Today's post is a more about what I perceive to be "normal" in American society with respect to finance and less about the specifics of my bankruptcy practice at Halcomb Singler, LLP. One conclusion that I have drawn after working with bankruptcy clients over the years is that Americans have odd priorities when it comes to money. Notice that I am not saying people who struggle financially or people who need to file bankruptcy have odd priorities.....I think these examples equate to Americans. You may or may not agree with me and feel free to leave a comment to let me know.
In order to illustrate how I believe Americans have odd priorities when it comes to money I have compiled a list of examples:
1. Gadgets: Americans LOVE gadgets. I am talking about cell phones, navigation systems, ipods, ipads, game systems and any other little electronic thing with buttons. Americans must have the latest and greatest when it comes to gadgets. I cannot for the life of me figure out why. I do not have an iphone, ipad, ipod or really any electronic that would be considered cutting edge technology or even cool for that matter. I am surviving. But people look at me like I am crazy when I tell them I have never owned an ipod. Americans seem to value gadgets so highly that they will find the money to buy them. I have met with many, many people struggling to make a house payment who had an iphone sitting next to them on the table. Are these electronics so important that we should value them over something as fundamental to our lives as shelter? Why not scale back a bit on the gadgets and realize that we can live with less?
2. Gigantic Houses: Gone house-hunting lately? It seems to me that Americans value square-footage over the quality of their home. Think about all of the people you know who live in a home so big that they have at least 2 rooms without any furniture that they never use. At the same time, their giant home is likely within spitting distance of their furthest neighbor and sitting on a postage stamp size yard. Finally, the house is finished with low-grade everything because the builder put all of the money you spent on the house into making it 5,000 square feet. Once the gigantic house is purchased it costs a small fortune to heat, cool, paint, remodel, and maintain.
3. Eating Out: Okay. If you have read more than 2 of my blog postings you know that I cannot figure out why people spend so much money eating out. I am not saying that it is never okay to eat out. But most Americans will still eat out if they don't have health insurance, life insurance, or estate planning documents. This is an example of how I perceive that our society values instant gratification over long-term stability. I am not saying that most Americans would rather order a pizza than have their loved ones taken care of should they unexpectedly pass away. What I am saying is that our society doesn't stop to think that if we didn't eat out, stopped smoking cigarettes, stopped buying a starbucks every day (or insert your other fairly useless spending here) that they could afford the health insurance premium that they believed to be unaffordable, etc.
4. New Cars: Every American knows that when you buy a new car that once you drive it off the lot you owe more than the car is worth unless you put a massive amount of money down or paid for the car outright. I am not saying that no one in this country should ever buy a new car....but I am saying that if you are going to buy a new car you better be the one who drives off of the lot owing less than the car is worth even after that massive depreciation hit. Americans love new cars so much that they will spend more money on payments for 2 cars than they do for their gigantic house each month. Better yet, as soon as the big payment on that car ends after 60, or even worse, 72 months they will often go out and buy another brand new car to replace it. It's almost like Americans don't sleep well at night without a car payment. Why not buy a slightly used car and hopefully be able to pay cash due to the savings over a new vehicle? Or if you cannot pay cash fiance over 36 months instead of the dreaded 72?
5. Valuing Stuff over Savings: This illustration goes back to what I believe to be true about Americans and instant gratification. We all want what we want right now and therefore many Americans are not good savers. Americans add up their monthly income and subtract their monthly expenses and so long as the final number isn't negative we think everything is just peachy. However, when your budget doesn't take saving money into account or putting money away for retirement it should set off some red flags. I know many people approaching 50 who have yet to save for retirement and others who saved until they were 35 and then found a reason to stop saving for retirement. Americans seem to value buying stuff now over being able to take care of ourselves in our elderly years. It seems Americans believe that they can survive on social security when the time comes. However, if you have watched the news more than once in the past year you know that there is no guarantee that social security will even be around in a few years. Why not put some money away now to give yourself peace of mind that even if the government fails in fixing social security that you have provided for your future self?
I am not trying to insult anyone who fits into the examples above, as I see these spending habits as driven into the minds of American society from birth. I believe that Americans are subconsciously trained during their lives to spend in the ways mentioned above and that it is really difficult to break out of the mold of spending the way that you have been taught your entire life. But my hope is that with the hard times that have been facing America since 2008 that Americans will question these habits and change them. What spending or financial habits do you believe Americans hold? Have you been able to break out of the mold? Please share your story in the comments.
Halcomb Singler, LLP, is a debt relief agency. It helps people file for bankruptcy under the bankruptcy code. No attorney-client relationship with the firm of Halcomb Singler, LLP, is created through this blog. Also, please note that Erika Singler is an attorney licensed in Indiana and does not seek to practice law in any jurisdiction in which they are not properly authorized to do so. The information contained in this blog is general in nature and should not be relied upon for the circumstances of any individual(s) or businesses.
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