Being Played

A Grudge Purchase is something you feel you have to buy, rather than something you want to buy. When you do your planning of how to spend your income, Discretionary Spending is what you do with what is left over after your needs are met. Clearly not everyone considers the same things either reasonable, necessary, desirable, or pleasurable. Often the best place to learn about financial planning is not from people with twice as much as you, but from people with half as much who still seem to come away with something extra. The delusion we have is that more coming in solves the problem. What really controls the financial waves is the relationship between what comes in, what goes out, and how much autonomy you have over the difference. That is the difference between playing and being played.

Have your Cake

I have always struggled with the concept of “covering reasonable expenses”. Reasonable is in the eye of the beholder. Even if people are told to “spend roughly what they would have spent on themselves” anyway. I am a cheap bastard most of the time. Spending money is firing money. One of the best magic tricks of Capitalism is to convince people that it is better to “have their cake, but not eat it”. Then, instead of cake, they get a number that grows. Many of the super wealthy we look at are super wealthy “on paper”. They fire (draw salaries to spend) at different rates. Another rule of thumb for reasonable is “think like an owner”. But an owner knows not eating their cake means it gets bigger. An employee isn’t an owner. So expenses are often considered part of the remuneration. If you want to see entitlement, don’t look towards the poor. Look towards senior management. Actions normally follow incentives. Reasonable completely depends on how you look at the world and what drives you.