One of the points he makes in this blog post is that you should not look to others as role models because most other people are failures when it comes to money. That is, if you see other people taking lots of vacations and buying luxury goods, you don't need to copy them. Ramit says the following:
Would you look at a bunch of blue whales for advice on losing weight? Then why would you look at your ordinary friends, who are making ordinary money decisions, and will end up with ordinary results — not having enough money — as role models? Refocus your financial aspirations to people you value and their conscious decisions...Ramit has just told us not to be like everyone else. If other people buy a Mercedes, don't copy them. However, Ramit then goes on to say the complete opposite, that you should prepare yourself to be like everyone else, that you should save money based on the expectation that you will spend like everyone else.
People are delusional about what will happen in the next 10 years. For example, if you’re in your 20s, the next 10 years will bring kids, a new car, a mortgage, taxes, insurance, maintenance, travel, life insurance, medical insurance….etc.This strikes me as being contradictory. Earlier he said that you should not spend like others and then suddenly he is saying you should spend like others. Should I buy the new car or not?
Every day I get frustrated people who tell me they’ve implemented all my strategies, yet when I tell them the next step is to implement the Ten Year Savings Strategy — where they save for the most likely things they’ll encounter within ten years — they become oddly dismissive.
As a thirfty person, of course I am not going to splash out on a new Mercedes. I'd be spending $100,000 for a car when I can easily get a car for maybe $20,000. Given that the average child costs $250,000, producing a child is monetarily equivalent to purchasing a Ferrari. If you've committed yourself to never touching luxury sports cars, why wouldn't you apply the same thrift to children?
This children-as-luxury-goods concept is something I always talk about to people. It's one of those topics of discussion that everyone loves. Whenever I tell people I plan to never get married and never have children, more often than not they tell me that I say that now because I am young, naive, stupid, or a combination of the three. According to them, I will change. What they normally say is that when they were my age they thought as I did but over time they fell in love and subsequently their whole way of thinking changed.
Ramit even says something similar to this to some degree. In the blog post Why do Delusional People Think Their Spending Will be Different Than Other People’s?, Ramit says, "We like to believe we’re individual and different, but the entire field of social psychology illustrates how we mistakenly believe we’re in control of our own lives while systematically underestimating situational and social influence." Ramit's main point, I think, is that even if you believe you won't have children, save up for it anyway because chances are you underestimate social influence and will end up having children.
I will concede that I do understand what he is talking about. I am fresh out of university and with my new full-time job I have a new group of friends who are more cashed-up than my old university friends. Already I do indeed notice how much social pressure there is, not just to wear the best clothes but also to drive a nice car, to have a beautiful wife and children, to fill your weekends with fun social activities, and so on. Being the rebel that says no to all this can be draining as I have to explain everything in detail from first principles. I am going against culture merely for the sake of saving money. To refuse to have children or buy a luxury car for monetary reasons is equivalent to walking into a wedding function naked because you want to save on the costs of clothing. You will save $100 or so from not having to buy a suit, but you pay for that with non-monetary and cultural costs, namely by incurring the emotions of shame, self-consciousness, embarrassment, and so forth.
So then what is the optimal trade-off? To what degree do we incur pain for cash? Saving money is a tool I use to gain security in the future, which in itself is something I do to achieve certain emotions since financial stability induces within me emotions like comfort and confidence. The solution then is to do what suits you. Do you value social conformity or are you willing to incur the costs of shame and embarrassment so that you can attain stability and comfort (as opposed to anxiety)? It's a dilemma because you either face shame or anxiety. If you buy a luxury car or produce children today, you reduce shame and gain pride but at the cost of comfort in the future as your loss of money creates anxiety. If you sacrifice the luxury car or children today, you feel ashamed at being such a rebel but the abnormal cash you accumulate reduces anxiety in the future and gives you comfort and stability. What is better for you depends on your preferences.
Ramit says that it is important to save up a lot because you are likely to underestimate the extent of unseen influences (such as social influence) on you. But saving up a lot is often dependent on your being able to resist social influence. Many of the big costs that we incur--buying mansions, having children, funding lavish weddings, buying expensive engagement rings, and buying luxury cars--are the result of social influence. How then can Ramit say that we should be thrifty for the sake of conforming to social influence when social influence itself is the enemy of thrift?
I haven't read too much of what Ramit has written, but based on casual observation I have a feeling that Ramit makes his living mainly by rebelling against mainstream thinking, kind of like Penelope Trunk and Jim Betts. Mainstream thinking is filled with contradiction, but knee-jerk rebellion or doing the opposite of what is mainstream will not fix that problem.