How can I escape the herd mentality?

The herd instinct is ‘a mentality characterized by a lack of individual decision-making or thoughtfulness, causing people to think and act in the same way as the majority of those around them’. It’s a familiar term in investing, where investors are influenced by the positivity – or negativity – of others, and their behaviour then feeds into the market, perpetuating this cycle and sometimes leading to bubbles or crashes.

But the herd mentality I want to talk about today is the one that is much bigger than the stock market, and permeates almost all of our money (and other) decisions.

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Is your home your greatest asset?

One of the things I most looked forward to, in buying a home of our own, was having more freedom.

Owning, to me, was more than just about no longer having to pay rent, lining someone else’s pockets, but about having the ability to make the ‘house’ I lived in a ‘home’ – something a bit more personal – getting to paint the walls a different colour or put up pictures if I so chose.

And I think this is a common dream. Take the cliché ‘A man’s home is his castle‘. It encapsulates the notion that ‘One can do whatever one wants to in one’s own home’.

But is that always true? And are there other ‘castles’ you can build that give you even more freedom?

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How can I travel the world on $50 a day?

Figuring out how long you can plan a holiday for, or whether you can afford to travel long-term, is a relatively simple calculation if you have the right variables. In a previous post, I illustrated a few different methods of calculating short, medium, and long term or even permanent travel, but all of them are based on how much you will spend each day.

I mentioned the figure of $50 a day, which for some, might sound entirely unreasonable. That’s how much Paul Terhorst suggested in his book, Cashing in on the American Dream, which is what inspired my husband and I to begin our current travels in large part, and was the impetus behind my most recent post, the first in a series probing the notion of the American Dream. But Terhorst’s book was published back in the 1980s, and the world is, unarguably, different today. One could even say it’s a different world since I wrote my first post in this series on the American Dream two days ago. So is travel on $50 a day still possible?

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What is the American Dream? (and what happened to it)?

I’m coming up to my fifth month of being on the road, partly inspired by the fantastic book Cashing in on the American Dream: How to retire at 35 by Paul Terhorst. It’s a book that sat on my wishlist for a couple of years, for one simple reason – the word ‘American’ in the title. Although I (and probably most people in the world) am familiar with the concept of the the ‘American Dream’, I wasn’t sure whether the book would be too heavily focused on the American context to be of any use to me. As it turned out, it was extremely relevant, despite its distance from my location in both time (being published over 30 years ago) and space (given my Australian background).

A few days ago, I started to write a post about this book, about how we can all ‘cash in on the American dream’ in some way or another, and the relevance of Terhort’s ideas decades later, in contexts outside America (which I’ll still do in my next post). But this led me to research the very phrase ‘American Dream’, and that turned out to be a whole other (and in some ways, even more interesting!) story.

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What’s the price of bread? Or a Big Mac?

When a politician is criticised for being ‘out of touch’, it is often said that they don’t know the cost of a loaf of bread or a carton of milk. The BBC describes this as ‘a classical political ambush that has been popular on both sides of the Atlantic for decades’, with cynical voters suspicious that political leaders live in a world divorced from the ordinary lives of the majority. But why are these two items such important yardsticks? And how would they stack up in a global comparison? What about something a little more fun… like the Big Mac?

It’s 30 years since The Economist invented the Big Mac Index, a ‘lighthearted guide to whether currencies are at their “correct” level. It is based on the theory of purchasing-power parity (PPP), the notion that in the long run exchange rates should move towards the rate that would equalise the prices of an identical basket of goods and services (in this case, a burger) in any two countries’.

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Are you cheap or frugal?

‘I love your shoes!’ How should you respond to such a compliment? With gracious acceptance? With modesty?

It’s probably the influence of my time spent in Japan, but my usual tendency is to downplay any compliment.

‘Oh, these? They’re only cheap! They were reduced to $20’

For me, responding to compliments with a simple ‘Thank you’, as is common in many European cultures (including Hungary, where I am now located) goes against the grain.

Complimenting ‘is a complex sociolingustic skill’, says Holmes (cited by Grossi), and in Japanese society, a desire for modesty generally outweighs a desire for agreement (Leech, cited by Pohl). Using Japanese norms in Australian society has sometimes surprised – or even annoyed – those I’m speaking to. ‘Don’t say that!’ they respond with utter horror, ‘I don’t need to know how much they cost!’ highlighting the taboo of talking about money.

There’s a stigma attached to the word ‘cheap‘, especially when applied to a person. Something that is cheap is meaningless, to feel cheap is to be embarrassed. No one wants to be a cheapskate – someone who is labelled as ‘stingy’ and ‘miserly’. But just like the word ‘budget’, should ‘cheap’ be viewed so negatively? Surely saving money – or at least, not wasting it – is a good thing?

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Where do I get started buying a house?

Buying a home – especially your first – can be both exciting and terrifying. How can you ensure that your search for the house of your dreams doesn’t turn into a house of horrors?

When my husband and I bought our first place, we felt in the dark – and came close to making a pretty big mistake. Fortunately, we learned a lot from the experience, and things worked out well in the end – we found a place we loved that suited our budget, paid off our mortgage in under 5 years, and that was what started our journey to financial independence.

But before we look at what you should do when getting started buying a house, let’s take a look at what to avoid: Continue reading “Where do I get started buying a house?” →

Are you keeping up with the Joneses or the Kardashians?

‘Keeping up with the Joneses‘ is an idiom in many parts of the English-speaking world, implying successfully matching the lifestyle of your neighbours.

Idioms, or fixed expressions such as ‘costing an arm and a leg’ or ‘waste not want not’, are normally considered ‘figures of speech’ in Linguistics, and their meaning is not the regular sum of their parts. For example, to ‘kick the bucket’ must be understood as a set phrase meaning to die, and cannot be determined by analysing the words ‘kick’ and ‘bucket’ alone. As a result, many idioms are culturally specific and difficult to translate.

Nevertheless, unsurprisingly, similar idioms suggesting changing on the basis of changes you observe in others exist in many languages: for example, the delightful Mexican idiom ‘Si de tu vecino ves la barba cortar, pon la tuya a remojar’- ‘If you see your neighbor has shaved his beard, you should start lathering yours’.

But in our globalised world, who exactly are your neighbours, and should you care?

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How can frugality make me more creative?

There is a paradox when it comes to creativity: the tension between freedom and constraint. While we often think of the ideal creative process as unstructured, open-ended, and free of limitations, research has found that creative individuals – in both artistic and business settings – can actually benefit from self- or externally-imposed constraints.

Most of us cringe when we hear words like ‘budget’. As with the word ‘diet’, images of spartan deprivation, meager portions, and boredom spring to mind. But my experiences of frugality have been exactly the opposite – not tightening, but freeing.

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Do you have Affluenza?

‘Affluenza’ – a portmanteau or blend of the words ‘affluence’ and ‘influenza’ – is said to be a ‘virus’ caused by a combination of consumerism, property fever, and the battle of the sexes, resulting in consumer debt, overwork, waste, environmental harm, psychological disorders, alienation, and distress.

Over the past decade or so, a number of books have been published under the title Affluenza. The word first appeared sometime between the 50s and the 70s, taking off in the 1990s following the broadcast of the American documentary of the same name, and the subsequent book by John de Graaf, David Wann and Thomas Naylor in 2001. They define ‘Affluenza’ as:

‘a painful, contagious, socially transmitted condition of overload, debt, anxiety, and waste resulting from the dogged pursuit of more.’

Like many novel neologisms or coinages, the term is not without controversy. At least one psychologist wants to ‘eradicate this word from our vocabularies’.

So how can you know if you have ‘Affluenza’? And how can it be treated – or immunised against?

Click to play the ‘Do you have  Affluenza?’ podcast:

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