Tag: deliberate ignorance

Are Discounts and Sales Worth It?

During the Christmas and New Year holiday period, there would be many retailers offering discounts, and on the surface it makes sense to buy something when it is discounted. However, there are many times when I go into the shop with the intention to buy something and end up buying something else as well because it is discounted. Discounts create a sense of urgency and exploit FOMO.

This is purely anecdotal, but based on my observation, those who tend to buy products on discount also tend to end up buying a lot, which makes sense because sales are used as a marketing tool to attract customers and boost sales.

Avoiding FOMO using deliberate ignorance

At the train station, there is a display that provides the times when certain trains would come. This display details which train comes at what time, when the next train comes, and which platform to go to. I have seen many people look at this display, notice that their train is coming in a few minutes, and then proceed to run to the platform because they feel stressed that they may miss their train. Even if they miss their train, the next one will likely come in ten minutes, so is it even that harmful if they miss the train? Clearly FOMO is impacting them and creating a sense of stress and anxiety.

After realising this phenomenon, my technique now when I go to the train station is to never look at the display. I’d rather not know when the next train is coming. I’ll go to the train and catch whichever train comes next. If I end up at the train station and miss a train that came a few minutes beforehand, because I never knew that train came, I don’t feel any worse off, and even if I am ten minutes late, it doesn’t really matter.

The same anti-FOMO concept can be applied to discounts and sales. Rather than shop around for the best discounts and sales, it is better to just ignore everything and only buy when you really need to buy.

Buy discount and stock up vs buy only when necessary

I have a friend who is obsessive about sales and discounts. He would collect petrol coupons and bulk buy goods when they are discounted. He has two children and needs to cook for them. Once when I went over to his house, he showed me his stash of vegetable oil. When vegetable oil was on sale, he bought an enormous amount and stockpiled it in the garage.

From experience, I know that when you have a huge amount of a certain product at home, you tend to use it up more. For example, if you see food on sale and buy it and leave it at home, the food is likely to be eaten very quickly. So stocking up on more will just make you consume more. It is like keeping cash in your wallet. The cash will just end up being spent because it is so easy to access. Money that is harder to access, e.g. because it is locked up in an illiquid asset such as your home or your retirement account, is harder to spend. The same concept applies to consumer goods. If you need to get dressed and go to the grocery store in order to buy something, it adds layers of friction, which means you are less likely to consume it. Food in the supermarket is less likely to be consumed than food in your refrigerator.

As such, rather than hunt for discounts on food, bulk buy them, and then leave them at home where you overeat them, I believe it is better to leave as little food as possible at home and just consume what you have. Once you run out, then you buy a small amount and do a quick search to see where it is cheapest.

In other words, frugality is about reducing quantity by suppressing desire rather than bulk buying in order to get a discount only to encourage overconsumption.

Avoiding commitment

When you think about it, buying something on discount is a form of commitment. You are committed to consuming that product. For example, if you purchase ten bottles of vegetable oil, you have committed yourself to consuming all that vegetable oil before the expiry date. However, over time you may get sick of the vegetable oil. The problem with commitment is that you cannot reduce consumption once your desire wanes. If you purchased vegetable oil as you need it, if you suddenly get sick of vegetable oil, you can just stop buying it.

Deliberate Ignorance of Net Worth

When I started working, I tracked my net worth religiously. I did it every month. I was living with my parents and saving 80% of my salary. I invested in shares, ETFs, etc, and now I am putting a little into crypto.

However, something that annoyed me was that everyone kept asking about my net worth and they would automatically compare me to this person or that person. Gradually I increased my savings rate to 100% of salary and lived off my investments, but now I don’t bother with checking my net worth. For some reason, everyone keeps trying to pry into my finances. So now I don’t keep track of my net worth. I simply spread all my pay into many different investments and don’t even look at it. I don’t keep track of the performance. I keep myself deliberately ignorant.

People keep asking me when I am going to buy a house, when I will marry, when I will have children, how much I’ve saved, why I am still living with my parents, when will I grow up and be a man, etc, and now I simply tell them that I am a minimalist so don’t want much. I don’t want to be burdened by debt or obligations or social customs. I also don’t keep track of anything so I don’t know my net worth.

The benefit of this is that all the consumerism is gone. People cannot compare anything to me and I too cannot compare myself to others simply because I don’t know how much I am worth. So long as the dividends come in, I just live off it. This I believe is what money is all about: living and having freedom. However, an obsession over net worth distracts people into thinking money is about comparing yourself with others to see who is better, who is “more of a man” or who “has his life together.”

After living like this for a while I found that it is more calming. I no longer compare myself to others and others cannot compare themselves to me. Because I am limited by how much I can spend because I can only spend investment income, I cannot splurge on anything. This keeps me from indulging in consumerism.

My main point is that net worth is important but not as important as passive income. Passive income can keep you alive but net worth doesn’t necessarily do so as your wealth may be locked up in illiquid assets. Furthermore, an obsession on net worth seems to make you obsessive with consumerism and materialism as you’re comparing yourself with others. At the end of the day what matters is freedom, and freedom comes from having no debt, no obligations, and passive income.