The Splurge Debate

I just came across  an interesting couple of posts at Being Frugal and Smart Easy Money that really made me think.   The original post was at Being Frugal, and then the counter point is at Smart Easy Money.   Basically the question is whether you get any additional value for buying extremely expensive stuff (the example cited was a $1000 stroller), or if it’s just a status symbol.   Overall, I very much tend to agree with Being Frugal.   I see no value what so ever in a $1000 stroller, a $500 pair of jeans, or a $10,000 watch.  

But one of the points made at Smart Easy Money is that she spent quite a bit of money to take 9 months off and travel, instead of using the money as a down payment for a house or to fund a retirement account (the “sensible” options).   She feels that the experience was well worth it – and I agree.   After college, when most of my friends were getting job offers and setting up 401k plans, I spent two+ years in Africa with the Peace Corps.   There was no retirement plan, but I wouldn’t trade my experiences during those two years for anything.   I came back to the US and got started on my career in the spring of 2001 – nearly three years after I had graduated from college.   And yet I don’t see the time I spent as lost money or wasted opportunity – it was an amazing experience, and worth every penny of income that I would have earned had I gotten a traditional job right out of college.

But as for “stuff” – I just can’t see how it can really make a person happier to have a pair of $700 jeans as opposed to a pair of $50 jeans.    I have friends who tend to be much more extravagant than I am.   One has a penchant for Kate Spade bags and shopping sprees at Nordstroms.   Another recently spent $1000 on a medicine cabinet.   And yet neither of them is as happy as I am – not even close.   In both cases, they seem to be shopping in order to fill a void, and are always searching for the new outfit that will make them feel great about themselves.   But that feeling is never going to come from an outfit, no matter what the designers would have us think.   If you don’t already feel good about yourself and your life, a new outfit – even the best that money can buy – is only going to provide a temporary boost.  

Another issue I have with the idea of extravagant spending is that a good number of people who buy expensive stuff can’t really afford it.   If you’re Madonna and you want to buy a $1000 stroller, go for it.   But if you earn $50,000 a year, that stroller is a significant amount of money, and you probably can’t afford it.   And I’ve written about how much I dislike gift registries, and I don’t think it’s cool at all to ask other people to pay for your extravagances.   Let’s face it – if everyone were smart with their money, we wouldn’t be a nation of debtors, with bankruptcies and foreclosures around every turn.   The fact is that there are plenty of people who can realistically only afford jeans at thrift stores (the only place I buy mine – I consider $10 to   be expensive), but who are buying the $175 jeans instead.   And there are people who can afford $50 jeans who are buying the $350 pair instead.   As a one-time thing, it’s not a big deal at all.   But when you extend that kind of money management over a lifetime, you end up with people in their 50s who have a house full of stuff and only $20,000 saved for retirement.   Not a good scene.  

So overall, I would agree with Smart Easy Money that travel and new experiences are often worth it – even if they’re expensive.   But I agree with Being Frugal that spending huge amounts of money on “stuff” is generally a waste.   They both raised interesting points of view – head over to their blogs to check out the debate and add your thoughts on the matter.