How to wreck your investment and savings portfolio Step 2.
Confusing Needs and Wants and Your ability to Rationalize; the components of Lifestyle Addiction™.
In part one of this series we discussed how you could make sure of failure in finance if you just spent a bunch of time talking to other people who aren’t really experts in the subject matter. This could be the media or it could be the Internet or maybe even your best bud. Today let’s discuss another tried and true method of increasing your chances for failure with your finances, namely your ability to confuse your needs and your wants. The term I like to use is to call it “Lifestyle Addiction”™.
First, let’s look at what this is and then we can learn how to apply it to your world so that you can be sure to get the most failure possible. Lifestyle Addiction™ sounds so ugly and maybe it is but let’s dive into it and see if you even have it before we worry about it’s impact. My definition of Lifestyle Addiction™ is a certain lifestyle that you have gotten used to slowly over time. It’s a situation where if the lifestyle were to be taken away quickly it would cause sever emotional and family pain. Most people don’t admit they have an addiction to lifestyle but the best way to tell is to call your own bluff…if you aren’t addicted to it, then cut spending immediately and permanently by 40%.
Here is what that might look like:
You make $200,000 per year.
After tax, charity and savings rates you are spending $9,000 per month on lifestyle (mortgage, cars, cheeseburgers, etc…)
As of TODAY you will now only spend $5,400 per month. Not for a 60 day time frame…this isn’t like some diet “cleanse”, I’m talking forever.
If you can’t comfortably do that then you have an addiction to your current lifestyle level.
Now if you already have a healthy Lifestyle Addiction™, then there is no need to read on as you are already well on your way to destroying your financial portfolio. However if you can’t identify with the bullet points laid out then we need to get you up to speed quickly so you can get addicted to lifestyle. Without that addiction then there is no way you are going to fail and this is a series on how to make sure you fail!
The best way to build a good Lifestyle Addiction™ is confuse your needs and your wants. Think of it this way, most everything in this amazing country is about wants. Needs are typically things like physical safety, food, water, and shelter. You need water. You want bottles of Fiji Water. You need shelter, you want a $500,000 home with a pool in the backyard (wait, the pool has water and water is a need so….). You need food but you want dinner at Capital Grill 4 nights a week. This occurs everywhere. Look at the car you “need”. Even worse, look at the car you “need” to buy your child. In addition, a good addiction to lifestyle requires a great ability to justify any purchase you desire. My clients who have the best Lifestyle Addictions™ show an uncanny ability to be able to make it seem rationale to buy stuff all the time. If you can confuse needs and wants and you can justify and rationalize it then, congratulations, you have an amazing Lifestyle Addiction™ and are surely close to the failure you desire!
I should throw in a quick disclaimer here: it is entirely possible to have Lifestyle Addiction™ and NOT achieve financial failure. So I can’t guarantee that just having this addiction will produce the failure you desire. I’ll use myself as a case in point. I like cars. Specifically really cool looking Jeeps. I also like to eat out. I also will spend lots of money on anything health related (gym memberships, clothes, sports equipment and gear). I do NOT like hotels with shower curtains. I do NOT like flying coach…I could go on but my point is this: I have a healthy lifestyle addiction. But I’m not failing financially. My big mistake is years ago I begin to save 25% of my income before I spent anything on lifestyle. So I paid tax, gave to charity, and saved 25% and I spent the rest. I only got addicted to what was left after the first three things. Doing that really messed up my chances to achieve maximum financial failure.
The bottom line is the only way you will be able to use Lifestyle Addiction™ to it’s highest capacity in order to generate failure is to 1) confuse your needs and wants and 2) to get addicted to lifestyle before you get addicted to saving! If you aren’t good at rationalizing your purchases and if you aren’t good at ignoring savings first then I’m sorry to say that your odds of failure will be pretty low.