People think that it's a smart idea to buy a new car once you've paid off the old one because that way you don't get used to the extra money being available each month. So if you have a $300 car payment and you just paid it off, you need to look for a new car with a similar payment before you become accustomed to the extra $300 being available and lifestyle inflation "prevents" you from buying a new car when you do need one.
Is this your interpretation or have people actually told you that they believe this? Because that is seriously one of the most insane things I have ever heard...
As messed up as this sounds, it makes sense. The point of it is that if you say have $1000 disposable income every month and this suddenly becomes $1300, because you paid off your car. You will spend more and when you need a new car, you will have to cut back spending to afford it.
Now lets say you take that extra money and rent an apartment for 300$ more a month. Then your car breaks down and you need a new one. You now cant afford that apartment, because you will need to finance another car.
I'm not saying its a good idea, but for the average pay check to pay check guy, I bet it works.
Yeah, I sort of get the general idea. But that just makes it particularly weird to me because it betrays that there was actually some rational thought that went into this. And then at some random point the rationality went completely out the window. Unless we assume that the genius that thought of this has absolutely no idea of the concept of saving. And I mean not in the sense that they think something like "saving is impossible for an average person since live is too expensive". But in the sense that they have no clue that the concept of saving exists at all. If you assume that all of the money that comes in each month also has to be spent in that very month, then the train of thought is suddenly perfectly logical.
Sounds kind of like a co-worker of mine whose young, single son is in the military. When he decided he wanted a sports car, she encouraged him to go ahead and do it while he was young and had the disposable income. She cautioned him that he'd better "get it out of his system" before he has a family and is required to spend everything on needs. These weren't her exact words, but the gist of it was, "You're going to spend every penny anyway, and a sports car is something more permanent than living in an upscale apartment or going to the bar every night.
On the other hand, I'm talking to my slightly-younger daughter about working this summer before her senior year in college and saving every penny so that
IF she chooses to relocate after graduation for a good job offer, lack of an apartment downpayment, etc. won't hold her back. And I'm already talking to her about beginning her 401K from the day she first sets foot in the hospital as an RN, then moving towards other investments as soon as she's able. If she told me she planned to spend every penny and be broke on the last day of every month, I'd feel I'd done poorly by her.
The trick is getting the right farmer and butcher combo.
Yeah, we used to do this, but the price has skyrocketed lately, and I can't justify it any longer.
I'm starting to think my local stores just count on selling most of their chicken at BOGO sales, now that I'm thinking about it... it's gone up faster than most other things in recent years and they do run the sales pretty often.
If you start keeping a grocery price book, you'll be able to predict with very good accuracy WHEN those BOGOF sales will pop up -- for us, we see chicken on that good sale about every 5-6 weeks. So we stockpile about what we'll need for that time frame ... and no more. Information is power.