Comment by noirbot | Hacker News Reader

Comment by noirbot | Hacker News Reader

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That seems like an unhelpful way of thinking about it. I always think about it as "I make X per Month. This thing costs Y per month. Is Y/X a reasonable amount of money to spend on a thing?"

By your logic, I earn "just $N per month" so I'll earn infinite money unless I'm fired. That's obviously not a useful way to budget, but neither is thinking about $5/month as "costs infinite money".

If, after taxes and mandatory expenses I have $500/month left over, then the proposition "Should I spend 1% of my discretionary money on this?" is a much more reasonable way to think about things until your financial situation changes. If I lose my job, or take a pay cut, then it's obviously time to consider cutting back unnecessary expenses, but otherwise, it's as "infinite" as my income.

It is interesting to me that you have income and outflow so tightly coupled that you think in terms of "N% of income".

I did that for several decades. These days I take pains to decouple income and outflow. That is: I judge the expenditure on its own merits, whether I need or want it by itself, without regard to what % of income it might be.

Think of it like a leaky bucket: my paycheck goes in the top, and I control how much leaks out the bottom. Of course, I am lucky enough to have that luxury. Many people (most Americans) don't have enough income to decouple outflow from it, and are forced to think in percentages of income.

Sure - there's benefits to both ways of thinking about it. It's less that I tightly couple them and more that I find, for a sufficiently low percentage of my income, it's not worth stressing that much about the expense.

My mental model is quite close to yours for larger purchases ($100 or more, generally), but for something whose monthly cost is less than my hourly wage, thinking too long about if it's really worthwhile is probably not a great use of my time.

>> Is Y/X a reasonable amount of money to spend on a thing?

The proper question to ask is sum(Yi)/X a reasonable amount of money to spend. If not, which Yi is not providing the desired marginal utility.

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