Don’t Buy It

(For international readers, allow me to explain: I am an American but I have lived in China since 2004. My city of Chongqing, often abbreviated as CQ, is pronounced Chong Ching to rhyme with Wrong Ring. CQ is a megacity of 30 million people in south-central China, on the Yangtze River. I’ve come a long, long way – 13 time zones to be exact – from my original home town of Rolla in south-central Missouri, on the Little Dry Fork creek.)

Photo by Pijon

One giant step in the process of reinventing a simple life is to reduce the importance of your possessions and how you purchase them. Yes, we need and want possessions. But… how much and how many are really necessary? Consider for a moment how much of your life revolves around material possessions. Our possessions can easily come to possess us. They limit our freedom to act, and most of them require ongoing maintenance – a significant expense in itself. Possessions consume our time, attention, and energy. 

In addition to all those negative aspects of material possessions, we often incur debt to buy or maintain our possessions. But pressures accompanying that debt complicate our life and bring their own set of restrictions. One of the great follies of the modern era is misusing consumer credit to instantly improve our standard of living. Make no mistake: There is no doubt that, if properly used, credit can allow us to do many things and enjoy many benefits in the present or the immediate future. With credit, we can purchase a house and furnish it, open a business, start a family, get higher education, and own a car. The wise use of credit will allow us to enjoy some big-ticket items immediately without waiting until we save enough money to pay cash for them.

There is a compromise, however. All those loans must be paid back – plus interest. Depending on the amount and your personal circumstances, those monthly payments may involve some pain. They may limit future possibilities. Additionally, think of the relentless mental pressure when you are committed to making regular payments – sometimes, for years. Often, those monthly payments can become a substantial portion of your monthly income. Excessive or careless use of credit may lead to severe limitations on future financial moves. Before borrowing money to make a purchase, we should consider the long-term consequences of that debt. Is it really worth it? When we begin to purchase many things on credit and plan to pay for them over a period of time, we are venturing into dangerous financial waters. 

Photo by Alexsander-777

How it starts: The problems begin when we expect our possessions to make us happy. We often fall victim to the highly effective advertisements that bombard us every day. Their purpose is to make us unhappy… then show how this new miracle product will make us happy. Furthermore, if we are not consciously resisting, it is easy to begin thinking that we must have many consumer items, both products and services. Yet, examined dispassionately, these are clearly not essential; many are actually of dubious value. This is another case where doing what everyone around you is doing is not the best standard for making a choice. At best, it makes our financial decisions a popularity contest. At worst, doing what everyone else is doing can lead to financial disaster. Certainly, it is not the key to happiness.

Reduce your financial pressures. In modern society, we are conditioned to be avid consumers. The implied promise is that we can buy happiness through owning things. The process is insidious. First, we are persuaded that we need something to make our life better. Second, ironically, we often become contributors to our own demise when we begin to rationalize that we are entitled to these things. Third, we are assured that their acquisition will meet social approval. Gotta be cool, right? This mentality goes back to our hunter/gatherer tribal heritage where approval was critical because getting kicked out of the tribe meant living by yourself in the unfriendly woods. That need for approval is still in our modern social DNA. When everyone seems to be doing something, it must be okay. Fourth, we are constantly tempted to act impulsively when credit is so easy to obtain.  

Avoid impulse purchases. Here is one simple idea to break the pattern of purchasing unnecessary items: Wait one week before you buy something. If you decide that a particular product or service will solve a problem or improve your quality of life… don’t buy it today. Impulses, enthusiastic salespeople, advertisements, or celebrity endorsements should not be the driving force behind any financial decision. If you have lived without something all your life, one more week won’t matter. Say to yourself, “I will wait one week then decide if I still want to purchase this item.” Write a note in your calendar and promise yourself that you will not act on this matter until that date. In the majority of cases, after the initial enthusiasm has subsided, the item doesn’t seem so important. 

Use Trade-offs. Your life – and your home – is already full, right? Before making any purchase, another important question should be, “If I buy this, which of my current possessions or activities will I give up?” Specifically, which item on which shelf will you give up to make room for something new? If it is a service instead of a material possession, declare which of your current activities you will sacrifice to create time for the new one. Your purchase decision should consider how you will change your current lifestyle to include this new item.

Photo by AlLes

Three ways to throw away money: 

  1. A variant form of the impulse purchase pattern is buying something because you want to learn how to use it. Yet, after you take it home, it often sits on a shelf, unused and forgotten. Make a resolution that you will only purchase something only if you make a commitment to begin using it immediately. 
  1. Likewise, be aware that it is very easy to spend your money on education without getting educated. Online courses are notorious for being purchased but never completed. (What did you learn from this course? You learned not to make impulse decisions. Maybe.) Be sure you are committed to beginning immediately and to fully completing any online course before you pay for it.  
  1. For your projects, don’t begin to study something until you actually need to know it. In addition to the frequent occurrence of changing or canceling of projects, information itself changes rapidly, making what you learned last year outdated. Practice just-in-time learning and study only as much as you need to know about something before you can apply it. Purchasing knowledge is one of the greatest investments of our money… but only if you actually learn something valuable.

Avoid stockpiling. Another insidious trap is purchasing items in advance, then storing them until needed. We often purchasing something because it is something we will need in the future – or think we will need it. This decision is often very close to blatant rationalization. “I want to buy this because I want to buy something.” Unless there is an immediate financial benefit – such as a deep discount but only if you purchase today – it is usually better to wait until you actually need something. Until then, “Store it at the store.” 

Paper or plastic? (Cash or credit card?) Hint: Cash is simpler. One of the greatest hazards of using credit is that it is so easy to overuse. Psychologically, there is very little pain involved with paying for something with a plastic card or an app on your smartphone. Conversely, we tend to be less impulsive when a purchase involves taking some cash from our pocket. In addition to all those other factors, paying with cash is often faster than completing all the steps involved in paying electronically. Conversely, you can use this psychological trivia to your advantage. For your own purchases that are carefully considered and justified, offer cash. If you offer a lower price then literally show someone cash in your hand, ready to purchase something immediately, many people will choose to take the cash. Psychologically, it is hard to resist. There is a good chance you will conclude the transaction immediately, and for less than the original asking price.

Photo by attiliovaccaro

Don’t buy it until you need it. Another means of defeating impulses is to make a commitment to yourself that you will begin immediately to use anything that you purchase. With this simple self-promise of, “If I buy it today, I will begin using it today,” many purchases are never made. Similarly, beware of enticing discounts on items you don’t really need. If it is for something you don’t need, why should you purchase it at any price? Buying a 1,000-dollar item on sale for 700 dollars doesn’t mean you saved 300 dollars. It means you spent 700 dollars for something you didn’t need.

A justifiable exception to this rule is when purchasing items that you will use repeatedly in your daily life. If you find something that you like to wear, it is financially wise if you purchase several of them, maybe even a multi-year supply. For example, shirts have a very long shelf life. Assuming that you’re going to be wearing the same style of shirts for a long time, why not buy several instead of one? In addition to the possibility of quantity discounts, consider the time you will save in future shopping. If you find such an item on sale, buy a large amount. Save money today, plus you can stop thinking about it for a long time.

Summarized, the best financial rule for a simple life is: don’t buy anything that you don’t really need. Conversely, if you buy something, make a commitment to begin using it immediately. Despite unrelenting assurances that money can buy happiness, it is not true. However, spending your money foolishly can make other people happy.

Action Step: Decide what goods and services you can eliminate from your life. Get rid of them immediately. Make a promise to yourself that, beginning today, you will wait one week before you make any significant purchase; write the decision date in your calendar. 

Photo by Nattanan Kanchanaprat

Author: Randy Green

One thought on “Don’t Buy It”

  1. Hi Randy,
    Glad to read your new blog, your article always gives me many suggestions. Actually, I don’t have a good financial habit, and I bought new iPhone or other things that over my capacity by credit. I even don’t have income but debt now. I want to make a change, but it seems need more time. Once I paid all my debt back, I will start to make deposit.
    You are right, we should make a plan for our money and we can control our life.
    Wish you all well.

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