A family member of mine was looking at houses and I started thinking about Charlie Munger when he said it is important to keep a lot of the “silly needs” out of your life. (This particular family member is doing a great job managing his budget, but in general, it made me wonder about society as a whole.)
[mainbodyad]Had I not wanted to own my own firm, I would have been perfectly happy living in a nice place like this Toll Brothers townhouse outside of New York, staying debt-free, wearing cashmere sweaters, taking my kids to piano and soccer practice, and managing a portfolio at an institution such as an insurance company.
That is, instead of buying a huge house, I’d rather live comfortably and use all of my extra earnings to acquire shares of stock or real estate. Or, I’d rather have an $18,000 handmade armoire that will appreciate in value each year. The desire to build a bigger house than you can afford, spend large sums heating or cooling it, cleaning it, and insuring it, and then spending half your day working somewhere else just never made any sense to me. I see it all the time. Why? If your funds are limited, wouldn’t you rather live inside a smaller diamond than a larger rhinestone?
What am I missing? Getting up every day and working to buy assets that bring more money into my personal treasury excites me. I wouldn’t want to be spending my labor paying all of my earnings to the bank in the form of interest expense. Is it signaling theory, again? I think I underestimate how powerful it is.
