I remember reading in one of Donald Trump’s books that he’d buy cheap clothes and shoes because he didn’t think the more expensive ones were worth the money, even though the cost difference was negligible relative to his income.  Then he finally splurged (I think it was on a $2000 pair of shoes), and he was impressed by the difference in quality relative to a much cheaper pair of shoes.  The construction was much better, the shoes were significantly more durable, and he ultimately saved time and money by not having to replace them as often.  At his income level, saving that extra time is more important than saving $2000.

Now you may think a $2000 pair of shoes would never be a wise purchase, but recognize that as the dollar-value of your time increases, the quality of your purchases becomes more and more significant.  Think of it like this.  If it takes you 100 hours to earn $2000, then buying a $2000 pair of shoes would likely be a poor trade.  But if it takes you 10 minutes to earn $2000, then maybe it’s not a bad trade at all, and it would be worthwhile for you to trade those 10 minutes for the best shoes you can get, especially if they may last you for a decade.  $2000 may seem like a lot of money, but if it’s only 10 minutes of your time, it’s not too significant.

Even if you consider what you could do for others by giving away that $2000 and foregoing the shoes, if you’re capable of generating that much value in 10 minutes, you could obviously do a lot more for others by contributing through your work vs. fussing over such a small amount (small relative to your total value-generation potential).  Who cares what shoes you wear if they help you provide millions — or even billions — of dollars of value through the course of your lifetime?  If you’re capable of doing such a thing, by all means enjoy the best shoes money can buy, and just keep doing what you’re doing.

Quality and income

The importance of quality is relative to the value of your time.  The quality-cost tradeoff doesn’t scale linearly, so when you want something of better than average quality, you usually must pay a premium for it.  To get something twice as good as the average, you may have to pay five times as much.  For most people that isn’t a reasonable trade, but as your time becomes more and more valuable, it may be wise to pay 80% more in order to get that last 20% gain in quality.  The time and headaches you’ll save will more than make up for it, as will the potential enjoyment from the increased quality.

When Erin and I were fresh out of college, we’d often buy the cheapest stuff we could get — cheap furniture, cheap clothing, cheap used cars.  That just seemed intelligent to us.  Why spend more when you can get by with something almost as good for a lot less money?

Eventually we went from being cheap to being value-focused, so we looked for the best quality-cost tradeoff.  In the long run, cheap often ends up costing more, not just in money to replace or repair items that wear out quickly but also in lost time dealing with the shortcomings of those excessively frugal purchases.  We started buying well-made items that would last instead of the cheapest we could find, even if we had to pay more for them.  And this actually saved us money in the long run.

When our income was close to the average, consumer products of average quality seemed just right for us.  But as our income shot above average, it made sense to pay those premium prices for a modest boost in quality, at least in certain situations.  The time-quality tradeoff became more significant than the cost-quality tradeoff.

For example, when Erin and I bought our new house last month, we went for a significant upgrade.  The new house has more than twice the square footage of the old house, it’s in one of the best neighborhoods in Las Vegas, and it cost more than three times as much as our old house.  But the payments (mortgage, insurance, utilities) are only around 20% of our income, so it’s hardly a financial burden.  Erin now has her own office instead of having to share it with our bedroom, so she’s a lot happier and more productive.  Plus we both really enjoy living in this new house, which puts us in consistently more positive states while we’re living and working here.

As another example, I recently bought a new laptop PC.  In fact, this is the first article I’m writing with it.  I spent about $1700 on it (purchased online with free shipping).  I probably could have gotten something 80% as good for about half that price, but since the price difference is less than a day’s income, that marginal quality improvement is a worthwhile tradeoff for me, especially since it’s a tax-deductible business purchase and something I’ll be using frequently.  If I could have found a better model with the specs I wanted, I’d have gladly paid even more for it.

The outrage script

Several years ago, I’d have viewed such purchases as extravagant, wasteful, or imprudent.  But I started asking questions that led me to some new insights.  How could anyone possibly justify spending $10,000 a night for a hotel room?  What kind of person would pay $100,000 for a car?  Who’d be crazy enough to spend $200 on a dinner?  Are such people completely nuts, throwing away good money just to show off?  Don’t they realize that if they bought a cheaper but still adequate car they could use the rest to put a few kids through college?  And what kind of person eats $200 in a single meal?

I eventually saw that these questions were a function of scarcity thinking.  I call it the “outrage script.”  Have you ever run the outrage script?

Personally I found it difficult to dump the outrage script.  It was ingrained in me from a young age.  I partially learned it from my grandparents.  They were delightful people, very loving and generous with their grandchildren, but having lived through the Great Depression, they had a lifetime subscription to the outrage script.  I eventually dropped this script when I saw that the more outrage we feel towards abundance-minded people who experience no lack whatsoever, the tighter we are with our own money, and the less we ultimately contribute.  I don’t know if you’ll agree with that, but I think you can at least agree that running the outrage script surely does no good for anyone.

You won’t often see abundance-minded people running the outrage script.  Instead you’re more likely to see them running the gratitude script.  That script looks something like this:  Isn’t it wonderful that certain people are generating so much value — and so efficiently — that they can easily afford to pay $10,000 for a hotel room, thereby helping to create new jobs and keep money flowing through the hard-working service industry?  Isn’t it great that people can afford a $100,000 car in order to fund new innovations that could benefit us all?  Isn’t it outstanding that people can buy a $200 dinner, encouraging the best chefs to create new culinary delights and to help the wait staff support their families?  While it would be unusual for someone to phrase their questions like this, the common element is that they recognize that spending money is itself an act of contribution because spending is giving.

The contribution script

Even better than the gratitude script is the contribution script.  Here’s how this script sounds:  What could I do to create so much value for others that spending $10,000 for a hotel room would be easily affordable… and a great way to reward myself and my friends for a job well done?  I could adapt the other two examples as well, but I think you get the idea.  Money isn’t a scarce resource unless you make it one.  Money becomes abundant when social contribution is abundant.

How does the concept of quality relate to the contribution script?  First, as you contribute more and more value to others, the ability to enjoy better quality is your natural reward.  Secondly, upgrading the quality of your surroundings can in turn increase your ability to contribute.  These two aspects serve to create an upward spiral.  The more you contribute, the more you can contribute.  It’s all good.

Unfortunately it’s easy to fall victim to mental blocks that keep you out of this positive spiral.  Running the outrage script is one example.  Another example is feeling that your best contributions won’t make much of a difference, so why bother?  Try to see these blocks for what they are.  Think about them consciously, and ask yourself if they’re really true.  Whatever bothers you most about people who are contributing (and being handsomely rewarded for it) is a pointer to something you must work on within yourself.

The quality-contribution balance

Ultimately the physical stuff in your life is a reflection of your life’s inner quality, not the cause of it.  When you’ve found and accepted an inspiring purpose and are feeling totally fulfilled by it, that inner fulfillment works like a magnet, drawing unto you the physical surroundings that are congruent with it.  You could refer to this as “fake it til you make it,” but I think it’s more accurate to say, “As within, so without.”  You don’t need to fake anything.  You just need to recognize that your inner world and your outer world are constantly influencing each other, and a glaring deficiency in one will induce a similar deficiency in the other.

Over the past year, I’ve had the opportunity to speak to some very financially successful people, and I keep noticing this quality-contribution connection.  One friend I spoke to last week runs a business that earns $15 million a year and has dozens of employees, and it’s growing like gangbusters.  When I asked him how he manages his life without being overwhelmed by stress, he said he just absolutely loves his work.  He also mentioned he takes week-long vacations every six weeks, gets massages, enjoys relaxing spa days, and spends plenty of time with his family.  On the one hand, you could consider these the rewards of success.  On the other hand, you could make a case that they’re contributing to his success.  I think they’re really two sides of the same coin.  The more you contribute, the more you’ll enjoy your life, and the more you enjoy your life, the more motivation, energy, and willingness you’ll have to contribute.

Your quality of life and your social contribution will tend to remain congruent, so if you want to see improvement in either area, you must create a temporary positive imbalance.  Raise one side, then the other, and create a new equilibrium.  An even better approach is to commit to seeing both sides grow together, so the whole system has a positive momentum without becoming seriously unbalanced.  This kind of change takes time, so don’t pray for an overnight miracle.  Be patient with yourself.

If you want to increase the quality of your life, focus on increasing your contribution.  And if you want to improve your contribution, take steps to upgrade the quality of your surroundings.  Ultimately the two are inseparable, but you’ll often find that one side or the other is lagging behind, thereby dragging down the whole system.  Is your contribution suffering because you aren’t being adequately supported with a positive environment, good friends, and reliable tools?  Or is the quality of your life suffering because you’re wearing yourself out from over- or under-contributing, while blocking the abundant flow of rewards into your life?  What can you do to restore balance and re-align yourself with that upward spiral?