When to Choose Extravagance Over Frugality

When to Choose Extravagance Over Frugality

There was a time when I thought I was all aboard the minimalism train. Bare essentials and doing away with luxuries sounded pretty good to me. It was an exercise in Stoicism’s voluntary discomfort, which expands your comfort zone and makes you appreciate the moments where you truly have it good.

If I was fine with opting for less before, why did I decide to start paying more money for more things now?

It started when I got to the Philippines.

Although it can be incredibly cheap to live in Southeast Asia, chances are you can spend just a bit more for luxury and really get value out of every dollar. When I told my dad I was thinking of renting a new condo for about $450/month he asked me why it was so expensive. “Isn’t everything supposed to be cheap over there?”

Yes and no. Sure, I could find a “decent” place for less than $300/month, but what’s the value in that? Okay, $150 more dollars a month in my pocket, but knowing that I could spend that extra money to make myself 10x more comfortable makes it a no-brainer. The difference in value is higher than you’d think and the benefits of spending another $150 could be too attractive to pass up.

It’s not like I’d be starving myself several times a week just to make ends meet. Some people may shake their head at me and scold me for not putting that extra $150 into savings, but hey, why not maximize the value of the almighty dollar while I’m in Southeast Asia? If you’re not living paycheck to paycheck and the decision between spending more money is about whether or not it’s worth it then spend time thinking about value.

I’m not saying that you shouldn’t save money or invest it elsewhere. Or at least, not all of it.

You need money to play. You need money to have fun experiences (because you deserve to enjoy yourself.) You need to spend a bit more of it to upgrade the value of certain aspects of your life instead of stashing every extra penny away.

I used to pat myself on the back because I sacrificed luxuries in the name of minimalism. Upon reflection, it became obvious that it was doing nothing except feed my ego. It felt good to compare myself to my family members who spent a lot of money because then I could convince myself that I was better for not having to go buy new toys all the time.

But I’m not better than them. I’m just as attracted to luxury as everyone else is.

The narrative of the frugal minimalist no longer relates to me. It may not even relate to you if you stop and think about it for a bit. When deciding between saving money and spending a bit more of it, you have to take into account the full value of what you’re buying.

Is spending $15 on earphones and having to replace them every other week superior to buying a $250 high-end pair that will last you years? Does buying a $30 tennis racquet and avoiding the $200 racquet make sense for someone like me who wants to be at his best?

Of course not.

That’s why I’m willing to spend a bit more money on a condo. The $300/month or less place would work, but the value isn’t worth it.

Meanwhile, I’ll just spend a bit more and suddenly I’ve got a place triple the size with better furnishings.

I’m not bashing on the frugal crowd, I’m definitely still frugal in a lot of ways. The biggest difference is that I now account for the value and experiences I’ll get out of the money I spend.

Don’t just spring for inferior purchases and pat yourself on the back for saving a couple bucks.

Spend that extra dollar.

I feel like this topic can be polarizing so I want to know which side you’re on.

Do you save every bit of money when you can or do you factor in value when deciding between a more expensive purchase and a cheaper one?

Rolling your eyes because a 19-year old is talking about money? Share your perspective in the comments below!

Photo Credit: DiscoverDuPage – Flickr

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Vincent Nguyen is the author of Self Stairway and founder of Growth Ninja, a digital marketing agency that specializes in Facebook Ads. Voted "Most Guapo" five years in a row (lost during 6th year to a hand model.)

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31 responses to When to Choose Extravagance Over Frugality

  1. You make a pretty big leap there, from investing in quality because it’s going to last and save you money in the long run to justifying spending extra money on rent that builds no long-term value for you at all. They’re just not the same thing. Buying $250 earphones because they’re going to last more than 17x longer than $15 earphones does make economic sense. Spending on luxury for its own sake, while it may be justifiable, can’t be justified for THAT reason.

    The trap you’re falling into (and despite how harsh that sounds, I am willing to call it a trap) is the same one most people do. It’s extremely easy to see how much pleasure your dollar can buy today, but extremely difficult to see how much pleasure that same dollar will buy you in ten years, or twenty years, or when you’re 60.

    You have the opportunity right now to reach a point where you never NEED to work again by the time you’re 25. I’m sure that sounds ridiculous, but think for a minute about what that would mean. How would your life change if your time were 100% your own while you still had the health and energy to enjoy it? How enjoyable would life be if you never, ever had to turn down an opportunity?

    I’d encourage you to read the likes of Mr. Money Mustache to see stories from real people who are doing it. Most of us have figured out that the little luxuries just aren’t that compelling in the face of the opportunity to own your own life. But like you said, you’re 19. Only you can choose to learn from other people’s mistakes instead of learning from your own.

    • Lindsay, I really am grateful that you shared your honest opinion here and didn’t just walk away or senselessly agree with me.

      Before I address my own arguments, I’ll acknowledge what I completely agree with in your comment:

      The comparisons were unfair (rent vs earphones/racquet scenario.) I lumped together two scenarios that were completely irrelevant to one another. One about spending more in the short-run to save long-run and the other being about spending more to maximize short-term pleasure.

      Luxury items for pleasure should then be separated from items that happen to be higher priced but also bring longevity. By the way, I used to love Mr. MM. I stopped reading him a while back because the material wasn’t relevant to me–as I was even younger before–and finances didn’t apply at all to me then, but he was my first introduction to Stoicism.

      Anyway, as with a lot of things, it’s always about finding a good balance.

      I know plenty of people who save TOO much and forget they’re living right here and right now. They “save for a rainy day” but they’re like Doomsday Preppers in the sense that they think that there’s a 100% guarantee that something horrible will happen and they MUST prepare for it. If they can find a cheaper rental for $50/mo less then they’ll take it even if the walls are oozing slime, ignoring the fact that the place that’s $50/mo more is better value sans slime.

      I don’t need to talk too much about the other side that spends too much as we’re probably all too familiar with people who are like that. You know, spend every dollar of every paycheck, buy every new phone, etc., not because of value, but because why not?

      The balance, however, is someone who saves up enough from his/her paycheck, spends enough to get full value out of most purchases by weighing whether or not spending more is warranted.

      Right now it makes sense for me to spend a bit more on rent. Sure, it won’t provide long-term benefits and I may not remember how it felt to have a beautiful view at age 19 when I’m 60, but that extra money I spend monthly isn’t digging a hole for myself and it’s me taking advantage of being out in SEAsia where the difference in spending can insanely multiply value. I’m not expecting my readers to relate to the SEAsia part, but what they should take from it as that if they’re too tight with their money then they should be a bit looser and treat themselves just a bit. Don’t pick up any debts though please. 🙂

      • As with most things, the virtue is in the mean, that’s for sure. But the law of diminishing marginal utility matters too. I’ll never forget the question my dad asked me when I was first moving into a place by myself. I told him I was picking one place that had two bathrooms over one that only had one. He just looked at me deadpan and asked:

        “How many butts do you have??”

  2. I think living frugally isn’t a lifestyle choice, but merely a result of how you manage your finances.

    I was late in getting serious about my finances until I left the corporate working environment and realising how important it is of having money saved for rainy days.

    I wasn’t until i split up my earnings into separate accounts when I realised how basic I must live based on the income I was getting If I was to account for saving at least 20% of what I earned as well as paying my monthly bills and taxes if you’re freelancing or working for yourself.

    The biggest mistake you can make is to simply spend whilst not worrying too much about your security. It’s easy to pass this up when you’re younger, but it’s almost inevitable to start thinking alternatively the closer you get to the big 30 age mark.

    • Can you expand on what you mean by “I think living frugally isn’t a lifestyle choice, but merely a result of how you manage your finances.”

      Isn’t managing your finances a lifestyle choice? You can choose to not manage them and just waste it all.

  3. I moved out at 21 with my boyfriend & we very easily got ourselves into debt that we are still paying now 6 years later, but it had nothing to do with our rent & more to do with how we spent the rest of our money. I think paying more for a place you will enjoy is really important considering it’s where most people spend a lot of their time. I definitely have the though process of buying good quality items the first time around, but we were just spending too much money on doing fun things & going out with our friends. In the end everyone has to learn their own money lessons, but it seems like you are much more savvy about money then I was at 19!

    • Debt’s nothing to joke about and it’s something I always kept in mind back when I was trying to figure out whether or not college was for me.

      “Don’t spend money you don’t have” is something that seems like common sense but it’s pretty easy to ignore that rule and swipe credit cards or take out loans.

      I want to give my readers credit so I don’t think it’s necessary to say this post isn’t encouraging anyone to spend money they don’t have. I hope everyone knows that. 🙂

  4. Hi Vincent! We are living a very simple life, but it is not devoid of pleasure or fun. We prioritized and base what we spend, save, and invest based on those priorities. To anyone (not necessarily you) who is in their 20s and not saving or investing a good chunk of their money (after paying down debt), I would say, “Don’t do what I did!!!” We were in our mid-30s before we started getting serious. Now in our early 40s, we are enjoying a life we could have never imagined. We get to work part time, have paid down our debt, and are investing – BUT we could have been retired a lot earlier if we’d known then what we know now.

    I hope all is going well. It sounds really good!

  5. I think it depends on people’s priorities and values, not really on “extravagance” and “frugality”. I have a minimalist lifestyle. I own very few things, but what I own are things I absolutely need, and I’m willing to pay a high price for it. It’s an investment. In the same way that $150 more for your apartment can be an emotional investment in yourself. There’s no point in going the hard way just for the sake of it.

  6. Lei Lani Lucero May 13, 2014 at 1:59 pm

    Congratulations, you have now graduated into the “I may be 19, but I am learning important lessons, and passing them on to older people” phase of your writing! I, personally, am almost 50 years old, and I appreciate the wisdom and honesty of your writing, as well as your perspective on things (life, etc.) By learning that the value of money is fluid, and that the value of the ‘extra’ few dollars each month is worth the cost, you have continued on your journey to being a fiscally responsible adult. The value of anything is how much of yourself you put into it. (whether it be money you earned and are now spending or time you have chosen to invest in something ). Just do not try to put a dollar value on things that are valued more for the experience (which you are seeming to do nicely, by uprooting yourself and having fantastic experiences in another country).

    • It always feels weird to be doing that! I know plenty of people are probably rolling their eyes, especially on a subject like this. I totally admit that I don’t have any of this stuff figured out though. Best I can do is write from my own personal experience. 🙂

      “Just do not try to put a dollar value on things that are valued more for the experience”

      Great point. While planning my trip in June I kept thinking about dollar value instead of experiential value. The latter is more important and I was stressing over small differences in cash between each destination. Decided it wasn’t worth using brainpower to cut corners and save money when I should be maximizing enjoyment.

  7. Very nice is that above picture your apartment?

  8. At least one study has shown that: Thinking about and dreaming about purchasing an expensive item is more pleasing than actually buying and owning it. And if this turns out to be true has been the case for me IN VIRTUALLY ALL CASES (except where it immediately trespasses on comfort and practicality/utility. Let’s say a furnished apartment vs a studio one with a bed and a chair. Or an apartment much closer to the place you work. Or for example an apartment that gives you the space you feel you need.) meaningless extravagance is a waste of money, period.

    And besides, your logic seems to be based on the assumption that more expensive is always indicative of better quality. This is not always the case. And even if they tend to last longer, I would assume that at least part of it comes from the reverence that you’re more likely to bestow on a really expensive pair of headphones. (Even lots of expensive shit is built to break these days.)

    And there’s always a tradeoff. (You mentioned having to postpone travelling due to lack of funds, the shitty apartment could have gotten you there sooner. Although in the context I tend to agree with your choice as enjoying your daily life is a better goal than looking to travel as a form of escape.) Most of the super-frugal people I know put the money they save to good use.. like traveling(I guess this is debatable?), and investing(also debatable? Haha). One of my friends owned and rented out an apartment at 22, and by 25 she had visited 25 countries. She doesn’t do extravagant at all, and I don’t think it would add any value to her life if it did.

    BUT if it makes your life easier, or it has a lingering placebo effect, or it just makes you feel better, I’d say yeah it’s worth the money . (Let’s say you always dreamed about buying a tailored suit, you finally buy one, wear it and it turns you into a completely different person. Someone who doesn’t take shit, always keeps his word and does everything right… that’s worth every penny time and time again.)

    I’m surprised nobody has mentioned compound interest yet(although Tammy kind of mentioned it by proxy). But a monthly contribution of 150$ when started as young as you are now could become massive even if invested in a fund that doesn’t perform astronomically well, just performs average over time.

    But then again, when all is said and done, I tend to side with my dad’s mentality when it comes to money. “Spend it while you can still enjoy it.” So if you’re enjoying your 200$ racket, and 250$ headphones and 150$ extra per month condo, why the hell not.

    • Ragnar, love it when others bite into my articles like this because it gives me tons of different perspectives to consider.

      Do you have a source for that study? I’ve heard something similar before but it always felt so… Sketchy. It sounds cool and makes for good advice in personal development type “How to be happy” articles, but I’m not buying it just yet. Although I would agree with Stoicism’s concept of hedonic adaptation where we get used to the new luxuries we’ve bought and simply yearn for the next latest and greatest. E.G. buying the new model of the iPhone and getting bored with the new purchase every month.

      Correct, more expensive does NOT equal more quality. See, this is where I fail at writing. I don’t want to spell too much out word for word but then I completely miss the instances where it’s important to step back and address certain issues so it does not appear that I am taking a specific stance. I suppose I could resolve that in the writing itself to make it clearer that research is important in product purchases, but like I said, failure on my part in writing.

      Agree on the trade-off. That’s the thing though, right? Saving more money by taking the shitty apartment to me doesn’t make sense (financials aside) because I’m planning on being in this one place for a long period of time. Therefore, I would really like to make my stay as comfortable as possible. Of course, if I were only in the PI for two months then I would spring for shitty. The fact that I’ve been here for six months already and I’ll be here for another who knows makes it a clear choice that I should make it feel like home. Keep in mind that I work from home almost all day every day so it not being a shitty place is even more important. That also tells you that travels isn’t a high priority for me but a nice-to-have. Would LOVE to, if I had unlimited money, but lack of funds doesn’t keep my up at night.

  9. I’m somewhat a minimalist, but I like quality. So I live with less, but what I do purchase I go for the best.

  10. Quality is important. You don’t want to get ripped off either. With research, I found sturdy headphones for $30, and randomly… my best headphones ever (I’ve yanked it, and it’s fine, and it’s the loudest I’ve ever had) are from some street vendor for $5……. But otherwise, good point. Some things that are cheap now cost more in the long run like replacing headphones all the time. But $450/mo, hey. You’re living better on less in the Philippines. You’d have to pay way more for the same thing if you were in LA. Luxury where you can. Although, I’m personally also saving money for investments way far into the future so there’s one argument for still penny pinching for some things where upgraded quality doesn’t enhance your life by THAT much.

    • My friends and I were discussing this very subject during Cinco de Mayo! They seem to have hit-or-miss luck with earphones but a random fake/generic pair I bought online for $30 years ago seem to be lasting me. I used the earphones example because I also know several people who have run into the buy a cheap pair and they break weeks later ordeal seemingly constantly.

  11. I couldn’t agree with you more. I’ll get down to simple basics. Margarine would give me some savings versus pure butter, but I wouldn’t be able to savor the flavor and really good taste of butter on my croissants.

  12. I totally agree with you. Usually buying better quality things it’s not only a pleasure but it’s simply an investment. Is better not only for our own mind peace (so we are not annoyed that the cheap stuff got broken again) but also for the environment. I think we should buy as expensive things as we can afford, but as rarely as we really need it.

  13. “Sure, it won’t provide long-term benefits and I may not remember how it felt to have a beautiful view at age 19 when I’m 60, but that extra money I spend monthly isn’t digging a hole for myself and it’s me taking advantage of being out in SEAsia where the difference in spending can insanely multiply value.”

    Don’t ever doubt what you will remember when you are 60! You will not only remember the view, but also the feelings and emotions. But you won’t have regrets, wishing you HAD gone for it.

    I have the same dreams at 61 that I had when I was 15! I am choosing to act on them now and not wait to have an excess of money, though I have a bit more experience at this age 🙂 It is never too late to live your dream and create the lifestyle you want…it is also never too early to start creating the life you desire. Money is just a tool – true wealth lies within.

    I admire your abundance view of the world and I will be following your journey. Thank you for sharing so openly with us, Vincent.

    • Thanks for the assurance! You know, I thought I was going to get a lot of backlash for this post but it looks like I’m not too crazy. 😉

      Glad to have you following, Pam! 🙂

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