what can you "afford" to spend?

[makewayhomer]

from another thread:

Originally Posted by phxlawstudent

Afford is probably a week's salary after tax or thereabouts.
I've always wondered how people define "afford" in the context of a statement like "only buy what you can afford". off the cuff, 1 week of salary after taxes, seems like a lot for a purchase of shoes (that was the context of the above) that means somebody making $100k a year can afford $1,000 shoes. in a strict sense that is probably true, but my guess is that the average salary of someone spending $1k on shoes is more likely to be making $200k+ of course other variables play in to this. some people like food, others cars, others random expensive hobby X, and all of this needs to be budgeted in to total annual spend. but if you could generalize, how do you define "afford". what % of your salary do you think is about right to spend on shoes, shirts, suits, watches, etc? (it's not my intent at all to figure out what people make, and I don't want this thread to become that)

 

[Master Squirrel]

According to Visa, I can afford anything.

 

[in fits of print]

A week's pay after taxes sounds like about the most I ever spend on clothes in a given month. I'm in an entry-level position though, and there's no reason to think that my clothing budget will increase in direct relation to my salary.

The first reason is that by the time someone is making 100k a year, chances are they have a pretty decent wardrobe already, and that a person's appetite for clothing isn't (or at least shouldn't be) infinite.

The second is that past a certain point, the money you spend on a given item brings diminishing returns. A $10,000 suit is not ten times as good as a $1,000 suit. A person needs to get exponentionally, not proportionally, richer to justify that kind of extravagance.

 

[Col.]

well for most this is up to their Minister of War & Finance

 

[Verno Inferno]

I define "afford" by using a budget that I create beginning of each year. I have a predictable monthly income, so it's easy for me. I allocate the income each month for housing, food, school loans, athletics, professional association dues, entertainment, charity, going out on weekends, savings, and clothing among many other things. And it's all those discretionary things that battle with each other for the surplus: savings, entertainment, clothing, etc. I pick a number I'm comfortable with for each of these, and that guides me through the rest of the year. I know exactly what I've spent on each of these categories per year for the past 3 years, so I have a baseline of what's reasonable for me. I know I can "afford" to spend a lot more on clothes, but that would mean I could no longer "afford" to save as much as I'm doing per month right now. I also have the spreadsheet set up to tell me what % of my income is being spent on major categories, and I can compare this to national averages. That gives me some reassurance that I'm not doing something insane.

It's all quite nerdy, but it helped me get out of a lot of credit card debt and is keeping me in check.

So yeah: an excel spreadsheet that's designed to help me reach financial goals for the upcoming year tells me how much I can afford to spend on clothes per month.

 

[Trompe le Monde]

as much as i want, knowing obama will bail me out if needed

 

[Wrigglez]

I'm a uni student so I'm obviously not wealthy at all, however I'm not stupid and don't waste my money of crap. (Most of it goes to text books

, however I do spent large amounts on clothes, massive relative to my income. At no stage have I been in debt as a result. I guess I save for those things I like. Once everything's said and done I will have prob spent $1000 on the latest pair of shoes I'm commissioning. So for me, to afford something, it shouldn't impact on necessary purchases i.e. food, txt books, and also not send me into debt.

 

[in fits of print]

Originally Posted by Wrigglez

I'm a uni student so I'm obviously not wealthy at all, however I'm not stupid and don't waste my money of crap. (Most of it goes to text books

, however I do spent large amounts on clothes, massive relative to my income. At no stage have I been in debt as a result. I guess I save for those things I like. Once everything's said and done I will have prob spent $1000 on the latest pair of shoes I'm commissioning.

I guess this still leaves open how long you've been saving for them, and therefore what percentage of your salary gets spent on shoes, but no figures I could dream up would make this not sound insane.

 

[Wrigglez]

i also live at home, so overheads are very little, i have no family to support. i save and i dont go out drinking very often (you'd be surprised how much you save when you dont drink!)

 

[teddieriley]

Originally Posted by Master Squirrel

According to Visa, I can afford anything.

According to your actual Visa account, I will guess no more than $25,000. Unless of course, you're big time.

 

[dhaller]

I'd be willing to bet that if you surveyed people who buy $1000 shoes, they're more likely to make $60,000/year than $200,000/year.

DH

 

[Lowndes]

Well, I define it to as (1) I have to have the money to pay for it. I don't buy clothes if I am unable to pay for it that month. (2) The cost of the item can't be so high as to take out the enjoyment of wearing it. This sort of goes to (1) but there still are things that I could afford to buy but are so costly that I think I would remember the cost of the item too much to really enjoy it.

 

[Wrigglez]

Originally Posted by makewayhomer

others random expensive hobby X,

this is my justification. Clothes are my hobby.

 

[cwh812]

Originally Posted by dhaller

I'd be willing to bet that if you surveyed people who buy $1000 shoes, they're more likely to make $60,000/year than $200,000/year.

DH

I'd take that bet.

 

[TheWGP]

Originally Posted by in fits of print

I guess this still leaves open how long you've been saving for them, and therefore what percentage of your salary gets spent on shoes, but no figures I could dream up would make this not sound insane.

IMO a lot of the math gets difficult for uni students - they sometimes have very streaky cash flow, and honestly, there's a lot of students (especially grad students/law students) on these boards & other similar.

That said, I think there's nothing unreasonable about what he's doing - if he's not going into debt, saving, say, his Christmas money along with whatever he can per month, and so on, it seems pretty likely he could amass that much. Lots of kids do it for cars or computers, no reason for clothing to be any different if that happens to be your particular hobby. And yes, it's amazing how much you save when you don't drink! Noticed that markedly when I went to law school and more or less cut back on drinking.