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Someone pointed out an article called When Money Buys Happiness recently, which discussed the results of a request by Dr. Geoffrey Miller to:

List the ten most expensive things (products, services or experiences) that you have ever paid for (including houses, cars, university degrees, marriage ceremonies, divorce settlements and taxes). Then, list the ten items that you have ever bought that gave you the most happiness. Count how many items appear on both lists.

Well, I didn’t read any further than that before deciding that I wanted to try it for myself. First I tried to think of the 10 items, services, or experiences that I’d spent the most money on. Ever. Here’s what I came up with, in the order of when I bought the items/experiences:

• First condo (long since sold)
• Trips to Germany & surrounds.
• Miata
• Our current house
• Graduate school
• Rental condo (sold too)
• Cruise
• Trip to Hawaii
• Rental duplex (also sold)
• Trip to Italy

And here’s my list of the things I paid for that brought me the most happiness:

• Our wedding
• My son (if you count associated expenses!)
• Trips to Western Europe, Vancouver, Hawaii, Eastern U.S., Italy, cruises, the beach, to visit family, etc.
• Miata
• Our house & home-related projects
• Pets
• Cameras
• Therapy
• A painting
• Flowers

Quite a few of my items appeared on both lists, which was what the responders also reported.

But then I wondered if the things in my first list were really what I’d spent the most money on. It would be easy to forget stuff, so I fired up Quicken for 15 years of data that’s pretty inaccurate for various reasons, but still much better than my memory.

This is what Quicken told me I’d spent the most on, from most to least expensive (and even the least expensive amount is enough to make me choke):

• Housing
• Auto-related expenses
• Credit (ow, glad that’s no longer the case, but ugh)
• Taxes of many types
• Medical
• Groceries
• Dining
• Wedding photography business
• Travel & Electricity, tied at the same amount
• Childcare
• Graduate school

Clearly my memory was pretty faulty. What’s funny to me is that four out of the ten truly most expensive items appear in some form on my “happiness” list, but six of the things on my happiness list are actually very inexpensive (at least compared to the other stuff I’ve spent money on.)

What do you think? Are you spending on the things that you really enjoy? Or is too much of your money going to things that you don’t?

Have you heard of anchoring? Anchoring is a phenomenon that’s been mentioned in several of the books I’ve read lately, including Predictably Irrational.

Basically, anchoring is a tendency to evaluate one thing based on our perceptions about another thing (the “anchor”). This anchor can be completely unrelated to the item being evaluated, but we still unconsciously take it into consideration when making a decision about or evaluating the price we’re willing to pay for an item.

In Predictably Irrational, the author describes a study where participants wrote down part of their social security numbers, and then were asked questions about how much they were willing to pay for an item.

The amount they were willing to pay correlated with having a higher or lower social security number. So the participants were using a completely unrelated number to determine the monetary value of an item.

Unfortunately, we do this all the time, often without realizing it.

It’s as if the need to compare is built into our brains, and we find something to compare with whether it makes sense or not.

Companies often use this phenomenon to their advantage when pricing products. For example, we’re probably more likely to think an item is a good value if it has a crossed out higher price listed as well.

You almost never see things for sale at  MSRP (manufacturer’s suggested retail price), but rather you see the MSRP listed and then the actual price. The is especially common in car sales — and we determine how good of a “deal” we got based on how much “under sticker” we paid, instead of evaluating our purchase based on things like what we can afford, how reliable the car is likely to be, etc.

It’s also a common way to encourage someone to purchase in the first place. Being aware of our natural human tendency to use anchoring can help us make more logical purchasing decisions.

Had I not gone hog wild with spending this month, my net worth report would have been better.

But as it stands I’m happy with what I spent on and I’ve hopefully finally gotten that little spending-more-than-planned bug out of my system. I’m stopping that before it turns into a trend!

My investment accounts went up, but that was mostly due to contributions. As far as an actual increase due to the investments themselves goes, things were pretty flat.

(Which is a whole heck of a lot better than all of those months when I contributed like crazy and the accounts went down down down, eating up my contributions and then some.)

Savings barely increased, because I somehow got so focused on investing that I forgot about it. So I quickly sent $50 to savings as a better-than-nothing gesture.

Compared to this same time a year ago, I’m slightly ahead of the game. (By less than $1,500.) Considering that encompasses some of the very worst months of 2008, I’ll take it.

I updated my car value this month as well, figuring it would result in a decrease. Surprisingly, the value stayed the same. Probably that means it’s worth so little that it hit its minimum value, although the wishful thinking part of me prefers to believe that it has become a classic car.

But to sum up, here are the numbers for June:

Assets: Up $1268.38
Liabilities: Down $972.22
Change in net worth over previous month: Up $2240.60