Spending season is fast approaching. Black Friday, Thanksgiving, Hanukkah, Christmas, Boxing Day, are some looming opportunities to challenge your resistance to spending funds you don’t have to buy things you don’t need. Sophisticated neuromarketing techniques, seductive advertising, seductive financing, will make you buy things because … well, others were buying them too. Do you remember the phenomenon of pet rock in the 70s? A fart rock? Invisible dog? E-pets? Go figure!
How are you preparing for the attack? Are you? Or have you been unknowingly brainwashed and planning to search for deals at these upcoming sales events? Maybe on Black Friday you plan to queue early for a big screen TV, Blu-ray DVD player, iPhone, iPad, or other adult toy. You will quickly remind me, you will get great deals so these items will be worth the expense; right?
What is a deal?
What is a deal? A participant in one of my seminars said that a settlement is an act of madness that increases debt. I added: it leaves you depressed, empty, anxious and lonely! Have you ever noticed what happens after you impulsively spend to buy things, return home, and then reflect? The euphoria disappears, reality sets in and you don’t feel so good; Right?
Merchants use two hooks for you to spend: deals and sales. And he thinks he comes out on top in these transactions. You do? In my seminars and counseling sessions, I spend a lot of time convincing people that they don’t save on sales. Oh yeah, I understand your reaction: “I don’t know about you, but I save when I shop on sale!” Let me repeat, you don’t save on a sale! If you understood this, you would stop wasting funds on nice but useless things.
Do you think you save when you spend?
Friends, save when you deposit funds without risk for capital, the amount deposited, in specific financial vehicles. So if you have $ 1,000 and want to save it, you won’t spend it on a sale, nor will you buy stocks, bonds, mutual funds, or other investment instruments whose values could fluctuate. You would deposit it with a reputable bank, credit union, government savings bond, or similar low-interest instrument. Because your principal is safe, interest rates on savings accounts are low. On the contrary, stocks and bonds carry the hope of obtaining high returns, some higher than others, so the invested capital is not as safe as if it were deposited in savings accounts.
When you buy an item, regardless of price, you spend, you don’t save. If you pay less than you thought you would, you don’t save the difference, you spend less. And spending less is not saving! When your friendly merchant tells you that an item is 70% off, you don’t save when you buy that item; you spend 30% of the original price. It’s that easy. Is this reduced price a good value proposition? Sometimes we know, sometimes we don’t. Perhaps the actual value is 30% of the list price. But that is irrelevant! You spent 30% of the original price, that’s your cost.
It gets worse. You think you’ll save on a sale, so you buy on credit, don’t pay the full balance on the credit card, and incur high, recurring interest costs. Not only did you not save, but you bought an item with funds you didn’t have and you are stuck paying interest on a loan.
If you want to save when you spend on a sale, you should set aside the list price discount of 70% on a savings vehicle similar to the ones I described above. If you are not convinced and think you save when you buy items on sale, where are the funds you saved from previous sales?
Copyright (c) Michel A. Bell