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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. I immediately started browsing and (including shipping and sales tax) paid $54 for stuff I wanted, but didn’t really need.
We’ve all heard it so many times that it’s almost a joke, “Stop trying to ‘keep up with the Joneses.’”
But there’s a reason we keep on doing it anyway.
As humans, we make decisions emotionally and then rationalize them. We’re also social creatures, so being well-thought-of is important to us. That’s why it’s unrealistic for someone to expect you to stop trying to keep up with the Joneses.
Merchants and marketers have 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’ll likely trigger you to buy related items.
Even before the pandemic-triggered economic shock, according to NerdWallet, the average US household owed over $7100 in revolving debt on credit cards.
With an average credit card 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 (accrding to the St. Louis Fed), that’s almost 6% of after-tax income!
While many people are forced into such situations due to 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 need, buying it is purely a bad idea.
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.
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.
Too many adherents of Financial Independence, Retire Early (FIRE) go so far overboard that after a few months or years, 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.”
Disclaimer: The information in this article is not intended to encourage any lifestyle changes without careful consideration and consultation with a qualified professional. This article is for reference purposes only, is generic in nature, is not intended as individual advice and is not financial or legal advice.