It is interesting to look at consumerism in America. Most of us don’t think twice about buying something new, even when the thing we are replacing is still perfectly serviceable. For most of human history, our decision making when it comes to buying things was almost totally based on need, unless you happened to be in the privileged position of being wealthy. Nowadays, the average person lives far better than kings used to just a hundred or so years ago.
This of course started only in the last century as we increased our ability to make more and more things at cheaper and cheaper prices. The industrial revolution and the technological advances that followed it created a world where it was about the same price or effort to just buy something new rather than fixing what you had. Throwing things away in favor of the shiny new bauble was far preferable when the cost was the same.
Unfortunately, this attitude ignores one of the most logical tenets that should be a part of our decision making process: just because you can do a thing doesn’t mean that you should. In a previous post, I described how making decisions from a place of emotion rarely results in the best result. While that post was centered more around having the courage to face our fears, the same logic applies when it comes to the way we use things in our daily lives.
One of the best examples of the negative consequences of emotional spending is the purchase of vehicles. The average car has a reasonable useful lifespan of at least ten years, while the average loan today is only six years. Typically, the person owns the car for a few years and then gets bored with it, attracted by the shiny new model they see in an advertisement. Rather than paying off the car and using the extra four years the car should last to save up for their next car, they trade in now at a net loss and place the negative equity on top of the new car. Each new loan adds more and more debt for less value.
It doesn’t have to be this way, if you can learn to control your desires. I have historically struggled with this myself, and am saddled with a fair amount of debt because of it. However, I have learned to suppress this desire in certain areas of my life and I am now finally making headway. For example, I was accustomed to getting a new phone every couple of years, but rather than add another phone payment to my plan, I simply paid off my current phone and I’m holding onto it until it fails. It still works fine, despite a cracked screen and body, and there is no reason other than aesthetics to replace it. Why spend more for something I don’t need?
This is counter to what the market wants us to believe. It is not in the best interest of the economy in general for consumers to start spending less and holding onto things longer. It relies on people spending what they make to increase productivity and grow the GDP. You will rarely be told that you shouldn’t buy a new car or a new phone or a new house or whatever else you’re considering. Businesses rely on your dollar to keep running, and will do anything they can to acquire your patronage.
The point of this post isn’t so much to criticize people who buy things before they need to, but to encourage you to stop and think about your purchase before you commit to it. If you have the disposable income to arbitrarily purchase things with cash without endangering your finances, then I absolutely support your decision to inject money into the economy via your spending. However, far too many of us can’t really afford that shiny new thing and end up going into debt for it. This is where we really need to take a hard look at what we’re doing.
Being smart with money is something the average person just isn’t taught. It isn’t in the best interest of those who manipulate the rest of us to have a public that is informed on how things really work, and especially not to have someone like me advocating for people to not spend money they don’t have to. At the end of the day, only you can decide how to budget your finances, and it is your priorities that set your spending. Just keep in mind that the new thing you buy usually ends up costing you more than you first think.
What do you think about upgrading to new things? Are you good with your decision making, or do you tend to be wasteful? How much of your existing debt is a result of buying something new that you didn’t really need? At some point, we all need to learn how to be better with our money. If we don’t, we will continue to make the same mistakes over and over again, wasting money that we could have applied to something more valuable.
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