Tag Archive | lifestyle inflation

Why You’re Failing at Frugality

I received these napkins as a gift 9 years ago.

“I’ve tried to be better with money but it just doesn’t work. I was shopping at ALDI, but then I bought some strawberries that were moldy. So I’ve started using coupons. We replaced our weekend night out with take-out so we don’t have to pay a tip. I had to get a car payment because I can’t break down on my way to work. But now I’m saving on gas because the car gets better mileage. Plus I get fuel discounts from my grocery card. And I can’t get out of debt because I don’t want to wipe out my savings. If only I made more money, then I could follow all the financial advice I hear.”

Sound familiar? We’ve probably all heard or made some of these statements. If to err is human, so is to make irrational excuses. Don’t worry, I’ve erred and excused with the best of them. We nursed our student loans for a couple years (and went to Europe, and bought a house) before deciding to decimate them. I withdrew funds from my retirement account after leaving my first real job at age 21. (Doh!) We all make mistakes, and we all have different priorities. But I hear a lot of people who are completely mystified about their financial frustrations because they genuinely believe they are pretty frugal.

So how is it that some people cut coupons, shop sales, eat Meatless Mondays, even give up cable (!) , but just can’t seem to get ahead financially? Chances are, they’re only pretending to be frugal, which is a world apart from pretending to be poor.  In a materialistic culture that masterfully markets the financial fallacy that we save money by spending money, it’s almost impossible to resist the pitfalls of faux frugality. The point here is not to feel guilty, but to wake up and get clarity about our financial decisions so we can take charge. I can’t sit back and let comrades Pretend to Be Frugal, when they should instead Pretend to Be Poor. Let’s explore the difference.

Pretending to be Frugal Pretending to be Poor
Finding less expensive ways to inflate lifestyle Finding ways to deflate lifestyle
Views spending as a way to “save” Views spending as something to minimize; actually puts “saved” money into savings
Seeking luxury, comfort, and convenience at a discount Minimizing luxury while increasing usefulness
Views spending as a game to get “more for my money” via coupons, sales, “freebies,” tax write-offs, etc.  Challenges oneself to increase savings and generosity by reducing expenses
Focuses on small savings areas instead of big ones Ruthlessly prioritizes savings on the big three (car, house, food); continually finds new small ways to save
Lacks consistency in frugal practices Has a detailed plan and focuses on results
Lacks goals and purpose of frugality Focused on financial goals & bigger purpose of frugality—understands why
Makes excuses for lack of savings, blames lack of income Tracks own progress toward goals
Fights with spouse/SO over spending. Competes for resources with spouse A frugal team, work together to find new ways of saving
Stuck in survival mode Generous

So are you frugal or just pretending? Are you simply finding cheaper ways to inflate your lifestyle, or taking concrete steps to deflate your lifestyle? In other words, are you looking for discounts on luxuries, or continually searching for the bottom boundary of how little you can be content with? You are either pushing the upper limits of your budget with excuses to spend, or challenging yourself to spend less and less.

Faux frugality views spending as a way to save. Do your “thrifty” habits belie spendthrift problems? We’ve all been tempted to spend extra to get a “free” gift, “free” shipping, or a tax write-off. But spending $50 to save $10 doesn’t mean you saved $10. It means you spent $50. On a larger scale, someone might upgrade a vehicle to “save” on fuel costs. But many times the cost of that upgrade can’t be recovered by the gas savings in a reasonable amount of time. People even buy houses because the mortgage payment looks cheaper than rent, and fail to consider the hidden costs of home ownership.

Those who Pretend to Be Frugal see spending as a game that consumers can win. If people who Pretend to Be Poor see spending as a game at all, it’s how little they can spend. Not how much crap can I accumulate while shelling out hard-earned cash. Instead, they want to spend in order to secure real needs and carefully chosen wants for as little as possible. I’m thrilled to optimize spending, but I’m not optimizing my money if I’m indulging in discounted luxuries that I don’t truly value. Materialism is a losing game, and I’m out.

Another big distinction between faux and true frugality is a willingness to tackle the big expense areas. The top three cost of living categories are housing, transportation, and food. If you can get these under control you are well on your way to financial progress. Often people stop at smaller areas like clothing or cell phone plans. I believe no budget line is safe from frugalizing. And people often need to start with something smaller and more manageable. But if you’re unwilling to delve into the deepest savings potential, you’re only playing at frugality, and it won’t get you anywhere. You can shop exclusively at ALDI and Goodwill, but if you’re unwilling to get rid of your car payment, slash your $300/month dining budget, pay off your student loans, or stop paying outrageous interest on credit card debt, you will not get ahead financially.

The Faux Frugals also lack consistency in key frugal practices. For example, they may shop at a discount grocery once in a while when it’s convenient, but mostly end up over-spending in unplanned trips to the Big Store. Until you are truly committed to the bigger picture of why you’d Pretend to Be Poor, you’ll lack the motivation to plan ahead and build frugal habits into your routine. Whether it’s hanging laundry to dry, packing a lunch, saving up for purchases, or paying off debt, consistency is key. You can’t practice frugality only when you feel like it; you’ll never see a difference. It’s those who give up too soon who say, “I tried being frugal, it didn’t really help.” The problem wasn’t the advice, but the lack of perseverance.

And this brings us to the issue of motivation. Pretending to Be Frugal has many possible motives. If you find yourself constantly comparing spending to friends, fighting with your spouse about money, or making financial decisions out of guilt, you probably haven’t latched onto lasting motivation. Understanding why you want tosave money is going to get you a lot further than just knowing how to save money.

Why the heck would I wash poopy cloth diapers or go camping for vacation with two tots in tow? What keeps us going is our purpose. Pretending to Be Poor is not about being a miser. There’s nothing actually impoverished about our lifestyle. But we are essentially pretending to have less money than we do, so we can have the flexibility to take opportunities that come our way (like my trip to India), prioritize people, and practice generousity . Authentic frugality increases your usefulness as you learn new skills, get creative, help others, strengthen your relationships, and enjoy it all as a fun adventure.

So stop playing at being frugal. Unless you make a ton of money, if you want to make progress financially, you have to go all-in. That doesn’t mean tackling your entire budget at once. But you have to be willing to challenge any area of spending, one at a time, big and small. You have to quit the materialistic game of spending to “save.” You’ll need to give up some preferences and be consistent. And you must get your reasons in order to secure lasting motivation.

Consider Proverbs 14:23: All hard work brings a profit, but mere talk leads only to poverty.

What other differences do you see between faux & real frugality? What motivates your frugality?

Inflate Your Usefulness, Not Your Lifestyle

Lifestyle inflation is a popular personal finance metaphor for the phenomenon of expenses endlessly rising to match (or surpass) income. It captures the predicament of the 37% of Americans living in one of the world’s richest countries who claim to be too broke to save. And it describes what those pretending to poor want to avoid. Bloated spending not only causes financial problems, it also makes people less useful. It ties up time and money so that it all has to be spent on lifestyle maintenance, leaving less room for meaningful pursuits like family, friends, and volunteering. Plus, when life is centered on convenience and acquisition, people miss out on the satisfaction of becoming handy, resourceful, and helpful.

But those of us who don’t inflate our lifestyle also face potential danger. Have you ever thought about what you are inflating instead? We need to invest in something we can put stock in, and I don’t mean the stock market. If all you inflate is your bank or retirement account, you’re missing out. Saving and investing are worthy, responsible steps that we preach. But we all know there’s more to life than money. Most people think this “more” is freedom: from the 9 to 5, having to worry about money, or keeping up with the Joneses. Freedom is depicted as early retirement, working for yourself, traveling-hacking, or otherwise finding happiness outside materialism.

These are all appealing replacements to lifestyle inflation. But will they pay the dividends of a joyful and productive life? It’s easy to place false hope in the financial freedom or frugal ecstasy so often promised. A growing body of research documents the correlation between increased wealth and decreased interpersonal skills, emotional health, and happiness:

  • Lonely At The Top, by Thomas Joiner, documents the tragic pattern of men achieving success and wealth, only to find themselves without companionship.
  • In the Boston Globe article “Why It Matters That Our Politicians Are Rich” Britt Peterson reports, “Rich people have a harder time connecting with others, showing less empathy to the extent of dehumanizing those who are different from them. They are less charitable and generous. They are less likely to help someone in trouble.”
  • Richard Ryan’s report in The Annual Review of Psychology (2001) found that a focus on financial and material goals correlated to a lower sense of well-being and found money is not a reliable predictor of happiness.
  • Madeline Levine’s The Price of Privilege states the “newly identified at-risk group is preteens and teens from affluent, well-educated families.” These privileged kids are more likely to suffer from depression and other emotional ill health.

Yikes! There is a real gravity toward these scary outcomes for the wealthy. Pursuing wealth for different reasons doesn’t make us immune. Let’s heed these warnings and not let the journey to so-called freedom make us slaves to side hustles and financial goals. We want to remain flexible while increasing our financial flexibility, and the key lies in what we’re inflating along the way.

To us pretending to be poor is about inflating our usefulness at the same time we invest for future needs. Our financial journey isn’t just about us, or even our family.  If we get to “retire” early, that’s just icing on the cake, because we’re using our time and money to build a good life NOW. And the good life is not just about geeking out over spreadsheets, net worth, and shopping at ALDI. It’s not just about finding happiness in frugal hacks and free pleasures. The good life is about helping others.

The outcome of inflating your usefulness isn’t to leave yourself destitute, but to do good, to be rich in good works, to be generous and ready to share,  storing up for themselves the treasure of a good foundation for the future, so that they may take hold of that which is life indeed” (1 Timothy 6:18, 19). So how can deflating your lifestyle inflate your usefulness?

  1. Work to live, don’t live to work. A good work ethic is important, but working constantly while ignoring family, friends, faith, and those in need is not a balanced or healthy life. If you’re hustling for the proverbial dangled carrot, maybe it’s time to free yourself from the rat race, not necessarily by retiring early, but by deflating your usefulness so you don’t need that carrot.
  2. Get useful by DIYing. Some people feel excited when they find the next new product that will make their life easier. Don’t get me wrong, I love my microwave and dishwasher. But others seek accomplishment in spending less, and this often results in becoming more useful. For example, I love Indian food, but I don’t love spending money at restaurants. So I’m learning to make Indian food. Neil enjoys riding his bike because it’s free exercise and saves on transportation costs. For both of us these money-saving measures are enjoyable in part because we feel accomplished after a challenge.
  3. Share the usefulness. Now that you have amassed helpful DIY skills, you can help other people. When someone need helps with a broken car or house, you can help. When someone loves Indian food, you can cook. You are saving other people money, perhaps teaching them useful skills, and feeling satisfied by widening your sphere of usefulness. Even if you don’t have amazing skills, simply by making time to help others you will find a world of needs to meet. Volunteering for an after school program, the high school group at church, to help a friend move, or to babysit are all ways we’ve found to be useful. Other ideas include volunteering at a nursing home or hospice center, Habitat for HumanityBig Brothers Big Sisters, English tutoring for refugees, mentoring teens in prison, or taking a short-term missions trip. (I’m going to India this summer!)
  4. It is better to give than to receive. Freeing up money to give to charitable or faith-based causes is hugely rewarding, and, need I mention, helpful! For example, donating to disaster relief in Nepal would expand your usefulness to a global scale. Yes, you have to do a little research to make sure an organization is trustworthy. But there are lots of reputable places and you can check them out on charitywatch.org or ministrywatch.org. Or visit a local food bank, after school program, or homeless shelter and check it out yourself.
  5. Be a good friend. The research on sad, rich Americans should be sobering. Thankfully the antidote is simple and free: have friends. Caring about other people and sharing life together can keep you grounded and balanced throughout your financial journey. You’ll avoid ending up lonely at the top, and you’re bound to be useful if you’re a good friend.

Titus 3:14 describes usefulness well: “Our people must learn to do good by meeting the urgent needs of others; then they will not be unproductive.”

What DIY success are you most proud of? What have you learned from sharing your time or money with others? 

Pretend to Be a Student Until You Pay off Student Debt

College me: "I live in a tiny dorm room with 2 other people, and it's awesome!!"

College me: “I live in a tiny dorm room with 2 other people, and it’s awesome!!”

‘Tis the season for fake commencement speeches and poignant advice for college grads. Steve at Think Save Retire issued a challenge to write a commencement address, and I’m tweaking mine to be more of a “coffee date message.” Because my advice isn’t eloquent or pithy, it’s purely practical.

My #1 financial message to recent grads would be: pay off your student loans. My #1 strategy for doing so would be: pretend to still be a broke college student. Lifestyle inflation is nearly inevitable after college, and that’s appropriate, but delay as much of it as possible until you slay those loans.

Hopefully you’ve landed a good job, but even if you have a great new income, you still don’t have money if you have debt. I know those new paychecks will burn a hole in your pocket, but try to think about the impact of keeping those student loans around for 10-15 years. Let me give you some perspective.

I graduated from college ten years ago. Many of my peers are married with kids, and some are still swimming in student debt. They may long to purchase a home, but cannot afford one because they graduated with mortgage-size debt. Others are struggling to afford medical bills or fertility treatments, because student debt still holds them back. And college funds for their kids will have to wait, because they still haven’t finished funding their own education.

Now, I don’t judge people for having a lot of student loans. When they were teenagers, the people they trusted most told them this was good debt. They said you had to do this to get ahead in life. But the people telling them this—parents, teachers, school advisors—went to college at a time when you could pay for tuition by working in the summer! Times have changed, and some of us were railroaded into massive debt before we were mature enough to understand the implications.

So that stinks, but it’s too late. After all, student loans are the one type of debt that can’t be forgiven through bankruptcy. Not that that’d be a great option, anyway. So what are you supposed to do?

How about, for starters, don’t take on any more debt?! No cars loans. No financed furniture or computers. No credit card debt. Definitely no mortgages! Just don’t go there, because you’re already in debt.

What are you supposed to drive? Sit on? Eat? Wear? Live in?

The same things you’ve been driving, sitting on, eating, wearing, and living in. Keep splitting the rent with roommates. Get hand-me-down furniture. Keep driving the beater. Shop thrift stores for your professional wardrobe. Pack your lunch.

My husband and I married while we were still in college, but even after graduating we declared that we wanted to keep living like college students. Not in the sense of late-night partying and living on ramen noodles, but we wanted to keep our lifestyle simple and inexpensive.

We did “upgrade” from beat-up college rental homes with many roommates, to a 1-bedroom apartment. Our little place felt like the lap of luxury, but it was actually cheaper than the combined rents we’d been paying in a college town.

I remember our newlywed grocery budget was $30/week (not adjusted for inflation). We shopped at ALDI and Save-a-lot, packed lunches, and cooked dinner at home most nights. We still sometimes got fast food or went out to dinner. For entertainment, we often invited friends over, went for long walks, or visited free community events.

We bought a new bed and a bookshelf, and that was it. All our other furniture we bought used or got for free as hand-me-downs or gifts.

We continued driving our used cars, once of which Neil salvaged after the engine was submerged in water. We split Internet service with other friends in our apartment complex.

None of this felt like a sacrifice; we had plenty of fun, traveled, and still bought things we didn’t really need. In fact, we splurged big time after Neil graduated and went to a Europe for a month! So it wasn’t like we 100% froze our lifestyle or refrained from all extra spending. But we were able to save up the money from my first year teachers’ salary to take this big trip.

We didn’t take our own advice perfectly. We even bought our home right before paying off the school loans. In the end it didn’t matter, because it was simply of matter of timing at that point. We were bound and determined to pay them off quickly, and we did. I’m so glad we paid them off before starting a family, so we could start college funds for our kids.

Even with major “slip-ups” in pretending to be college students, we were able to set ourselves up for a more flexible future. An overall mindset of delaying lifestyle inflation helped us make financial progress I know wouldn’t have been possible otherwise. It’s also made it easier to live on one income while I’m home with little kids.

It’s really hard to deflate your lifestyle, so keep it simple out of the gate. You had a ton of fun in college without a big budget; the same is possible now that you have an income. As you focus on your new stage of life, don’t lose sight of your real financial position. If your net worth is still negative, pretend you’re broke. Because you actually are.

Is Minimalism the New Materialism?

Organizing our basement made way for a guest room.

A new movement toward minimalism is emerging. People are building tiny homes, skipping Black Friday, turning their hangers around, and holding all their possessions in their hands to determine which items bring them joy. People are selling, donating, and trashing the not-joy stuff. And we are picking it out of the trash.

Reclaiming Our Basement

The Pretend to Be Poor household hasn’t been impervious to all the Joy of Less Junk hype. We’ve been wanting to increase our basement’s usefulness by creating a guest room with a bed my mom gave us. Our summer free time was consumed with a massive home repair and my India trip, so the project got delayed. But when we had to turn down a friend looking for a temporary place to stay due to our basement’s disarray, we knew we should prioritize the project.

Thus we embarked on our mission to 1.) increase usefulness while 2.) decluttering. My husband finally tackled several boxes of God Knows What that have been collecting dust since we got married almost 10 years ago. While untangling his fourth box full of cables and cords, he admitted he has a problem.

“I had no idea it was this bad,” he said, extricating a SuperNintendo controller from 100 yards of Ethernet cable. We do not own a SuperNintendo. Or a football field. He was allowed to keep one pager and a walkman in his box of ’90s artifacts. It all comes of marrying an electrical engineer, I suppose. At least he keeps a tidy budget spreadsheet.

After devoting several 1-hour increments to rearranging furniture, divesting ourselves of antiquated electronics, and unwinding furlongs of cords, we were riding a decluttering high. We felt very pleased with our progress and proud of the more useful, open space in our home. I started showing it off to unfortunate guests, who probably thought, “Um, still lots of cords.”

For my friends who did not have the awesome privilege of witnessing firsthand the 10% less cords, my decluttering high led me to brag about how much stuff we got rid of (3 old computers!), and how I even got Neil to undertake the cords. I probably made more than one wife jealous over that one. Sorry.

And then I realized—I’m obsessing about stuff. And that’s materialism. My de-owning high was almost identical to the thrill of consumerism. A new purchase feels exciting and important at first. You want to show it off and tell people about it and what a great deal it was, and why it was the perfect choice. You might even make someone jealous. And if you have too much stuff, all your friends are probably thinking, those look just like the boots you already have.

When Minimalism Turns Materialistic

I’m glad we got more organized, found stuff to donate and sell, made our basement more usable. I’m glad many Americans seem to be replacing insatiable materialism with a more contented minimalism. But I have to confess from experience that an inordinate focus on minimizing, at least in the short term, can end up being rather materialistic. We’re most at risk of minimalism going wrong when we absorb its practical pointers without embracing the philosophy of simplicity behind it.

Let me qualify such an irreverent proposition. I’m a bit of a minimalist at heart. When I was a kid I used to go through the old crayons to find all the colors I needed before the beginning of school, rather than asking my mom to buy new ones. I used to build tiny homes with my LEGOs. I used to say that when I had kids, I’d give them one teddy bear and a library card, because that’s all you really need. (Read here why I still believe the library is a secret weapon to a less-clutter home.)

But then I married a cord-hoarder, bought a house, had two kids, and didn’t have time to keep my possessions streamlined. Our frugal reputation must precede us, because we’re constantly being offered whatever others are jettisoning. I am extremely grateful to be part of a community of friends and family that shares goods. And to be fair to my cord-loving lover, I’ll confess I’m over-stocked on books, clothing, and kid’s toys. But at some point recently I shifted my default response to Free from “Sure!” to “Thanks, but no thanks. I have enough stuff!” If it’s something I currently need or want, or will need in the near future, I’ll gladly accept. But I’m trying to pass on more than I receive now.

There certainly are lots of benefits to owning less, including:

  1. Less to clean up.
  2. Less to store and maintain.
  3. Less to lose.
  4. Makes stuff you need easier to find.
  5. Better-behaved children (according to Super Nanny).
  6. More creative children (according to our moms).
  7. More useful space (i.e. guest room!)
  8. Looks nicer—I love uncluttered space.
  9. Allows unused items to be used by someone else–and may generate income if sold.
  10. Helps set a limit on lifestyle—you realize you don’t need to keep buying stuff. And you don’t need a bigger home or more storage space.
  11. Helps you enjoy and value the possessions you actually use.
  12. Reduces decision fatigue/simplifies everyday life.

Clearly it’s better not to be drowning in jetsam. But isn’t there a danger of minimalists’ thoughts being equally consumed with Not Stuff as the materialist is with Stuff? Just as a person with an under-eating disorder may have a view of food that is as unhealthy as a gluttonous person. I believe many minimalists avoid extremes and are focused on living the good life, but sometimes people glean nothing more than a reverse materialism from a more transcendent message. Minimalism gone wrong can be a life equally centered on material possessions, and this is what I’m calling us all to avoid.

A Pragmatist’s Solution

So for prospective minimalist converts, the de-owning process might involve a whole lot of thinking and dealing with stuff. I suppose that’s fine, but if I’m forced to choose between sorting through my junk or doing activities in line with my larger goals in life—like spending quality time with a friend, studying for a Bible teaching, or playing LEGOs with my kids—the junk can wait. Isn’t that what junk drawers are for?

People have proposed asking yourself “Would I keep this if I was moving in two weeks?” to determine which possessions you really need. If I’m choosing to spend time organizing a particular area of my home, this hypothetical is super helpful. But sometimes I can barely get the dishes done, and since I’m not moving in two weeks, I don’t need to angst over my unread copy of 17th Century Verse or a basement box of old video games.

It amuses me that some of my friends view me as a minimalist, while others are almost appalled at how much I own. It’s all relative, and if we’re honest, we all struggle against materialism in one form or another. I strive not to be a minimalist or a materialist, but hope to be a pragmatist. I’ll gladly own more stuff if it serves my over-arching purposes, such as hosting, being generous, occupying my kids so I don’t have to entertain them 24/7, making my life easier to a point (can you say microwave?), or if it may save me money in the long run. For example, I’m hanging on to my professional wardrobe in hopes that it’s not too ill-fighting or outdated when I return to the workforce in a future life when my kids are in school.

So what’s the practical take-away?

Declutter for a purpose–making better use of your space, selling or donating unused items, or making your life and home way more functional. (How about donating money you get from selling old stuff?)

Don’t declutter to keep up with the minimalists or strive for a magazine-perfect home. You have better things to do with your time. Focus on your bigger purpose, rather than Stuff or Not Stuff.

Release the guilt about those shoes that only match one dress, or that box of old wedding cards in your basement. If you have time and want to tackle it, by all means do. Provided you wouldn’t qualify to be on Hoarders, your possessions of questionable usefulness probably aren’t hurting anything. With excessive cord and cable collections as a notable exception, since they are almost certainly driving your wife crazy.

Have you ever found yourself consumed by minimalism? Do you have other tips for striking a healthy balance?

What’s Your Financial Metabolism?

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Guest post by Joel Hughes

There are so many parallels between financial discipline and dieting. In our first guest post, Dr. Joel Hughes explains his metaphor of financial metabolism. Joel is a professor, clinical psychologist, and church elder.

Losing weight is basically impossible in fatogenic America, or at least it feels that way to me. Part of this is because of the effects of metabolism on weight gain and loss. I’ve been reading about the effects of overfeeding and dieting on metabolism, and I have begun to wonder if these principles are a good metaphor for personal finance.

Overfeeding. When we eat too much, at first nearly 100% of the calories are converted to body mass. But after a while, the efficiency of this conversion wanes. When 12 pairs of identical twins were feed 84,000 extra calories at the rate of 1000 per day for about 100 days, they gained weight—but not the 24 pounds you might expect. Their weight gain was more modest, and ultimately only 60% of excess calories were converted to body mass. The rest was burned up as the metabolic cost of overeating, the increased metabolism associated with more body weight, and the increased activity in which they (unconsciously) engaged.

America is in a constant state of financial overfeeding compared to the rest of the world. For my entire career, there has been an increasing trajectory of income. You might think that 100% of increases are converted to net worth, but that has not happened at all. Instead, I’ve frolicked in the funds with meals eaten in restaurants, better cars, house repairs, more clothes, and other consumerism nonsense. The cost of living increased, but not as fast as my income. My kids grew (and I had more), so that’s a real expense. Certainly some of my increased spending was valid, but I wasn’t paying attention so 10 years later my debts remain largely unchanged. The efficiency of converting increased income to value is very poor. Most excess is burned up in a higher “financial metabolism.” It simply costs more in taxes, energy, and upkeep to maintain a higher standard of living. Solomon understood this principle thousands of years ago; “Whoever loves money never has enough; whoever loves wealth is never satisfied with their income. This too is meaningless.” (Ecclesiastes 5:10).

Dieting. When we don’t eat enough, at first we lose weight according to strict algorithms that approximate physical laws like thermodynamics. But quickly this changes, as all dieters can report. If you lose 10% of your body weight, your metabolism slows forever. Even after years at your new weight, you’ll never regain the faster metabolism you used to have. Meanwhile, your brain craves food more strongly than before. The body seems to defend itself against losing fat stores.

Here the metaphor works in reverse. If I put my finances on a “diet” and start saving more and paying down debt tomorrow, at first 100% of my efforts would result in savings and debt reduction. However, my “financial metabolism” is already broken. It would be really hard to lower the expenses associated with a (formerly) higher standard of living, and I would notice the “pain” of depriving myself of things I never had before I had more income (e.g., nice car). This is easily seen when Americans lose jobs. Many then promptly lose their houses. Or declare bankruptcy. Tightening the belt is really hard to do abruptly.

Prevention. Because we eat hundreds of thousands of calories each year, no one can correctly consume the precise number of calories each day required to maintain a constant body weight, but most people don’t vary by more than a few pounds a year. Our bodies regulate body weight, defending against rapid gains and losses when possible. However, when you are slowly overfed, you gain weight and then your body defends the new “normal.” Most Americans have gradually gained weight since 1970, leading to our obesity epidemic. As weight slowly goes up a few pounds each year, the “set point” changes. It’s reset to a new higher value. Therefore, prevention is better than the treatment. It is very hard (not impossible-I exaggerate) to lose weight and keep it off. It’s far better never to have gained too much weight to begin with.

When our finances are ignored, they slowly creep in directions we hadn’t intended. For example, I spent my new income instead of saving it. Now my habits want to defend a new “set point” where my higher income matches greater expenses with nothing left over. It would have been far, far better to intentionally set financial goals that anticipate increased income and allocate most of that to smart purposes instead of letting my standard of living float upward like a boat on a rising tide. It’s never too late to turn things around, but an ounce of prevention would have been better than a pound of cure.