Looking the Wrong Way

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A comment I saw recently on the Bucks blog over at the New York Times really stuck in my head. In a post about Americans spending less and less time shopping for a mortgage, CG said:

Why is this a surprise to anyone? You USE a car. You USE a house. That’s what you spend the time shopping for. You don’t USE a mortgage. The mortgage or the car financing is just the means to get it. You can’t put the top down on the mortgage and drive it around.

He’s got a very good point. In our day-to-day life, we don’t see debt itself. We see a house. We see a car. We see a meal. We see a job. The only time we interact with our debt is that time once a month when we pay our bills – and sometimes, when the billing is automatic, we don’t even do that.

Instead, every single day, we see the effects of debt. We go to work at the highest-paying job, which is often not the job we would enjoy the most. We live in a location that isn’t where we would necessarily choose. We’re stressed out over our work and our social life and our appearance.

The problem is that many people don’t recognize – or don’t want to recognize – the effects of their debt.

We don’t connect job stress to overspending, even though they’re deeply connected.

We don’t connect the little painful choices we have to make each day to our overspending and debt in other areas.

We don’t connect our distance from family and old friends to our need for financial success.

A person who has made the “hard” choice to be debt free and to conserve some of their money has many, many more options available to them than the person who doesn’t.

How do they get there?

They USE a car, but that car is a used one, usually paid for in cash saved up from making lots of little financial choices.

They USE a home, but that home doesn’t have to be shiny and new. It’s also got a smaller mortgage, one that can be paid off much more quickly.

They USE their kitchen using functional low-cost equipment to make great meals at home instead of using it as a decorative element in their house and going out to eat all the time.

They actually use their stuff instead of admiring it or luxuriating in it. For that, they avoid debt and have freedoms in life that most people just dream of.

When you look at the stuff around you, think about what you can actually do with it, and also think about the cost of it. The more critical thought you actually apply to your world, the more likely it is that you’ll start looking the right way and wind up building the life you want.

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18 thoughts on “Looking the Wrong Way

  1. I just want to thank you for this blog. I have started using many of the tips and tricks in here to cut spending on useless items.

    I have started to pause before buying something, making sure it will be something I use and is something I NEED.

    I have begun following a plan to be debt free in one year. (I did not have that much debt to begin with and I am lucky enough to currently own my home and car with no loans of any kind.)

    I am incurring some debt in the form of school loans but I know the value of the education will far outweigh the burden of the debt. Again, I will USE the skills I gain from getting my degree.

    Really looking at the usefulness of things is an interesting mindset. I recently decided to NOT buy a Wii because I don’t need it for exercise (which was my excuse for wanting it). I sold my Nintendo DS because I wasn’t using it and it was gathering dust. I DID decide to buy a replacement iPod part (on sale) because I do use that a LOT for walking and listening to around the house.

    I know I feel far less stress when I am doing things to free myself from debt and this “gotta have it” mentality. I feel more in control of my life overall and knowing I can build and work towards what is truly important to me is far better than worrying how I’m going to pay the light bill at the end of the month.

  2. I try to look at the overall cost of all our stuff instead of just the purchase price. Our home will end up costing us $142,000 instead of the $114,000 we agreed on and our car will be $23,000 instead of $21,000. Thankfully, the rest of our stuff wasn’t financed and makes our lives easier (mostly). The maintenance costs add up too, which is why we try to limit our purchases to things we see as “worth it” and not just anything that would lead to extra headaches.

  3. So true. Far too many people fail to see the true cost of their things.

    It’s not always easy being debt-free. For us, one of the hardest parts was dealing with other people’s changed perception of us once we “downgraded” from our McMansion to our modest home, and from our Rover to our Honda. Our status shifted overnight…

    We had to learn to become secure in the choices we made to live smaller and more simply. We also learned who our true friends were.

    It’s been quite a ride, but so worth it :o)

  4. A part of what the New York Times and CNBC don’t talk about why people don’t spend as much time shopping for a mortgage is that the lending process is so opaque. The industry makes shopping for a mortgage extremely difficult and consumers have a hard time comparing. This is done on purpose.

  5. Completely agree.. We can see all our money in the things we have, I rather see nothing!

  6. I have lots of beautiful antiques – antique dishes, furniture, lamps etc.

    The difference from some others who have antiques? I actually use them….we eat off the antique dishes using them everyday, we sit on the antique furniture, we use the antique lamps.

    What’s the sense in having stuff if you don’t use the stuff…which is why I purge anything I haven’t used in 2 years.

  7. My wife and I got a mortgage loan guy to get us a loan and it was a great thing. We got a loan we wouldn’t have, if we did it ourselves.

    Because of his connections, we got a very good rate. Mor importantly on our second loan, which we did because we couldn’t make the 10% down, the mortgage guy got us a FIXED loan, which for a second loan is unusual. Our other loan is fixed as well.

    Us spending the extra money to get a mortagage guy certainly was worth it.

  8. The linked blog post is pretty much covering a press release from a survey conducted by a company that will make money from people using their site to research mortgages. And this blog post is based off a comment on that. It feels a little … thin.

    Perhaps dialing back on the “quantity” knob might be a good idea. I generally find the posts here to be thought provoking, but I’m sure there’s better meat out there than this.

  9. So art is a waste of money, because we don’t really USE them? They just hang on the wall looking pretty?

    I’ve never had to USE my life or disability insurance – are they wastes of money?

    I’m not sure how this post got from ‘A’ to ‘B’ (where ‘A’ was “people don’t put much thought into shopping for their mortgage” and ‘B’ was “Things you can’t USE are a waste of money”). There’s a logical leap in there somewhere that I must have missed.

  10. A timely blog post– my family is in the middle of a big household purging. My 3 year old son is moving from crib to his big brother’s lower bunk; the changing table is being switched out for a dresser. We also happened upon a good deal on a used denim sectional couch (which I had wanted forever but the cost had been prohibitive new- it took me a long time to find what I wanted on Craigslist!) and are switching up our livingroom furniture. Out with the old, in with the new (to us, anyway).

    With all the mess of moving everything, it becomes apparent how much extra we all have. Every family member is called upon this week to define what they no longer need– and we are planning a garage sale in two weeks time. Everything that doesn’t sell will get donated. Clothes will be sorted thru and sized up if needed; those no longer in use get passed on to our circle of kids clothing friends/family.

    If you don’t use it, you don’t need it.

  11. I think part of what you are saying is that we don’t actually experience the cost of what we buy beyond that initial date of purchase. We don’t “see it” on a daily basis like we do our household items. Therefore, we don’t have a daily connection with our debt and realize what our purchases are really costing us in regards to what we really want out of life.

    What this article has sparked in me is the realization that I need a visual reminder of my debt. Perhaps a chart on the refrigerator would help. An even better idea, in order for it to actually take up space in my life, would be a stack of something (perhaps books) that represents every thousand dollars owed.

  12. I don’t see that there’s automatically a dichotomy between conscious spending and being able to admire/luxuriate in what you’ve bought. And I too was expecting a totally different direction with this post – maybe more along the lines of what an affordable mortgage is, what considerations one needs to be looking for when shopping for a mortgage, how making a larger or smaller down payment impacts your overall mortgage expense, reasonable payoff times.

    The one piece of advice my parents and grandparents gave us when we were planning to buy our first house was not to need 2 incomes to afford it. We still live in a modest home but do have certain items we ‘luxuriate in’ without guilt.

  13. Interesting perspective. Lots of people are often too interested in keeping up with the Jones’ and may not consider whether they will use and enjoy their purchase. Just like the kitchen example.

    Many years ago a friend suggested that my house looked a little too bare. At that point, I did not come across anything worth buying nor displaying. I have since added items. Mostly single purchases that I have made while on vacation. It reminds me of the vacation and it is something that I enjoy seeing.

  14. Out of sight, out of mind. The scary part is debt is like a cancer festering below the surface.

    People need to “see” their finances with a written budget and spending plan– I do it weekly. I can’t recommend that enough!

  15. To me the key word in your thoughtful post is ‘freedom’. Believe me, I would love to have nicer stuff, from clothes to furniture – but freedom from debt is far more important to me. Freedom to work fewer hours, freedom to travel, freedom to spend more time with my honey instead of working, freedom to create – to me it’s all about freedom. All of my life choices revolve around my biggest commodity – having more free time. So if I were to ever ‘hit the lottery’ (which would be impossible since I have never played) my lifestyle wouldn’t change – I’d just upgrade my stuff. Maybe…

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