Untucked Episode 87 Microspending
Meghan Tait: [00:00:00] Today we’re going to talk about an article called The Avocado Toast Effect of Spending is Totally Overblown. This was in Men’s Health and written by Chris Browning. We’ve discussed this topic a bit before but wanted to revisit it. There are many talking heads who believe your Starbucks habit will prohibit you from being able to save for larger expenses, be it your first home, retirement, etc.
And that you should in fact avoid all of those costs. Chris, however, takes a different angle by actually advocating for what he describes as small, intentional purchases that are good for us on multiple levels. Social example, social interaction or breaking up our routines, um, or just treating ourselves, for example.
Jeff Mastronardo: I kind of struggle with kind of where I shake out on this. Like obviously if you’re making 25, 30 grand a year and you’re spending 8 a day on a Starbucks coffee. Like the numbers [00:01:00] don’t make sense, like you’re just, that’s, that’s a part of your budget that probably shouldn’t be there. But if someone, if you can afford a Starbucks coffee and you’re saving a few bucks each year into your IRA, like, I agree.
Yeah, go get yourself a Starbucks. And these people that want you to analyze your spending and just do absolutely everything correct to help you amass the most amount of wealth by the time you’re this arbitrary age of 65, I think is stupid. Like there has to be it’s like we talk about all the time like Where’s the balance, right?
I’ve said for years, and I have no idea if I’m on track for it, like, I’d rather have, like, accumulate 3 million dollars by the time I’m 65 and have lived a lifestyle than accumulate 6 million dollars by the time I’m 65 or 5 million dollars or 4 million dollars and have, like, really just watched every single
Mike Traynor: penny.
Yeah, again, I feel like we’ve talked about [00:02:00] this before, but I’m annoyed by these articles because they seem to… Overemphasize these little decisions that are nowhere near as important as making the right big decisions when it comes to like Overspending on your first house, for example, or we’re buying a car.
That’s 15, 000 too expensive that compared to what you should or what stuff like that like this is just trivial and you know, Dave Ramsey’s and people like that and Susie Orman’s out there that Talk ad nauseam about this issue and it’s just not on the of the top ten like financial decisions It’s not one of them in my opinion
Jeff Mastronardo: throughout.
It’s a pretty interesting take. Yeah, I agree a hundred percent with that
Meghan Tait: Yeah, the the decisions that matter are not Those your lunch with your girlfriends once in the right Or, like, and, and, and Chris’s point is, there’s other positive [00:03:00] impacts that those types of things have that matter too. And, when you’re talking to, when the Dave Ramseys and Susie Ormans of the world are talking to the masses, they’re not specifically understanding anybody’s individual circumstance.
So it’s like, yeah, you shouldn’t spend any extra dollar. Like, If the lunch or the latte or, you know, like is important for your general happiness, like, yeah, do it. I mean, again, I think in the context of like, it’s not the most expensive or consequential decision of your life.
Jeff Mastronardo: But what about those tiny decisions that over a month add up to a big, you know, a kind of.
A balance sheet moving decision.
Meghan Tait: I think that’s when yeah, then the ship has to be righted, but I guess I’m maybe specifically talking about like singular or like two or three decisions right [00:04:00] not Not decisions that end up moving the needle right because it feels like those are the things that people stress about I mean we talk with people a lot about their cash flow and it’s like where do you think?
You can pick up a couple of bucks and the first place everybody assumes is like going out to eat or take out. It’s like, okay, there are certain people. Yeah, who like you can look at their DoorDash history and it’s like whoa They spend 350 a month on takeout like that is a place where we could start but then for the for the couple or the person who you know enjoys dinner out with friends twice a month to the tune of 200 bucks like I just don’t know if that, if the impact of that financially is going to outweigh the emotional impact of not doing it.
Does that make sense?
Mike Traynor: Yeah, and I have two things to say, two more things. One, in the article they use the example of four Starbucks a week would [00:05:00] cost you a thousand dollars a year, let’s say. And then after twenty years that would be, that would grow to forty four thousand dollars. So, wow, that’s like, it’s money, but it’s not.
Life changing money. I hate when they do that. And by the way 44, 000 20 years from now is probably the equivalent of 15, 000 today because we’re talking about Inflation so that’s always a misleading thing when they say it’s the X amount of hundreds of thousands of dollars and you know 30 30 years from now It’s like stop like you’re missing That that number seems way bigger than it really is because of the future value of the money is always gonna be much higher So that’s that’s the thing that’s annoying about that example I will say though, back to your point Meg, you’re getting, this person is presumably enjoying their coffee, or whatever it is, and they get some sort of personal enjoyment from it.
I would say if somebody’s spending, um, [00:06:00] ten bucks a day on lottery tickets, I would have a different take on that.
Jeff Mastronardo: What if they won?
Mike Traynor: They will not win. Um, or if somebody is, you know, got a, uh, Online gambling habit, Jeff, like, like you. Guilty. Um, now, you get enjoyment from that, so maybe you could argue that, Hey, I know I’m net spending money on this, but I, I like it.
I’m in the green.
Jeff Mastronardo: Yeah, you’re in the green. Is it green or black? Oh, I don’t know. Let’s go with green. No, when you’re in the red, you’re, you’re not making money. I, I hate those calculations where they tell you what it could have, like how much you’re. What that money could have grown to like we use software where you have someone’s cash flow and they say like, Hey, can I should I buy a new car now?
And if you enter that transaction in like what if scenario like what [00:07:00] if you spend 30, 000 for this car, how that impacts you over the next 30 years and like that that 30, 000 purchase is going to cost you like 250 grand over your lifetime. I hate, like, you would never buy anything, right? Should I get this 50 shirt?
Well, if you buy that 50 shirt, 30 years from now, it’s going to cost you 17, 000. Like, okay, but like, I need a shirt.
Meghan Tait: But, but that’s what you were saying, right? It’s the balance that we have to strike. We just strive to create, like, it’s for who, for what, right? Like sacrificing these lottery tickets, lattes, whatever it is.
For what? Like, is your goal to have X amount of dollars when you’re 50 so you can stop working early? Is your goal to be able to put your kid through college? Is your goal, like, to me, all of this is too general and too high level to matter to anybody. Like, anybody reading this article [00:08:00] and being like, oh, I should or shouldn’t do anything, it’s not in the context of their situation, so it’s like, it’s far too general for us to even, Be mad about yeah, and mad isn’t the right word, but I’m like basically taking back everything I said, because I’m like, this is just annoying.
Mike Traynor: Yeah, well, I, I was listening to somebody on another podcast complaining about. Today’s, I’ll say today, too many of today’s people, um, don’t, will not accept delayed gratification and it’s immediate gratification. Um, and I think there’s a point to that, um, but to your point, Meg, 100% delayed gratification isn’t, is no good either.
Right. Um, and you have to figure the balance between the two, so, um, we could do a whole nother Subject on the immediate gratification crowd, but yeah, that’s not this. No,
Jeff Mastronardo: I think if these articles can spark people to be [00:09:00] more conscious of their spending and be more thoughtful with it, whereas you’re taking and hearing what we’re talking about, which is don’t sweat the little things, do the little things right.
But also be more conscious on the bigger decisions like. , you’re looking for a new car and they have like an R three model and R five and an R six. Like do you really need the 320 horsepower car R six or is the R three with 220 horsepower? Good. Like that one’s gonna cost you 10 grand more like just get, get the car that you like.
But it doesn’t have to be like the top of the line model. You’re looking for a new house. Yeah. It doesn’t have to have like absolutely everything. Like if it doesn’t have AC now, But it’s cheaper. Maybe you get it. Maybe you add a C later. Like I think if they can help people make Better small decisions and then hopefully they’re making better bigger financial decisions, too.
Meghan Tait: Yeah, I think that’s a
Jeff Mastronardo: good takeaway.
Mike Traynor: Cool. We’re good. Yeah