Planned Obsolescence
Episode 112R
Episode Guide
Episode Timestamps
ChooseFI Episode Show Notes
Episode Summary
In this episode, Brad and Jonathan delve into the concept of planned obsolescence and its impact on personal finance, sharing personal anecdotes about car ownership and appliance failures. The discussion transitions to the critical issue of lifestyle inflation, featuring insights from listeners like Nasima and Jill, who illustrate different strategies for achieving financial independence and engaging partners in financial discussions. Their conversations stress structural financial decisions that can drive long-term wealth building.
Key Topics Discussed
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Planned Obsolescence
Brad shares experiences related to planned obsolescence, particularly in relation to house repairs and car maintenance. -
Lifestyle Inflation
Discussion on how lifestyle inflation affects finances, with anecdotes emphasizing the need for financial awareness and proactive changes. -
Getting a Spouse On Board with FI
Jill's strategy for introducing her husband to the principles of financial independence through attending Camp FI, highlighting the effectiveness of community in fostering financial conversations. -
Community Voicemail Highlights
Listeners share their insights on pursuing financial independence and facing life challenges, highlighting community support. -
Listener Feedback and Closing Thoughts
Reflection on the takeaways from listener experiences and the collective pursuit of financial independence.
Actionable Takeaways
- Evaluate the true cost of car ownership; consider the long-term expenses and benefits of maintaining an older vehicle.
- Implement zero-based budgeting to better track and allocate your finances.
- Prioritize communication with your spouse about financial goals and challenges for better alignment.
Key Quotes
- Brad: "Your choice in car ownership could mean $750,000 more in your retirement fund."
- Nasima: "Freedom is a choice; she showcases how to reclaim your life from debt."
- Brad: "Time spent with family outweighs monetary gains; prioritize accordingly."
Speaker Highlights
- Brad Barrett: Discusses the implications of planned obsolescence and shares personal anecdotes about managing expenses.
- Jonathan Mendonsa: Underscores the value of lifestyle changes for long-term financial benefits.
Related Resources
- Financially Intentional Blog - Learn more about intentional financial choices.
- ChooseFI Community - Join the community for support in your financial journey.
Discussion Questions
- How does planned obsolescence affect your purchasing decisions?
- In what ways has lifestyle inflation impacted your financial situation?
- What strategies have you used to engage a partner in financial goals?
Email Campaign Information
- Join our community to explore financial independence with like-minded individuals and access exclusive resources.
- Discover effective budgeting techniques that can revolutionize your financial journey.
Listening Links
Note
- This episode contains a correction regarding any mention of "Dominic Cortuccio" or any similar variations; the name should be corrected to "Naseema."
Embracing Financial Independence Through Smart Choices
In today's fast-paced world, understanding financial independence is crucial. Planned obsolescence, lifestyle inflation, and the true costs of car ownership are just a few aspects that can impact your financial health. Here, we explore actionable strategies to help you build wealth and make informed financial decisions.
Understanding Planned Obsolescence
Planned obsolescence is a marketing strategy where companies design products to become outdated or fail after a certain period. This leads to consumers having to continuously replace items, often at a financial loss. Recognizing this can help you make informed choices regarding purchases.
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Research Before You Buy: Before making a purchase, invest time in research. Look for products known for durability and longevity rather than opting for the cheapest option available. High-quality items may have a higher upfront cost but will save you money in the long run.
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Prioritize Longevity: When purchasing appliances or furniture, choose brands with solid reputations for durability even if they come with a higher initial price.
Combatting Lifestyle Inflation
As income increases, many people fall into the trap of lifestyle inflation, which is the tendency to increase spending as finances improve. This can lead to debt and financial stress.
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Set Financial Goals: Establish clear savings targets and stick to them. This can help you resist the urge to overspend simply because you feel you can afford more.
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Live Below Your Means: While it’s tempting to upgrade your lifestyle when your earnings increase, consider maintaining your current lifestyle. This can build a significant savings buffer over time.
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Track Your Expenses: Implement zero-based budgeting or any other effective budgeting technique. Knowing where your money goes can uncover unnecessary expenses and help you prioritize savings.
The True Cost of Car Ownership
When considering transportation, the costs associated with car ownership extend beyond monthly payments. The cumulative costs can vastly deplete your savings if not properly managed.
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Evaluate Total Ownership Costs: Consider all costs associated with owning a car - insurance, maintenance, fuel, and depreciation. Sometimes, holding onto an older car can save you substantial amounts compared to leasing or purchasing new vehicles.
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Consider Alternatives to Car Ownership: In many cases, biking, using public transportation, or car-sharing services may provide cheaper and more sustainable alternatives to owning a vehicle. Assess your needs to determine if such alternatives could work for you.
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Invest Your Savings: If you can eliminate or reduce car payments, consider investing that money instead. Over time, these investments can significantly grow your wealth due to compound interest.
Engage Your Spouse in Financial Independence
Often, couples may find themselves at odds when it comes to financial goals. Engaging your spouse in your financial independence journey is essential for achieving success as a team.
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Communicate Openly: Sit down with your partner and discuss your financial goals and challenges. It's essential for both parties to be on the same page to work towards common objectives.
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Introduce Them to Resources: Introduce your partner to blogs, podcasts, or engage them in community events related to financial independence. Sometimes, seeing is believing, and learning together can spark interest.
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Seek Community Support: Attend financial independence retreats or workshops together. As one listener demonstrated, sharing experiences with like-minded individuals can ignite enthusiasm in your spouse.
Building Community Support
Leveraging a community can enhance your financial independence journey and provide motivation and accountability.
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Join Financial Communities: Engage with online forums or local meetups focused on financial literacy and independence. Sharing stories and strategies can motivate you and keep you accountable.
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Share Your Successes and Challenges: Utilize social media or community platforms to express your journey, get feedback, and gather support. Discussing setbacks and victories fosters resilience and learning.
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Encourage Others: As you grow in your financial knowledge, use your journey to inspire others. This can create a cycle of support and motivation, benefiting everyone involved.
Conclusion
Achieving financial independence requires intentional choices and lifestyle adjustments. By understanding the implications of planned obsolescence, combating lifestyle inflation, accurately evaluating car ownership costs, engaging loved ones, and fostering community support, you can put yourself on a fruitful path toward financial freedom. Remember, the pursuit of financial independence is not merely about frugality; it is about creating the life you want with thoughtful decision-making and proactive planning. Start today to build a better financial future!
Your journey towards financial independence begins with small, deliberate steps. Take the first step today by evaluating your financial habits and making informed decisions.
An evaluation of the long-term savings that result from driving old cars, a review of how Naseema McElroy has optimized her finances and reversed lifestyle creep, and a series of voicemails and messages from the ChooseFI community.
[elementor-template id="143609"]- Planned obsolescence is the idea that a company makes something knowing that you will have to replace it in a relatively short time period.
- ChooseFI started a new DIY Facebook group to help the community tackle DIY projects.
- Brad explains how economically efficient it is for him to keep driving his 2003 Honda Civic:
- Brad aims to use his car for 15 years, and chooses to invest the money he would’ve used for car payments, anticipating that he’ll need 3 cars in his adult life.
- Total that he’ll invest, instead of spending on a car payment: $742k.
- When we optimize housing, transportation and food it makes the difference of hundreds of thousands in savings over a lifetime.
- Naseema, from Monday’s episode, chose to optimize her finances and resist lifestyle creep.
- Do you really value what you’re spending your money on?
- Naseema’s $200k+ income as a nurse is not uncommon for her location.
- Even if you’ve taken a specific career path, if you want to make a change, you are never stuck.
- Having options is a hallmark of financial independence.
- Naseema is making the most of geoarbitrage by living in Nevada and working in California.
- A message from Kim, excited to prioritize her quality of life and incorporate lessons learned from Naseema.
- Voicemail from Ryan, who explains how the U.S. government shutdown has given him the opportunity to practice a “pre retirement” and explore new side hustle and hobby opportunities.
- Jill shares how she got her spouse fully on board with FI: sent him to CampFI using the power of a “tired parent” and 4 days away as a vacation.
- In order to bring your spouse on board with pursuing financial independence, a good starting point is to start talking about what truly brings you joy.
From the Mail Bag
"Are you allowed to use your company match when calculating your savings rate?"
Brad includes the company match in his savings rate. If you do though, be sure to include it in both the total savings computation as well as total compensations sum (e.g. the denominator as well as the numerator of the rate calculation).
