enough for a healthy reserve fund in case the furnace goes out in the middle of winter. This actually happened to me when I bought my house. Right as we were moving in the furnace went out. Luckily we hadn’t closed yet and the furnace cost was split between us, the realtors and the sellers. We did have an inspection but it turns out the owner of the heating and cooling company that inspected the furnace was a buddy of the owner and let’s just say the inspection was “very questionable.”
Buying a house is big stuff. Utility bills are small things. Buying a used vehicle is a big thing. Buying a new hybrid automobile at a premium is ridiculous because gas money should be a small thing.
I’m constantly reminded every day of how well this philosophy works. Every time I talk to someone who can’t unload their house in down real estate marker (I personally know 3 people like this) I feel very fortunate that I bought a recession proof house. What’s a recession proof house? It’s a house on the mid to low end of the market that will at least sell for its purchase price no matter what. People always need places to live. They don’t always need a 4 stall garage but they always need a bedroom, a bathroom and at least a single garage.
In terms of retirement savings, I firmly believe that you are much better off with a 60/30/10 mix of a whole market index fund, a whole market foreign index fund and a bond index fund. Start with the big stuff like the correct asset allocation then worry about picking individual stocks. I personally don’t even watch the markets. I’m far too busy with a family, my job and my projects (like this site) to worry about the market. With a combination of dollar cost averaging, I can be fairly sure I’m going to be alright in the long run.
Houses, cars, retirement and kids are the “big stuff.” Everything else is small stuff. I don’t care of worry if I go out to eat 4 times a week or not. I don’t care if someone turns the furnace up to 70 degrees (Fahrenheit) in the winter. That’s small stuff. I’ve saved so much money on the big stuff that the small stuff just doesn’t matter enough to worry me.
So in the end how do you want to live your life? Do you want to worry if you can afford to order a beer with your meal because you house has drained your financial life blood. Or are you willing to accept a used car and a reasonably sized house in exchange for a care free lifestyle. When you’re old and gray and you look back on your life, will you see a life full of joy or a life consumed by stress? In the end the choice was (and is) yours and yours alone.
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Comments
2 Comments so far
I agree, while the aggregated savings from the "small stuff" can be suprising, it pales in comparison to savings you can achieve when making some of the bigger decisions in life.
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