Before this blog really gets off the ground, I have to set a ground rule. And there’s no way to sugar coat it:
Credit card debt is a no-no.
If you can’t pay off your credit card bill at the end of the month. Don’t buy it! Now, I’m not bad mouthing credit cards in general since I use one. They’re convenient and you can earn perks such as cash back, hotel stays, or airline miles. I’m talking about the abuse of credit cards. Are those $100 shoes really worth $120 or $150 dollars when you include the cost of interest? Maybe, but most likely not.
So if you can’t have it all, what do you do? You have to make a choice. Think back to high school or college economics class, and please don’t have a nightmare. What were some of the first things you learned? Opportunity cost and scarcity. Until you earn more money, the money you have is a scare resource. There are only 24 hours in a day. And you only have so much closet space. Put another way, if I have $75 to spend, I have to choose between a new dress or dinner at the new restaurant in town. Check out Live Creating Yourself every Friday for her debate between purchasing fashion vs. furnishings.
Unfortunately, Americans (and especially Millennials) want what’s bigger, better, newer, and faster. And we want it now! Maybe even yesterday. Especially if Ms. Jones has it. Let’s work on changing that mentality. Because when you boil it down, will “it” make you happier?
The NY Times had a fantastic article about that very subject recently. Studies have found that people are happier and enjoy their purchases more when they’ve saved up and planned to buy something long before they buy it. Even better, buying experiences such as vacations or theater tickets can lead to even longer-lasting happiness. Bonus points if you’ve saved for it. This is because those experiences create memories and you can build stronger relationships with family and friends. Pretty powerful stuff, eh?
Based on personal experience, spending money on a deep sea fishing trip during our honeymoon (happy second anniversary!) was more valuable to me than the dress I bought to wear to my sister-in-law’s rehearsal dinner. Why? Because I have some great stories about the mahi mahi and 8.5 foot sailfish we caught.
What about you? Would you rather spend your money on an experience or the new “it” item?