Get Rich With: Conspicuous Consumption

MMM Note: The following is a lesson from our Canadian friend Mr. Frugal Toque, a long-time reader and contributor to this blog, and soon-to-be early retiree.

I can’t say for certain that we Mustachians need perfect honesty: I’d be lying to you. But if we’re to proceed with the utmost efficiency, we’re going to have to at least cut the crap out of our own lives when we look in the mirror and get down to business.

Do you drive a car? I do. Do you lie to yourself about how much the use of that car costs? I used to.

The Toque family makes an annual visit to Grandpa and Grandma Toque every summer, a family reunion of sorts to meet up with the entire Toque clan. Mrs. Toque and I would always record this journey, 600km in each direction, at a reasonable cost of about $100: billing the whole thing to ourselves as if it were simply the cost of gas.

We’ve made this journey for 18 years, every summer we’ve been married and the one before that, and sometimes more than once per year. To add to the issue, before we’d even met, I’d make that 1200 km round trip several times a year in a small sports car with at most one passenger, always billing it in my head as the price of gas.

I would lie to myself, basically. Even while train rides made themselves available, at something like $70 or so round trip, I’d take my own car because, “Hey, it’s the same price, right? Plus, I’ll have my car with me when I get there.”

Never mind that the Toque grandparents live within walking distance to everything and had extra space in their car for events farther away. No, I took my turbo-charged sports car on that long journey, never really accounting for the insurance, maintenance and depreciation it cost me.

Nowadays, having chosen the career Software Engineer over Professional Race Car Driver, I got rid of the sports beast and drive a tidy little Nissan Versa. It only burns through my cash at about 20 cents per km. Despite this savings, this past summer, we took the train on our annual sojourn.

First of all, I have to say, “Holy shit! Trains are awesome.”

If we book our train seats all at once, Mrs. Toque and I and get two comfy seats facing our two children. Then, like a particularly fast cloud, we get to drift lazily past all of the highways we’d normally find ourselves jammed up in. I calculate many tens of dollars of benefits associated with the absence of swearing at stupid drivers and worrying about getting ourselves in another highway collision requiring the procurement of a new car.

In my sports car days, my racing vehicle must have burned through at least 40 cents per km, some $500 per round trip, when a VIA train ride would have cost a tiny fraction of that for a single person. Nowadays, with four seats purchased for the entire Toque family, the cost of the equivalent train ride runs up to $360, exactly the cost of taking an average 30 cents/km car on the same trip.

But here’s the thing: the cost of the train ride is honest. Our consumption stares at us, right there when we hand our credit card information over and click “Proceed with Order”. It doesn’t hide away in the depreciation of our car, maintenance costs and insurance. We can’t lie to ourselves that our trip only costs the price of gas.

Yes, nowadays we drive a cheaper car.  But taking a car because it’s cheaper is still lying to ourselves. Believe it or not, many of the costs of driving a car are hidden away in road maintenance and pollution, line items we find really hard to quantify. I feel confident, mind you, that if we were to find a way to quantify the damage exhaust fumes do and the subsidies that go into highways versus railroads, we would discover that the train ride costs a lot less.

This is what I mean by saying that we can get richer through the use of Conspicuous Consumption. By putting your consumption out there where you can’t hide it, where you have complete honesty, you’ll find yourself getting richer. If, when I’d driven an Eagle Talon TSi, I’d been honest with myself, I’d have saved over a thousand dollars in wear and tear on my car every year.

Moving on, I’d like to give one more example.

A few years back, Mrs. Toque had lamented that many of the children’s Lego constructions had grown dusty. Since the mini Toques wanted to keep many of their toys in the fully assembled state for playing purposes, they would store their toys on dresser tops and inside bookshelves. Layers of dust had accumulated and become unsightly. Now, you might begin to wonder, how many Lego sets are we talking? Figure for a pair of boys, 9 and 11 years of age, receiving a Lego set for each birthday and Christmas since they turned 4 or so. Add in there Mr. Toque’s own building block stash from his own childhood, and we have a lot of the magical clicky-blocks hanging around.

Mrs. Toque wisely proposed the purchasing of a set of simple glass cabinets, which the children could easily operate to retrieve their toys, but would encourage them to “put things away”, and also keep dust from accumulating on them in an unsightly fashion.  As a side note, many of these cabinets can be found cheap, but slightly used, over the Internet.

What does this have to do with Conspicuous Consumption? Behold the image.

This is going to hurt my Frugal cred, I know.

We’ve discovered a delightful side effect of these cabinets, and thus I’m writing to you about it.  Whenever the children show interest in acquiring new toys with their allowance, we take a moment and pause in front of the glass cabinets to look at all of the toys currently available.  Are you certain this new toy is significantly different from the toys you have here?  Isn’t such-and-such just a re-paint of so-and-so?  Is the new toy going to increase your happiness enough that it’s worth the allowance money you’ll use up?

Like many other money-related exercises, the goal is to build habits in our children that will serve them for life by preventing them from becoming Clown Consumers looking for happiness at the far end of their credit cards’ limits.

Toque Junior (II)’s custom creations.

It’s not fool proof, mind you. Allowance still flows into toys, but even the younger of the two brothers, at nine years, shows a lot more conscientiousness  about it. He has since built a fleet of his own creations, rather than relying on the official designs, and he spends a bit of time disassembling the formal constructions in order to harvest pieces from them.

There you are: a Hot Tip from the man in the Cold North.  Make your consumption as conspicuous as possible and learn the very finest lessons from it.