There is a certain brand of financial media that would like to convince you that a $4 coffee from Starbucks is all that’s standing between you and financial freedom. If only you had the discipline–so the line of thinking goes–to stop that habit, and instead invest that money at unreasonably assumed returns, then bam! You’d be practically a millionaire within four to five decades.
That’s dumb, and the reason it’s dumb is that none of the folks spouting that “wisdom” focus on what matters exponentially more: How big ticket items like rent/mortgage, cars, health insurance, vacations, etc. are the real things to focus on when looking for extra ways to save.
In the world of corporate taxes, there is such a thing as a “de minimis safe harbor”–a pretty low dollar threshold under which any purchase of equipment or other tangible property can be expensed rather than capitalized, no questions asked.
Well, we can and do have a personal de minimis safe harbor. We all do. It’s the dollar amount under which we ask no questions, and spend without conscience. And I think that’s fine and good, and the $4 coffee is probably under anyone’s de minimis threshold.
But something really interesting can happen, even when we think we’re focusing on the big stuff and doing well, and that is this: Our de minimis thresholds can increase exponentially without us realizing it, to the point where seemingly small ticket items do actually accumulate into medium and large sized ones.
$4 without conscience is fine, but all of the sudden you can be spending at 10x or 100x that amount without stopping to ask any questions of value or priority, and if you do that enough times, you can get to four or five digits really, really quickly. And maybe for some folks that’s still well below a de minimis threshold, but not for most.
So watch out for the slippery de minimis slope. It might be worth a second look at where yours is and to start asking some simple questions sooner.
Meaningful Returns 