For the next few months on this blog, I’ll be hosting an informal book club devoted to All the Money in the World. I’ll go through one chapter a week, and will link back to earlier posts so you can start whenever you pick up the book. Last week, we looked at the introduction, and talked about what an observer would discern of your values by looking at your finances.
This week we’ll look at Chapter 1: What Else Could That Ring Buy? While I spend a chunk of the chapter talking about wedding spending (hence the title), that’s really just a way to get at the idea of opportunity cost. Money is completely fungible. A dollar spent on one thing could always be spent on something else. We tend to view certain amounts of spending as “normal” — spending $5000 on a ring is normal; spending $5000 on outsourcing your laundry is profligate — but the beauty of a fungible entity is that you don’t need to view it in context. A diamond ring and never having to do your laundry again could conceivably cost the exact same amount. Which would make you happier? There’s no right answer, but it is a legitimate question.
Last week, we looked at the big picture. So here’s this week’s primary question: looking at the smaller, discretionary expenses in life, what do you spend a lot more on than a “normal” person would? And what do you spend a lot less on than normal? Why have you made these decisions?
And a bonus question: About half of people (according to one poll) feel underpaid. About 47% feel fairly paid, and the rest — a very tiny sliver! — feel overpaid. Which category do you fall in? Why? And if you fall in the underpaid category, what do you think you could do about it?
My answers: I spend less on casual restaurant food than most people. Since I’m not commuting, and not in an office, there’s no cafeteria fare, or Starbucks near the subway stop. There’s not a question of packing my lunch or not. So unless I’m traveling, I don’t go out for convenience. When I go out to eat, there’s usually a festive reason: meeting a friend for lunch, date night, a party. That may be why I like eating out so much!
I splurge on nice notebooks, especially for my journals. I’ve kept a hand-written journal for decades. Literally, two decades now. When I started, I used a notebook with dates to build the habit. In high school and college I used wire notebooks (like school notebooks). Then, around 2002 or 2003 I started buying nice cloth ones or nice leather ones, and haven’t gone back. $20 is a lot for a little notebook, but I really like to write on nice things, even if my words are occasionally inane (if any historians wade through my journals, let’s just say they’ll have a lot of wading to do).
Earning: I feel underpaid. Not for a writer — I feel like I’m doing fine as a writer. I’ve more been thinking about the comparison with other fields. Some things tend to be rewarded more than others. You could be among the top 1% of poets in the English language, and still not earn as much as a really mediocre investment banker. What can I do about that? I go back and forth. I may explore setting earning targets for myself this year. Part of me wants to just focus on building the brand but I as long as I set minimum guidelines (the money has to come from bylined articles in major publications), higher earnings also correlate with getting my name out there more. The more stuff you throw against the wall, the more likely something is to stick.
Please share your answers in the comments!
Links to past weeks:
17 thoughts on “ATM Book Club Week 2: Chapter 1”
Ooh, interesting questions, and I’ll have to add your book to my vacation reading list (long plane trip + hopefully sleepy toddler).
Lately I have gotten ridiculous about my Starbucks spending – I go there once a day, nearly every day. And it’s not for the caffeine fix. I think since I gave up sugar, it’s a more sneaky way to get that “treat”. And it’s so easy for something indulgent like that to become a habit, esp. when they are convenient enough to have drive-through so I don’t even need to get out of the car/unbuckle the kid, etc. I signed up for their Rewards program and have earned 3 free drinks this year already, which means I’ve been there at least 45 times (!).
Also, I spend WAY more $ on craft supplies than “normal” people and it’s way more than I *need*. I just love having them. It’s almost like a collection. I do use them, but not at the rate I’m buying them. I’m sure there’s some deep psychological thing going on there, too 🙂
Also, I feel overpaid (or maybe just lucky to have such a great job!) I’m good at it, and it is *so* much easier than anything I studied in college, so I feel like it’s crazy that I get paid to do something easy and fun. But I guess that’s the definition of a good situation. Add to that my flexible part-time schedule, and life is pretty good.
@ARC- congrats on being in the lucky 3% who feel overpaid! That’s great that part-time work has remained lucrative for you. Looking at the statistics, it often isn’t, so yes — lucky you!
I’m reading ATM and loving it. It’s like you’ve been reading my mind, as I’ve been thinking about these issues for a while now! You’re providing great insight.
I’ve subscribed to the “cut out the latte” habit, and yes, I’ve got a nice coffeemaker at home that can do a latte. It’s good, but it’s not the same as the “real” latte you get at the coffee shop. That’s a treat I love and still allow myself — my focus has been more on dropping the daily habit and just making it a 2x a week treat.
I’ve also been looking at “quality vs. quantity” with regards to purchases (like you and your journals). Is it better to spend a few extra dollars to buy the nicer version that will last or hold up longer? For most of my life, I used to buy clothes on clearance with extra % off because it was so cheap! But if it didn’t fit me well or wasn’t 100% “right” for me, I ended up not wearing the item. When you look back at the money wasted, I could have invested a few extra dollars into a nicer garment that I could have worn more frequently or for a longer period of time. Cheap is not always better, I’ve learned, and I find I’m much happier spending a little more to have something that fits me better and makes me feel good.
Re: your earnings question — I feel fairly paid. I worked hard to get myself there though. Seven years ago in a former job, I was definitely WAY underpaid in my role at a large corporation. I stuck with it for a while because I liked the work and the team, but I jumped when another opportunity came to me that opened a door of earning significantly more. I nearly doubled what I was earning at the large corporation. That was my way figuring out how to earn more so I could save more and put myself in a better place to negotiate a fair salary later on.
@Amy- thanks, I’m glad you’re enjoying the book! Congrats on doubling your salary. That sounds like a story in its own right. I, too, am trying to get into the mindset of buying fewer but better clothes. If you don’t wear something, it’s a waste, even if it was 90% off.
I think the clearance clothing thing is a time issue, as well. It’s easier to cruise by the super-cheap clearance rack when you’re doing something else (like at Target or Old Navy) and just grab something. If it doesn’t fit, well, it was only $10. But if you go somewhere nice, like Nordstrom you have to invest the time to try it on, think about what you can wear it with, etc etc, because that price tag demands it. And I don’t often have the time to do that 🙁 I haven’t figured out how to solve that issue just yet.
@ARC – sounds like Joy’s suggestion of shopping with the personal shopper at Nordstrom might be wise. Yes, it takes time, but at least you know it’s efficient time. She’ll definitely choose a lot of outfits, and they’ll all look fabulous on you.
Yeah, I’m putting some serious thought into doing that in the not-too-distant future. Everything I’ve bought at Nordstrom, I’ve loved, because I had to put serious thought into it.
Since we live in a rural area and can’t drive small cars with 3 children, we spend more on gas than normal. We also spend more on diapers and young children’s clothing than normal, since I have 3 sons with a total weight range of ~6 lb. In shorts, especially, they all wear the same size.
While in some sense these are choices (we wanted engineering jobs and didn’t want to live in an urban area; people without young children don’t buy diapers or children’s clothes at all, so the baseline “normal” is zero), these observations don’t seem all that helpful.
More on books, less on TV (no cable or satellite). I could say that’s because I’m just that sort of sophisticated person, but most of my book dollars go to romances.
More on ingredients (including $ to local farmers), less on prepared food. That’s the paradigm that worked for me to lose weight.
More on clothes, lately. It was necessary due to the weight loss and was also a conscious choice to make a step up in quality as a way to tell myself that this weight loss is permanent so I can spend more on high quality clothes. I usually shop at Nordstroms with a personal shopper and I’m also paying for that lovely experience.
I’m not currently employed and consider myself fairly paid! I felt underpaid as a librarian compared to my previous work as a computer programmer. I was a better librarian, but you couldn’t tell it from the paycheck. The lack of compensation contributed to my decision to become an unemployed librarian. Losing my salary just wasn’t that great of a loss.
@Joy – the good thing about kindles and nooks is that no one needs to know you’re spending your book dollars on bodice rippers. For all they know, it’s Kierkegaard. To get to the librarian point, my husband and I have been having a conversation lately about what sort of career direction advice is wise to give children (not our children, but more our friends with high school and college aged kids). You obviously don’t want to choose work you hate, but it’s also possible you’ll find a variety of things interesting. If some professions with similar training have vastly different prospects, how should you present that to your kids?
It’s complicated. I have actually recommended that girls and women look into librarianship if their interests are technological. Computer jobs can be quite hostile to women and lots of us find ourselves happier in libraries. But the pay differential contributes to unhappiness. For those of us willing to make choices about money to keep our lifestyles relatively cheap, it opens up the option of lower-paid work. Unfortunately, it’s not just the money. All kinds of issues abound about how we value work, how we value female-dominated versus male-dominated professions, and how those professional cultures match with our own values and ways of doing things.
@Joy – there may be another post on the topic of “male” jobs vs. “female” jobs. One of the most fascinating charts I ever looked at was the percentage of PhDs granted to each gender in different STEM fields. Put the word “bio” in front of something and you could massively raise the percentage of women. So “bio-statistics” PhDs were a diverse lot, but “statistics” PhDs far less so. I certainly don’t think one could argue that one is harder than the other (sorry, Larry Summers) so why would that discrepancy exist?
I’m pretty sure a lot of smart women just self-select out of fields where there are an overwhelming majority of men. When I was a kid, I learned how to program in BASIC starting at age 6 and LOVED it.
But by the time I got to college, when I was picking a major, I took one look at the nearly-all-male CS majors and thought I wasn’t smart enough or brave enough to sign up 🙁 I still regret that today (though I did love biochem, too).
Just purchased ATM and really enjoying it as I did 168 hours. You have great insights and I’m trying to be wise with my choices and understanding what I and my family prioritize.
@Tricia – thanks for buying the book! I hope you enjoy it and I look forward to your feedback when you finish.
I am in a pretty frugal place in my life since I just ditched the 9-5 and started my own business, so I’m not buying a lot of anything right now. But if I did, eating out and travel are my two weaknesses. I’m in a place in my life where experiences are more important than things and not being married or having children allows me to do it. I do anticipate both in my life in the next five years and hear the opportunity for travel and eating out dramatically changes once the latter happens.
I’m hoping I get to that place where I feel overpaid once the business takes off, but right now, will admit, am still struggling in the first six months (however, I feel good about the pace of growth). But, I think it will all be worth it in the end since I’m getting my mental freedom back. I’ll check back with myself on this in about three years and see what my answer is then. 🙂
@Susan – that sounds good, to aim to be overpaid in three years. I think I might adopt that as a goal as well. Next week’s book club post will likely look at ways of changing one’s income. Or if people have ever done so (one way or the other).