Why would anyone choose to be worse off?
In our case, we chose to live in France. Now, when you hear people talking about France, it might be about the wine, the food, the bureaucracy - they even invented the word! But what you don't hear anyone say is that France is a low tax country...because it most certainly is not!
Living in France increases our annual tax bill by £3,200/$4,000/€3,700. That's something to think about. And from 2025, that will increase to £11,700/$14,400/€13,600 per year. Wowsers, now that's a BIG number, and one we can avoid simply by living somewhere else.
We must be odd people - choosing to be worse off seems a strange thing...
Surely not many people choose to be worse off!
But that's not true. In fact, choosing to be worse off is probably the norm rather than the exception. The question is whether it's a conscious choice.
In the early days of my early retirement, I took some time to look at my costs. I asked myself:
1. Is this item of expenditure good value for money?
2. Can I get the same thing for less money?
The result of this exercise was that I:
Changed our TV and mobile phone packages
Switched to a lower cost supermarket
Started using a shopping list
Took time to shop around
Exchanged time for money e.g. taking an indirect rather than a direct flight
Changed our utility provider
Didn't accept the first quote
Used a gift list
Paused before buying
In my post about it, I calculated that making these changes saved us £4,471/$6,305/€5,200 a year. Importantly, these changes didn't impact our quality of life.
Around the same time, we also went from being a two car family to a one car family as well as downsizing our accommodation when our kids left for university - the saving from these were even bigger.
Before making these changes, I was effectively choosing to be worse off. Whether it was because of laziness, apathy, or simply not realising how much could be saved - it was costing us a lot! At least better late than never, we made the changes - we stopped choosing to be worse off.
That was over four years ago, a different life, when we lived in Dubai. It's probably past time for another review - choosing not to be worse off is not a set and forget thing.
However, I'm not arguing that we must always spend the least amount of money possible. Life is about finding a balance - we work hard for our money, and there's nothing wrong with spending some of it on the things that make us happy. We've chosen to spend an extra £3,200/$4,000/€3,700 each year in tax to live in France, and that's worth it to me. Yes, we are financially worse off, but I'm enjoying the life that flows from this decision. As we get closer to 2025, I'll have to think about it some more, am I willing to spend an extra £11,700/$14,400/€13,600 on tax for this life? That's going to be a tough decision.
One of my pet hates is the concept of keeping up with the Joneses. Society, with plenty of help from the marketing people, is very adept at encouraging us to do this. I know that I'm not immune from it, but I find it the most annoying way that we choose to be worse off.
At the same time, we shouldn't think that we need to be frugalists either. Living at a low cost can be something of a FIRE mantra. Spend less > saving more = get to FIRE more quickly. Spend less > need a smaller retirement investment pot = get to FIRE more quickly. These things are true, but are best done with some balance. I'm a big fan of financial independence (and retiring early if that's your thing), but it's important to enjoy the journey to FIRE too.
So choosing to be worse off is a thing - in fact, I suspect a very common thing, and we're far from unique in doing it. If it's done consciously, for good reason, then choosing to be worse off can be good. But if it's done unknowingly, through laziness, apathy, or to keep up with the Joneses, hmm, then there is probably some work to be done.