Black Friday Special: Hedonistic Adaptation

Day 88 | $50,944  paid | $39,773 till freedom

I just posted my progress report for month 3, and I want to take a moment to offer a deeper reflection.

Dollar-wise (as opposed to time-wise), I’m officially past the halfway point. I started with $90,717 in debt and I have $39,773 remaining. I’ve paid down over $50k in loans in three months by wiping out my savings, selling off a car and motorcycle, stopping my 401k contribution, starting a landscaping business, taking on roommates, and cutting back my entertainment expenses.

I took a step back today after I balanced the November books, and I thought to myself, “Wow. I just spent over $50k in three months…on a piece of paper.” My next immediate thought was, “If I could have spent that $50k on anything besides my student loans, what would I have spent it on?” I started wondering how much sports car $50k could buy, so I headed over to Ebay Motors…$49,750 for this beauty.

Over twice the power of my S2000 and 1000 times sexier…I thought to myself how awesome it would be to call that my daily driver. Would that give me instant rockstar status and make me so freaking happy, or what? 

But then I thought back to a post I recently read on Mr. Money Moustache about “hedonistic adaptation.” I’ve heard about this phenomenon before, but I never knew it had a label. I’m going to shamelessly quote MMM here for the definition:

[This term means that] “no matter what happens to you in your life, you’ll very quickly get used to it.” Hedonic Adaptation is a feature built right into your Human DNA that allows you to function efficiently in a wide variety of environments, even very harsh ones.

In other words, I could buy the Viper, but it’s not going to make me happy in the long-term. I’ll eventually adapt to it and I’ll go back to my baseline level of happiness.

Likewise, now that I’ve sold off my Murano and bike, I might be a little depressed for a bit and I do miss my bike, but I’m going to adapt and I’ll get over it sooner or later.

Mr. Moustache goes on to write:

It turns out that when a person jumps to a new level of material convenience, he loses the ability to enjoy the things he previously thought were pretty neat. A cold Bud Light was once a true delight after a work day for the lottery winner, but after the win he quits the job and takes up high-end scotch, poured by a personal butler. Both serve the same purpose, and the pleasure is about the same. Similarly, when moving down the hedonic scale, either voluntarily or involuntarily, we can learn to appreciate simpler things with just as much gusto as we would have appreciated more expensive things.

When I read that paragraph, I immediately thought of Francois and his exotic car that he would stare at after a hard day’s work to make himself feel better. I didn’t know how to think about that practice when I first wrote about it on October 23rd. My gut told me it seemed a little off, but I wanted to cut the guy some slack–he just really, really, really, really, really likes cars, right? But now that I have a tidy definition of hedonistic adaptation, I’m not sure I can let Francois off that easily. And it becomes even more difficult to do so in light of Diana’s comments on my 9-20 post about selling the Murano. In fact, it has become clear to me that Francois is a hedonist when it comes to material goods and consumption.

Diana’s comments are below.

Diana – November 21, 2011 at 5:21 pm (Edit)

I love the idea of downsizing. Of course, downsizing from my one bedroom apt and lack of car would mean living in a studio and selling my bicycle, which is depressing. I dated a guy who’s dad had a boat and a small plane and like 7 cars, along with a huge house, and taking care of all that crap seemed like way too much work, even with all the money in the world. (which they apparently had? Can you imagine the insurance alone!?) Even though I have nothing to really sell besides clothes and a few textbooks, I still plan on spending my days off this thanksgiving filling up bags to give to goodwill, clearing some space in both my apartment and my head. great post.

nomoreharvarddebt – November 21, 2011 at 11:25 pm (Edit)

I struggle with this. If you’re super loaded, then what does living below your means look like? If you were to hire a team to to deal with the hassle of the house, cars, boat, and plane, then you still have the hassle of managing that team. Then if you hire somebody to deal with the hassle of managing somebody to deal with the hassle of the team who deals with the hassle of the stuff. I’m sure wealthy people make it all work, but I’m still left wondering if they’re lives are still too complex. Maybe they frame it internally differently than a typical person does. Maybe they’re more tolerable of or comfortable with unnecessary complexity/clutter than most people are. Maybe they’ve become used to it. Maybe they depend on it.

diana – November 22, 2011 at 1:15 pm (Edit)

i don’t know what living below your means looks like for rich people either. If that family got rid of their G Wagon and kept their S class are they now living below their means? Maybe- but they don’t exactly deserve a medal for austerity. If you can afford ten cars, and you only buy five, that doesn’t mean that five cars still isn’t pretty wasteful. I mean, do whatever makes you happy, but when I’m rich and famous I think i’ll just opt to rent the damn yacht and let someone else be in charge rather than own it myself.

Thanks to commentary by Mr. Moustache and Diana, it appears that Francois is simply a man who’s taken scotch to an entirely whole new and completely unnecessary–and quite frankly, scary–level.

I guess what I’m driving at here is just because you have the money doesn’t mean you need to spend it, especially if it won’t ultimately make you any happier. Can’t it be used for something more meaningful than cars to stare at? E.g., donate it, start a foundation, etc. 

This seemingly simple concept of hedonsitic adaptation is the best-kept secret in the US. It often seems like very few people understand it, and we try to keep up with the Joneses every chance we get. Almost nobody believes that buying crap doesn’t make them happy.

Black Friday commences at midnight tonight and people are going to be out in droves buying stuff they don’t need, stuff they hope makes them happy. But the sad truth of the matter is that it quite simply will not. Full stop.

(I’ll be hiking on the Barton Creek Greenbelt tomorrow.)

Think about what would happen to our country if people started figuring out hedonistic adaptation. Entire corporations would go belly-up, unemployment would be sky-high, etc…maybe it should be kept under wraps…

It’s not like I’ve mastered the concept, though, either. Does a very large part of me wish I had blown the $50k on the Viper, even though I’m acquainted with the theory of hedonistic adaptation? Hell yes! Absolutely. And maybe that’s what makes this so tricky. Even after we’ve read the reports and seen the facts and figures, case studies, empirical evidence, and anecdotal evidence, there’s still a voice in our head saying, “Buy it. It’ll make you happy.” Behold the power of Marketing. (And yes, that is a capital M.)

I used to work with somebody who told me the story of a psychologist who visited elderly people on their deathbeds and asked them what it took to find happiness. He hoped that these old souls would have some sort of deep wisdom to share with him on the subject of happiness and the key to finding it. The answer he got most consistently was very simple: Be happy now. Don’t wait for the degree, the promotion, the girlfriend/wife, the new car, the house, or the boat. Just be happy now. Choose happiness. This is a concept that is complementary to hedonistic adaptation. And similarly, even though its simplicity makes it look good on paper, the real-world execution is another matter entirely.

While the concept of hedonistic adaptation is not well known, it looks like it might be getting some traction with the recent publication of this article titled “How Americans Are Rethinking Prosperity.” Susan Johnston of US News writes about how Americans are turning to other things besides money and things for their sources of fulfillment.

I do think that there are limits to the concept. My Mormon friend recently told me about his family friends who sold off all of their possessions and moved to Africa for a mission. He said that his friend reported that he’s never felt more free in his entire life. I would argue that something like this can be done in a developing nation, as they’re demonstrating, but that kind of move simply wouldn’t fly in the US. It almost seems like there’d be a stigma associated with it. I believe there should be a ceiling on consumption, but maybe a floor for what’s appropriate, too.

Thank You, Mom and Dad
On this Thanksgiving Day, I want to give thanks for my student debt. While it is an absolute pain in the butt, it is a symbol of my MBA from Harvard Business School, which I am also thankful for. And my Harvard MBA is a symbol of a lot of things, but I would say it is mainly a symbol of the way my parents raised me–being outstanding role models, instilling within me confidence and a strong moral code, believing in me, pushing me, encouraging me, and most importantly, loving me. The way they raised me had everything to do with the hard work and perseverance I demonstrated in high school, undergrad and my career–as well as the strong relationships I built and the key decisions I made along the way–that led to admission into Harvard’s MBA program. So ultimately, I want to give thanks to my parents. I wish I could be there with you today to raise a toast. I love you guys!

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10 responses to “Black Friday Special: Hedonistic Adaptation

  1. Sarah L

    I felt like I just processed those thoughts & emotions right alongside you! Great post…very thought provoking.

    As a strong Christian who’s graduating in the spring, I’m kind of at a “quarter life crisis,” so to speak. I’m evaluating whether or not I should go into full time ministry or the workplace. Obviously, I want to make some money my first couple years out of school, as a safety net for whatever else I choose to do with my life in the future. But part of me wonders if it’s because I’m simply too scared to dive into full time ministry and have to trust God to provide for all my needs.

    The psychology of money gets a lot more complicated once a religious element is added to the list of hopes, dreams & goals we all have.

  2. Mr. NMHD,

    First of all, congrats on making it this far. Keep grinding all the way home buddy. Secondly, I see a little hole in your theory – not that I don’t fully agree with it in most situations – but I think that it has gaps. How about your bike? Did you ever adapt to owning it? Did the joy of riding it decrease after a while? I doubt it, and therein lies the exception.

    Sheer materialism is shallow and gets old, sure. But certain objects (like, say, an old ratty Wisconsin shirt) mean something to us because they represent what we put into them. They are symbols of our achievement more than mere possessions and, if the achievement is worthy, they never get stale. Anyways, the story of Francois reminded me a lot more of someone staring longingly at an object like their gold medal than of some crazy loon who digs cars. But I could be wrong.

    My point? I guess that it’s not to be afraid of spending (be it money, time, effort) a lot to get something, as long as it has meaning beyond its physical being. When you successfully complete this challenge, think of how rewarding the first big guilt free/debt free purchase you make is going to be. Because that’s the point of this isn’t it? I hope that it’s something that you hang on to for a long time and that you don’t let the materialism of others cheapen it for you. Like maybe a coffee table made of the Verbrugge.

    In closing, GO BLUE.

    • I guess that it’s not to be afraid of spending (be it money, time, effort) a lot to get something, as long as it has meaning beyond its physical being.

      Amen, brother. I do not disagree with you at all on this point. Thank you for reminding me that the value of a physical good can be measured on more than one level–

      What a game!!!! GO BLUE!

  3. ac

    Hi, Long time lurker here.
    Your blog post instantly reminded me of a Derek Sivers interview I listened a few months ago, he talks about living below your means, hedonistic adaptation and how he resisted to adapt to that mindset when he became a millionaire. I thought you may want to check it out, when you have time:
    Interview:

    http://www.eventualmillionaire.com/blog/2011/06/dereksivers/

    Transcript of the interview:

    http://www.eventualmillionaire.com/blog/derek-sivers/

    I have learned a lot from your blog, your writing inspires me so much to fix my own financial problems. Thank you so much for sharing your story!!!

    • AWESOME COMMENT.

      It took me a little while to skim the interview and find the key part, so I’ll save other folks the trouble and repost the pertinent stuff here. The dude is so down to earth. The entire section completely resonated with me.

      JT: Specifically we talk a lot on the site about personal finance and I’ve read about you and your personal finance theories and you live a debt free life. Can you tell me your thoughts on personal finance and how you go about working with it?

      DS: Yeah, I don’t really optimize. Well first let me just say I’ve always been very debt adverse. I don’t like being in debt at all even on the small level. I never bought anything with a credit card unless I had that much money in the bank. The credit card was just a convenience. Like I never went into negative debt on a credit card, even as a teenager because I just hated that feeling. They say that there are two ways to be rich. That one is getting more money and the other one is lowering your expectations, lowering your needs.

      So if you lower your needs far enough, then you can be rich quite soon. So, that’s what I did when I was 22 is when I quit my last job. So I did actually have a job for a couple of years from the age of 20 to 22 and I had saved up $12,000. So I was 22 years old, that felt rich because I was working in the circus at the same time as I had this other job. It was like two jobs at once and I was working seven days a week and it was awesome but my rent was only $330.00 a month. I had a little place that we split with three guys so my rent was incredibly low. Never even took taxis, never went out to eat. I just ate pasta and peanut butter and jelly and I just focused on my work and I never went out.

      I didn’t want to, I was really just focused and drive on practicing and improving and building my career. So I had saved up $12,000 and was like whoa. That is like I can live off of that for a couple years. So I did. I quit my job. The last time I had a job was 1992 and I lived off that $12,000 for a couple years and I just kept my costs really low and I was still earning a few hundred dollars a month net profit with the circus. I think with the circus I was earning maybe like $12,000 a year and that was just enough to pay my cost of living. So I felt pretty rich ever since then.

      I didn’t buy anything. I didn’t want anything. Then there was the level of, I know you talk to millionaires, but to me, like my really feeling rich moment came about once I had like $200,0000. It’s like CD Baby had been running for a few years pretty well and once I had like $200,000 in the bank, then again, I was like wow, it could all disappear and die right now and I would be good. I could live for ten years on that. I would not even need to work. I could just sit and read books and do nothing for ten years just with the money I got right now and what an awesome sense of security that was.

      But again, it was because I had no, like I kept my cost of living down to nil. I think that’s important. I don’t know, my thoughts on personal finance are just realizing that buying some new shiny thing doesn’t make you happy past a few minutes. Like yeah, to get a new computer or something, like new fancy gadget, new iPhone 7, whatever it may be, yeah for five minutes you’re like oh cool, look. But after a few minutes, it’s like well just another phone. You’ve played with the little apps and the gadgets for a bit but in the meantime you’ve wasted so many hours of your life that you’re going to have to work to pay for that thing now and feel like a slave and all that to buy that thing.

      Then you see people do it on the bigger with they buy a sports car or they buy a five-bedroom house or a giant thing. It’s like you don’t need that. Then they talk about how they feel trapped and well I have to work, I have to do these things and I have to pay the bills. Well it’s like you didn’t need to get those bills in the first place. You know what I mean? You don’t have to do anything. You could just, there’s that book The Power of Now written by, I forget his name.

      JT: Eckhart Tolle.

      DS: Thank you. Where at the opening of the book he describes it like he just hit some point in his life where he just decided to sit on a part bench for a few years and he sat on a park bench for a few years and I don’t know what his cost of living was for doing that, like I imagine take the cost of some bread and peanut butter and jelly or something like that for a few years, and I think your cost of living doesn’t really have to be much more than a couple hundred dollars a month. Anything over that is just your indulging your unfortunate insatiability.

      So my thought on personal finance is like number one, lower your wants. Just even really deeply internally just make yourself stop wanting all that stuff. Realize that it doesn’t make you happy and then number two, appreciate all the wonderful freedom you have now that you’ve lowered number one and you don’t need all that crap to make you happy.

      My role models, I told you I was with the circus for 10 years and so not just my circus performers but often even their parents were of this more artistic mindset. For example, my girlfriend of many years, her parents, one did part time photography and one was like a part time seamstress and that’s it. They lived in a house in the woods and it was a nice little house and they raised their daughter and put her through college just with the money that they made just as a part-time photographer and part-time seamstress because they kept their cost of living low. That was such a role model to me.

      Like you don’t need to do all this kind of rat race stuff that we think you need to do. You can spend your time just doing what you want as long as you can find a way to make a few hundred dollars every now and then doing what you love. That’s enough.

      JT: That’s awesome. Well it’s funny because you’re describing my epiphany when I was 24 exactly to a tee. Like I was $70,000 in debt and realized hey I don’t have to have my job if I just get rid of this debt and live way below my means. I could actually quit my job like completely even though I made six figures and two-thirds of the income, it didn’t matter because if you lower it enough you could pretty much live on anything. Then it’s a freeing experience. It’s so huge to be like hey I was working that whole time and I really didn’t have to, yeah!

      DS: Yeah, exactly. When I quit my job that was a big thing. It’s like whoa, why didn’t I realize this sooner? Isn’t that an awesome feeling?

      JT: Oh yeah. You feel kind of dumb though at first because I was like hey why did I do that? Why wasn’t I smart enough to know that to begin with? But knowing that and being able to move past that it’s just an amazing, amazing, I’m so lucky now where I am. I work part time too. We’re just lucky that I was able to have the epiphany at 24 instead of 64.

      DS: It’s funny, I still follow this. When I decided to sell CD Baby for $22 million, like when that was the agreed upon price, it was like whoa $22 million dollars, what the hell do you even do with that and the funny thing is I did a poll among my friends like what would you do if all is said, like something you were doing, like you were just told that you were about to be given $22 million what would you do? It was so interesting hearing different peoples reactions.

      So one friend would say something like well I would buy a big house for my parents and a big house for my brother and a big house for me and I would get a Ferrari and I would get something, something and if there’s anything left over … So I had a few friends that would say variations on that. Some that wanted to do such charitable things like they say I’d instantly open a school for the needy in Africa and I would throw myself into humanitarian. I would use all my money to save lives. Like okay.

      I actually I asked my lawyer who has been this music industry lawyer for a long time and his reply was funny. He goes, honestly, Derek, it’s not that much money. I mean yeah it will carry you for a few years but it’s not like real fuck you money, you know. But it’s funny like he is coming from that point of view where he has a multi-million dollar house and five cars and to him, that wouldn’t sustain him that long.

      Anyway, but my best friend, Meredith, had a really interesting thought. She said, “Well, I would put it all into the bank or put it all into like a safe, very conservative investment kind of thing where I wasn’t ever going to lose it and it was just going to grow at a few percent and I would never, ever, ever touch it for my whole life. I would only live off the interest.” I’d say, okay, what is the interest on $22 million well then that’s my cost of living and she said, “I would just adjust my cost of living accordingly so that I would only live off the interest.” It was really sweet. It was kind of like right on, I hadn’t told anybody that that was my thought too but she said that and she put it so bluntly and directly.

      It was like that’s kind of what I was thinking too and so that’s what I did with this charitable trust that you can read on my site where I really did give it all away. I put it into this charitable trust and it’s irrevocable. I could never, ever, ever get it back no matter what but it does pay me out 5 percent per year and that’s enough. So I adjusted my needs accordingly so I’m just living on that interest and will never touch the principle and it will all just go to charity when I die. Hopefully by the time I die in fact it will be, I hope it will be $200 million by the time I die, that it could just compound and grow for my whole life so that by the time I die it will be a lot more.

      The thought being that while I’m alive I can do helpful things for the world with my actions but when I’m dead I can’t. So when I’m dead the money will have to be helpful in my behalf.

      JT: I love that. I love that and it’s funny because my site is Eventual Millionaire and it’s not about, of course, the million. It’s about the person you’ll become and what you’ve done in order to get there. But that’s awesome because everybody assumes when you become a millionaire you’re like oh everything changes, everything is different and, you know, you put it away and you’re getting 5 percent a year and that’s it and that’s an amazing thing that you chose to do. Excellent.

      DS: It made me happier. I know another friend of mine kind of was in the same position as me a few years before me. Sold his company for about the same amount of money and he took the lump sum and like he went and bought himself a $10 million house and it was kind of sad that even when he was telling me about it, when he said something like I realize that was only $10 million we could afford it and I never want to hear myself say only $10 million. Know what I mean?

      JT: Oh yeah.

      DS: I don’t even want to be in that mindset. I think there can be a thing of having too much money so that you’re doing really wasteful things and not doing that math like we described. The iPhone, will it really make me that happy? No it won’t. It’s like still using that math. Like even though you can afford it, yes, but still acting as if you can’t. In a way, trying to think like how happy will this really make me?

      That same friend, when he flies around the world, he flies on Virgin Airlines upper class which, I don’t know if you know, like it’s beyond business class. It’s even beyond first class. They have like an upstairs cabin where it’s I think it’s something like $10,000 to fly from LA to London or something like that and he takes it just because he can and he’s like it’s more comfortable, you get to recline. I’m like yeah but you’re trapped on the same plane with everybody else. You’re getting there at the same time as everybody else. It’s only ten hours of your life and you’re going to spend $10,000 to be a little more comfortable.

      It’s like it’s so sad when you think of all the other things that that $10,000 could do. Hell, that could hire you a part-time assistant for a year if you had some ideas that you wanted to turn into reality and you need some more help doing them. Or it could sorry to do the usual charitable route but hell, look at what they’re doing with malaria nets and think of how many lives you could save, like people who will not die because you give that $10,000 to them instead of to Virgin upper class.

      So part of me I deal with locking away, putting all the money into the charitable trust was like I don’t want to be able to touch it. Like I don’t want access to it because I don’t want it to change my perspective on what’s worth doing or buying.

      JT: It’s so funny because after interviewing so many millionaires, they all have this same mindset, you know what I mean. Even the ones that do buy the Lamborghinis, it’s only after they’ve made so many millions that it doesn’t matter and that was the thing they wanted since they were a little kid and that’s why they got it. But it’s never about the money and it’s always about keeping the value of a dollar still the value of a dollar and that’s huge.

      DS: Interesting.

      JT: Yeah, it’s great to hear to everybody who’s not a millionaire that they can do the same thing and once they get to that point, it’s going to be the same not angels don’t fall from the sky, you know what I mean. These huge things don’t happen just because you hit millionaire status. I don’t know yet but I hopefully will find out, you know.

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  5. Travis

    I’m really enjoying this blog. The content goes beyond the number crunching and progress tracking of debt reduction. It’s discussing the “why” behind the decision-making process of committing to debt reduction. I’ve been trying to pin a term to understanding the concept of why after you continually purchase something that you thought was the end-all be-all, it doesn’t increase your baseline level of happiness. That’s really affected by the people you interact with, and yourself. And considering that you’ve gone thru this effort, after the debt is gone you’ll have a stronger control and understanding of the decisions, financially and usage of time to make even more effective decisions in the future. Reading this has helped me frame that I need to be even more meticulous in planning the purchases I want, and presenting a clear understanding of “why” I want it.

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