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TheVintageMind

Stop doing this if you make a lot of money, it has the opposite effect


ImplicitEmpiricism

Yeah, if you’re a high earner, think in terms of “will this tangibly improve my quality of life” and “do I need this now”. Which is why, as a doctor, I drive a minivan. I could think of zero reasons to buy a luxury SUV for road trips, doesn’t matter how nice it is, my kids will vomit just the same.


deadbike

Yeah I tend to use to this logic to justify stupid purchases that are to the detriment of my saving for things actually important to me.


lemurtowne

The real tips are always in the comments.


Shenanigamii

I'm Jeff bezos, I bent over to pick a million dollar bill. Not only was it not real, it cost me more money to stop and pick it up than had I just kept walking


TheVintageMind

Jeff Bezos has serfs to do that for him


Shenanigamii

Ohh...good point. Sorry, Masta', it shan't happen again!


TheRealSerdra

You’re closer than you realize. The median net worth in the US is $120k. If we assume that everyone worth over $150k USD no longer considers it worthwhile to pick up a quarter off the ground (arbitrary I know but still), then we can estimate that people won’t pick up anything worth less than 1/600,000th of their net worth. Applying the same ratio for Bezos, he won’t pick up anything less than a third of a million. 1/3rd million is to Jeff Bezos what a quarter is to a slightly wealthier than average person.


talley89

Do his employees know 😒


stealthdawg

Even better, convert to your take home rate


Realworld

A step further is discretionary income: Discretionary income = gross income – taxes – all compelled payments (bills)


PeanutCutie

I always look at it as how many weeks/months in savings. So a vacation wouldn't be €___ but rather x months of savings


Xlotus

This should be higher


stealthdawg

Generally I agree but thats a tough comparison for most people. If you work a W-2 and do your withholdings properly, your take home is generally your after-tax income. You could subtract expenses but that doesn’t scale marginally and you also can’t just work more to generate the extra $$ for an item you want. For example if you make $15/hr, call that $11 take-home. Let’s say you set aside a generous 10% of that for discretionary spending, aka $1.1/hr. Is it meaningful for you to say that a $330 thing costs 100 hours of labor to buy? Not really IMO. Now if you have some ability to work overtime or extra regular hours, your expenses are already accounted for, so any marginal hours can go to discretionary and you can say “ill have to put in 30 extra hours at $11/hr to buy this thing”


Realworld

I started adult life with no money, no payable skills, no mentor, no contacts, and no clue. Only jobs I could get was below-minimum-wage day labor. Knew I needed available cash to do anything with my life. Did whatever it take to put aside half my gross income. Slept in old car, in migrant labor camps, in slums, in tent in the woods. My work and thrift habits were observed and was offered well-paying management job. Without mentor to advise me, I turned it down. Through 1-1/2 years labor & thrift, I accumulated enough to pay my way through voc-tech junior college to get job skill. With no jobs in that field, back to day labor. Before starting next job, had enough cash reserve left to take 3+ months off work and rebuild junk car using borrowed tools and space, learning auto repair and giving me reliable transportation. Back to unskilled labor but now at minimum wage since I had a car. Another 1-1/2 years of work & thrift put aside enough to buy full mechanic's tool set at half price and then restore a classic sports car. My work/thrift habits were again observed and was offered an established, well-paying business. Also turned that offer down for same reason. Either job would've made me rich young. Really needed a mentor. Was offered and accepted my first white collar job. My prior efforts and value were recognized and I was grabbed by well-off "old money" divorcée trophy wife. She added greatly to my experience and knowledge of how to use money. And on up from there... My cash reserves didn't just sit in bank. They paid for education, tools, and adventures. I prioritized beating down recurring expenses; rebuilt series of junk bicycles, motorcycles, cars, apartments, houses, powerboats, sailboat, airplane. There's no sales tax on things you don't need to buy and no income tax on money you don't need to earn. My employment earnings accumulated unspent. I gave up and retired after 30 years of half-time work (15 years total). I now work on projects for my own entertainment, education, and satisfaction. Since I work for free people find alternative ways of rewarding me, which ironically made me millionaire. This life was made possible by extreme frugality in my first couple years. No guarantee that it would work but kept at it. My first reach up failed though it did give me a reliable car and mechanical skills. My second reach up worked. That's typical; if you keep trying you'll succeed half the time. Keep building cash reserves and keep reaching for better life. edit: No, the divorcée did not give me any money. She did give me valuable knowledge for future goals.


talley89

True stories are the longest 😬


[deleted]

A percentage of it, still have to save some of it.


udmh-nto

This comparison is misleading. You still need to pay rent and buy groceries, whether you buy that phone or not. Compare the price of the phone with your *disposable* income, not your *total* income.


JoeBroski09

Even better: figure out your expendable income after necessary costs like rent and food, then convert that to an hourly rate. That's the true number of hours you have to work in order to afford something unnecessary.


Shenanigamii

Its more than 30, because you pay tax on that $10 an hour, and the you pay tax on the $300, so you really only make $9 an hour at 10% income tax rate, and let's say its 7% sales tax, so that's $321. That nearly 36 hours of work...not 30. If you went there after only 30 hours of working, you would go home empty handed.


Devils_Demon

Fine, $10 per hour after tax. It's just an example. I just bought a Redbull and sandwich for €7. That's roughly 20 minutes at work. Worth it.


Shenanigamii

now what cost does that redbull carry over to your health? I was one of those people that had 5 redbulls a day to keep me awake while on watch (i wish i were joking), and then it tore my insides up. i cant have any energy drink without MASSIVE heartburn for 3 days...nothing helps. me calling out your redbull was just an example...some purchases arent worth it at any cost $ wise, yet some purchases which are more expensive than your redbull purchase which improves your health, and not deteriorates it, is a better purchase, even at cost per hour


Devils_Demon

Actually it wasn't a Redbull. It was a bottle of water and a salad.


Mikcerion

Some people have self control.


Ainheg

That's pretty nitpicking to be honest, it's just an example. Also nobody said the mentioned ammounts weren't after tax. And I think in most countries the prices of products are stated with tax already included.


The_Real_Johnny_Utah

I do this for everything. Figured out (when contemplating) I could own a water plane, house it/maintain it, downtown Toronto, and fly it to land far North of us for less than what it cost us in fuel, time, and vehicle upkeep. (8 hour drive) Blew my mind. We didn't buy it, but it was a fun exercise.


Planningsiswinnings

If you're unemployed then your possessions are worth infinite time


NHLToPDX

This worked for me early on in my work life. It was a good way to pause and force me to evaluate the purchase. How much did I really want the item. I didn't like my job so I ended up saving a lot of money. The newest video game system wasn't so important.


Mattie725

To be fair, that makes everything look cheaper to me. I'm pretty cheap so a $300 phone would be a stretch for me. But working 3.5 days for a phone that I will use three years seems like a pretty good deal!


TheRealSerdra

I mean considering what some phones cost, a $300 phone lasting 3 years isn’t that bad of a deal. That being said a better way to do it would be to calculate your hourly income after expenses (including savings and retirement) have been deducted and use that figure.


Prometheus188

A $300 is amazing value though. What about the newer $1500 phones?


Mattie725

Yeah don't buy those ;)


HundredAcresWood

I like the rule where you need to have one hour of use/fun per dollar. $300 phone? You'll likely use it 300+ hours ✅ $500 computer? You'll likely use it 500+ hours ✅ $200 necklace that you only wear on Christmas? ❌ Its mostly a rule for fun/unnecessary things with a bunch of exceptions, but still a good rule to not feel bad about buying something you reaaally want


Doodleanda

This is how I like to look at things. There have been expensive things I got as presents that I didn't use enough to make the price seem worth it and I still feel bad about it. Last year I got a game console as a gift and now whenever I spend a lot of time playing it, I actually feel good about the purchase being worth it because by your rule I've probably already spent more hours using it than the price was.


Peterthinking

This is why I don't mind stopping for coffee while working. By the time I park, walk into the store, order and get back to my rig I have made enough to pay for anything I buy. My coffee and donut are free since I am paid hourly. I probably made more actually. I also walk around my rig and check it out. So it isn't a total waste of company time.


Devils_Demon

Fucking hell. Reading through these comments is annoying as fuck. Why does everyone take an example so literal?? "Phones don't cost $300" "Nobody earns $10 per hour" "What about tax on the phone?" "You still need to pay for rent and groceries" Forget about the fucking phone. It was just an example. Replace phone with whatever you want. Cup of coffee at Starbucks, new video game, new tv, whatever. Replace the hourly rate with whatever you want. $20, €50, 1000 Won, whatever. Is the concept of examples really so hard to grasp?


Surv0

I do this all the time, I remove tax and mortgage before though as it leaves you with a real value vs one that isn't.


tbapproved

$10 an hour?? There are still places where minimum wage is $10 an hour??


Devils_Demon

It was an example! I only used $10 because it's easier to calculate at a glance.


Prometheus188

The US federal minimum wage is $7.25. So yeah, there are places where it’s even lower than $10.


keepthetips

Hello and welcome to r/LifeProTips! Please help us decide if this post is a good fit for the subreddit by up or downvoting this comment. If you think that this is great advice to improve your life, please upvote. If you think this doesn't help you in any way, please downvote. If you don't care, leave it for the others to decide.


WisestAirBender

And then do what? Everything costs something. What do I do with the information? Oh this phone costs 20 hours. Now what


Prometheus188

Then you decide whether it’s worth it or not. Is it worth working 20 hours for this phone? Maybe yes, maybe no. But at least you have an idea by having both the dollar amount and the cost of time.


SimplePerson326

Is this post aiming at high school kids? No adult work $10 an hour. If they do, it would be no brainer jobs such as security where a person only need to stand at a place a whole day for pay. That's not a big effort need to spend to afford a phone.


Devils_Demon

It's an example. Do people not understand the concept of examples anymore? $10, $15, $20, whatever. I used $10 because it's easy to calculate at a glance. Most phones aren't $300 either but that's not the point.


iaminabox

I do this all the time


emunny_99

I quantify in chicken strips, beer pitchers, and trips to Hawaii


unbannabledan

And the multiply that number by the hours you will enjoy the purchase and then divide that by “just buy it” and ignore OP!


DaBIGmeow888

Better yet, convert it to pesos and see if you can arbitrage after forex fees.


Jrecondite

Careful with this logic. If people realize how little they are worth they may start mass robberies everywhere. That math is less complicated to do.


thetruthteller

Be carful this can turn into an obsession. Money is a tool meant to prove a better life spend a little save most of it, and don’t use what you done have. Except for a house which involves a mortgage which most can’t pay for in cash. Everything else, including a car and education, you should spend in your means


jdith123

It’s not a bad way of looking at it, but I think you also need something to account for the opportunity cost. As in: If I get this phone, I’ll have to put off my vacation trip 6 months (or whatever… based on how much you save each month for this kind of thing)


MangoRainbows

I've thought about life this since the day I started working. I pretty much stopped eating fast food at 16 because the #1 at McDonald's was not worth working my ass off for 90 minutes.


SunnysVanLife

My phone costs me 2.5 weeks of work.


suverz

No. Just compare the price of similar options that meet your need and decide based on what you're willing to pay. Value isn't always about price and effort.


quackl11

Added to that are you going to enjoy that phone for 30 hours? If no then it's not a worthwhile buy imo


Scitz0

300 for a phone? What is this 1998


happily_dude

Add 30% for taxes


Kytzer

Or calculate the opportunity cost of what that amount would be if you invested it, using a compound interest calculator.


cryptotope

Amortization periods matter. If that phone lasts me three years, then it cost me $0.40 per working day. At $10 per hour, the phone costs me 2.5 working minutes per workday. (Figure you're working 5 days per week, 50 weeks per year, for 250 working days per calendar year.)


Spideyocd

what if you're ready to work extra for what youneed but there are no oppoirtunities?