There is a pitch going on everyday for YOUR money. The pitch? The pitch that says if you buy "fill in the blank" you are going to be happier, more successful, very popular, truly amazing, you name it, you deserve it!. This month we are talking about the evolution of materialism and how it has infected societies all over the world. Yes, I said infected and if you are not careful, it will leach on to you!
What exactly do I mean by the pitch? I am talking about the sales pitch that comes from anyone from your local car dealer to the restaurant to the store selling the latest greatest TV, computer, phone, clothing, furniture, flooring, deck materials, etc. Here is a message you need to hear. The more of these pitches you fall for, the less money AND freedom you will have. Check out this perspective.
You might think to yourself, I need this "amazing" item that is "on sale." Do you? Or do you just think you need it because you have been hit with a barrage of advertising over the years telling you that you need it? You and I have been brainwashed since we were very young children telling us that "stuff" will make our lives better. Is that true? Hell no! It is not true now and it never was true. Watch this.
Let's take a step back and state something rather obvious. It is generally nice to acquire something new on occasion. It brightens our day and if we can pay cash for it, it can actually feel pretty good. That is reasonable, but I am afraid millions of people all over the world have gone far beyond reasonable. They buy stuff they cannot afford thinking it is going to make their life better. It does the opposite.
When you go into debt to buy things, you are stealing from your future self and hurting your chance of reaching financial freedom. As soon as you buy that item, it starts depreciating rapidly to the point where it is worth little to nothing in the future. Weeks or months later, you lose interest and it goes somewhere to the back of the closet or the garage. It becomes junk. Listen to this perspective.
What is the cost and I am not just talking about the dollar amount you paid. What is the opportunity cost of buying something you probably do not need vs. saving that money and investing in a retirement account where it can grow tax deferred and tax free (Roth 401(k) or Roth IRA). When you start adding it up, this becomes a very big number over time. We are talking well over $100,000!
By not spending $1,000 a year on needless stuff and instead saving and investing it at 9% over 30 years in a tax advantaged account you end up with over $148,000. It would be much higher in a 401(k) with matching money. If that savings was $2,000 a year, you would end up over $297,000 in 30 years. What about $3,000 a year invested instead of spent over 30 years? It comes to over $445,000!
What am I getting at here? The majority of Americans are being duped into spending most or all of their money on junk that brings them more harm than good. They are not thinking for themselves. They are allowing people who run advertising campaigns to think for them. If you want to get your financial house in order, you MUST start thinking for yourself. Your financial future is at stake!
Am I exaggerating the situation? Nope. I am merely laying out the facts. Most Americans live paycheck to paycheck, stressed out over their financial plight. If an emergency came up that required $1,000, 56% of Americans could not come up with the money. This includes people with very high incomes. That percentage is probably over 75% for average income Americans. Learn more here.
Is this about instant gratification? Sure. Is it about buying the latest and greatest gadget because someone else bought it? Sure. Is it about looking looking rich (instead of actually achieving wealth)? Sure. It is a complex issue that isn't just one thing. It involves many things to include depression, poor self-worth, insecurity, boredom, the ease of doing it with credit and debt, etc...
So, is there a solution? Sure there is. You see through the pitch. That means you know that more stuff will not make your life better. It just accumulates over time until you hand it off to someone else, usually the garbage man. By seeing through the pitch, you end up not spending money on crap you do not need. This means you have a lot more money that can be saved and invested.
Here is a sure fire way to spend less money on stuff. Every time you feel the need to buy something that is not a need (most things), give yourself a 30-day waiting period. This takes emotions and delays them for 30 days. If you still "need" that item after a month and you have the cash to buy it, then go right ahead. Guess what? Most of those items will never be purchased. You will forget about most of them.
The more money saved and invested wisely in low fee stock index funds brings hope to a better future. It provides cash reserves in a Money Market Mutual Fund at Vanguard currently earning 5.27% that can be tapped when the next emergency occurs and it will, when we least expect it. This reduces the stress of that unforeseen event. It also means you don't have to go into debt to deal with the "catastrophe."
This leads to a surplus in money instead of a deficit. That surplus can go toward helping others as you reject the pitch again and again. That giving will change many lives including your own. It will provide hope to those who seek it and salvation for those who want it. This is your benefit to living a life with less stuff. Purpose and freedom follows. Allow love to flow to others. That is my pitch to YOU.
