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Archive for the ‘luxury vs. necessity’ Category

Don’t Give Money More Power Than It Deserves

Sunday, October 4th, 2009

Last night I watched the 2007 film “The Diving Bell and The Butterfly,” based on the biography of Jean-Dominique Bauby. Bauby, the former editor-in-chief of the French fashion magazine Elle,  suffered a massive stroke at age 42 which resulted in “locked-in syndrome” — he could hear and understand everything around him, but couldn’t move or speak. He was able to communicate only by blinking his left eyelid.

Bauby’s speech therapist develops a way to help him communicate (see photo); he blinks as she reads the letters of the alphabet, spelling out his thoughts letter by letter. When she initially presents him with the system, he blinks the sentence “I want to die.” Eventually he realizes that although he’s locked in, he still has his mind and his imagination, and he decides to write a book about his experience, dictating it to an assistant word by word, by blinking. (In case you haven’t seen the DVD, I won’t reveal the end.)

Despite all I’ve learned about money and happiness, I admit I’ve had moments in which I created my own locked-in syndrome by giving money more power than it deserves. I’ve allowed it to play a role in my choices that was limiting, even paralyzing. At those times, I lost sight of how powerful the mind and the imagination can be.

Bauby, who, at the top of his game, is suddenly deprived of everything — even, as he puts it, the simple pleasure of ruffling his children’s hair — doesn’t allow his circumstances to diminish his spirit. He focuses on what he has, rather than what he’s lost, and forges ahead.

I have a series of stories coming out this Wednesday (Oct. 7) on Savvy Money Moms, a special section on the website www.family.com. One of them looks at the silver lining in the recession. I had the privilege of interviewing a number of families who are suffering financial hardships but found ways to come together, focus on simple pleasures and laughter, and even renew old dreams of doing work they love.  They inspired me, as Bauby’s story did, and reminded me that attitude is a choice, and it costs nothing to be  joyful.

The Diving Bell and the Butterfly is beautifully directed by artist Julian Schnabel. I watched the film with two of my daughters, and was grateful for the luxury of ruffling their hair.

Cell Phone Snafus

Thursday, October 1st, 2009

If there is an industry rife with streamlining possibilities for smart entrepreneurs, it’s got to be the cell phone industry. Last week I pulled the charger plug out of my Palm Treo and the entire bottom of the device popped out with it. I headed over to Verizon with a simple request: Please fix my phone or sell me the exact same model, and I will go along my merry way.

This being the cell phone industry, neither option was available. Instead, the salesman suggested, I could exchange my dead Treo for a new Blackberry, which was free — but only if I mailed in the $100 rebate, and agreed to extend my existing contract for another two years. But this would require learning an entirely new phone, I said, which doesn’t even have a touch screen. What if I don’t like the Blackberry?

No problem, he replied, you have 30 days to return it, no questions asked – although it will cost you a $35 restocking fee. And if I change my mind after 30 days and decide to switch to, say, an Iphone? Then it would be the restocking fee plus $175 if you break the new extended contract agreement, he said. But no worries, it’s pro-rated.

Huh? Can anybody make this industry simply give the customer what they want?

And here’s a question for you IPhone users out there. Tell me if the product is revolutionary enough and the experience life-changing enough to warrant returning my new Blackberry (with the no-touch screen) in the 30-day window. As regular readers know, I’m a practical gal. I buy products (like used cars and generic groceries) because they are useful and do the job. Neither my self-image nor my self-esteem are related to said purchases, and I don’t even know who the Joneses are, much pay attention to what they think.

However, I keep running across such interesting IPhone apps that I am wondering if this product has crossed the threshhold from luxurious item to impress the neighbors to useful item that will grow in usefulness over time.  Would love to hear your response…within 30 days if possible.

Nickel and Dimed on Picture Day

Wednesday, September 30th, 2009

In my moral values class at Seton Hall University, we were discussing some of the universal moral themes that researchers believe may be genetically hard-wired (see this article by Harvard psychologist Steven Pinker in The New York Times Magazine). These are values that when violated prompt a universal moral reaction or a sense of outrage, across a variety of countries and cultures. The values are harm, purity, community/group loyalty, authority and fairness.

I think fairness is the underlying value that provokes disgust when we feel nickel and dimed by the products we buy and the services we use. Perfect example: Picture Day this week at school. Lifetouch, the vendor that seems to have a monopoly on school pictures in New Jersey, sent home the form to be filled out — photo sizes, back- grounds, cropping, retouching options, and an envelope for payment.

Frankly, I think school pictures are a waste of money, because I take waaaay better photos of my children. But the kids really want them, and of course we want the class picture, so I pony up $28 for each kid to get some 5 x 7s and 2 x 3s — that usually come home and go right into the drawer with the last eight years of school pictures.

This year, Lifetouch began charging $3 if you order a background in any other color than “traditional gray.” Now traditional gray would be better described as ”your child’s school picture will be taken against a concrete prison wall.”  If you want blue, or fakey reddish fall foliage, or the somewhat sappy patriotic background with the American eagle, it’s an extra $3.

Well anyone who’s ever used photoshop knows that  it costs Lifetouch nothing to insert a gray background or a blue one. The unfairness, the outrage! I felt taken, cheated, nickled and dimed. Filling out the forms the night before the photos, I ordered the gray. My daughter protested — she wanted the blue. I fumed that I wasn’t going to pay a $3 rip-off fee to Lifetouch (and actually wrote that on the order form. I need to take some yoga classes or something). 

The next morning I relented, and told my daughter if she really wanted the blue background I would throw another $3 in the envelope. “Nah,” she said. “It doesn’t really matter.” Interesting how the things we desire immediately don’t seem as important the next day. Perhaps I should pay Lifetouch $3 for a lesson in delayed gratification.

Loving Life With No Cable

Sunday, September 27th, 2009

It’s been one month since we got rid of cable television (I wrote a story about it in my Yahoo!Finance column a few weeks ago). I’ve had all kinds of feedback — from parents who would like to do the same, to folks who think I’m some kind of Amish Luddite who should be charged with cruelty to children. But 30 days into our experiment, the results speak for themselves.

In the old days, we didn’t allow television during the school week, so my kids would usually gorge themselves on it during the weekends. Yesterday, instead, my oldest read an entire novel; my middle daughter had a sleepover and spent most of the morning playing Mancala and other games; and my six-year-old created a story about hidden treasure and drew the map, strapped on her backpack and went treasure hunting in the house (complete with a parachute made out of a grocery bag).

The household is quieter, calmer and more focused; it’s like a loud, unwanted house guest has finally departed. Even the dog is happier, because she always finds someone to play catch with her.  We still watch DVDs from Netflix, but our media choices are active, not passive. I do occasionally miss a little TV before bedtime, but I just read instead. And I did feel a little out of it reading about all the new fall programming in the newspaper. But will my life be ruined  if I never catch an episode of “FlashForward”? (Heck, if it turns out to be a cultural phenom, I can always order the whole season on Netflix.) 

I had lunch with a friend who is a senior editor at Consumer Reports, and he reminded me that the issue of a la carte cable programming has been around for years.  The truth is, if I had the ability to choose and pay for the channels I like — such as the History Channel, Bravo, Animal Planet, ESPN — I would have kept the cable. But when I have channels I hate shoved down my throat because of the way the cable company has chosen to “package” them,  the only choice is to opt out entirely.  Financially, it’s been great. We’re saving about $80 a month, or $960 a year.  

Do you have a story about kicking out the cable? I’d love to hear it.

Frittering Away Cash: How Luxuries Become Necessities

Thursday, February 28th, 2008

How many of your luxuries have become necessities? For me, it was my Treo cell phone. Back in the mid-1990s, I got a deal on a Bell Atlantic phone through my former employer – something like $25 a month for 500 minutes. (The thing weighed about 40 pounds.) In 2000, Bell Atlantic acquired GTE and changed its name to Verizon, continuing to honor my deal. Until last year, I was paying an average of $35 a month for my cell, which I rarely used.  

Then I missed an email from a producer at CBS Evening News, who was requesting an interview for a story they were doing on debt. By the time I returned the call, it was too late. I had missed the opportunity to preach the anti-debt message. (And my book had just come out in paperback; the publicity would have been nice too.)  

Suddenly a Treo became a necessity, so I could check my mail on the fly. Now I pay about $90 a month for unlimited calls and messages – or an extra $660 a year.   

“The ratcheting up of needs is a difficult problem for us to handle; this is an ongoing problem in an age and a culture which produces a lot of rapid innovation,” says Stuart Vyse, psychology professor at Connecticut College and author of “Going Broke: Why Americans Can’t Hold On to Their Money.” 

I interviewed him for my Yahoo!Finance column on “America Saves Week.” “Things we never considered a possibility can rise to the level of a need, such as computers and cell phones,” Vyse explains. “It’s not as though other needs go away; the (innovations) become an added expense. It wasn’t that long ago that basically no one had a cell phone – you had a land line and an answering machine. Now a cell phone is considered a necessity by more than half of Americans, and in many cases that’s a bill added on top of the land line.” 

Vyse says pharmaceuticals are another category of continual product advancement that most people don’t think about. “The innovation in pharmaceuticals has created a tremendous additional burden,” says Vyse. “No one took Lipitor until it was invented, and now it is the most profitable drug on the market. Somehow that money is being absorbed by lots of people, and there’s no question it’s a necessity.”  

Moreover, in a competitive culture, it’s hard not to envy — and emulate — the early adopters. “Iphones, Ipods all become part of our culture and easily flip over into the ‘need’ basket,” says Vyse. “You have to make an ultimate effort to say no to something everyone else thinks is a basic thing.” 

I’ve found the definition of “need” becomes slippery as you move through different life stages. When I was single in my 20s, my needs were pretty simple – a tiny affordable apartment, a brown bag lunch, bus fare, a little savings, a good pair of running shoes.    

Now – with a full-time job, a spouse who is often away for work, three kids and a house – the world of needs is all-consuming. Mortgage, utilities, school tuition, shoes that the kids seem to outgrow within a month, college and retirement savings. Two years ago I broke down and hired a cleaning lady twice a month. Now I need her.  

What luxuries have become necessities for you? 

Kids and Spending

Saturday, March 24th, 2007

The Wall Street Journal reported recently that luxury goods makers Louis Vuitton, Tiffany, Coach and Neiman Marcus are developing special marketing campaigns targeted at kids. Nieman Marcus joined forces with Theory, Nanette Lepore and Tory Burch to create an exclusive collection of dresses, promoted during a “hip event” weekend this month for teens. Designer Mark Jacobs is using 12-year-old actress Dakota Fanning to promote spring 2007 in Vogue and W. Coach and Tiffany have introduced “aspirational products” – silver bracelets, smaller wallets, gadget cases – to attract the younger buyer.

I find myself becoming increasingly vigilant in shutting out the marketing messages that saturate my kids’ lives at every turn. They adore Radio Disney, but we turn it off the second the DJ says “we’re taking a break,” because, as my four-year-old says, “commercials are stupid.”

I don’t find it that hard to say no to my kids when it comes to gadget cases and silver bracelets. That said, my kids devour a huge portion of my income – private school, college savings, enrichment programs, orthodontia, etc. There’s a fine line between expenditures that potentially enhance your child’s future, and the ones that simply diminish your finances. When one of my kids was struggling a bit in math, for instance, I enrolled her in an after-school tutoring program twice a week. Her sister, who is doing fine in math, showed some interest, so I enrolled her too. (Meanwhile, I never had a single academic enrichment class in my life. I did just fine.) 

Have you ever found yourself straddling the fence on a purchase or investment for your child, wondering if it will enrich his or her future — or just empty your wallet? I’d love to hear your story.

The Hedonic Treadmill: The More We Have the More We Want

Thursday, March 8th, 2007

In 2002, after more than a dozen years in Manhattan, my husband and I finally bit the bullet and moved to the suburbs.

We traded our 900-square-foot, one-bedroom apartment in the city for a 2,000-square-foot, four-bedroom colonial in New Jersey. Just in time, too. Our third child was born shortly after we moved.

I thought I’d died and gone to real-estate heaven. But it didn’t last.
Just as I had once longed for the classic-six apartments and Hamptons retreats of our Manhattan friends, I now began eyeballing the mansions higher up the hill and envisioning the delights of a summer place on the Jersey Shore.

Scientists call this phenomenon “the hedonic treadmill.” It simply means we adapt to the improvement in our circumstances and then seek more. The more stuff we have, the more we demand from life –and the more disgruntled we become when we don’t get it.

So what’s wrong with improving our material circumstances? This is just the pursuit of the American Dream, right? Well, not if your ultimate goal is happiness, according to three decades of research in the field of “subjective well-being.”

Scientists have found that while a certain amount of money does indeed make us happy, once basic needs are met, happiness doesn’t continue to rise in direct proportion to income. For instance, surveys of lottery winners found they are not much happier than the average person — and actually took less pleasure in routine events, like a friend telling a joke. I suppose once you win Powerball, the neighbor’s knock-knock jokes kind of pale in comparison.

But that’s not all. Researchers Tim Kasser of Knox College and Dr. Richard Ryan of the University of Rochester have found that people who make money a top goal in life are at greater risk for depression, anxiety, behavioral and relationship problems, and score lower on indicators testing for self-actualization and vitality (or feeling alive and vigorous). The results were consistent across different countries, income levels, and age groups.

So if scientists say chasing more money and more stuff can actually be bad for you, why do we keep climbing on the hedonic treadmill?
Here’s one compelling theory: People are bad at predicting what will make them happy. Princeton psychologist Daniel Kahneman won the Nobel Prize in economics in 2002 for his work in this area.

Basic economic theory suggests that you and I are motivated by self-interest. We know what we want, we can predict the most desirable outcome, and we can make the best choice to maximize our welfare. Not true, say Kahneman and others. We don’t always act rationally.

Consider the irrational attachment to New York City that would prompt a family of four to live in a one-bedroom apartment, for example. We left reluctantly, viewed it as a sacrifice for the kids, and predicted living in the suburbs would make us unhappy. Strangely, it turned out to be quite the opposite.

Why can’t we predict what will make us happy? As Kahneman explains, there are two people involved in our decisions: The self that actually experiences events and the one who remembers them. It’s the remembering self who keeps score and controls our destiny.

When we recall events, we craft a narrative for ourselves, paying closest attention to the peak and the end of the experience. And that results in a limited picture of what actually happened.

Psychologists discovered this phenomenon by having subjects do both real-time, minute-by-minute assessments of an experience and then an after-the-fact evaluation. Kahneman, for instance, did a study of patients receiving colonoscopy exams.

In the study, Patient A went through a buildup to sharp pain and then the procedure was over. Patient B went through a longer procedure — a buildup to sharp pain, which then declined to slight discomfort before the exam ended.

Here’s the wacky part of the findings: The people whose experiences ended on a less-painful note rated the experience better, even though they suffered exactly the same pain as Patient A and the event lasted for a longer period of time. They only remembered the peak and the end.

So what’s my point? Like the colonoscopy patients, we focus on the peak of an experience and the end, ignoring the stuff in the middle. So we’ll remember the rush of closing a big deal at work, but we won’t remember what it cost in time away from our families. We’ll remember how spectacular it felt to trade up to larger digs, but we won’t remember how long and hard we had to work to get there.

The bottom line: The bigger the trade-up in lifestyle, the bigger the monthly nut — and the harder we have to work to achieve material goals. Since there are only 24 hours in a day, we end up sacrificing other aspects of life that actually do create lasting happiness (at least according to scientists): Spending time with family and friends, exercising, volunteering, or swinging on that hammock in the back yard with a copy of Sports Illustrated and a cold Heineken. (Okay, that last one came from husband, not from scientific research.)

So how do we resolve this dilemma? Make a list of 10 things you value most in life. Make a list of the people, the qualities and the experiences that are most essential to your happiness. Then set goals for yourself as to how you’ll build a life that consciously reflects those values, connecting them to both money and time.

Value a relaxed, secure retirement? Max out your 401k or IRA contribution. Value a relationship? Schedule lunch with that person a couple times a month. Value helping others? Mentor a colleague or volunteer for a charity you strongly believe in. Consciously choose what the happy life looks like for you, rather than allowing the irrational self to run you ragged on the hedonic treadmill so you can buy more stuff.

Meanwhile, if you come across a bargain surfer’s shack on the Jersey Shore, let me know. On second thought, don’t.

When Status Has Too High A Price

Thursday, December 8th, 2005

At a conference over the summer of 2005 I met a delightful designer and author named Pamela Scurry. Her many activities include offering recipes and tips as a contributing editor for Campbell’s Soup. Essentially, she helps make family meals and holiday gatherings simpler and less stressful. Her goal, she told me, is to empower women — to give them permission to make their own choices.

To illustrate, she related the story of a young mother who threw a birthday party for her toddler in Manhattan. The woman got so caught up in the pressure of planning the perfect event that she spent upwards of $5,000 — much more than she expected.

This caused no small amount of tension with her spouse. Wrapped up in the social expectations of her New York peers, Scurry explained, the woman needed to be empowered to break free of convention.

In case you’re wondering, the last party I threw for a toddler in Manhattan cost $100 — and that included chicken and cake for 20 people. We met on the Great Lawn in Central Park, and it was B.Y.O.B. (bring your own blanket). The kids chased kites and lobbed Frisbees. It had never occurred to me that I needed to be empowered to throw a cheap, fun party. And, frankly, I could summon little empathy for a wealthy person who felt bad about her frivolous spending.

Once upon a time, status was derived by birth into a specific social class. Today, people compete for rank through money and material goods. Immersed in a consumer culture of astonishing choice, we define ourselves by style and aesthetics.

“Identity is the meaning of surface,” Virginia Postrel explains in her book, “The Substance of Style.” “Before we say anything with words, we declare ourselves through look and feel: Here I am. I’m like this. I’m not like that … . Aesthetic identity is both personal and social, an expression both of who we are and with whom we want, or expect, to be grouped … .”

The quest for status through aesthetics starts early. In August, standing in a long line to buy my kids’ school uniforms, I chatted with a mom from a neighboring town known for its quaint Main Street and million-dollar historic homes. She said she appreciated the school uniform because it leveled the social playing field. In her child’s preschool, some of the four-year-olds declared they wouldn’t play with another child because she wasn’t wearing “Lily” — as in Oilily, the colorful Dutch fashion line for kids. Its T-shirts sell for $50 or more; its shoes, $150.

According to Oilily’s web site, its fashions are geared toward women “who believe that creative freedom, particularly within the shared space of a family, is a fundamental part of nurturing a lifetime’s capacity for joy.”

I can just imagine my joy as my kids dribble maple syrup down the front of a $75 sweatshirt.

While impractical in my book, Oilily makes a beautiful aesthetic statement. But I would be mortified if my child made this the benchmark for her social grouping.

The pursuit of self-definition through aesthetics is not limited to the wealthy. In their book, “Trading Up: The New American Luxury,” consultants Michael J. Silverstein and Neil Fiske discuss a shipping clerk earning $25,000 a year who springs for Victoria’s Secret silk pajamas, and a coal miner who works overtime to buy “the best for me.”

Like Postrel, Silverstein and Fiske argue, new luxury goods “have become a language, a non-verbal method of self-expression and dialogue. The language enables consumers to say, ‘I’m intelligent and discerning,’ in many different and individual ways.”

Advertising reinforces this quest for self-definition. Consider a Starbucks ad that fell out of my newspaper: “The old saying is, ‘You are what you eat.’ But at Starbucks, we think what you drink reveals more about who you are. We’ve noticed for example, that triple, grande, decaf latte people aren’t the same as tall, iced caramel macchiato drinkers.”

Even a cheapskate like myself can appreciate the aesthetic pleasure of a $3 cup of coffee from time to time. But if I drink it to express how much more sophisticated I am than the folks who drink instant Nescafe, I’ve got a problem.

Dr. Shaun Saunders, a researcher at the University of Newcastle in England, studied more than 1,000 people and found materialistic folks who try to keep up with the Joneses are more likely to be angry, depressed, frustrated, and anxious.

This theme arose in a recent conversation with a successful friend who works for a major investment bank. She is a practical gal, and over the years she and her husband have always saved one of their salaries, living on the other.

She told me about a colleague in his late 40s who expressed some anxiety and frustration over the fact that, after so many years working on Wall Street, he had so little to show for it in the bank. She was able to identify three reasons pretty quickly: Manhattan apartment, country home, and children in the city’s private schools (some of which rival Harvard in annual tuition costs). He saw these costs as necessities, standard among his peers.

Maybe I’ve never made enough money to worry about status, or I took my cue from parents who never defined themselves by what they bought. But it seems to me that the pursuit of identity and status through material goods can be costly — and not only to our bank accounts. When we compete this way, we alienate ourselves from others and base our self-worth on something extrinsic. What this telegraphs is that without my designer coffee, country home, birthday affair to remember, and what have you, I’m worthless.

Pam Scurry is right. When it comes to breaking out of the status game, it seems both rich and poor could use a little empowerment.

A Scientifically Proven Way to Be Happy

Thursday, November 10th, 2005

I teach a course on contemporary moral values at Seton Hall University in New Jersey. We recently studied Aristotle’s notion that all things have a “telos,” a noble end or goal to which they must give expression. The seed’s highest telos is to develop into a tree; the lyre player’s is to become an accomplished harpist.

With this in mind, I asked my students to write a paper on their talents and how they plan to share them with others after they graduate.

These papers always inspire me to reflect on whether I’m using my own gifts to serve others — or if I’m just milking them for the bucks. Saddled with a mortgage, a ’95 minivan beginning its death spiral, and the prospect of a $900 heating bill in January, even the most ardent idealist can get distracted.

And there are other diversions, including the perennial suburban pastime of “keeping up with the Joneses.” A recent tour of my neighbor’s finished basement sparked a deep yearning for sheetrock, wall-to-wall Berber carpet, and louvered bi-fold doors. I had not anticipated such desires when I entered the working world, eager to give expression to my telos.

So I was delighted to receive a nugget of wisdom from one of my students. He wrote that his greatest gift was the ability to be grateful for what he has been given. He reminded me what many researchers have confirmed: If you want to increase your happiness — including your financial well-being — find concrete ways to express your gratitude.

“Gratitude seems to be incompatible with some negative emotions. It’s hard to feel envious or greedy or bitter when you’re grateful,” says Sonja Lyubomirsky, a psychology professor at the University of California, Riverside.

She conducted an experiment in which students were instructed to write down five things for which they were grateful. One group wrote once a week, another three times a week, and a control group did not write at all. Those who counted their blessings once a week showed a measurable rise in happiness.

Interestingly, students who wrote more frequently apparently got bored with the routine and showed no change in well-being. Researchers suggest that if you practice gratitude, choose a timetable that keeps it meaningful, and change the domain in which you contemplate your good fortune every week — from, say, health to career to relationships to simple pleasures. That may help sustain the rise in happiness created by the exercise.

Can’t think of anything to be grateful about? Try this technique from Vietnamese Buddhist monk Thich Nhat Hanh. “When I have a toothache, I discover that not having a toothache is a wonderful thing,” he writes in “The Heart of the Buddha’s Teaching.”

“I had to have a toothache in order to be enlightened, to know that not having one is wonderful. My nontoothache is peace, is joy. But when I do not have a toothache, I do not seem to be happy. Therefore, I look deeply in the present moment and see that I have a nontoothache, that can make me very happy already.”

Consider applying this technique to your finances. Celebrate your steady paycheck, lack of credit card debt, paid-off car loan, balanced checkbook, employer’s 401(k) match, or low-cost health insurance. After all, these things are far from universal.

If making lists of the things you appreciate isn’t your bag, consider another method of boosting happiness: Intentional acts of kindness and generosity.

Lyubomirsky and two other researchers had students perform five acts of altruism a week over six weeks. The acts had to benefit others or make them happy, at some cost to the participant — donating blood, helping a friend with a paper, visiting an elderly relative, etc. Those who practiced five systematic acts of kindness in a single day each week showed a significant rise in well-being.

If you want to banish envy, never measure your financial achievements against anything except your own goals. Contemplate the deeper values you aspire to in your own life — your telos, if you will — and organize your financial house to help you realize your highest priorities.

As Aristotle wrote, “The life of money-making is one undertaken under compulsion, and wealth is evidently not the good we are seeking; for it is merely useful and for the sake of something else.”

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