Balance and Moderation Are the Name of the Game
Go Ahead and Buy It, It’s OK
How to tell if and when you should go ahead and buy what you want…
I confess.
I’m just like you.
I sometimes buy stuff I don’t really need.
Just the other day, I got a digital $30-off coupon on orders of $60 or more. Guess, what I did… I immediately started browsing and paid $54 for stuff I wanted, but didn’t really need.
“Keeping Up with the Joneses” Is a Natural Impulse
We’ve all heard it so many times that it’s almost a joke, “Stop trying to ‘keep up with the Joneses.’”
But we keep on doing it anyway.
As humans, we make decisions emotionally and then rationalize them. We’re also social creatures who want to be well-thought-of.
That’s why it’s unrealistic to expect you to stop trying to keep up with your personal version of “the Joneses.”
It’s unrealistic to expect you to stop trying to keep up with your personal version of “the Joneses.”
When It’s a Really Bad Idea
Merchants and marketers made a science of figuring out how to trigger our shopping impulses.
Do you think it’s accidental which items show up in aisle end-caps? Count on those having higher profit margins, or that they’re expected to trigger you into buying related items.
Even before the pandemic-triggered economic shock, according to NerdWallet, the average US household owed over $7100 on credit cards.
With an average interest rate of 16.14% (according to CreditCards.com), a minimum payment of 2% plus accrued interest would be $237/month.
For a couple making a median household income of $63,179 (according to the St. Louis Fed), that’s almost 6% of after-tax income!
While many of us are forced into debt by external circumstances, in too many cases it’s because, in the words of Dave Ramsey, “We buy things we don’t need with money we don’t have to impress people we don’t like.”
If you’re in a situation where you can’t afford to pay for something in cash, and it’s something you don’t really need, buying it is purely a bad idea.
If you’re in a situation where you can’t afford to pay for something in cash, and it’s something you don’t really need, buying it is purely a bad idea.
When You Can Go Ahead and Buy It
Conversely, if you can afford to pay in cash (even if you choose to earn a cash-back reward by using your credit card)…
If it’s something that will bring you enjoyment…
If it’s something you’ll likely continue to be happy you bought tomorrow, and next month, and next year…
If it doesn’t derail your long-term plans…
Then, by all means, go ahead and buy it, even if you don’t really need it.
If it’ll bring you enjoyment over time and it doesn’t derail your long-term plans, go ahead and buy it, even if you don’t really need it.
The Bottom Line
The important thing is to not be so frugal in the here-and-now that you can’t enjoy your life, but rather to balance current pleasure with achieving your long-term financial goals. None of us know if we’ll live long enough to reach retirement, so we have to do our best to enjoy life in the present too.
Too many adherents of Financial Independence, Retire Early (FIRE) go so far overboard that after a few months or years of deprivation and self-denial, they fall off the wagon completely.
Then, as happens to many people who quit a diet, they go too far in the other direction.
Avoid that by following Seneca the Younger’s admonition: “Everything that exceeds the bounds of moderation has an unstable foundation,” while keeping in mind Oscar Wilde’s rejoinder, “Everything in moderation, including moderation.”
“Everything in moderation, including moderation.”
— Oscar Wilde
About the Author
Opher Ganel has set up several successful small businesses, including a consulting practice supporting NASA and government contractors. His most recent venture is a financial strategy service for independent professionals. You can connect with him there, or by following his Medium publication, Financial Strategy.
Disclaimer
This article is intended for informational purposes only, and should not be considered financial advice. You should consult a financial professional before making any major financial decisions.
Originally published at https://wealthtender.com.
