I recently saw a TV commercial that triggered a long-forgotten memory. While shopping with my parents, my mom saw a coat, on sale, that she wanted. It was a little pricey, and she didn’t have the money for it at the time. Instead of hoping that it would go on sale again sometime in the future, my mom brought the coat to the counter and put it on layaway. It’s that old-fashioned system, where you can put a down payment on an item and come back later to gradually pay it off. Apparently Kmart has decided to reinstate the policy.
Americans no longer put wallet-stretching purchases on layaway. Instead, we’ve racked up a national average of credit card debt that totals at almost $10,000 for every family that owns at least one credit card. Especially in the context of today’s economic meltdown, that’s a dangerous number. Loan and credit card companies are less forgiving than ever, and it’s even harder to make personal financial sacrifices when you are already dealing in invisible money. What’s an extra $50 on a $10,000 bill?
Our consumer culture has long thrived, and continues to thrive, on a deeply-entrenched system of rapid upgrades and acquisition. If it’s bigger, better, newer and faster, the desire sets in. We immediately crave to be just as cool as those overpaid commercial stars oozing with praise over their newest gadgets.
This system of thought has to change. It’s not that we need to, or should, stop buying things—consumerism keeps our struggling economy afloat—it’s that we need to change the way we think about making purchases. America needs a lesson in basic economics.
I am typing this article on a 2005 Compaq desktop. It has crashed twice, is likely infected with some type of unfixable computer malady and takes approximately 10 minutes to start up. Ten feet away from me in my purse sits a three-inch piece of plastic that would solve all my problems. I can open a new browser, enter some numbers in next to my dream computer, and have a new laptop by Friday.
The reality, though, is that on my paltry salary, it would take me about 35 weeks to pay off a new computer. And that doesn’t take into account my other expenses, necessary future purchases or the 10 percent interest rate I will pay alongside my credit card bill. It’s almost scary to think that so much is possible with this powerful piece of plastic.
I’m going to go out on a limb and say that layaway days are probably long gone, though maybe Kmart will have some luck with their new marketing strategy. The concept can still exist in our own heads, however, and as up-and-coming big spenders of both visible and invisible money, it’s time for us to be realistic about credit. We are only in college, at far too young an age to start accruing major amounts of non-academic related debt. You will literally be paying for the rest of your life if you start careless spending habits at age 19. Don’t give the plastic more power than it deserves.
The power of plastic
Published: Monday, November 17, 2008
Updated: Monday, November 17, 2008
3 comments
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Sure, but in this kind of economy is investing this much in our education a worthwhile cause? There might not be the kind of jobs out there in a year or two that can support this much debt.
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Education is a much more worthwhile investment than a new wardrobe ..student loan debt or other unavoidable debts are a completely different story from spending sprees.
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Is accruing $40,000 a year in tuition any better? I guess we'll all pay it off pretty quickly if we find a job in a top law firm or something similar. You could say that by going into debt now we're building ourselves a good credit rating that will help when we apply for mortgages or loans.
