Irrational thinking is the reason why diets fail, resolutions are broken, and why we buy things we don't need. The majority of financial decision making is done irrationally and if you don't believe me, have a look around your living room right now. Better yet, review the buying you've done in the past and wonder what the hell you were thinking. I come from the generation of Beaver Canoe sweatshirts, acid wash jeans, jelly shoes (now Crocs), and remember when peach, black and white was a cool colour scheme for household interiors.
Housing is a need. Having a 5 bedroom, three bathroom home on an almost an acre of property is a want. Basic sustenance is a need. Having smoked salmon, filet mignon, lobster and fois gras in the fridge is a want. So is the stocked liquor cabinet, the pop fridge, and the wine & beer stash that we no longer have. Sniff, sniff...
Clothing for the kids is important, but anything not labelled Joe Fresh is probably a want. I have a weakness for coats...some women it's shoes. Being that my feet are a size 10 and it's hard to make gigantic feet beautiful, perhaps I've unconsciously chosen to distract the eye of others with a plumage of fine jacket wear. Having over 20 jackets for 4 seasons of the year is a want, not a need.
Having transportation to get to and from work is a need. "Why the world's most intelligent primate would buy a Hummer H1 Alpha sport utility vehicle for $139,771?" is hard to understand. As Geoffrey Miller goes on to say in his book Spent: Sex, Evolution and Consumer Behaviour, "It is not a practical means of transport. It seats only four, needs fifty-one feet in which to turn around, burns a gallon of gas every ten miles, dawdles from 0 to 60 mph in 13.5 seconds, and has poor reliability, according to Consumer Reports. Yet, some people have felt the need to buy it- as the Hummer ad says, "Need is a very subjective word."
Unconscious irrational consumerism is the best way to describe the way that the majority of us shop. If you have ever thought the following things I am about to describe than you have bought stuff without rational justification.
It's such a great deal! Everyone loves a good bargain.....I know I can't resist one time only buys that make me feel like I have saved us a fortune doing my good deed by maximizing the value of the dollars we earn by providing my family with the things we "need". How much do these savings cost us, when those buys are on credit? No doubt these bargains cost our family more than I am willing to admit, but is there a bigger cost, one that I don't even realize?
"Most of us know that, at some level, cheap stuff comes with a price. But what does it mean to have discounting as the defining force within the whole economy?", Gordon Laird explores these ideas and more in his book, "The Price of a Bargain: The Quest for Cheap and The Death of Globalization."
He goes on to say, "Our world is littered with shipping containers, shaped by logistics networks, subsidized by affordable crude oil, and deeply dependent on consumer spending that, directly and indirectly, accounts for as much as 70 per cent of all economic activity in North America and Europe.
Blaming bankers, deregulation, and sketchy financial dealings for the recession is only halfway correct. Some of the greatest challenges of our time stem from the transformation of western nations into shopping economies. Unsustainable consumer debt, the rise of Asian economic powers, and the growing impact of former externalities like climate change, pollution, and poverty are rising up, threatening the very sustainability of our economic recovery. And they all are tied to our relentless pursuit of cheap.
At the core of The Price of a Bargain is a timely argument: the worst economic crisis in 50 years is not just a financial collapse but the beginning of a major shift in society, economy and environment that will mark the decline of globalization and the bountiful tide of affordable consumerism that many economies have come to depend upon. Our whole system of cheap is leveraged in ways we are only just beginning to understand – and broken in ways that may not be easily fixed." http://www.gordonlaird.com/price-of-a-bargain/
Buying this widget will make our life better. We have all been manipulated like a puppet on a string by government, big business, public relations marketers, bankers, publishing corporations, Hollywood, Freud's theories and psycho analysts that have tapped into our innermost desires to manipulate us into spending money we don't have and to make sure that we behave in ways that protect society as a whole.
Would I trade my precious time with my kids and my husband if I didn't think that by providing for them through work wasn't "making their lives better"? Would I get up and go to work everyday if we weren't up to our eyeballs in debt and bill payments?
In Spent, Geoffrey Miller explores an imaginary conversation with our Cro-Magnon selves as hunter-gatherers in which he plays out a scene where our current selves attempt to convince our Caveman ancestors that our way of life has been for the better.
"So, what's the catch? What would we have to do to get these knives and shoes?" says our Cave woman. We explain," All you have to do is sit in classrooms every day for sixteen years to learn counter-intuitive skills, and then work and commute fifty hours a week for forty years in tedious jobs for amoral corporations, far away from relatives and friends, without any decent childcare, sense of community, political empowerment or contact with nature. Oh, and you'll have to take special medicines to avoid suicidal despair, and to avoid having more than two children. It's not so bad, really. The shoes with the swooshes are really cool."
Are we out of our mind?!!!!!! Or have we been powerfully marketed to and manipulated in ways we don't consciously realize? If you want to see something that will leave you completely gob-smacked (jaw-dropped), watch "The Century of Self: Happiness Machines", a program put out by the BBC http://www.youtube.com/watch?v=prTarrgvkjo .
We are nothing but a bunch of dummies or at least that is how I felt after watching the first of a four part series this morning.
We work so hard, we deserve it. How many years of future happiness have we pledged for pleasure now? Well, if we stick to our current budget plan and follow the debt repayment that we have set out for ourselves. We will have it all paid off by April of 2015. That's if...nothing unexpected comes up, and we don't lose our jobs, and don't get sick or get into an accident or something horrible and wacky happens with our broken dream home and our seven year old car keeps on going with no major repairs. Wow, that's 2.5 years!!!! (Insert every swear word I know but won't type here.....since the likelihood of us getting through that mine field of unrealistic expectations is hysterical!!! I'm laughing, crying AND swearing now....)
Gail Vaz-Oxlade's book, "Debt-Free Forever" delivers a sobering message in her no-nonsense way, "If you don't have an emergency fund and some savings, if you're carrying around a pile of consumer debt, if your expenses exceed your income and you're covering the difference with credit, it's time to grow up. You are not entitled to anything for which you cannot afford to pay."
The only people in this world who are entitled are the children we bring into it. Gail says, "Children are entitled to feel secure, to have enough to eat, and a safe place to live. Parents who put their own wants before their children's needs are selfish and irresponsible."
"How can having a fifty-inch plasma TV be more important than the pain in you children's eyes as they watch their home being repossessed? How can a shiny truck be more important than fresh fruit and veggies for your kids? How can a fancy handbag be more important? I'm not a shiny truck or handbag owner but I can't deny that all the time that I have traded at the expense of my kids has been in the pursuit of buying stuff that I thought in my deluded way, would make our lives better.
If I had re-examined my thinking 10 years ago, I could have saved myself and my children and my husband years of anguish that resulted from my belief that by getting a college degree to pursue my passion for becoming a Chef in a industry I loved, then working aggressively to gain the skills and experience to become a business owner would in turn, be a shining example to them as a mother who could manage it all. Super woman or Super ego or Super deluded....hindsight is 20-20.
Does this mean that I think all women should quit their day job or that I should quit mine? Well, no, that's unrealistic and completely one-sided. I do think that I could have taken it a little easier and made it a much better journey had we made better financial decisions along the way and had I not put so much pressure on us to "get ahead". Like most average Canadian families, as our income went up, so did our spending. We kept counting on the raises to create a buffer...the old," when we are making x amount...we will have some breathing room." Only the breathing room never came because the spending habits never changed.
The change needs to come by asking some tough questions the next time we go shopping. Questions like, How much trade off time with my kids are those Lulu Lemon yoga pants going to cost me? Is that White Chocolate Mocha Frappuccino Blended Beverage a need or a want? Has my life become so over-scheduled with better quality of life obligations that it makes sense to eat take out at McDonald's so that we can get our kids to sports activities on time?
Instead of just questioning our priorities Gail offers an even better way of breaking things down into real cost in her book, "Debt-Free Forever". Here is the lowdown:
"Let's say you make $50,000 per year net. This translates to a net hourly income of $25 (50 weeks and 40 hours per week). Minus essential expenses such as mortgage, car payments, debt repayment, food, etc. For a guess, lets say it adds up to $3300 per month, which breaks down to $19.80 per hour. Taking $25 an hour minus $19.80 per hour leaves you with $5.20 per hour of disposable income."
So, supposing you want a $1500 flat screen TV? Well that translates into 289 hours of work. Divide that by 40 hours and now you have just over 7 weeks of work to pay for it, without spending a dime on anything else.
I just figured out the combined hourly average that my husband and I make per hour. Then I took our personal & discretionary spending budget and subtracted the things which we are currently obligated to pay for. This included music lessons, the gym, a flat screen tv payment, childcare and our monthly donation to David Suzuki. It leaves us with .03% of our income to spend on extras per month.
To put this in frightening perspective.....here is what a little spending spree would look like now for us (hopefully your disposable income is more....), if we stick to the budget:
Starbucks Coffee $7 = 14 hours of work
Bottle of wine $20 = one week worth of work
Book $35 = almost two weeks of work
Blue Jeans: $50 = 2.5 weeks
Family Trip to the Movies: $75 = 3.75 weeks
LuLu Lemon Yoga Pants: $100 =5 weeks
Dinner for 2 with Drinks: $125 = 6.25 weeks
ipod: $200 = 10 weeks
Cell Phone: $350 = 17.5 weeks
Couch $600 = 30 weeks
ipod with 800 songs: $1000 = 50 weeks
Family Vacation to Cuba $6000 = 6 years
New Subaru Forrester $32,000 = 1600 weeks or 30 years
Luxury car $45,000 = 43 years......thank god for car loans!
If I bought all these things tomorrow, I would need to work till I am 119 to pay for them with the current amount of disposable income I have.
Why would I buy any of them given the amount of my life I need to give up in order to own something shiny? Geoffrey Miller has a theory that all of the "the goods and services we buy unconsciously advertise our biological perspectives as mates and friends."
He argues that everything from the clothes we buy, the cars we drive, the neighbourhoods we live in, the bling we wear, the pets we choose, the drinks we consume, the careers we have is all about advertising our personal traits to others.If you think that because you may be a vegetarian, fair trade coffee drinker, living off the grid, with hand stitched hemp clothing and so may be exempt from the evolutionary flaunting that Miller describes, you're wrong....we all do it, whether you buy goods or services to do it or not.
The irony of the whole thing is that, "These costly signals are mostly redundant or misleading, so others usually ignore them. They prefer to judge us through natural face-to-face interaction. We think our gilding dazzles them, though we ignore their own gilding when choosing our friends and mates." http://www.time.com/time/health/article/0,8599,1900032,00.html
Think about it.....what was the thought process when you bought that widget when you get past all the bullshit justification? Dig deep....most of what we buy is because we are irrationally attracted to it...dig deeper.....we think it will make us cool or impress others.....deeper still.....we think it will make us happy because the widget is a reflection of who we want to be and will show others who we are, thus gaining the love and acceptance that we all so desperately need.
Marketers know this and they use it. In 1927, it was argued that the push by bankers, the government, and corporations were turning Americans from citizens to consumers....it doesn't seem like much of an argument given the state of the current economy. Americans, as well as Canadians are going broke as a result of over spending.
However, that won't stop big business from trying to get our hard earned money. "Neuromarketing is a young and growing field–some won’t even admit that it is a field yet–that is striving to reveal the inner mechanisms of our consumer behaviour. Soon, marketing experts, with the help of cutting-edge brain research, will get direct access to the inner depths of our brains where, with the right stimulation, they can unleash our buying impulses and get their cash registers ringing."
If you think I am making this up, read the following article regarding some experiments done at Atlanta's Emory University by a Clinton Kilts. http://www.scientificamerican.com/article.cfm?id=neuromarketing-brain
Is there no hope? Geoffrey Miller offers some exercises to try for the mindless spender like me in the back of his book, "Spent", that will help us all give our heads a shake. This is one of many and called the Natural Living Test.
"This quantifies how closely your life matches that of our Cave Woman ancestors. Write down honestly how many times in the past month you have had each of the experiences below:
- Rocked a newborn baby to sleep
- Made up a story and told it to a child
- Felt the sunrise warm your face
- Satisfied a genuine hunger by eating ripe fruit
- Satisfied a genuine thirst by drinking cool water
- Shown courage in protecting a child from danger
- Shown leadership and resourcefulness in an emergency
- Shared a meal with parents, siblings, or other close relatives
- Gossiped with an old friend
- Made a new friend
- Made something beautiful and gave it to someone
- Repaired something that was broken
- Improved a skill through diligent practice
- Learned something new about a plant or animal that lives near you
- Changed your mind about something important on the basis of new evidence
- Followed good advice from someone older
- Taught a useful skill, charming art, or interesting fact to someone younger
- Petted a furry animal such as a dog, cat or monkey
- Worked with earth, clay, stone, wood or fiber
- Comforted someone dying
- Walked over a hill and across a stream
- Identified a bird by its song
- Played a significant role in a local ritual, festival, drama or party
- Played a team sport
- Made a physical effort to achieve a collective goal with others
- Sustained silent eye contact with someone to show affection
- Shamed someone who was behaving badly, for the greater good
- Resolved a serious argument using humour, emotional self-control, and social empathy
- Sang, danced, or played instruments with a group of friends
- Made friends laugh out loud
- Reached a world-melting mutual orgasm with a sexual partner
- Experienced sublime beauty that made your hair stand on end
- Experienced an oceanic sense of oneness with the cosmos that made you think, This is how church should feel
- Applied the Golden Rule by helping someone in need
- Warmed yourself by an open fire under stars
We are your average Canadian family and we spend our money without thinking on things that no one cares about.....
Another great post Mandy! I have often applied the real cost rule, ie figured out how much I would have to work to pay off a purchase and it does make you stop and think whether it is worth it or not when you see it like that.
ReplyDeleteAnd I love the Natural Living Test. Thanks for sharing it.