Observations on life

Pay to Play – HumbleDollar

A good article on wealth and how the desire for it affects us all. I urge you to take a look at the full article.

Pay to Play Tom Welsh  |  July 19, 2019 OUR WEALTH is usually measured by net worth, which is total assets minus all debt. But there’s an alternative measure—which is to assign our wealth to the purposes it serves. What purposes? Two come to mind: physical and social.

Source: Pay to Play – HumbleDollar

Categories: Observations on life

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2 replies »

  1. I suppose the author can define “social wealth” any which way he wants – it is his article.

    However, his test is faulty. He states: “… Differentiating physical from social wealth can affect our decisions on current spending. Along with funding basic physical needs, we all indulge in “social spending,” whether we can afford it or not. How can we tell if we’re engaging in heavy social spending? Two simple tests can help you analyze your own degree of social spending.

    Test No. 1: Did you pay $57,000 or more for your car—a 50%-plus premium to the average $38,000 new car price?

    Test No. 2: How many rooms in your home are used by people every single day? Divide that number by the total number of rooms in your home. Is it 50% or less? …”

    Well, I can confirm that I have never engaged in social spending as he defines it. The closest I got was when I spent $8,000 for a new car in 1980 when the average new car pricetag was $7,500.

    But it is the second question that is truly faulty. My wife and I purchased our 4 bedroom 2 1/2 bath home with an unfinished basement in 1988 for just over $100,000, and we have lived in it ever since. That is 4 bedrooms, 3 rooms with full or half baths, a living room, dining room, kitchen, family room and basement – 12 rooms. At the time we bought the home, we had two children, ages <1 and 4. Even after 2003, when our oldest left for college, we met test #2 everyday – where 2 bedrooms, 2 baths, kitchen, dining room and family room were used by someone everyday – 7 of 12 rooms. However, since 2006, when the second child left for college, and we became an empty nest couple, we met the test less than half the time – most days just 1 bedroom, 1 bath, kitchen, dining room and family room – 5 of 12. So, he may want to adjust his test to meeting it at the time the home is purchased – as this is a test regarding "buying" and "social spending".

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