I've been thinking a lot lately about anchoring. It is more difficult for someone used to spending, say, $100k per year to start living on $50k than it is for someone who has always lived on $50k to just continue doing that. The mere experience of spending money like a consumer-sucka creates a baseline in our minds that is hard to undo.
MMM had a nice blog post on this:
https://www.mrmoneymustache.com/2011/10/22/what-is-hedonic-adaptation-and-how-can-it-turn-you-into-a-sukka/Anchoring is another term, but the effect is real. I'm at a point in my life where I've watched friends go through this. "Oh, I'll just buy a $100k luxury car! I can afford it!" - and... you've therefore gotten "used to" a bunch of stuff you then can't possibly live without, and have cost yourself an extra couple hundred grand in your life, because, I mean, it's not a car without adaptive cruise control, automatic lane keeping, air conditioned seats, etc. Going without would just be horrible!
I try to keep the "fancy new features" to a minimum, because, as you note, that resets the baseline. I could go back to some of the cars I drove in college (no heat, no back seats, no interior, limited functionality on the head gaskets and a thing for water pumps), but I'd really rather not. On the other hand, my personal "car" most of the time is a cantankerous Russian motorcycle with a sidecar that makes a snowmobile's handling look civilized. So I still enjoy my challenges.
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Back on topic:
If you're not spending 100+% of your income, you shouldn't be feeling poor if you've got savings. If you're even at a 20% savings rate or so, that's far better than most people, and you should have a buffer so that you can afford almost anything.
The trick is dialing your desires back down to your reduced income - or, preferably, not letting them creep up in the first place. Going from leasing Mercedes SUVs every 3 years to... well, anything actually sane, in terms of vehicles, is going to feel like deprivation. So don't be a knucklehead and lease Mercedes SUVs in the first place. A cheaper car gets you around just as well. So does a bicycle, in a lot of areas - and in many places, a bicycle is literally faster.
I just try to be a late adopter of things and wait for the price to come down before I bother making changes - I waited an awfully long time to buy SSDs for my computers, because I knew that as soon as one machine had one, I'd want them in the rest. Waiting a few years for the first wave to come out used, well, saved me a ton of money. And I was able to upgrade everything at once.
My phone is 4 years old (iPhone 6S). It still works fine, even though I had to replace the battery and the outside lens cover on it - not a big deal, I do small electronics repair regularly. It does everything I want a phone to do, so I see no reason to replace it until it's genuinely out of OS support. And then I'll do some deeper analysis and figure out if I'm still comfortable with it having account access.
And there's a fine balance to be found. We really don't keep to an insanely tight grocery budget - we probably spend 30-40% more on food than we could, if we absolutely clamped down. The couple hundred dollars a month difference isn't that big a deal to us, and I would
far rather have fresh produce and decent cuts of meat in the house than eat rice and beans (though we certainly enjoy some of that - a 50 pound bag of beans and an Instant Pot are awesome). It took me a while to convince my wife (who can pinch a penny and get a nickel out) to please, please, stop buying the cheapest "steak" cuts she could find. Don't go crazy, but buy something decent if we're going to cook it up.
But we also don't drive newer vehicles. The car is 8 years old (Chevy Volt, wonderful option), the truck is 23 years old (we live in a rural area and a truck makes life far easier for hauling trailers of gravel/solar panels/etc), and... they're just fine. We bought an awful lot less house than "we could afford," and are entirely content with it. It's not fancy, but we have an amazing view, it's fairly cheap to heat, and it's enough space for the four of us. In some ways, it's quite excessively large (2k sq ft), because we have another nearly 500 sq ft of storage buildings outside (a shipping container and a shed).
The point of MMM, IMO, isn't to live a knife-cutting-miserable existence. It's to be able to rationally evaluate, "Is this something I value?" If it is, and you can't find a cheaper way of doing it, well, if you can afford it, go for it. But a lot of the stuff that culturally we tend to mindlessly chase after? It's pointless. I
regularly get junk mail telling me that I can, for a mere $800/mo, lease the latest Cadillac SUV. I have literally zero desire to own one. The car is cheap to run around in, the truck does everything else, and the Russian bikes have style (and full "You rode a motorcycle in
THIS?" credits, even though I've got three wheels and 2WD). I'm good.
But I'm also part of a local flying club (cheapest way to fly), and spend money on Cessna time and 100LL. We value that. Being able to go a few hundred miles, with the four of us, in a fraction the time of driving (assuming good weather and all), is something we're willing to spend the money on.
So... figure out what you want in life, and then figure out spending accordingly. Being worth a couple hundred thousand and feeling like you can't buy something nice at the grocery store, or go out with friends occasionally... that's just being a miser.