Think Ahead to Minimize Regrets

Three articles today, all with the same theme about regrets. Each has a different story to tell regarding personal finance.

  1. Going without a car. It’s easy to do in a big metro area with good public transportation. We all know that. Still, the author does a good job crunching the numbers on how much saving they derive, and how to compensate for the lack of a car when you’re out in the countryside and want to visit natural parks or get groceries.
  2. Bride regrets her expensive wedding. This does hit home due to my recent wedding. In planning my wedding, I had an ongoing conversation with my now wife about costs. We are both frugal people, and in the end came to a happy balance where we were able to have a quality memorable experience by not skimping on the things that matter while not fretting about minutia.
  3. Letting go of FOMO. Also known as “fear of missing out” – it’s supposedly big with the millennial crowd. My personal experience with Bitcoin was reading the first summary of its original release posting on Slashdot, back when I followed tech news religiously. In this article, various academic elite all comment on why they, and many other experts, missed the Bitcoin bubble. Yes, many of them thoughtfully evaluated the technology very early on, like I did, and concluded that it had minimal value except as a tool for money laundering and other illegal activities. None of us really entertained buying because we knew the intrinsic value was likely close to zero. Still, it’s not easy to have that kind of lottery ticket regret when you recognize a bubble early and could have ridden it. The article does suggest ways to mentally cope; perhaps the best one was that other experts similar dismissed it too.
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Get Out of a High Cost Area

You probably know that coastal cities are expensive. Actually, if  you’re reading this blog, chances are better than not you’re an educated person living in an urban area. It’s also not surprising that the high cost of living serves as a wall that prevents the migration of poor workers from e.g. Ohio or West Virginia. Interstate mobility in the US has decreased, and part of that can undoubtedly be explained by pull (family ties) and push (cost of living) factors. This has contributed to political polarization, overall wage stagnation, class-based segregation, and increased resentment all over the board.

The key tenet in my book is that wages are not going up, at least not as fast as cost of living. This article makes it abundantly clear that it’s driven by housing:

Housing costs have grown much faster in high-income places than low-income ones since 1960. Housing has always been more expensive in high-income places, but the difference is getting more extreme. In 1960, on average, US states with 10% higher incomes had housing costs that were 10% higher. In 2010, states with 10% higher incomes had 20% higher housing costs.

I would also add labour to that mix. As part of overall price pressures, you have to pay more for help, since they need to be able to afford to live there or otherwise be compensated for a long commute in from the exurbs.

So if you’re living in an expensive city, carefully examine your own life and entertain the notion that you may have more disposable net income after moving to the sticks. (Note: this doesn’t factor in the potential for career advancement and networking opportunities in the big city)

Better yet, take advantage of geographic arbitrage using techniques from my book.

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