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!