July 19, 2013

Disposable Income

We live in a disposable world in which stuff is designed to be thrown away after being used or used up. So we have disposable red cups, party hats, lighters, packaging, workers, and income.

Hold on. Throw away income? Who has enough of the stuff to do that?

Disposable income is basically seen as money remaining in your hot little hands after paying taxes and bills for necessities. It is "play money" in the game of buying things you like, or are nice to have, or establish your social standing, but strictly speaking that you do not need.

Although this 'extra' money could be saved, most people choose not to save seeing it as boring and staid. It is more thrilling to play the game as a shopper than as a saver. Until you go bankrupt, and then it's game over.

Savings help protect us from unexpected changes in life, and we knew that some of those would be coming. When Linda and I were playing at full time jobs we bought more stuff than we do today, but we never saw our money as disposable.

First of all, we worked harder for that money than just passing Go and collecting $200 dollars. Second, we saw the potential in trading buying stuff for savings and increased freedom. After meeting our monthly obligations we banked the rest of our income. Not everyone does this, finding the lure of spending too great. And I admit, it can be tempting.

Spending money is very easy to do while saving it requires some delay of gratification. While a country like Switzerland has a forecasted savings rate (as a percentage of disposable income) of around 14%, New Zealand's rate is only 0.1%, and Denmark's comes in at negative 0.7.

You don't have any disposable income if you
spend more than you make.

We resisted the urge to throw money away on frivolous pleasures by keeping our long range goal in mind.

Our plan was to live a simple life while working so we could save and eventually have a simple life that did not involve working (in a salaried capacity). Over the years we enjoyed tweaking our budget to maximize savings. We wanted to start our unfettered simple life as soon as possible.

We threw our money into our account, paid off all debt, and after about 20 years we had reached a point where we were able to break free from the work/spend cycle. Controlling our desires and delaying gratification allowed us to create the life we wanted to live.

Today we rarely buy anything beyond necessities, but we are enjoying life like never before. We feel like we are ensconced in a lush, protective oasis of simplicity surrounded by a desert of debt and flagrant spending.

If you actually have disposable income, the best thing to do with it is throw it at yourself and your dreams, not things and experiences that only provide momentary pleasure.


  1. Anonymous7/20/2013

    But don't your dreams involve experiences? I am sort of confused at your last sentence, since there's a lot of quotes floating around about 'gathering experiences, not things.'

    1. Yes, dreams can and do involve experiences. I have also seen a lot written about gathering experiences rather than things, and it is probably an improvement. What I don't like about some of what I have seen is that it moves from buying and collecting stuff to buying and collecting a certain set of advertised experiences.

      But it is still about buying something and then collecting it, albeit in your memories and not in an oversized shopping bag and your garage.

      We can have the most important and meaningful experiences of our lives without spending any money at all.


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