Friday, October 26, 2012

Future Bias

This article talks about present bias but there can be future bias also.  It is considered that for the average person it is 3% better to spend your money now than one year from now.  Also remember that you can enjoy things more when you are young and you will still have the memories in the future. Those memories will be worth something. 

Monday, May 7, 2012

In Retirement

Even in retirement some people over save.  You can at least spend all of your dividends and half of the retained earnings of the company's that you own.   To make the calculation take the earnings per share subtract the dividend and divide the result by two.  
If the companies you own are not growing earnings fast enough to make up for the stock that you will need to sell to get the money above the dividends then they are investing retained earnings very badly and you should change to other companies.  An alternative is move to utilities.  utilities generally pay higher dividends and rise with inflation.  

Sunday, December 18, 2011

We Tend Discount the Future AND the PAST

We hear a lot of people say that they wish that had spent less in the past so that they have more now we less often hear people say that they should have spent more in the past.   We live in the present and so it is hard to compare the enjoyment now with past OR future enjoyment.  Cheapskates like us tend to over estimate the joy that we will get from having more money in the future.  This is a major reason why we over save.

We also tend to over estimate the security that money will bring.

My grandmother once told my father "If you would enjoy it get a new car now while you can enjoy it.  When you are old you will not be able to enjoy it so much."

Wednesday, December 14, 2011

This Blog

This blog is to help compulsive savers spend.  It seems that most Americans spend too but believe it or not their are so Americans who spend too little.

One of the goals of this blog will be to get cheapskates to spend at least 2/3 of their income or the median income in their country which even is less on consumption in most years.  Now if buy a home or own a home you are only consuming the depreciation not he full price, same with cars or other long term assets.