Be Careful Justifying Your Spending As An Investment

Lambo Huracan For $237,000
The Lambo Huracan For $237K: Because You're Worth It

One of my readers on The Spending / Savings Balance post asked why I should feel bad spending money on remodeling my house when it should be considered an investment, so long as I don't go over board.

The truth is that when I was cutting multi-thousand dollar checks every week, I was telling myself that all this spending was indeed an investment to make myself feel better about going outside my spending comfort zone.

But now that I've taken a hiatus from spending for a couple months, given it takes time to get my drawings approved by the San Francisco Planning Department, I've come to realize how dangerous it is to justify every single dollar spent as an investment.

An investment has an implicit assumption that it may provide a return some time in the future. The reality is that there are no guarantees, except for the guarantee you no longer have the money you spent!

My hope is that by spending around $100,000 on my home, I'll provide at least $200,000 in value at some point in the near future. Given I was so focused on this type of “investment return,” I cut checks with ease for the first $60,000.

Now that I've taken a break and only have $40,000 left in my budget to spend, I'm going to be as scrupulous and strict as possible to make sure the contractors do an amazing job within budget. If I didn't take a break from remodeling, I'm pretty sure I'd go over my budget by at least $20,000.


We've just talked about how homeowners can easily blow through their budget. They have a default assumption that whatever they spend in their home will provide more than a 100% return. This is false thinking. Instead, the homeowner should think about how much the final product can recoup.

For example, kitchens and bathrooms tend to recoup 80%-90% of the money spent. The other 10%-20% should be considered the “joy value” created by your usage. Only in very expensive areas of the world does remodeling provide greater than a 100% return on spend given the cost per square foot to purchase and people's incomes, which makes the opportunity cost to do the work themselves more expensive.

Related: Desire Is The Cause Of Suffering

Here are some other common examples where people might trick themselves in spending more than they should:

Overspending On Material Things

Hermes Birkin Crocodile Bag
Hermes Birkin Mykonos Crocodile Bag: $75,000

One woman I know told me she had to buy the latest $2,900 Louis Vuitton purse because it was an investment in her appearance. She wanted to look like a million bucks during her interviews.

I bluntly told her that if she looked like she had more money than the interviewer, she wouldn't get the job unless it was some unscrupulous guy who showed tremendous bias towards attractive women.

She ended up interviewing with a woman whom she thought was mean and didn't get the job. It turns out my friend has around 15 luxury bags worth between $1,000 – $5,000 each. She's not doing great on the financial front.

Fancy Clothes Don't Hide Being Overweight

A buddy of mine wanted to pay $2,000 for a Giorgio Armani suit. He also said it was an investment. But the truth is that he would be much better served spending the $2,000 on healthier foods and a trainer because he was obese. 10 years ago he was fit, but something happened over time.

It didn't matter whether he wore Armani or Macy's store brand, he still looked out of shape. His “investments” in nice clothing led him to mask up his real problem, which was his deteriorating health. We got him into our health group, and he's in much better shape now.

I wrote the Net Worth Rule For Car Buying post to justify my desire at the time to buy a $100,000 Porsche 911 CS. The post gives those who've accumulated a decent amount of assets, but who are no longer making a high income, a green light to buy something nice. I wasn't making $1,000,000 a year to follow my own 1/10th rule for car buying, which has since become one of the most popular car buying rules on the web.

I think it would be sweet as hell to buy the new Lamborghini Huracan for $237,000. It's $200,000 cheaper than the Lamborghini Aventador, and it would be a great online media investment because of all the articles and videos I could produce driving around in such a beast.

I could do video posts to see if driving a nice car really does attract more people. I could write about whether police officers will try to pull me over even when I drive the speed limit. I could create a Lambo website that sells after market parts! Oh yes!

Lamborghini Aventador
2015 Laborghini Aventador for $480,000

Spending Too Much On Education

Education will alleviate poverty and set us all free, up to a point. I am constantly amazed by people who get into some of the most elite private universities in the world because there's no way I could ever get in. My cousin, for example, has straight A's, plays varsity soccer, and recently got a “Likely Letter” to Princeton.

My only fear is whether or not Princeton will provide her parents enough financial aid so that they can continue leading normal lives as research scientists. My cousin certainly won't be forking over the $60,000 all in cost a year.

There is tremendous brand value going to an elite private University. Society has convinced us that we should pay whatever it costs to go to a university like Princeton. But that's an old school mentality.

Are You Overspending On Education?

We must recognize that thanks to the Internet, education is quickly becoming free.

Not only do you have the private universities themselves giving away their course work online, you've got Khan Academy, MOOCs, and blogs written by experienced people who provide valuable insights and knowledge. I firmly believe anybody can get a world class education for free nowadays thanks to the Internet.

If I meet someone around my age who went to Harvard, I'll be impressed by his or her ability to get in as a high schooler. But what I want to know is what they've done with their degree since then. If you are considering getting an MBA or suffering through a PhD, don't fool yourself into thinking the prestige is worth all that money and time you'll spend.

Focus on the practical applications of your degree(s). Have a good idea of what you want to do post graduation, how much such occupations pay, and the employment trend.

Investing in education is fantastic up to a point. Once you go beyond that point, you'll be laden with debt and voting on big government to give you a freebie at the expense of tax payers who didn't go crazy with education.

The College Of William & Mary
The College of William & Mary: $12,458 In-State Tuition For 2015

We Can Justify Spending Money On Anything

The beauty of being human is our ability to justify anything. It's those who justify their spending too often who get themselves in trouble. Always mull things over for at least a day before buying some material item you don't need.

When it comes to bigger ticket items such as a car, going back to school, or buying a house, get as many different perspectives as possible before ultimately deciding what's right for you.

Before the end of the year, I challenge you to produce something that will bring you incrementally more income if you're planning on spending incrementally more money than normal. Maybe you'll go the extra mile at work to set yourself up for a raise and a promotion.

Or maybe you'll start something you've been mulling over for years, but have been too lazy to launch. I promise you that producing is more rewarding than constantly consuming.

Related: Great Things To Buy With Your Massive Investment Gains For A Better Life


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About The Author

65 thoughts on “Be Careful Justifying Your Spending As An Investment”

  1. We have decided not to fix up our apartment. It just really isn’t worth it. We don’t plan on spending our lives here, so there is no sense in spending money for a short term living arrangement.

    1. Whoo hoo! I love Kristin, the curator. She rocks!

      I’ve actually been featured in The Wall Street Journal already. Check out my nifty “As Featured In” banner ad on the right!

  2. Funny, I had the exact same discussion with 2 women about their bags! An investment should at the base of the discussion appreciate *something* (maybe it is the asset or in the fitness aspect your life)…

    I think it is so satisfying when you have a conversation with someone and they actually don’t try to justify their spending. To say to me, “I want X just because I want it” seems like the start of a real conversation vs. “I want the bag because it will help me get a job”

  3. Sam,

    You are certainly a “big spender” compared to me!

    I’m not sure why anyone would want a Porsche or a Lamborghini? I could see a BMW or Mercedes perhaps…… If you can’t park it in the Safeway parking lot without worrying about the thing getting molested, what’s the point?
    Perhaps the old saying: Expensive sportscar, small physical endowment has merit?

    You are correct about the high cost of college education. I do think state universities are a much better deal. And perhaps….. Some folks would actually do ok without going to college (start a small business, etc.).

    House remodeling……. Well….. Outside of critical repairs, much of that is simply subjective to what is important to your daily living comfort. Obviously, some effort in updating is probably necessary in order to maintain good resale value; but I seriously doubt you will ever get all your investment back (maybe not so much, where you live).

    But…. Again…. It’s your home. You live in it. You need to make it a good place to live for you. Sometimes, that’s all that matters.

    1. Ah, but am I really a big spender though? I like the IDEA of driving around in a Porsche or Lamborghini, but not enough where I want to part with $100,000 or $237,000 hard earned dollars!

      The cheapest, and most fun thing one can do is dream. Call me a day dreamer. It provides almost the same amount of entertainment as winning the real thing. I know this because I always daydreamed what it would be like to have X amount of money, or experience absolute freedom and not have to work, for years. And when I achieved these goals, I realized the journey was just as fun as the end, and the dreaming was almost just as enjoyable as the attainment.

  4. On the comment about Princeton, your cousin is a very very lucky individual not only for getting a likely letter to such an amazing university, but also because Princeton provides such generous financial aid to all of its students that I do not know a single person who went there and had to take out any loans.

    1. Great to know! I guess they’ll find out in the Spring how much financial aid they will get.

      I’m definitely amazed at my cousin’s accomplishments. I’ve known her since birth obviously and I feel like a proud brother.

  5. Paying $280K for a house to live rent free. Returns = 240-360K in 10 years of rental savings! I think that is justified.

    1. Ryan Turner

      I’m not saying that purchasing a house is a bad decision, but you have severely oversimplified the analysis.

      Purchasing a house is not a one-time expenditure, even if you pay in cash. There are continuing property taxes, utilities, and repairs. You also have to consider the opportunity cost of the capital you have committed. The $280,000 locked up in a house could be earning 4-8% in the market. With ten years of compounding, that amounts to an additional opportunity cost of $140,000-$320,000.

      If the decision to buy a house was as simplistic as taking its price and subtracting all the rent you might ever pay in the future, everyone would own their own house. In reality, some people choose to rent, and some choose to purchase, so both options must have their tradeoffs.

      I would personally argue that owning property to live in must be more expensive than renting. Owning property is highly desirable for many behavioral reasons and these factors are priced into the cost of ownership.

      1. “There are continuing property taxes, utilities, and repairs.”

        Yes you are correct of these expenses. That is why I opted to move out of SF to a smaller city that allows me to pay 1/4 of taxes, and a new home that I hope will minimize repairs.

        “The $280,000 locked up in a house could be earning 4-8% in the market.”

        Could be vs guarantee. No rent nor mortgage saves up about 3K of my income to savings. That is a guarantee for me. I pay no interest and the SF house also adds another additional 1K to my earnings even after paying taxes and HOA.

        “owning property to live in must be more expensive than renting.”

        Yes you are correct in this, however after having two kids and a large circle of friends, I want to live well and enjoy with my kids. I want a yard, a sunroom and the whole nine yards :-) Even with this – I still can set aside almost 3K/month just buying a house cash.

  6. Great reminder about the power of rationalization.

    Investments are great, and education and talk estate can be great investments. However, money spent is money spent, so I’m always cautious about any spending. After all, you can only spend any single dollar once and it’s gone. Best to make sure you’re spending it in a way that truly matters, not just in a way that makes you feel good.

    In today’s multi tasking, distraction driven world, conscious thought and focus on relevance is becoming freakish, sadly enough.

    1. EXACTLY. The only guarantee is that the dollar you spend now will be gone. Think about all the investment mistakes, all the spending regrets…. if one never spent any money, one would never have these regrets. Of course that is an extreme, but that is my point.

      Think very carefully before spending money.

  7. Yes, I’m fixing up our rental and it’s costing quite a bit of money. I’m justifying all that spending by saying it’s an investment. I can upgrade/remodel as much as we can for now to offset any income. When we move into the place, we won’t be able to write off anything.
    Just spent $25k on a new metal roof…. Ouch..

      1. Not that big. The living area is about 1,100 sq ft. The roof is steeply pitched and is pretty complicated, though. The metal roof is under warranty for 50 years, but should last even longer. It’s a replacement so even a regular asphalt roof would cost about $15k. So might as well go for the longer lasting product.

  8. I feel guilty every time I spend money. I’m trying to make myself buy a house right now. Even though I have investment real estate, buying a home to live in is hard and stressful since it doesn’t produce any income. December is the worst due to buying Christmas presents!

  9. Zambian Lady

    I once justified spending thousands on a personal finance course because I thought the return would be very good. The returns were good, but not worth the amount. I later learnt of very cheap courses I could have attended. Much later on, my church ran free financial literacy classes that were really good.

  10. Great point on education. MBA and Ph.D degrees look good but are they really worth the money and time? That answer will be different for each individual.

  11. Todd Guthrie

    When I was remodeling my house, I kept telling myself that although I was spending tens of thousands of dollars in cash, I was also getting at least as much back in equity (I’m also here in San Francisco, and so many of the improvements increased the home value by > 100% of what they cost me).

    Of course I knew that it was all “unrealized” equity, and that I wouldn’t actually see any of those dollars again unless and until I ever decided to sell my house (I probably will never sell). Still, it made me feel slightly better about the whole thing.

    I think you’re right though, that many people have the wrong idea about spending as an investment. I was very careful and methodical about the whole thing, making lots of spreadsheets, doing lots of market comps, going over lots of alternate designs. If I was less careful though, as many people are less careful about such things, then it would have been very easy to go overboard and do something I really couldn’t afford.

    Education is a great example. Many young people (with little concept of money or value) as well as many older people (who grew up during in the time of cheap education) seem to think it is priceless, and are willing to pay any amount at all, without even thinking about ROI. In fact, I think this is one of the great tragedies of our time – an entire generation making this huge bad investment, with the debt haunting them for the rest of their lives.

  12. It’s can be even easier to justify spending as an investment when the returns are nonmonetary. If you can’t compare apples to apples, you can fall into the trap of convincing yourself that the intangible benefits justify the spending. I find myself doing this with spending on family.

  13. I’m doing this right now – justifying my investment in a new, family home, because of all the ‘intangible’ benefits it will bring for my family, as well as never having to move home again – we’ve found our perfect house in a perfect location. Like Mark mentioned above, I’m also using it as a means to push myself. And not that we ever plan on leaving or renting it out, but that’s always an option down the track. I’m not kidding myself that it’s a true investment though – it’s definitely a lifestyle cost I’m just willing to pay for.

    Since I’ll be spending much more on my home as of next year, I’ve already decided to take your challenge of producing something that will create more income – although it won’t be by the end of the year…

  14. Come on man! You’re comparing bags and cars to a house?

    Hah… point taken. People do have a tendency to justify. Honestly I was playing devil’s advocate… because I am amidst a reno myself right now and am uncomfortable with the costs. I’ve even doing the work myself. I guess I was saying that spending money on renovations that should recoup most of your spend (possibly even generate a positive return) is different then dropping $100k on a Porsche. Not saying you shouldn’t be careful or very diligent in HOW you deploy the renovation spend… just that it is not necessarily akin to discretionary spending. While illiquid, primary homes can still be considered an investment. While this isn’t the 90s anymore, there is still money to be made in capital appreciation/gains.

    If you plan on dropping $100k to maximize your lifestyle, spending in your home is probably one of the best ways to go about it (assuming you are updating an out-of-date style). Toys typically have a negative return, leisure travel nearly always does, and even education typically does (these days). Homes generally generate a slightly positive (net of inflation) return over a long time horizon.. especially if you sell it yourself.

    1. Haha, I knew you were going through some spending demons yourself!

      You should be honored I ended up writing a 1,500 word post with pretty pictures after your comment :)

      Yes, I’d rather spend $100,000 in upgrading my house vs buying a sports car. I wonder what happens after the house has been fully remodeled? What to do with the next hundo and the next and the next.

      PF is such a fun topic to write and talk about because it is endless.

      1. It’s never boring! Now how do we convince the masses of this…?

        Yes, yes… I’m honored. Though 2,000 words would have been better! :)

  15. This is true. I’ve seen people in my family “justify” spending beyond their means, not on huge ticket items, but just beyond their means and it doesn’t end well. Since I grew up watching that, I’ve tried really hard to really think carefully before I buy something. I still have made my own mistakes and bought some purchases that I regret, but fortunately nothing major. I can’t believe that Hermes bag costs 75k, that’s crazy!

  16. Sadly, I am guilty as charged. I take a high-level net-worth view of my financial progress, so I tend to see big purchases as a simple transfer from a liquid asset to a nonliquid asset. Thus, the bottom line remains unchanged, and it makes me feel like I didn’t actually spend anything.

    Therein lies the problem; for example, I purchased a stupidly expensive watch and a sportbike thinking that there will always be enough demand for me to at least break even if I ever need to resell. Unfortunately, the watch has a habit of smacking into doorknobs and I still remember the sickening crunch made by the motorcycle tipping off the kickstand in the garage. My hope that large unnecessary purchases will retain value almost never comes true, and I just end up writing off the assets later.

    Definitely a weakness I need to work harder on!

    1. What type of bike?! I loved motorbikes and had a BMW RC1200 retro cruiser as my last one.

      If you got an expensive enough watch, the bezel will never scratch! What type?

      1. That’s awesome–the RC1200 is pretty sweet! I got a Yamaha FZ6R that I got for a song from a friend moving away. After the incident, though, I ended up spending more on parts than I saved buying it used. It tipped over slowly and gently, but that didn’t stop the fairing and clutch lever from snapping off and the shift pedal from bending 90 degrees. I’m no mechanic, but I managed to do the repairs myself, and at least the tinkering served as pretty good entertainment!

        Perhaps the watch would’ve been okay if I had gotten some ceramic AP or titanium Hublot, but I ended up getting a Patek Aquanaut, which is surprisingly delicate and has taken quite a beating despite my best efforts to be careful.

        The moral of the story is as you said: if you want something unnecessary, don’t try to justify it as a good investment. Even with a solid basis for assuming it will be a good investment, there are no guarantees!

          1. That is pretty genius marketing, isn’t it? Don’t think about it as a personal indulgence, you’re simply providing something nice for your progeny. Don’t be selfish.

          2. Is your Patek an older one and that is why it is more suseptable to damage due to weaker materials? I had one Rolex that was a vintage and had a few scratches and I hated it. Best to spend more for better quality so it survives! My new DateJust seems scratch proof from the bangs I’ve done! Each time I fear it’s ruined but it keeps on going!

            Interested in your Patek review though as I’m eyeing that, an AP or another Rolex right now!

  17. I see parents investing in expensive private school education for their children K thru 12 instead of perfectly fine public school only to have their children attend community college or state schools. Some parents just can’t accept the reality that their kid isn’t that bright or have the discipline to work hard.

    1. Probably the worst disaster ever on an educational spending front.

      “I wanted little Johnny to go to U Penn all my life by sending him to private school, and he ended up at Penn State,” was a memorable Bloomberg article quote about 9 years ago.

  18. From growing up poor (my wife as a child hoarded stick chewing gum in 1960’s Yugoslavia in fear of a Soviet invasion) we eschew bling in favor of quality; quality as in long term satisfaction, not conspicuous consumption. The Lexus and BMW we bought new for cash in 2000 are still bright and shiny enough so that the Macan and Cayman, respectively, stay on our computer screens and out of the garage. Those cars were good “investments”.

    My wife still makes her own clothes, because at 6′ and 130lbs she rarely finds good quality clothes that fit her. When her 30YO Pfaff sewing machine finally pooped out, the “best” replacement she would accept was a rather basic $3k Bernina that will see her into her dotage. Sewing machines, when combined with willing and able labor, are good “investments”.

    My wife indulges herself with preparing and eating good quality food and working out regularly with her pilates trainer. The high cost of a healthy lifestyle is a good “investment”.

    Over the past 15 years we have added nearly $200k to the basis of our home with landscaping, kitchen and bathroom remodels, and crown molding throughout. Other than the hardscaping, my wife did all the work with me pitching in with muscle as needed. Her reason? She has the time, the inclination, and she doesn’t want strangers in her home especially when they are doing inferior shoddy work. She does plumbing, electrical, and tiling; I do demolition, help with hauling, and mix the thin set. These improvements maximize our satisfaction with our home and may or may not result in a higher selling price in the early 2050’s. These efforts are a good “investment”.

    My point? When acquiring stuff, try to acquire once. Give up whatever it takes to acquire stuff that will satisfy you for the long term. Maximize utility; one shouldn’t conflate this with some rationale of a theoretical financial return upon sale in the distant future. This goes for things and, may I dare say, for wives as well – of course not the selling part.

    1. Great comments today. My wife and I are going through the same debate regarding a very small home remodeling project – super small. She said I confuse her because one minute you want to go cheap, the next you want to spend money. I was simply not conveying my point well. I finally told her last night – it isn’t that I want to go cheap or spend. I just want to do it once. If the cheaper way gets me that, then that is what I will do. But if that is only a stop gap, I’d rather spend the money now.

  19. Was this directed at me since I have the lambo? Haha. I would add I have never bought a new car. The lambo I bought was 15 years old and I belive at the bottom of the market and value cycle. They only made 200 or so a year in that era and the Diablo was one of the last true lambos with a manual transmission and v12. Plus it is an extremely rare Monterey blue.

    I have a much harder time justifying investing in my personal house than I did the car. The house will not show any returns until I sell or refi. I also used te lambo as a goal that pushed me way farther than if I did not have the goal.

    1. Maybe! I’ve been seeing several Lamborghinis pop up recently, and I love the Aventador look. It’s the best look car on the market now. Do you think you can buy one used in 2015 so we can go for a ride?!

      That’s interesting you have a harder time justifying spending money on your house, which has the chance to appreciate vs. a car, which most likely will depreciate.

      1. Haha, the Aventador is about $400,000 used. Most cars go down in value, but rare exotic cars tend to have a very different value curve. They will drop in value immediately quite drastically. Then after about 10 to 15 years they will level out and then some will increase in value. Some quite significantly. The Countach went from a $100,000 car to a $400,000 car in about five years. It was the predecessor to the Diablo.

    2. Case in point of the post! Hah, just kidding…

      I knew that net worth car buying rule was baloney. I’m glad you called it out for yourself…I thought you had wanted to use that rule to buy an Evoque though, not a Porsche! I don’t justify or rationalize things too much anymore. I just accept that I am buying luxuries because I want to. Of course, that can be dangerous so I definitely keep a balance. My example is buying a new Jeep Grand Cherokee. I don’t regret it yet!

      1. Nope, not baloney at all. Look at my actions. I didn’t follow my net worth rule for car buying to buy a $100,000 Porsche 911. I didn’t even buy $237,000 Huracan, which would be quite alright based on the rule. I stuck with my 1/10th rule for car buying and just bought a $21,000 Honda Fit 2015.

        But you bet your buns that when I’m 60 years old and rocking too much cash that I plan to utilize my net worth rule to buy whatever car I want!

  20. I have been 100% guilty of this in the past. When I was working literally a gazillion hours a week and bringing in a 7 figure income, I absolutely rationalized my spending on a new car, fancy boat, or last minute vacations. Although I still tell myself that I got a “great deal”, the reality is it was just a way to make some of the sacrifices I was making in my life seem more tolerable. Saving 60-70% of your income for years is not “fun” and I am glad I did, but I completely understand how people fall into this line of thinking of instant gratification.

      1. The nice thing is that I really do not have to downsize my lifestyle if I choose not to…everything is paid for & I structured my expenditures to be less than my passive income. Even when making a ton of money I lived my life on a $12K/month budget, and I would for myself to spend 20%-30% of my bonus/distributions so that I would be living a little. Granted, I do not have in my budget to be buying $100,000 sports cars and boats every other year, but I already have them and ironically that “stuff” does not really seem to matter to me anymore. First plan of attack, trips to Costa Rica over the holidays, then Snowboarding in Japan & visiting friends in China…I have not thought about February yet..oh other than snowboarding in Park City at a friends place for a week : )

  21. “A fit, healthy body—that is the best fashion statement” ― Jess C. Scott

    I’ve tried to rationalize buying a Porsche or like car myself. But for now, I’ll stick to my Millionaire Next Door rule of having my car = about 2% of my net worth.

      1. Or $25mm to afford the Aventador. Does the Millionaire Next Door have a similar home buying rule? It’s been too many years since I read it to remember. I do seem to recall the book’s subjects buying cars by the pound, or at least paying less per pound than others.

  22. Hi,

    Your comment about further education is true over here in the UK as well. Crazy, and sad, how expensive it’s becoming.

    Hmmmm I was going to justify a new set of golf clubs as an investment. :)

    1. A great investment! Golf helped me build a lot of business relationships while I was working in finance. If you can get hooked, there are a whole bunch of golf nuts out there who you can bond with.

  23. Too true! I also tend to think that smart folks are more susceptible to the justification trap. We can weave a logical sounding argument to convince ourselves… and sometimes completely overlook the big picture.

    I too know some people who spent _way_ too much on interview clothes. I think at the core it’s a reflection of their unease at their lack of control about the situation. Buying a new pair of shoes is something they can do.

  24. moneystepper

    “We can justify anything”.

    Right on! As a mathematician, this annoys me no-end. I’m going to Uni because I *know* its worth the investment. I’m buying this X because it will pay me back by Y.

    What I never see in these arguments are the figures.

    We recently ran a 5,000 word article on whether going to University is actually financially beneficial. When you run the numbers over the long term, you have to make some fairly dubious assumptions to make even an undergraduate level degree worthwhile. For post-graduate, the numbers get even tougher to make the case for going to University.

    However, each of the comments stated that it was worth it for them (but again with no numbers backing up why this is the case).

    Its easy to make a statement. However, its much harder to back it up with the proof in numbers.

    I’m pretty sure your friend who is spending $5k on her bags would find it pretty damn difficult to show me the maths which makes these purchases worthwhile!

    1. After retiring at 45 I got a JD at a middle tier private law school. After I passed our state bar, I immediately went inactive. One might think that this was a total waste of money, but I’ve never thought so.

      First, going to law school provided a transition from a stressful executive position to a happy retired life. All the studying and Socratic BS gave me scant time to agonize over the life decision I made. After the three years, then the stress of taking the bar, I became a very interesting person to talk to; of course, the person I spend the most time talking to is myself. I also love alternatively ranting at Fox News (fascists) and MSNBC (socialists).

      But actually I’m serious. As I am running on the beach near my home, I usually have something interesting to ponder. Either I am thinking about my life experiences or some issue that because of my education I understand to be more complex than what the talking heads would have us believe. I think, therefore, that financial return on an education “investment” is secondary to the lifetime enrichment it affords. Of course I feel that way because I have already achieved financial independence.

      1. For most of my adult life (until recently), my retirement dream was to go back to school to get a history degree. Depending on the cost of school and my assets, that may be something I consider in the distant future of retirement – though it is no longer a dream of mine.

        Kudos to you for obtaining a degree – even one you may never use as a career – just because you wanted to. If you have the financial wherewithal, why not.

        1. These comments are doing a wonderful job proving Sam’s point – that we all find ways to justify our materialistic and/or depreciating asset purchases!

          Many of these comments are people justifying why their situation is different or reasonable or “investment” worthy.

          It’s funny but more importantly it’s a great experiment that shows we’re all human and our brain can sometimes be our enemy.

          An important thing that I’m taking away from this post is the reminder, the increased awareness that I (like all of you) are weak to emotional rationalization and need to take a step back and make sure that the big purchases are for the right reasons – whatever those reasons may be!

      2. Jay @

        Interesting story! Do you have any desire to practice? Also – watch out for those talking heads, they’ll make you go crazy!


    2. And to think, Uni where you are in the UK, France, and the rest of Europe is around 50-80% cheaper than what we have to pay in the States!

      I will always encourage my children to go to University, but I will make them run the numbers and think long and hard about going to an expensive school vs. a state school that’s also 50-80% less.

      Run the numbers and pro formal analysis folks!

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