May 27, 2005

that time of the year

I'm a pretty risk averse guy. I come from a very risk averse family. I think it had to do with a number of things. First, my parents grew up in England during WWII and had bombs buzzing overhead. Second, both my parents were dirt poor. My dad used to go collect coal outside the mines and sell it by the side of the road when he was 8 because his dad had died of black lung. My mom had poor and irresponsible parents and would actually collect the welfare and ration it out to her parents. It's like something out of a movie.

So when I was growing up we tended to not go sky diving or swimming less than an hour after eating or splurging on fancy cars. Our entire family to this day looks on at people who die doing things like climbing Mt. Everest and mumble under our breaths, "serves him right, bloody idiot". I knew what an umbrella insurance policy was for when I was a teenager.

This aversion to risk primarily showed up with regard to finances. We purchased 2nd hand cars. 2nd hand Pintos no less. Our washing machine had pieces of it come off during each wash and my parents refused to replace it. My mom still buys used clothing. My parents generally had this perspective that World War III was around the corner and they'd be damned if they were going to suffer meat rations again.

I have inherited much of this risk aversion. I remember at a very young age completely not getting involved with anything slightly nefarious. My friends were outstanding do-gooders as well. We all worked hard in school, kept out of trouble, avoided the 'bad crowd' like the plague. We didn't go over well with the chicks as you can imagine. I'm not sure what defined someone as being in the 'bad crowd' now as I look back on our simple suburban Midwestern existence. I think it had something to do with inadequate lawn care.

But more to the point I've been risk averse with money. Not in investing it. Just in spending it. I've had a few splurges here and there (especially when I first got a job) but as I get older I seem to spend less. At any rate I find myself thinking about risk again. Primarily because I have a daughter. And secondarily because of the outrageous amount of money people spend in New York. Apartments across from us just went on sale. Average selling price? $1.5M for a 2 bedroom. One guy bought 4 apartments! When I see people spending money willy nilly I get the heebee geebees. The more the US becomes a consumer society the more I don't like to spend. I think I've always been a contrarian in that sense. But I'm that way moreso because I just don't like the concept of monetary risk.

Why am I talking about this? Last weekend I went through my annual cost cutting routine. I do this every year. Sit down with my bills and MS Money and credit card statements and actually run analysis on it like a total loser. If you really sit down and look at what you spend in a month it is really crazy. Having done this before I don't actually have a lot of frivilous spending. But each time I find at least 3 things to cut back on. My primary focus is subscription based or subscription-like expenses. Cable was a major cutback in 2001 that I don't miss. Things like call-waiting and caller ID went last year. I feel like I'm slowly running out of things to cut. Nevertheless I found some things.

Starbucks. Gone. I figured out I was spending a grande latte every work day per month - $100 subscription model effectively. $1,200 per year. That's insane. It was only after I started using my credit card to pay that it showed up.

New books. I still purchase books on a weekly basis. Used books cost around 1/3 of a new book. For a year I figured I can save around $400.

Eating out. This is a tough one for me. It's one of the luxury items I allow myself. But I'm trying to cut it to 3 times a week. That's 1 breakfast on Saturday, 1 dinner on Saturday, and 1 brunch on Sunday. Still a little excessive. But I actually figured out I would double my savings if I just ordered a little more sensibly. No bottled water. No booze (tough!). Don't order from the top two expensive entrees. No appetizer and no desert which I never really need anyway. Plus don't pick the most expensive restaurant in the city. Tons of good cheap food exists in Manhattan. Annual savings around $3,000!

I almost got rid of my cell phone too. Whenever I think to myself well I can't get rid of that expense I've learned to slow down and question it. That's how I got rid of cable. How on earth can you live without cable? For a month I wasn't sure. I'd get home and stare at the wall. But then again I'm more happy with that reduction than anything I've ever come up with in my 4 years of doing this cost cutting thing.

The strange thing about all this is that there really is no reason for me to do any of this. We're not really hurting for money in any sense of the word. But since I started doing this I've found I actually enjoy life more. I don't know why that is. Maybe it's more uncluttered. I think buying things is a little drug like. But it's such a fleeting high. And when I think of all the crap I throw away that I never should have bought it's obscene. Things like scanners and color printers and useless kitchen utensils and clothes i didn't need. Stuff like that depresses me. And besides this way I'm ready for World War III and those meat rations.

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