Ramit Sethi argues you can't answer whether you can afford something without a number. His system: fixed costs up to 60% of income, guilt-free spending up to 35% of discretionary money. A $2,500 mattress only works if your guilt-free budget allows it.
People actually have no idea how to answer the question, "How do you know if you can afford it?" I'll ask you right now. How do you know if you can afford that $50,000 car? How do you know if you can afford that $565,000 house or a $2,500 mattress? If your answer does not have a number in it, you don't know how to answer that question. A proper answer to the mattress question should be something like, well, baseline mattress that we can assume costs $500. We decided that because our back is important to us, we have $1,500 that we saved up in our guilt-free spending. We've allocated that and we are still below 35% guilt-free spending and 60% fixed costs. Do any of the words I just said mean anything to you? If not, you need to go back and you need to read I Will Teach You to Be Rich.
