It’s natural to look around your life and see if there is any way that it can be improved. The changing of the new year is one of those times, along with birthdays and springtime (the proverbial “spring cleaning”).
The New Year is my personal time. I’ve been taking time around Christmas, traditionally a very uneventful time for me, to furiously throw a lot of things out, rearrange things in my place, and even buy some new pieces of furniture that have been seriously in need of an upgrade. (An actual bench instead of two chairs, how novel!)
It can feel good to freshen up your surroundings and possessions, especially if you’ve felt stuck.
And yet, there can be a few different motives at work here.
When you are making new purchases for the purpose of “upgrading”, the question you need to ask, first and foremost, is: who are you doing it for?
Photo credit: Self Drive Vehicle Hire
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Who are you doing it for?
There are things we buy for others. For loved ones, this might be an act of love and generosity. Your partner has wanted that new dining room table for what seems like an eternity, and you want to show that you’re aware of your partner’s needs and desires.
And of course if you have kids, your desire to buy things for them is practically biological.
To a certain extent, everything is going to be for yourself somewhat. We love stuff, even if we enjoy getting rid of stuff too. But it’s not always as simple as that. We might be buying something for ourselves, while thinking about others.
If so, is it a specific person? Or might it be the non-specific “other people”? Because that’s where it starts to get complicated.
Why are you doing it for them?
If, when thinking about your own purchase (and I bet you have at least one in mind), you’re thinking of other people, specific or not, it’s worth asking yourself why.
Questions like these:
- What feelings do I feel now about the purchase?
- What do I expect to feel after I make this purchase?
- What am I hoping for / expecting in response?
The danger that I have dancing around all this time is that when you buy things because you want to create an impression for others, or because you believe it’s what others expect or want from you, you are in danger of making a financial mistake.
Phones and cars: problem purchases
This happens with phones a lot. Since so many people have a smartphone these days (present company excluded) phones are a fashion statement. Pulling out the iPhone Q when the iPhone R was just released (or worse, if you still have an iPhone M or N) might be viewed by others in a negative way. And since iPhones are little fashionable computers costing upwards of $1,000 these days, this is a costly treadmill. (Thankfully, this is starting to change.)
But we’re not so lucky with cars. I don’t consider myself a “car guy”, but I do enjoy certain things about cars. I like energy efficiency way more than horsepower, which is why I wanted to own a Prius for so long.
But I wasn’t buying that Prius for any reason other than for myself, for the reliability that I knew it offered. (And yes, the gas mileage.)
On the other hand, people buy cars for other people all the time. “If I drive a BMW, people are going to think that I’m rich and successful.” “I can’t drive this Honda, because clients won’t think I’m worthwhile otherwise.“
This is a grievous error though. Owning a BMW doesn’t have any bearing on whether you are successful, because you don’t need to be rich to own a BMW. You just need to be willing and able to make the payments, which can add up in the long run to be much more than the car itself is worth.
This is true with so many thing: cars, phones, homes, even college degrees. If it can convey status, we are all vulnerable to its call. If I just had it, people would look at me differently.
Everyone gets a BMW
I want people to look at you favorably, of course. But I want you to do it in a way that’s sustainable. And the ability to withstand status purchases is, I believe, one of the biggest indicators of whether you’re able to achieve true wealth, to say nothing of self-confidence and self-assurance.
And the irony is that after many years of not purchasing things that you can’t afford, you will more effectively be able to afford them.
Instead of buying a new car at $31,070 for a 60 month loan term (the average in 2018, according to Edmunds), you were to buy a used $8,000 car, saved up for and paid with cash, you will have netted yourself a savings of $26,000, after finance charges are taken into account. You invest $26,000 over the long term (and combine it with other financial decisions over time), and eventually, you will be able to buy a BMW for everyone in your entire family if you wanted to.
Rather than give in to the siren song of other people’s judgments for you, better to ask yourself what really matters. Is it those “other” people? Is that worth going deeper into debt, or slowing down your path to wealth?
Is status that important?
What are you tempted to purchase these days? Feel free to leave your thoughts in the comments below.
Also, as a reminder, as of 2019 I’m switching to a one-post-per-week schedule, so there won’t be anything new on this site this Thursday. But there are over 600 posts as of this date, and I bet you haven’t read most of them, so feel free to use that search bar at right and find something that interests you. And I’ll see you next Monday!
Photo credit: Self Drive Vehicle Hire