Do I believe that it is easier to spend now than it was a few years ago? Absolutely. I’ll be going through some of the reasons for that opinion.
In the previous article in this series, we talked about how the increased availability of good and services leads us to spend more today that we ever had before. If you missed that article, you can click here: Reasons We Spend Today: Availability.
Now, let’s talk about another big reason that we, as consumers, tend to get in over our heads, spending more on things than we can afford.
Increased buying power
Years ago, if you wanted or needed something, you got by without it until you had saved enough to be able to afford it. This was the general practice, from affording a house to buying a banana. Remember the old Christmas Club bank account which everyone had in order to save for Christmas presents? Sometimes you could live a bit riskier and put an item on layaway, paying it off a little each week until it was yours and you could take it home.
Today, those types of practices seem old fashioned and maybe even quaint. No one has a Christmas Cub or anything on layaway anymore. Today, our buying power is almost unlimited. It is easy to have multiple credit cards with high limits. Credit cards are competing for business, so they are usually only too happy to extend more credit to you (and increase your rate). There are cash advances, balance transfers and reward incentives to induce you to use those cards. This modern way of using credit makes it very easy for a person to go into debt. Now, we can buy products before we can afford them.
As many people found out this past year, we can even buy big ticket items, such as houses, that are way over our affordable limit through “creative credit” options. With increased buying power can come increased debt.
Mary Ann Romans writes about everything related to saving money in the Frugal Blog, technology in the Computing Blog, and creating a home in the Home Blog. You can read more of her articles by clicking here.
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Reasons We Spend Today: Availability