Seven deadly sins that lead to debt

[Martha]

The-Seven-Deadly-Sins-That-Lead-to-Debt: Personal Finance News from Yahoo! Finance

Be gluttonous
You deserve that cookie so go ahead and eat it and maybe a couple more for good measure. While you're at it, buy the bedroom set you can't afford but deeply desire.
As a nation, the United States is both plainly fat from eating too much and overstuffed in the materialistic sense. The message from society in general can sometimes be: You work hard, so splurge.
It's very possible to have a house full of stuff and no money. It's also possible to be extremely overweight and ingest no healthy nutrients.
Just like eating food for no good reason other than the fact that it is set in front of you, people buy stuff just to buy it.
"It's so easy when you're in a mall to start buying things on impulse. They're very attractive and all shiny and new -- especially when they're on sale," says Dave Jones, president of the Association of Independent Consumer Credit Counseling Agencies.
"People will react to a sale item -- 60 percent off -- and buy it when they don't need it or want it."
Big-box stores are vast dens of temptation, offering lots of everything at sale prices.
"People buy huge amounts of stuff and think they're saving money. But what happens is that it just takes up space, takes years to use up or it just spoils," Jones says.

 

[freebird5825]

great article! keep 'em coming...

 

[Moemg]

Good article ! Thanks for posting !

 

[W2R]

I really think a lot of people are addicted to shopping, in a sense. Even some of us here have a hard time resisting the impulse to buy, whether we need the item or not.

I lay the blame right on Madison Avenue and the bombardment of ads that we are exposed to in our daily lives.

 

[Moemg]

I think a lot of people use shopping as a stress reliever . I've noticed that I shop a lot less since I retired .

 

[frayne]

Don't know who first said this but it has stuck with me.

"People buy stuff they don't need, with money they don't have, to impress people they don't like."

Makes as much sense today as the day I first heard it.

 

[bbbamI]

That's why I don't go to malls and try to keep my face out of the refrigerator. I'm weak, what can I tell ya?

 

[UncleHoney]

Good article, makes me wonder though if our preferred method of payment, the credit card and our cashless society isn't the real problem. The fact that most aren't really dealing with cold hard cash on a daily basis may be the root of the problem.

I grew up in a cash world, everything I wanted when I was a kid had to be paid for with real money. If I wanted a candy bar the the drug store I had to dig out a nickel or dime and lay it on the counter. To earn that nickel or dime I had to mow grass or rake leaves or deliver newspapers. If you wanted to go to the movies, it was time to dig in the old pocket and pay up for your ticket. If the old pocket was empty or the piggy bank at home was empty, you had to wait till you saved enough to get what you wanted.

Every purchase back then was based on positive amounts of money in your pocket, ZERO was as low as you could count. Negative numbers couldn't exist in the all cash world of a ten year old. It was good old cold hard cash that got what you were after and the only way to get it was earn and save.

Fast forward to today and the world of credit cards and electronic bank transactions. I'll bet most us never see 99% of the money we earn or spend. We write checks, we use our credit cards at the grocery store and Lowes and the money we spend is only numbers, not real MONEY. And it's all controlled by a system that allows you to have less than ZERO money in your pocket. Once you take the cash out of your pocket and replace it with numbers, it's hard to track how much you spent unless you look at the numbers and you only see them once a month. If you're dealing with cash, every time you open your wallet you get a glimpse of how much is left and how much more you can spend.

With cashless transactions it's real easy to get carried away and pay no attention to how low your funds are.

Maybe we need credit cards that change colors as you spend, fading from green to bright red as you approach negative territory.

 

[Walt34]

I grew up in a cash world, everything I wanted when I was a kid had to be paid for with real money. If I wanted a candy bar the the drug store I had to dig out a nickel or dime and lay it on the counter. To earn that nickel or dime I had to mow grass or rake leaves or deliver newspapers.

Sounds like the world I grew up in. The only reason I got a credit card at age 22 was that my older sister told me it would be a good way to establish a credit rating. I used it a few times and always paid off the full balance. The one time I spread payments out over three months was to buy a set of tools to fix my car with. The reason I spread the payments out was that the set was on sale, I'd been eying it for a long time and I did the math to figure out that it would be cheaper to pay 3 mos. interest and get it at $100 off rather than wait and pay the normal price.

But I hated having that sword hanging over my head for 3 months.

 

[ProspectiveBum]

I lay the blame right on Madison Avenue and the bombardment of ads that we are exposed to in our daily lives.

That's why my TiVo was the best investment ever! I almost never *see* ads anymore. More importantly, I can pause a show at anytime to run and get more cookies!

 

[Charlotte]

Maybe we need credit cards that change colors as you spend, fading from green to bright red as you approach negative territory.

That would be a hoot... forget about gold cards and platinum cards, I'd love to see the shades changing (on other people's cards, of course ) green, lime, yellow, orange, red....

 

[BunsGettingFirm]

$10 billion on porn? I get my porn for free.

 

[HFWR]

$10 billion on porn? I get my porn for free.

Web addresses! We need web addresses...

 

[barbarus]

Being Gluttonous(Bernanke-Style):
Expecting the money you've saved, rather than frivolously spent, to earn interest at a rate higher than inflation.

 

[ats5g]

Good article, makes me wonder though if our preferred method of payment, the credit card and our cashless society isn't the real problem. The fact that most aren't really dealing with cold hard cash on a daily basis may be the root of the problem.

I grew up in a cash world, everything I wanted when I was a kid had to be paid for with real money. If I wanted a candy bar the the drug store I had to dig out a nickel or dime and lay it on the counter. To earn that nickel or dime I had to mow grass or rake leaves or deliver newspapers. If you wanted to go to the movies, it was time to dig in the old pocket and pay up for your ticket. If the old pocket was empty or the piggy bank at home was empty, you had to wait till you saved enough to get what you wanted.

Every purchase back then was based on positive amounts of money in your pocket, ZERO was as low as you could count. Negative numbers couldn't exist in the all cash world of a ten year old. It was good old cold hard cash that got what you were after and the only way to get it was earn and save.

Fast forward to today and the world of credit cards and electronic bank transactions. I'll bet most us never see 99% of the money we earn or spend. We write checks, we use our credit cards at the grocery store and Lowes and the money we spend is only numbers, not real MONEY. And it's all controlled by a system that allows you to have less than ZERO money in your pocket. Once you take the cash out of your pocket and replace it with numbers, it's hard to track how much you spent unless you look at the numbers and you only see them once a month. If you're dealing with cash, every time you open your wallet you get a glimpse of how much is left and how much more you can spend.

With cashless transactions it's real easy to get carried away and pay no attention to how low your funds are.

Maybe we need credit cards that change colors as you spend, fading from green to bright red as you approach negative territory.

I have the opposite problem, though this could just be an overreaction to my wife's spending. Since I never carry cash anymore, I rarely ever spend any money than I need too. For example, if I've got $5-20 cash in my pocket I'll go buy a candy bar or two, buy a coke or two, or go out to lunch when I've got perfectly good sandwich material at home. OTOH, if i don't have the cash, I won't buy any of that stuff, or eat out.

From the article:

"On the corporate side of things, companies can do things that can make it easier for people to figure out how to save and save in an effective way," says Wilcox. "And the same goes for the government. They can make it easier for people, but can't force anyone to do anything."

For instance, companies can automatically enroll their employees in their retirement plans, but participation in a savings plan can't be a condition of employment. Similarly, the government provides tax incentives for saving in retirement accounts such as IRAs, but you can't be thrown in jail for not taking advantage of it

Recently my company changed their 401(k) so that every new employee will automatically contribute 6% initially into the 401(k), and then every year after their contribution will rise by 1% until it reaches 10%. Of course, the employee could opt out, but that would require either filling out 1 page of paper or logging onto our provider's website. But who has the time for that.

"It's so easy when you're in a mall to start buying things on impulse. They're very attractive and all shiny and new -- especially when they're on sale," says Dave Jones, president of the Association of Independent Consumer Credit Counseling Agencies.
"People will react to a sale item -- 60 percent off -- and buy it when they don't need it or want it."
Big-box stores are vast dens of temptation, offering lots of everything at sale prices.
"People buy huge amounts of stuff and think they're saving money. But what happens is that it just takes up space, takes years to use up or it just spoils," Jones says.

My wife and MIL do this. They come home from Kohl's, or wherever, and say "Hey look how much money I saved!!"

- Alec

ps - Anyone else find it annoying that the title of the book by the UVA prof was mentioned 4 times. But what do you expect from "The University."

 

[freebird5825]

I really think a lot of people are addicted to shopping, in a sense. Even some of us here have a hard time resisting the impulse to buy, whether we need the item or not.

I lay the blame right on Madison Avenue and the bombardment of ads that we are exposed to in our daily lives.

Hear, hear.
Remember Pavlov's experiements with the ringing bells and salivating dogs? (i was awake that day in Psychology 100)
we are being psychologically conditioned evey day, every minute, every second. megacorps invest BIG bucks in this consumer psych stuff.
for the record, i hate shopping because i know i'm being manipulated. therefore, i shop online for play items, if at all. for necessities, small mom-n-pop stores don't invest in all that ad hype. it's refreshing.

 

[Marquette]

I have the opposite problem, though this could just be an overreaction to my wife's spending. Since I never carry cash anymore, I rarely ever spend any money than I need too. For example, if I've got $5-20 cash in my pocket I'll go buy a candy bar or two, buy a coke or two, or go out to lunch when I've got perfectly good sandwich material at home. OTOH, if i don't have the cash, I won't buy any of that stuff, or eat out.

I have the same affliction. I don't carry cash with me because it ends up being spent if I do. Thankfully, the vending machines here don't accept check cards.

On the other hand, between paying for everything with check cards, having paychecks direct-deposited, and online bill-pay, I've pretty much lost all connection to currency as a form of money. It's just this weird ethereal concept of transferring bytes of information from my account to someone else's account. I mean, when I stop to think about it, I'm working 40 hours a week to get some numbers in my account and then I give another party some of those numbers in exchange for goods or services... it's just weird.

 

[FinanceDude]

My wife and MIL do this. They come home from Kohl's, or wherever, and say "Hey look how much money I saved!!"

Sounds like my DW........I am trying to change that behavior. Like I tell her, "I don't care if it's 90% off,I don't need 26 white t-shirts"...........

 

[Walt34]

My wife and MIL do this. They come home from Kohl's, or wherever, and say "Hey look how much money I saved!!"

Yeah, 1st wife did that. Drove me nuts. She was never able to figure out that if we're going to end up paying credit-card interest rates on the purchases that it kind of negated the "savings". In other respects she was very intelligent, just had no impulse control when shopping.

So 2nd time around I married an accountant who hates shopping. She'll wear clothes 'til they have holes in them before she goes shopping.

 

[HFWR]

So 2nd time around I married an accountant who hates shopping. She'll wear clothes 'til they have holes in them before she goes shopping.

Heck, these days you have to pay extra for "pre-worn" fashions...

 

[myself]

I think a lot of people use shopping as a stress reliever . I've noticed that I shop a lot less since I retired .

I've noticed that I shop a lot less since I mostly stopped watching TV.

 

[myself]

Good article, makes me wonder though if our preferred method of payment, the credit card and our cashless society isn't the real problem. The fact that most aren't really dealing with cold hard cash on a daily basis may be the root of the problem.

I grew up in a cash world, everything I wanted when I was a kid had to be paid for with real money. If I wanted a candy bar the the drug store I had to dig out a nickel or dime and lay it on the counter. To earn that nickel or dime I had to mow grass or rake leaves or deliver newspapers. If you wanted to go to the movies, it was time to dig in the old pocket and pay up for your ticket. If the old pocket was empty or the piggy bank at home was empty, you had to wait till you saved enough to get what you wanted.

Every purchase back then was based on positive amounts of money in your pocket, ZERO was as low as you could count. Negative numbers couldn't exist in the all cash world of a ten year old. It was good old cold hard cash that got what you were after and the only way to get it was earn and save.

Fast forward to today and the world of credit cards and electronic bank transactions. I'll bet most us never see 99% of the money we earn or spend. We write checks, we use our credit cards at the grocery store and Lowes and the money we spend is only numbers, not real MONEY. And it's all controlled by a system that allows you to have less than ZERO money in your pocket. Once you take the cash out of your pocket and replace it with numbers, it's hard to track how much you spent unless you look at the numbers and you only see them once a month. If you're dealing with cash, every time you open your wallet you get a glimpse of how much is left and how much more you can spend.

With cashless transactions it's real easy to get carried away and pay no attention to how low your funds are.

Maybe we need credit cards that change colors as you spend, fading from green to bright red as you approach negative territory.

Somewhat true, even for me when I was a kid.

We're on a different page though. We spend only what we allocated, but we do it on our credit cards and pay it in full. Admittedly we're probably in the 5%-105% of the population that does this. On paper, it appears we have a average monthly balance of about $1,500. And thankfully there are rewards cards which pay cash (or cash back). We got back about $675 last year because of our charging things we paid in full and already had budgeted out.

You're right too. To me, it's only numbers, but I realize those numbers represent real money. If they're ever negative (which hasn't happened for 6-7 years now), we'd do a deeper check of our spending habits.

Keep in mind I'm not suggesting anyone do this. Especially if you carry a balance on your cards and pay interest (we don't).

 

[FinanceDude]

Yeah, 1st wife did that. Drove me nuts. She was never able to figure out that if we're going to end up paying credit-card interest rates on the purchases that it kind of negated the "savings". In other respects she was very intelligent, just had no impulse control when shopping.

Kohl's is a shrewd retailer. If you have a Kohl's Card, they'll give you an extra 15% off on their sales items. So they get you to buy even more because you'll "save" so much more.........

My house is a repository of various merchandise credit cards from Kohls, Target, TJMaxx, and WalMart. Somehow "we" never decide in time whether "we" want to keep purchases or not.............

 

[prgsdw]

$10 billion on porn? I get my porn for free.

Keep the porn - but where do you get free high speed internet access to get that porn?

 

[ats5g]

Sounds like my DW........I am trying to change that behavior. Like I tell her, "I don't care if it's 90% off,I don't need 26 white t-shirts"...........

I also love sitting at the table after dinner, as she flips through the "sale ads" that we got in the mail, and hearing "Hey look, [so and so] took 20% off the price of [insert materials for home improvement project]. We should [insert improvement project]." I actually asked once, "Were you even thinking about [painting, drywall, new floors, etc] before you read the ad?" To which I got THE LOOK.

At least now I respond with "And when are you going to [paint, plant flowers, drywall, put in new floor]?... Good, I'll take the kids to the [park, outside, aquarium]."

- Alec