Being Rich While Living Poor

We're all fixated on the financial markets these days. By and large, we're all feeling poorer, or at least I am, as I watch my investment accounts take a beating. With this in mind, I'm excerpting from one of my favorite lifestyle/culture websites, Of Two Minds. This featured website's "food for thought" is free and it's your option to take it or leave it.

To get through the upcoming economic hard times, Charles Hugh Smith's blog encourages us to:

aspire to the inner wealth of charity, forgiveness, empathy, self-acceptance, self-reliance, humor and a healthy humility about wisdom and how much remains to be learned in life. Regrettably for the Standard Model of Marketing, all of these are hopelessly and irrevocably free. (snip) I know it runs counter to everything we are supposed to cherish about the "American Lifestyle," but it seems to me that living poor has all sorts of advantages.

To list but a few:

1. Smaller cars are easier to park and cheaper to own/drive. A Toyota or Honda will last for 15 or 20 years with routine maintenance, while the luxury brands are rusting in the junkyard or requiring thousands of dollars in repairs.

2. Cooking real food is cheaper, tastes better and is healthier for you by far.

3. Teaching kids self-reliance and thriftiness (basically the same thing) cures dysfunctional dependence; cancel the maid service, stop buying sports drinks as everyday treats, etc.

4. Having a cellphone glued to your ear does not make you a bigshot. 80% of all "communication" is distraction. Creativity and innovation are not nourished by being overwired and distracted.

5. Being a renter is much easier than owning a house. When something breaks, you call the landlord or porperty management company. Once you buy a house with a mortgage, it's costly to align the mortgage to market forces; it's fixed unless rates fall and even then you have to pay thousands in refinancing fees. Rents are open to market forces so you can negotiate lower rents or move to a cheaper place without losing 10% of your capital (selling a house costs 6% realtor fees plus closing costs).

6. Second-hand stuff is treated as tainted by a "buy new" middle-class, but used is smarter. The first owner took a 90% loss, or a 50% loss for a recent auto. The second owner gets all the benefits with very little loss of intrinsic value.

7. Not buying anything new is best for the planet. Even a "green" Prius uses hundreds of gallons of oil to manufacture, extract the iron, make the steel and plastic, etc. It takes more oil to manufacture a Prius than the vehicle will ever consume. If you want a Prius, buy a used one.

8. The Web is mostly free (this site included). That makes it the greatest bargain of all time. Yes, a monthly access fee is required but these are less than cellphone plans. Or you can log onto free public wi-fi networks.

9. The real world trumps electronic simulacrums, which inevitably leave users with a strange inner hollowness and ennui. It's free to go outside, free to learn new things off the Web, free to do situps on your own floor, etc.

10. "New" is oversold. We seek novelty but novelty does not have to be purchased.

11. Drawing identity from Consumerism (in any guise) is true inner poverty. Focusing on being a better parent, smarter investor, mentoring younger colleagues, etc. are all free; they build an authentic identity that has no need for superficial externals for verification.

12. What you consciously give up as not in your own best self-interest you no longer miss: sodas, chips, ridiculously overpriced football games, ice cream, fast food, cable TV, etc. etc.

In the near future, we'll be reading more and more advice like this. While Smith takes the "living poor" philosophy further than I would, I believe we all should periodically examine our lifestyle priorities and choices. Our ability to be happy in difficult circumstances hinges on being flexible and adjusting to ever-changing realities. Now is such a time to examine and perhaps recalibrate our priorities and expectations.