The Culture of Spending

Posted by: Henry B. | Jan 05,2008

I read through this blog every day (what other people have written) and one thing struck me that was written by our good friend writing for Recent College Grads.  She mentions how college students are very susceptible to peer pressure.  They’re away from home for the first time in their lives and they want to fit in with a new peer group.  

This may suggest that it’s a problem that only affects teenagers who’ve recently left home.  I would make the argument that it’s a problem across the board, for every age group.  We live in a culture of spending.  If people see that their neighbor has something, they want it to, no matter what the difference is in salary, debt, or other financial considerations.  

When you think about it, debt is a fairly absurd prospect.  The majority of people in the U.S. are spending more money than they have.  You’d think that would be impossible, but basically that’s all that credit cards allow us to do: spend money that we don’t have.  Would you use your credit card if you had enough cash to make a purchase?

In some cases, this scenario is advisable – especially when you’re buying something that may need to be returned later.  A credit card is useful as a form of insurance.  However, using credit cards in this manner is most advisable when you have the cash on hand to pay it off in full at the end of the month.  Otherwise, it’s just going to build up interest over the months to come.  Really, the only good way to use credit cards is if you’re able to pay it off at the end of the month.  

So why even bother to have credit cards?  It just causes damage.  Well, the above example shows that credit cards can be used for insurance on a purchase.  As Michael wrote on Wednesday, credit cards can be used for travel insurance and reservations as well.  They’re also good for emergency expenses when you absolutely have to spend more than you have in the bank.  Finally, they’re good for establishing a credit rating.  

So credit cards do have very distinct uses, but ask yourself just how much you need the things that you’re putting on your card day-in/day-out.  Are they fun for a day and then gather dust in the basement?  Are you really back where you started, only now a bit deeper in debt?  The culture of spend, spend, spend and charge, charge, charge is a product of people believing they need things that really aren’t necessary.  It’s a result of peer pressure and the constant barrage of advertisements we all see every day.  If you take a step back – maybe wait a day or two before buying something – you may just find that the urge to spend has drifted away.  

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