If I Can’t Give Advice (!) How Do I Evangelize Frugality and Anticonsumerism?

Last week's post on advice-giving left me with grave doubts.

I feel strongly about my personal obligation to help reduce status competition. In fact, I consider it my ethical responsibility to give the people around me less to compete against. This is an important value to me, and I believe our society's health, and for that matter our planet's health, depends largely on our collective ability to reject consumerism and status competition in all forms.

But a problem came up last week. If it's true that any advice I might give produces the exact opposite effect, then the efforts I make to reduce status competition actually increase it. My attempts to do the right thing end up doing the wrong thing, and I end up hurting the planet and the people around me.

Heavy, right?

Here's another way to think about it. By being overtly and in-your-face frugal, how am I doing anything other than mere virtue-signalling? It's as if I had a little sign over my head saying "Ooh! Ooh! Look at me and how little I spend! Look at how much I love the planet! Aren't I awesome!"

So if all this is true, it takes us right back to square one: How do we really go about sharing and spreading these fundamental values of spending less, saving more, anti-consumerism and anti-status competition? How do we effectively share these values?

Well, let's start with first principles: We want to produce in others a positive, helpful response--for them. This means we have to keep in mind that most people have fragile egos and respond with reactance. This, therefore, carries significant implications for how we influence others.

A side note: It might bother us that many people have fragile egos or respond with reactance. Or, phrased a little differently, we might react with our own reactance to the reality of reactance in others. But reality doesn't care that we're bothered. And it doesn't matter what type of responses we think people should have. That's just solipsism. What matters is the responses people actually have, and whether we help them or not.

Thus our evangelism of these values probably should be counterintutive, non-overt, subtle, nuanced. Anything other than overt and direct.

And, once again with feeling: no unsolicited advice! No "you should do this"-type advice.

Further, solicited advice is possibly allowed only in very rare and unusual circumstances. For example, when you receive no excuse-making or verbal pushback from the person asking, and they seem sincerely and strongly interested in following and embracing your advice.

In the vast majority of cases, however, you should default to reverse psychology-type approaches: Once again:

Most of this stuff will be too hard for you.
This is just too difficult for the average person.
Naahhhh don't bother, it's probably not worth it to you.

These approaches, as we saw last week, produce positive effects via the mechanism of reactance.

Finally, I think we have to depend on the quiet strength of setting an example through how we live. Do things like drive an older, non-flashy car. Don't buy a mansion (or if you already did, for goodness' sake don't brag or status-signal about it). Don't go on and on about the prices of things. The point is to never status-signal in any way, thus bragging about the $300 you just spent on your new tennis racquet or how much your last luxury vacation cost are obviously off-limits.

Instead, consider employing reverse psychology and anti-brag and anti-status-signal about how little your last vacation cost!

Readers, how do you spread your values of anti-consumerism and frugality? Do you try to spread them at all? Why or why not?

READ NEXT: Constructed Preferences: How Having More Money Wastes Still MORE of Your Money

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Easy. Do all your shopping at Amazon.com via the links on this site! You can also link to me or subscribe to my RSS feed. Finally, consider sharing this article, or any other article you particularly enjoyed here, to Facebook, Twitter (follow me @danielckoontz!) or to bookmarking sites like reddit, digg or stumbleupon. I'm deeply grateful to my readers for their ongoing support.

Should You Give Advice Encouraging Others Not to Spend?

No. Never.

Let's start with advice-giving in its worst form: unsolicited advice. It's never a good idea to give unsolicited advice. Sure, you can try to convince people to do something other than what they want--but they're just going to do what they want anyway. By imposing your values on others (no matter how awesome you might think your values are), you're being both annoying and sanctimonious. Doubly pointless.

To repeat: do not give unsolicited advice.

But as we'll soon see, even if someone directly asks you for advice, it's still not a good idea to give advice.

Here's why. Whenever you give overt advice, whether requested or not, it usually creates the opposite of what you intend. Once you understand that everybody has an ego, that everybody suffers to some extent from not invented here syndrome, you begin to understand a rather twisted truth: when you try to "help" with advice (again, solicited or not), most people respond with reactance rather than agreement.

Therefore, by encouraging frugality in others, you actually influence people to spend more. Disturbing to say the least.

I know you didn't mean it. You never meant to produce this twisted contra-result with your heartfelt, well-meaning frugality advice. But to paraphrase the movie Unforgiven: I didn't mean it's got nothing to do with it.

Thus it is critical to observe carefully the actions and reactions of others after you give out encouragement or advice. If they respond with reactance-based or not invented here-type responses such as:

"I know that already"
"I tried that and it didn't work"
"Sure, that's easy for you, but..."
"I'm too busy to do XYZ"

...then it's time to shut up. You've already said way too much.

Then again, if you want to have some fun and actually produce positive results, forget the advice and switch to reverse psychology. Say something like "You want to save more money? It's probably gonna be too difficult for you." Or perhaps phrased more diplomatically: "It's really just too hard for the average person."

For a shocking percentage of people, well more than half, these reverse-psychology statements will be far more effective than actually saying what you mean. Why? Because your statement of doubt produces reactance in others. It makes them want to prove that you're wrong to doubt them!

In other words, your reverse psychology produces the result they (and you) actually want. Yes, this is weird and a little twisted. But it doesn't change the fact that it's true.

Finally, a thought for any readers resisting the admittedly counter-intuitive idea of using reverse psychology to positively impact others. And this goes double for any reader who considers doing so to be somehow insulting or condescending.

Ask yourself which is more caring: to produce a positive, helpful response in someone... or a negative, unhelpful response? Is it in any way caring or loving to produce in someone a response that observably does not help them?

Remember, this is about the success and effectiveness of the other person. It's not about you and the type of reaction you think they should have.

READ NEXT: The Top Lame-Ass Excuses Between You and Better Health

ALSO: "Nobody Listens to Me in Real Life, But on the Internet Everyone Does"

How can I support Casual Kitchen?
Easy. Do all your shopping at Amazon.com via the links on this site! You can also link to me or subscribe to my RSS feed. Finally, consider sharing this article, or any other article you particularly enjoyed here, to Facebook, Twitter (follow me @danielckoontz!) or to bookmarking sites like reddit, digg or stumbleupon. I'm deeply grateful to my readers for their ongoing support.

Synergies of Being an Investor AND a Consumer

"Consumer brands like Nike, Coca-Cola, or Starbucks all do somewhat similar things: they buy commodities (their raw materials) and sell brands. Nike's shoes and shirts might be nice, but the material isn't all that different than Russell's or Champion's, but you may not have even heard of the latter two companies and you likely have paid a 100% markup or more for Nike gear."
--John Huber, Saber Capital

Readers, the above quote is from a small hedge fund's year-end letter to clients. (Yes, I read letters like these in my spare time. For fun. Sad!)

This quote above, however, helped me crystallize an insight: think like an investor when you're a consumer. When you purchase something, who is on the other side of your trade? And how much money are they making off of you?

After all, savvy investors want to invest wherever there are juicy profit margins. Savvy consumers, on the other hand, buy products where there aren't juicy profit margins. If they want to get good value that is.

Therefore, if you think like an investor whenever you're out there buying stuff, you'll often discover both where not to buy--and where (possibly!) to invest. In other words, wherever you find a highly profitable company charging prices well above intrinsic value, forget buying the product. Buy the stock instead.

A quick final footnote: If you're interested in following various hedge funds and investment letters, and "borrowing" both interesting investing insights and specific stock ideas from many of the world's greatest investors, there's never been a better time than right now. Ten years ago, it was nearly impossible to get access to these letters. I'll offer readers few places to go to find them:

1) ValueWalk offers online access to investor letters from many well-regarded value investors. Some of the site's older, archived content sits behind a paywall.

2) Reddit has a Security Analysis subreddit with a long list of recent investor letters from a wide range of mutual funds and hedge funds.

3) At SeekingAlpha you can follow the changes in holdings of many major hedge funds (via official 13F filings at the SEC). See, for example, changes in Mohnish Pabrai's fund here. (Pabrai is a well-regarded value investor and the author of the exceptionally useful book The Dhandho Investor.)

On Self-Doubt

This short anecdote on Henri Matisse should resonate with anyone involved in any sort of creative work:

Matisse's continuing self-doubt is revealed in the story of his encounter with a group of schoolgirls in a Nice gallery where some of his paintings were on display. Years later one of the schoolgirls remembered, "At one moment we all stopped dead in front of a picture we couldn't understand... To our eyes, conditioned to perfect classical art, that work appeared as just 'bad.'" Matisse happened to be walking incognito among the students and heard their negative comments. When a girl asked him if he were Matisse, he did not identify himself, but when the group was about to leave he took their teacher aside and apologized for his lie. He said he had been afraid of the children's criticism: "I believe they are the only ones who see rightly, and for the moment I hate that picture in my heart for having shocked the eyes of a child, even if the critics should call it a masterpiece."
--from Matisse: A Portrait by Hayden Herrera

This story shocked me, to be honest. Matisse was one of history's greatest artists. If he gets down on himself when a schoolgirl criticizes him, who am I to have any confidence at all--about anything?

Then again, maybe there's an alternative, more encouraging way to think about this story. Yes, Matisse was one of history's greatest artists, but he's also a human being subject to self-doubt. Just like all the rest of us. But his self-doubt didn't stop him from creating. In fact, Matisse later went on to create some of his best-known works, including his famous late-career collages and cut-outs. It didn't stop him.

Maybe self-doubt is normal, and you just have to manage it--survive it--as best you can. But yet you still have the obligation to keep working, keep producing.

It's just another way to think about it. And framing it up this way makes me feel kind of lucky that sometimes, every so often, I get a random moment without self-doubt.

Readers, what do you think?

[Cross-posted at Quick Writing Tips]

Checkers... and Chess

The process of writing my last two posts (uh, remember? The one on choicemaking and the other one on the popularity of terrible blogs?) got me thinking about the nature of the various games being played around us. Writing those posts helped me grasp an insight: We want to know which games are being played, and we want to make sure we're playing the right game, the game that really matters.

Or, to put it another way: we don't want to be fooled into playing some game somebody else chose for us.

To help explain what I'm getting at, I'll use the metaphor of playing checkers vs playing chess. Playing checkers is playing a game someone else sets out for us, where the rules and the entire framework of the game are pre-set, limited, and played on their terms, not yours.

Chess, on the other hand, is the upper-level game going on around and above the people stuck playing checkers. Chess is where the real strategy happens, and it's where you have far more control--both over the framing of your choices and over the choices themselves. Thus chess is the real game, the game you want to make sure to play.

Let's consider a few scenarios that many of us might face in everyday life, each of which offer us a set of basic checkers moves... and a parallel set of nuanced chess moves.

Scenario 1: "Would you like to lease your new car or would you like to finance it?"

You're in a car dealership, you've decided to buy a new car... and suddenly a game begins around you, a game involving a set of choices about how to finance this car you've just decided to buy.

For a checkers player, the choice is obvious: "Ooooh! The lease payments are a *lot* lower... uuhhh, I think I'll lease it." The person in this situation is given two choices (to borrow a concept from two posts ago, you might call it "choice by limitation"). And because we're playing checkers, the choices offered are the only choices, and, obediently, we choose one of them. Before we know it, we're in the financing manager's office debating whether to get window etching.

But once you understand that there might be a greater game of chess going on around you, you start asking real questions, questions that take you right out of the box they're trying to keep you in:

"What will be the total cost of leasing a car, particularly if after three years I have to give it back? What's my effective interest rate, and can I do better? Should I finance at all? Heck, should I really even be buying a car? And what the heck am I thinking paying another $128 for stupid window etching???"

Think about the people who have set up the checkers game in front of you. They don't want you asking these questions. They don't want you playing chess. They want you playing checkers!

You, on the other hand, want to play the game on more equal footing, particularly when dealing with institutions structured to rudely separate you from your money. And in order to play chess in this particular situation, you'll need advanced preparation. You might need to have a far greater degree of independence to the outcome of a car-buying situation. Perhaps you'll need to have the financial resources to pay for the car in a variety of ways--not just the "checkers" ways they offer you. Perhaps you have to not need a car in the first place, allowing you to defer the entire car-buying process until circumstances heavily favor you. This might mean waiting until the end of the sales year, or waiting until a time when the dealer is liquidating inventory and thus is offering cars for sale at prices and terms suitable to you, not them.

Now you're starting to play the greater game of chess. Let's move on to another scenario.

Scenario 2: "If you transfer your balance to our credit card, you can have 0% interest for the first three months!"

Okay, what's the checkers move here? Easy: transfer your balance. And then do it again to some other card three months from now. You can even go full checkers and fluff yourself on how you're avoiding obscenely high interest expenses on debt you shouldn't even have in the first place.

The chess move? Well, this part CK readers can fill in for themselves. Readers here already know not to needlessly buy stuff, certainly not stuff they can't afford, so they wouldn't put themselves in a situation where they'd even have a credit card balance, much less need to transfer one.

A sidenote. At some point, you might find yourself in an occasional situation where the only available move is a checkers move. Let's say you really need to buy a car, right now. Or, after a big vacation (one you lamentably didn't save up for in advance) and a surprise car repair, you get hit with an unexpectedly large credit card bill, and as a result you can't fully pay it off. In these cases, you're playing checkers, and because you're playing checkers, you are unable to control the framing of the situation. Your moves are limited.

The primary insight here is get yourself out of the checkers game you're in right now, and try to create circumstances where you play checkers are infrequently as possible. A big part of winning the game around you involves avoiding situations where your options are limited to crappy checkers moves... like paying credit card interest to The Man, or shopping for a car without advanced preparation.

It helps even more to be vaguely ashamed that you're not playing chess. You should be at the chess tables. You deserve to be there. And therefore the next time a situation like this comes up you'll be prepared. You are not going to let yourself get elbowed down to the checkers game.

Let's look at one final scenario.

Scenario 3: "This mutual fund was the best performing fund over the past 5 and 10 years."

The retail investor, upon hearing this statement, nods her head, makes a suitably admiring comment, and plunks her money into a high-fee fund. What can possibly go wrong? it's the best of the best!

Readers: is she playing checkers or chess?

Unfortunately, over the next five- and ten-year periods, this fund's performance mean-reverts. The fund stumbles down to the bottom quartile of its peer group, and while she doesn't yet know it, this investor will be paying extra fees for years for the exclusive right to underperform the overall market.

Yep, you were right: checkers.

Let's play chess instead. The chess player knows to be suspicious of any investment that's being sold to him, in fact he likely uses "don't buy or invest in anything sold to you" as a general heuristic in all life domains, not just investing.

Also, the chess player wants to better understand the nature of this fund's outperformance: after all, there's a good chance it might be due to sheer luck. And of course part of the backdrop of his investing knowledge includes insights like knowing that high-fee investment products are almost always doomed to underperform low-fee index funds.

Thus the chess player is practically guaranteed to smile and politely turn down this investment. And if he hasn't already, he'll question why he's doing any business at all with an individual selling him crap financial products like this.

Chess players arrive to a chess game with the ability to leave the table, and with a great degree of independence, even antifragility, to the outcome of the situation. They skillfully avoid being in situations where they're forced to buy, spend or pay. They don't let themselves get boxed in where the only moves are checkers moves.

Checkers is the sucker's game, the game they want you to play. Don't play it. Play chess.

Appendix: Alternate scenarios
How about few other scenarios where we might consider chess versus checkers moves?

1) At a doctor's office: "Your cholesterol is a little high, I recommend we put you on a statin to get those numbers lower."
2) At the real estate agent's office: "Well, according to your mortgage preclearance form we should really be looking at homes in the low- to mid-$400s. Also, you're going to want to lock in a mortgage as soon as possible. Rates are going up!"
3) At the gym, one woman talking to another: "I don't want to lift weights. I don't want to get big and bulky."
4) At home, a person about to pay the cable bill: "I can't believe Comcast raised rates again. We're paying $205 a month now for cable!"
5) At the insurance agent's office: "This policy has a low deductible, so if you have an accident, you'll only be responsible for paying the first $100."

Finally! For further reading
Readers, it takes me a long time, an embarrassingly long time, to arrive at relatively basic insights. I had to read, over the past few years, the entire list of books below to be able to crystallize and articulate the ideas in today's post. Imagine the insights you'd get (and probably far more quickly) from reading them too. Plus! You can support my work here at Casual Kitchen by following the Amazon links anywhere on this site: you'll pay nothing extra, but a portion of your total purchase is paid to me in the form of a small commission. As always, I thank you for your support and attention.

Games People Play by Eric Berne
Antifragile by Nassim Nicholas Taleb
Fooled by Randomness by Nassim Nicholas Taleb
Risk Savvy by Gerd Giggerenzer
Capital by Karl Marx
Early Retirement Extreme by Jacob Lund Fisker
The Path of Least Resistance by Robert Fritz
The Art of Learning by Josh Waitzkin