I was out for a walk the other day, because that’s how cool I am. I was walking down a busy street near one of the trendy areas of Calgary, and as I started to pay attention to the cars whizzing by me, I noticed there were a lot of luxury brands mixed in with the Toyotas and Fords. It seemed like every second car was a BMW, or a Mercedes, or a Lexus. Even Cadillacs, Acuras and Porsches are well represented, at least on that road.

One of the things I’ve discovered with Calgary is the population’s love of luxury cars. There are many good paying jobs in Calgary, and a lot of them are filled with 20 and 30-somethings who are experiencing their first taste of upper middle class life. I hesitate to call these people the nouveau riche, since most of them would be pretty screwed if they didn’t get paid for a month. Easy come, easy go, apparently.

This got me to thinking what kind of car I’d buy if I had an unlimited amount of money. At first, my imagination ran away with it, and my imaginary car got more and more extravagant. Rockets on the back? YOU BET. The ability to fly? WHY NOT. My own personal computer system that acted as both my chauffeur and read out my tweets? MAKE IT HAPPEN, GOOGLE.

But then, reality set in. I’d probably upgrade from my current car, (a Ford Focus) but I probably wouldn’t go nuts. I’d probably buy a small crossover like a Rav-4, or a Ford Escape, or something like that. I’d probably spring for the seats that warm your ass in the cold, but not the sunroof. Hell, even leather seats don’t really do anything for me. My imagination is pretty lame.

When it comes to cars, I’m not really that impressed with luxury models. While I understand the desire to have a car that can parallel park itself, options like that don’t really get me excited. I use a car as a tool to get from point A to point B, and as long as I have enough leg room and a decent stereo to listen to Taylor Swift, I’m cool. For other people, luxury has more of a value.

Because we don’t live in a world where we all have unlimited amounts of money, we’ve got to make tradeoffs. If you’re like me, you buy the cheapest car that’s going to get you from home to work. If you’re like a buddy of mine, you’re going to buy a fancy new truck because the ladies in rural Alberta are apparently aroused by such a thing. Each of us are using exchanging resources for the ability to get places, but one of us is spending more for this privilege.

This is hardly groundbreaking, but here’s the big lesson when it comes to that. If you’re serious about building wealth, beware of declining utility. An older car will get you around for cheaper than a newer one. A smaller house will keep you warm just as well as a bigger one with a walkout basement. Everything you spend beyond the what’s necessary puts you further away from financial independence.

Many people are happy with exchanging additional cash for luxuries. Hell, I do it all the time. I’ve gladly paid extra for direct flights, justifying to myself that the extra $20 each way is worth it. When I bought a watch, I paid $50 for the nicer version instead of just using my cell phone like a normal person. I own more than one sports jersey, and not jerseys bought from some bootlegger selling a knock-off out of China. So yeah, I’m hardly the poster boy for this.

Doing stuff like this is all fine and good, providing that there’s actually some thought process behind your spending. I’m not a food snob, so I’m happy to buy meat that’s two days before the best before date at 30% off. I live in a small apartment to save money. My view is that as long as I’m doing my best to keep my big expenses down, I can afford to spend on little things that make me happy.

There’s no right or wrong way to do this, as long as you do it to the maximum of your ability. If you just can’t bring yourself to drive a crappy car, overcompensate by living in a place that would even scare off bedbugs. If you like fancy clothes, spend the majority of your entertainment budget at the public library. And so on. As long as there’s a conscious effort to make it happen, the details don’t matter so much.

A while ago, I took a look at the savings rate you’ll need to retire early. It was aggressive, to put it lightly. Getting to financial independence at a young age is difficult even with an assload of sacrifice. It’s virtually impossible without being a cheap bastard. If you’re looking to do this, understanding declining utility is imperative.

Even if you’re not looking to live off your riches over the next few years, understanding declining utility is a really easy way to maximize your savings. It’s kinda like taking a multivitamin. After a while, you’re just pissing out excess vitamins. Pissing away things are bad. Try to avoid that.

Tell everyone, yo!