Diderot Effect

The Diderot Effect: Why You Are Guaranteed To Go Broke

So what is the Diderot effect?

The Diderot effect is based on two principles:

  1. The first is goods purchased by consumers will be cohesive to their sense of identity, and as a result, will be complementary to one another.
  2. The second states that the introduction of a new possession that is deviant from the consumer’s current complementary goods can result in a process of spiraling consumption.

In simple terms, our identity is tied to the things we buy. The more expensive an item cost, the more we will spiral down the process of spending more on expensive things. Causing you to go further into debt. 

Find out more in today’s video.

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The Story Behind Denis Diderot

The effect was first described by Denis Diderot in his essay “Regrets on Parting with My Old Dressing Gown.”

In the essay, Diderot is given a nice new dressing gown to replace his old one. The luxury of his new gown, however, puts to shame everything else he owns.

Because of this, Diderot goes into a spending rampage, buying a bunch of nicer things to replace the old.

He replaced his old straw chair, with an expensive armchair covered in Moroccan leather.

His old desk was replaced with an expensive new writing table.

And literally everything he owned was then upgraded to match the new identity he had from his luxurious dressing gown.

Causing Diderot to lose all of his money and go into severe debt.

This is exactly what he said,

“I was absolute master of my old dressing gown, but I have become a slave to my new one. Beware of the contamination of sudden wealth. The poor man may take his ease without thinking of appearances, but the rich man is always under a strain.”

Or what Brad Pitt in the movie Fight Club would say,

“The things you own end up owning you.”

HOW IT HAPPENS TO US

Now let’s talk about WHY and HOW this happens to us.

The best way that I can explain this is by observing recent college graduates.

This is exactly what I have experienced with my friends.

The moment any of them get a nice stable job, the first thing they do is get a nice lavish apartment.

And the moment they get the nicer apartment, they slowly begin to associate their identity to things with nicer quality, thereby causing them to buy nicer and more expensive items.

Such as a nice car, a watch, or a new cool pair of shoes.

Ultimately, getting them further into debt faster.

Now my younger friends who have just recently graduated see my older friends with all these nice things, and THEY TOO fall into the trap of  buying things that they didn’t need because if their friends own things that seem better or cooler, they get this feeling of inferiority.

Now, no matter how hard they try not to  fall into the pressure of buying the nice things,

they still do because that is exactly how we are raised as humans.

This fits in with the human need of “keeping up with the jones” where us as humans want to be proud of what we have and to have more than our neighbors in comparison.

The thing is my fellow freedom fighters, do not let the Diderot effect affect you because this will be the FASTEST WAY to burn a huge hole in your pocket – causing you severe unnecessary DEBT that guarantees you being broke for the rest of your life.

HOW TO OVERCOME IT

Now this is exactly how you can overcome it.

1. Becoming AWARE of it

Knowing the fact that the Diderot effect exists and that it’s natural for humans, this will allow you to start thinking like the minority of people that understand how badly you need to get out of it.

2. Avoid Unnecessary Purchases

Only buy the things you need and not just for status sake.

I, for example, spend most of my money from the salary I pay myself on the bare minimum I need to survive: things like rent, food, and travel.

Anything else in excess, I either reinvest it back into my businesses so that it increases its growth or put it in my savings to invest in Multi-Family Home Real Estate in the future.

Where I will have the income and the stacks of cash readily available to go in and invest into huge amounts of units that will actually increase my passive income in return.

And that is why everything that I buy is only bought with a need or a purpose and not just because it looks cool.

3. Try Owning Under 200 Things

Start adapting a MINIMALISTIC approach.

The thing about minimalism is not you appearing to look homeless, it’s about maximizing your output for future results.

One of the things that you could adapt when you want to choose a minimalistic lifestyle, is if you have not touched a thing or an object in the past 30 days, GET RID OF IT.

Because like I said earlier, the things that you own end up owning you.

And if you don’t have any use for it, then it’s just taking up space, time and clutter in your living area, and worse, in your mind.

This is exactly what I did which is why I currently have less than 100 materialistic possession while I’m traveling.

From electronics to socks and my underwear,

everything that I own is less than 100 things that can easily fit on a carry on backpack.

This gets me the freedom to go wherever the hell I want to without being burdened by materialistic posessions.

For example last month, I lived in Krakow Poland, and now I am back living in Chiang Mai, Thailand.

In a couple of months, I am going to pack up everything and move to my motherland of the Philippines, then maybe back to Eastern Europe for the spring.

4. TRAVEL to Eastern Europe, Southeast Asia, or South America

One of the biggest causes why we as humans want to buy more things is because we believe that “happiness” is tied to the things that we own.

But if you travel to places like Eastern Europe, Southeast Asian, and South America, you will see a bunch of people that are a lot happier than you even though they have far less in life.

Think about this guys…

Nearly 1/2 of the world’s population — more than 3 billion people — live on less than $2.50 a day.

Even though you may be completely broke, just knowing that you are doing better than half the world’s population should make you stop complaining.

If you knew just how little the entire world had in comparison to you..

You can at least find a way to feel some level of gratefulness because if you’re able to wake up and smile with the opportunity at another chance at this life…

Then there’s nothing that’s stopping you from feeling a sense of happiness.

Question: Which one of these tips are you going to take action on TODAY? Comment below.

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