Photo courtesy of Tracy Olson
Several days ago I saw an online ad from Discover Card about the United States being a nation of consumers. The funny thing was, the ad said this was not a problem. When your bills come in, you know this is obviously becoming more of a problem. When you go shopping and you find something great you want to buy, whether it's that new gadget, dress, toy or whatever knick knack, you want it right away right? It is very tempting to buy it right there, so how do you usually respond? Do you buy or do you talk yourself out of it? If you buy it and if this is a problem for you, there is a way to talk yourself out of that purchase.
Why we buy
Most people living in any developed city, not just the US and Europe, are bombarded with advertisements throughout our waking hours. These ads prompt you to buy, buy, buy. I'm sure advertising firms are working on getting these messages into our dreams as we speak. One way to stop these messages is to cut yourself off from the media. The problem is, this is nearly impossible in the information age. After-all, Google built its profit engine on advertising. So what alternatives do we have that can bring you and me to stop the impulsive buying?
Questions to Ask
Below are some general questions you should think about before buying anything. It is far from a complete list, but its something to get you started.
- Is this something you will use everyday?
- If not how often will you use it?
- If you will only use it occasionally or very rarely, maybe its better to share it.
- Do I need it right now or can I buy it later?
- If it's replacing something, what will I do with the thing its replacing?
- What will you do with it once you use it?
- Do I have room at home for it?
- Where will I store it?
- Will it cost me money to store it?
- Can you resell it?
- Will it increase in value?
- How will depreciation affect resale price?
- Can I afford it now?
- Can I afford to pay for it in cash now?
- Will I charge it to a credit card?
- If I am charging it, can I pay the credit card in full?
- Can I lease or rent it at a better price?
- How long are you expecting this to last? If for a lifetime, factor in the price.
Lack Of Funds Can Help You
We buy because we have the money, or think we have the money, to buy something. Consumer credit has made it easy to make purchases. We've bought cars, homes, clothes and some would argue - new friends. However, as we are seeing from the economic changes, this is all coming to a screeching halt for the majority of people. Banks have halted lending and the governments have stepped in to help prevent a global economic meltdown. The easiest way for us to stop buying is to make money less convenient. That's why you see so many "financial gurus" say, "buy with cash". Yes, that is one answer, but I believe it is only a temporary answer. Most people have formed that bad habit of buying whatever they want, because credit is so easy. Using cash would limit that "easy going attitude".
Make It A New Habit
The best thing you can do for yourself and the economy is be more responsible in your purchases. Ask yourself questions whether you really "need" the item or "just want it", whenever you find yourself opening up that wallet. If limiting your purchases with cash only purchases works for you, do this for the short term. Once you get into the habit of asking yourself if you should buy something, before you plunk that cash down, you will be going in the right direction. Once you form your new habit, it can make your life and finances more fruitful in the long run. You will soon ask the same questions when purchasing using credit. As for what questions you should ask yourself, that all depends on your current needs and wants.
I've fallen victim to the easy purchase problem from time to time. I'm usually very good at not buying things right away. Usually asking if I need it right now or can I buy the item later. What about you? Have you changed your buying habits lately? Do you use less credit and more cash? Follow me on Twitter for additional links to tips and tricks. If you would like to contribute to Frugal NYC in any way, articles, ideas, posts, interesting links, advice, financial assistance, or anything else, feel free to contact me via email.
I'll be taking a break from posting to both Frugal NYC and FrugalTech for the Thanksgiving holiday and resume posts on December 1 for Frugal NYC and December 2 for FrugalTech. Happy Thanksgiving everyone!