The Dollar Army

Dollar SoldierAfter my recent change in lifestyle (the one where I now try to live a much more enjoyable life on a daily basis), the issue of personal finances (both spending and earning) have not so surprisingly risen to the forefront of what I often find myself thinking about. And the more I think about things and realize the utmost importance of bringing down one’s cost of living, the more I try extremely hard to convince my closest friends that more than anything else, they need to do the same.

But people are creatures of habit, and needless to say it is very, very difficult for me to convince them of this fact.

And so this got me thinking about what the actual reason for that is. I actually don’t think it’s what everyone else thinks – continuous streams of marketing and advertising in our faces, greater levels of disposable income for most, unmeasurably large varieties of junk for purchase everywhere we look… of course all these things contribute to the problem, but none of them are the real reason for such suffocating levels of spending in today’s society.

The Real Reason for Today’s Exorbitant Spending

I think the heart of the problem here actually comes from these three things not mentioned so far, and barely ever talked about:

  • Not understanding that every dollar you manage to save is a little soldier that works very hard for you for the rest of your life
    • After a recent discussion with a friend, the idea sort of struck me: this person managed to save a hundred bucks because they didn’t make a certain purchase they were going to make. Great work! You now have a hundred extra soldiers to add to your army!! And then the kicker? They traded the hard-working front-liners in for a pair of jeans to add to their collection of ten other depreciating pairs.
  • Not understanding how to put your army of soldiers to work
    • I would say this has developed from not learning anything about it in school (at least they didn’t really cover it when I was in school!), followed by the dry and overly complicated media coverage on the topic, as well as the sensational sounding events (and often times are!) that can unexpectedly occur (for those who aren’t paying attention, at least :) putting people off of the whole thing. Conspiracy idea: I even have to wonder if these things aren’t done on purpose so that the rich people in control don’t have to share the wealth with the rest of us common folk!
  • Not knowing how many soldiers you need in order to complete your army
    • Any idea how many you need? To know this you basically need to figure out two things here: How much does it cost you to live a year of your life, and, how hard can you make your army work for you. Most everyone seems to assume you need the power of Desert Storm behind you to retire, but that really isn’t the case at all. I’m fairly confident that all I actually need to fully retire (whatever “fully retired” even means) is a small battalion of around 400,000 strong. There’s no need to conquer the entire Middle East! More to come on that in a future post.

So how the hell have I managed to turn thinking financial news is boring into being the source of society’s over-consumption problem??

Quite simply, if you understand the fact that having money can earn you money, and more importantly you understand the few steps you need to take to actually make that happen, and lastly, you’ve done the simple exercise of figuring out how much money you genuinely need to have so that you are earning enough off of it each year to be able to spend some of it without losing any of it (it is imperative that you know where the finish line is if you ever hope to cross it!), decisions such as whether or not you need to lose 500 lifelong workers to the latest iDevice start to become very apparent.

And unfortunately very few people know the answer to these three things, so the spending spree continues…

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4 Responses to The Dollar Army

  1. Julian says:

    With the increase in computer-driven millisecond trades maximizing fluctuations and not fundamental value in stocks I encourage you to avoid using common sense to predict the market. The original capitalistic ideals, of open markets between free buyers and sellers finding optimal equilibrium, have survived primarily in private investment and not the large stock and commodity exchanges. The influence of institutional manipulation that seems immune to SEC oversight further tips the scales and makes this a hostile investing climate. That you have found a vehicle for such high returns is impressive and I hope it continues to reward you for your tenacity and courage.

    My criticism would be that I don’t see how the economy can support those growth rates, for the terms you plan to invest. Cheap energy, which drives everything, is on the decline. Natural gas (NG) is plentiful but the domestic price is due to rise when it can be sold internationally (as liquid natural gas). The cost of extracting NG currently only includes the gas itself. When clean water, health, agriculture and property value costs of NG extraction start dragging the economy down, even without any green legislation, I suspect the energy balance will still be insufficient to fuel the growth you hope for. There will probably always be narrow sectors in even a declining economy where you can get impressive returns, but this will likely be a more difficult proposition.

    Macro economic predictions are like assholes so please take all of this with some skepticism, but it is offered to encourage you to refine your plans in the light of evidence you come across during your term as general of your dollar army. As a footnote I have the highest hopes for renewable energy but none of the forecasts I’ve read could scale up these alternatives in time for the energy hungry economy we are strapped with. A less populated Earth could pull it off but that is not the hand we’ve been dealt. We should still transition, but I’m saying the economy is not likely to grow as fast.

  2. Valerie says:

    Could you start a consulting business and advise on how to live better/work less? Wealthy Barber style. Learning a lot from your wisdom (for free) on the blog, but an interesting business idea for people our age…practical, no nonsense.

    • mzungu says:

      Great suggestion Val! Yes, the thought has definitely occurred to me and I need to spend a lot more time working out what exactly that would look like. But I do see something like that in my future!

  3. Pingback: How to Save Money Like Some Kind of Kate Moss | Noble Anarchist

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