I've been thinking about this a lot over the last fews days, and have come to it simultaneously from several different angles.
For the past month or so I've been going over my finances, reviewing my spending, because I'm not happy with the amount I'm saving, and I'm trying to figure out where the money is leaking. Obviously there are big expenses like cars and vacations, but those I've budgeted for, they're not the leak (*) (**), but there's still a large general money leakage that I want to track down. It turns out a lot of it is buying stuff for the house or for productivity, stuff that on its own I can justify, but overall adds up to a big waste.
A lot of that waste are things that I tell myself will "pay off someday". Like I need some rope for around the house; hey look it's a much better deal if I buy it in a 500 foot spool. I'll use it eventually so that's the better buy. Or, I need to set a bolt in concrete; sure a hammer drill is expensive, but I'll use it the rest of my life, so it will be a good value some day (better than renting one for this one job). etc. Lots of stuff where the idea is that in the long term it will be a good value.
Now I certainly haven't hit the "long term" yet, but I can already see the flaw in that logic. There are lots of reasons why that imagined long term value might never come. I might never wind up using the stuff. It might get damaged over time from sitting, or flood or who knows what. I also essentially pay a tax to store it, having stuff is not free. I pay a tax on it any time I move. Maybe I won't want to do DIY in the future and will just hire out the jobs and so won't use it. There are a lot of costs and uncertainty about this future value which make it much less valuable than it naively appears.
Perhaps computer stuff is an even easier example; like I sort of need a USB hub; I could live without it and just unplug stuff to make room depending on what device I want to use at the moment. You could easily convince yourself that the value is high because "even if I don't really need it now I'll use it someday". But of course there's any number of reasons why you might not use it some day.
(* = aside : expensive cars actually aren't that expensive; if you're careful about how you buy and sell, and look for cars that are on a pretty flat part of the depreciation curve, you can get a "$100k car" that actually only costs $5k a year. That's not really a big expense in the scheme of things. However that also doesn't mean it's free; the big cost is the time spent buying and selling; if you actually want it to be low cost you have to spend a lot of time on the transaction to get good value, and for people like me that's excruciatingly painful; for people who like wheeling-and-dealing, they can do pretty well, getting almost free stuff that they are just holding temporarily between sales)
(** = more aside, and actually there is a spending leak that I have that's associated to cars and vacations; I, like most, and perhaps less than average, fall prey to the sunk cost fallacy. The sunk cost fallacy is the idea that you've spent a bunch on something, you should stick with it and spend some more. Like I've spent this much to go on vacation, I shouldn't cheap out on the dining or whatever. Or I've got an expensive car, I should buy the expensive tires. But that of course is not true. Each decision should be evaluated independently for its value; the fact that you have a large sunk cost only matters in that it changes your current situation. You don't keep chasing your flush just because you're already called some big bets (though obviously your past calls do affect the pot size which affects your current decision)).
Of course home improvements are a classic of false future value. I'm not foolish enough to think I'll get any resale value benefit, but I do fall prey to thinking "I'll enjoy this for many years" when in fact I might not.
I was thinking about buying a really good mattress that's supposed to last 30 years vs one that will only last 5. In theory the long-life one is a much better deal, but there are any number of reasons why that might not be the case. It might not last like it's supposed to; you might pee and poo on it; you might want a different size mattress. By making an "investment" what you've done is commit yourself to something, you've removed flexibility, which is a cost.
Of course if you ever decide you want to travel the world and live in apartments again, all the buying of stuff is a big liability.
Getting away from just "accumulating stuff" now :
I've been thinking lately about my career arc. All through my young-adulthood I was carefully building up my value as a software development employee. I was improving my skills, improving my profile, networking, all that stuff, going up the career ladder. During that time I was not getting paid particularly well. I took jobs based on them being good opportunities for my larger career, not for their immediate financial reward.
The problem is that the big payoff never came. When Oddworld went under I was at the point where I could have moved on to CTO-level jobs at major studios, but I decided I didn't want to do that. The stress was ruining my life (and various other things that I've blogged about back then). The point is that this "future value" I had been building suddenly became zero. If you actually want to redeem that future value, you are locking yourself in to a path, which is a major cost you are paying, giving up flexibility in your life. And in careers there are so many factors outside your control; perhaps your specialty will become less prominent in a few years. Lots of people have done things like getting a JD only to find the law job market has dried up by the time they graduate.
Saving money in general is questionable now. The governments of the world have demonstrated that they don't care about the integrity of the world financial systems, so socking money away for the future has immense risk associated with it. (I don't put much credence in the complete currency collapse alarmists, but I do believe that a long period of negative inflation-adjusted returns is very likely). In the old days we glorified the good salaryman, who worked hard and saved some money, putting the joy of today aside to build a life for themselves and their family tomorrow.
Of course we can relate this all to poker, in old skool cbloom-rants style.
One of the first big realizations I had on my own as I was getting better and moving beyond book TAG play is that implied odds are massively overvalued by most players. "implied odds" is the term used for the imagined future value that you will get if you hit a big hand. Like if I call with a flush draw, it might be a bad value based on the immediate odds, but if I hit I'll make some more money, which makes it worth it the call. The problem is that there are a wide variety of reasons why you might not get paid off even if your flush comes (scare cards, or your opponent never had a strong calling hand to begin with). Or your flush might come and he might have a better flush (negative implied odds). If you realistically weight all those undesirable outcomes, the result is that the true effect of implied odds is very small. eg. on the turn you have a 16% chance to improve, you can call a bet for zero EV if the bet is about 20% of pot size. The action of implied odds is very small; you can only call a bet that's maybe 25% of pot size; really not much more. Certainly not the 30-35% that people talk themselves into believing is correct. (and of course in no limit holdem you have to adjust for position; out of position you should consider your implied odds to be zero, chasing a draw out of position is so very bad). What I'm getting at is the imagined future value of your current investment is far lower than you imagine.
(sort of not related but "implied odds" is also a good example of the "rationalization trap". Whenever a complicated logical exercise justifies behavior that your naughty irresponsible side secretly wants to do (like chasing draws), you should be very skeptical of that logic. Whenever you read that "a little red wine is healthy" you should be very skeptical. Whenever the result of a "study" is exactly what people want to hear, beware).
This isn't really related to the "future value" mistake, but I've been mulling another spending fallacy, which is the "value of an hour" fallacy. Sometimes I'll do something like buy a tool or hire a helper because it only costs $50 and saves me an hour of work; my hour is worth more than $50, so that's a good deal, right? I'm not so sure. I feel like that line of reasoning is just a way of rationalizing more spending, but I haven't quite found the flaw in it yet.