I wanted to focus on unconstrained preferences, but you have a good point: expensive tastes and low funding are a damaging combination. I too am weary about people living well beyond their means and using credit card debt to finance it all.

I would guess most of these people aren’t taking opportunity costs into account (more on this in a future article). For instance, I wrote about buying a high end TV bought on credit card debt in a previous article. While the TV may be preference, is it really worth a total opportunity cost of $53,000? Similarly, I would guess people upgrading PS3 and souping up their car are not fully aware of what they’re losing.

On your second point, Even if frugality and saving are emphasized less, I would suggest they still very important. Sure, it’s not as flashy as making some quick stock trades, but it is a very sound way to accumulate wealth.

Good point–lots of people are pressured into graduate school because their advisors recommend it to them.

On the other hand, I do know people who really enjoyed graduate school over private industry. One college professor told me that his family life is much better after he got a Phd since he can live the flexible academic lifestyle instead of a high pressure consulting lifestyle.

The restaurant example is appropriate. While I find some places “sub-par,” my friends really do enjoy them. Try as I can, I simply cannot convince them my choices are better. Instead of thinking they’re wrong, I just think they have different preferences.

One question: what if your preferences are too costly for your particular set of finances? For instance, what if I make 200 dollars a week, but one of my high-priority preferences are to upgrade my PS3 gaming collection? Or to buy the most fashionable clothes? Or to soup up my car?

I ask this only because I always see such situations developing, especially in a place like NYC, and especially with people whose sole income is LOANS (usually for professional school).

I like the tracking of expenses part, but sometimes I fear that frugality & saving seems to be more of an ideal of the past. What do you think?

-A